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Prime Constructions (Qld) Pty Ltd v HPS (Qld) Pty Ltd & Ors

 

[2019] QSC 301

SUPREME COURT OF QUEENSLAND

CITATION:

Prime Constructions (Qld) Pty Ltd v HPS (Qld) Pty Ltd & Ors [2019] QSC 301

PARTIES:

PRIME CONSTRUCTIONS (QLD) PTY LTD

(ABN 11 128 215 903)

(applicant)

v

HPS (QLD) PTY LTD (ABN 34 131 447 517)

(first respondent)

and

JOHN TUHTAN (REGISTERED ADJUDICATOR NUMBER J1190798)

(second respondent)

and

THE ADJUDICATION REGISTRAR, QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(third respondent)

FILE NO/S:

No BS 10745/19

DIVISION:

Trial

PROCEEDING:

Originating application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

13 December 2019

DELIVERED AT:

Brisbane

HEARING DATE:

18 October 2019; further written submissions received on 23 and 28 October 2019

JUDGE:

Flanagan J

ORDERS:

1. The originating application is dismissed.

2. The sum of $1,072,568.28 paid into Court by the applicant pursuant to the order of Ryan J made 4October 2019 be paid out to the solicitors for the first respondent.

3. The applicant pay the first, second and third respondents’ costs of the proceedings.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where a subcontractor and head contractor entered into a construction contract for the installation of windows & glazing for a residential project – where there was a severe storm – where there were multiple sources of water ingress –  where the head contractor relied on an indemnity clause to deduct from the subcontractor’s payment claim the costs of rectifying water damage – where the adjudicator deducted a smaller amount than scheduled by the head contractor – where the head contractor asserted that the adjudicator committed jurisdictional error – whether the adjudicator failed to consider material that he was required to consider, give adequate reasons, or observe natural justice

Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 88, s 89

Annie Street JV Pty Ltd v MCC Pty Ltd & Ors [2016] QSC 268, cited

Avopiling (NSW) Pty Ltd v Mernard Bachy Pty Ltd [2012] NSWSC 1466, applied

Caltex Refineries (Qld) Pty Ltd v Allstate Access Australia Pty Ltd [2014] QSC 223, applied

Craig v South Australia (1995) 184 CLR 163, cited

Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525, cited

COUNSEL:

M D Ambrose QC for the applicant

B D O’Donnell QC, with J R Green, for the first respondent

No appearance for the second respondent

No appearance for the third respondent

SOLICITORS:

Holding Redlich for the applicant

Corrs Chambers Westgarth for the first respondent

No appearance for the second respondent

No appearance for the third respondent
  1. [1]
    The applicant, Prime Constructions (Qld) Pty Ltd, seeks a declaration that the decision of the second respondent (adjudicator) dated 27 September 2019 under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) is void for want of jurisdiction.  Prime also seeks consequential injunctive relief.
  2. [2]
    The declaration is sought on the basis that the adjudicator committed five jurisdictional errors regarding the part of his decision concerning Prime’s deduction claim in the amount of $866,263.72.  The deduction claim relates to rectification costs for damage caused by a storm on 10 December 2018.  The adjudicator only deducted an amount of $69,696.32.
  3. [3]
    The position of the adjudicator and the Adjudication Registrar as third respondent is that they submit to all orders of the Court save as to costs.
  4. [4]
    For the reasons that follow, Prime has failed to establish that the adjudicator committed any of the alleged jurisdictional errors.

Background

  1. [5]
    On 23 May 2018, Prime and the first respondent, HPS (Qld) Pty Ltd, entered into a contract for glazing works on an apartment tower and a 217-room hotel tower, which were each under construction in Cairns.[1]  The contract required HPS to supply and install aluminium and glass window and door assemblies and glazing to all windows for the project.
  2. [6]
    On 27 May 2019, HPS served Prime with a payment claim in the sum of $1,461,674.24.  On 14 June 2019, Prime served HPS with a payment schedule that responded to HPS’s payment claim and included Prime’s reasons for withholding payment.  Prime scheduled an amount of $360,810.95.  Prime has paid this amount to HPS.  On 29 July 2019 HPS served Prime with an adjudication application made under the BIF Act.[2]
  3. [7]
    On 28 August 2019, Prime’s served its adjudication response on HPS and the adjudicator.  The adjudication response included but was not limited to the following documents:
  1. (a)
    adjudication response submissions;
  1. (b)
    statutory declaration of Rick Stevens; and
  1. (c)
    a report of a quantity surveyor, Russell Welsh.
  1. [8]
    The adjudicator made his decision on 27 September 2019. 
  2. [9]
    The adjudicator determined the amount payable to be $1,365,408.67.  The only item that Prime challenges in these proceedings is the deduction made by the adjudicator for the cost of rectifying water damage to rooms in the hotel tower for which HPS is responsible.  As stated above, Prime sought a deduction of $866,213.72; the adjudicator allowed $69,696.22. 
  3. [10]
    Subsequent to the adjudicator’s decision, Prime, on 3 October 2019, applied for an urgent interlocutory injunction restraining HPS from filing an adjudication certificate under the BIF Act.  On 4 October 2019, consent orders were made by which HPS agreed not to take any steps to enforce the adjudicator’s decision pending the resolution of the present application.  This agreement was made upon Prime giving the usual undertaking as to damages and undertaking to pay into Court the amount of $1,072.568.28 to secure payment of the adjudicated amount (including the adjudicator’s fees and interest) until the determination of the present application. 

The adjudicator’s decision

  1. [11]
    The adjudicator’s decision is 52 pages in length.[3] 
  2. [12]
    By way of background, the adjudicator notes that on 10 December 2018, the project suffered a severe storm event and rainwater penetrated the building from multiple locations.  He states:[4]

“Specifically, the parties claim that water penetrated the building from;

  1. (a)
    services penetrations in the roof;
  1. (b)
    from the fire stair in the roof;
  1. (c)
    from openings in the building façade where there were no windows installed;
  1. (d)
    from openings in the building façade occupied by the temporary man and materials hoist [Alimak]; and
  1. (e)
    from windows that were installed but which were either incomplete or defectively installed.”
  1. [13]
    The adjudicator thereafter refers to and describes the payment claim, the payment schedule, the adjudication application and the adjudication response. 
  2. [14]
    The adjudicator notes that he required an extension for making the decision.  The present payment claim was a complex payment claim and ordinarily an adjudication decision would be required within 15 days after the response date.[5]  On 16 September 2019, the adjudicator, however, wrote to the parties requesting an extension of time up to 27 September 2019.  Such an extension may be granted by the parties pursuant to s 86(1) of the BIF Act.  The circumstances in which the adjudicator came to ask for an extension was that he sustained a severe injury to his knee on 5 September 2019, which caused him to be unavailable for work in deciding the adjudication application.  Prime and HPS granted the extension on 16 September 2019.
  3. [15]
    The adjudicator at paragraph 37 identifies the requirements of s 88(2) of the BIF Act, noting that in making his decision he had regard only to the following matters:

“(a) the provisions of the BIF Act and, to the extent that they are relevant, the provisions of the Queensland Building and Construction Commission Act 1991, part 4A:

  1. (b)
    the provisions of the construction contract … from which the application arose;
  1. (c)
    the Payment Claim to which the application relates, together with all submissions, including relevant documentation, that have been properly made by [HPS] in support of the claim;
  1. (d)
    the payment schedule, if any, to which the application relates, together with all submissions, including relevant documentation, that had been properly made by [Prime] in support of the schedule;
  1. (e)
    the results of any inspection carried out by the adjudicator of any matter to which the claim relates.”
  1. [16]
    In paragraphs 38 to 141 of the adjudicator’s decision, the adjudicator dealt with disputed claims relating to the original contract works, none of which are relevant for present purposes.
  2. [17]
    The deduction claim is dealt with at paragraphs 142 to 194.  The adjudicator commenced by identifying, at paragraphs 143 and 145, the competing assertions of Prime and HPS as to liability for water damage caused by the storm event.
  3. [18]
    From paragraphs 146 to 161 the adjudicator considered HPS’s contractual liability for the alleged damage.
  4. [19]
    At paragraphs 162 and 163 the adjudicator dealt with the expert report of Mr Derrington,[6] whom was engaged by HPS.  Mr Derrington’s opinion was that the project had not been sealed against water ingress on 10 December 2018.  The adjudicator noted Mr Derrington’s opinion that 42,640 litres of water had been permitted to enter the hotel tower via the roof.  Mr Derrington opined that the cause of water ingress had been largely due to water entering the hotel tower from the roof and tracking down via the internal section of the hotel tower.  He formed the opinion that any water that had been permitted to enter the hotel tower by incomplete window seals would be negligible.  Accordingly, he opined that it was unlikely that any substantial amount of rainfall would have been able to penetrate the scaffolding and be directed at the small openings left by the incomplete window seals.
  5. [20]
    At paragraphs 164 to 165 the adjudicator considered the expert report of Mr Stevens, the expert engaged by Prime.  According to Mr Stevens, based on his review of the contemporaneous records and photographs of the storm event, it was clear that water had penetrated the glazed assemblies during the storm event and this ingress reached internal finishes.  In his experience of water penetration of this nature, such ingress would invariably damage the internal finishes. 
  6. [21]
    The adjudicator’s decision in relation to the deduction claim is recorded at paragraphs 166 to 194. 
  7. [22]
    The adjudicator first considered cl 17.1 of Annexure 1 to the contract.  This clause required HPS to indemnify Prime against loss of or damage to property of Prime, including existing property in or upon which the work under the contract was being carried out.  The adjudicator noted HPS’s submission that Prime bore the onus of proving causation between HPS’s conduct in carrying out the glazing work under the contract and the relevant loss or damage.  The adjudicator noted:[7]

“That clause requires a causative link to be established between the damage suffered and the direct effects and the consequential effects of carrying out of the works under the Subcontract.”

He continued:

“168. As to whether the damage suffered was causatively related to [HPS’s] work under the Subcontract, regard must be had to the surrounding circumstances.  In particular;

  1. (a)
    Which purported defective work caused the damage; and/or
  1. (b)
    If there were no defects, what other things did [HPS] do in carrying out the work that caused the damage.
  1. If the evidence shows that either defects in the windows or other things done or caused by [HPS] in carrying out the installation of the windows caused the damage to the gyprock walls, then [HPS] will be liable for the cost of the rectification of damage pursuant to clause 17.1.”
  1. [23]
    Having considered cl 17.1, the adjudicator identified the relevant issues under the heading “Did rainwater come through the windows on 10 December and did that rainwater cause the damage”.  The adjudicator noted that the parties had provided him with hundreds of photographs of the hotel tower taken on 10 December 2018 and on several occasions over the next few months.  All photographs showed extensive water damage throughout the building.[8]
  2. [24]
    He observed that the parties had each provided an expert report “speculating as to the likelihood that water penetrated the windows and caused the damage” that had subsequently been rectified by Prime.[9]
  3. [25]
    In particular, the adjudicator referred to 10 annotated floor plans:

“172. … I have been provided with 10 annotated floor plans and a large number of photographs of each room in the hotel produced by Rick Stevens of [Prime] between 11.30 am and about 4.30 pm on 10 December 2018 showing wet areas in each room.”

  1. [26]
    The adjudicator did not accept that HPS’s work as at 10 December 2018 had been defective.[10]  The adjudicator was also not persuaded by either expert report “as neither prove on balance that the damage for which [Prime] seeks to set off the cost of rectification resulted from water passing through certain windows identified by [Prime]”.[11]
  2. [27]
    The adjudicator was, however, persuaded that some water had entered through completed windows, the water had tracked to adjacent completed gyprock walls, and that water had caused damage to those walls, which had to be rectified.[12]  He was also persuaded that significant volumes of water had entered the building from openings other than the windows.
  3. [28]
    The adjudicator’s primary findings are set out in paragraphs 183 and 185 as follows:

“183. Mr Stevens of [Prime] has provided with his statement, 10 annotated drawings and photographs of each room of the building that were taken between 11.30 am and 4.30 pm on 10 December 2018 (Drawings of level 8 and 12 were not provided).  The annotated drawings were particularly useful in explaining how water entered the building and tracked through the building and which damage it most likely caused.  Specifically, Mr Stevens’ report indicates;

  1. (a)
    Which rooms were dry;
  1. (b)
    Which rooms had wet corridors and wet windows;
  1. (c)
    Which rooms had wet windows only;
  1. (d)
    Which openings had no windows;
  1. (e)
    The entry point of water on each level and how it tracked through the corridors and the rooms;
  1. (f)
    The location of the Alimak openings;
  1. (g)
    The locations of penetrations in soffits where water entered certain rooms;

  1. It is clear to me that in rooms where the windows were wet and the water has tracked to walls and there is no other water entering the room, then [HPS] is liable for rectification costs for that room.”
  1. [29]
    The adjudicator then considered Prime’s attempt to apportion liability in circumstances where water had entered both from a window and elsewhere:
  1. “187.
    In situations where water clearly entered from a window and from a corridor, then it was up to [Prime] to prove the proportions for which each party is liable.  In other words, if water entered through the windows and water entered through the corridor, the respondent must prove the extent of the damage actually caused by the water that entered through the windows. 
  1. I have reviewed the tables of costs provided in the payment schedule for each room apportioning costs between [Prime] and [HPS], all of the photographs and the annotated drawings of Mr Stevens and there are clear inconsistencies as I will detail below.
  1. In the context that [Prime] has failed to provide any reasonable apportioning the cost of damage rectification for each room where there was water shown to be entering through a window and from a corridor, and given that the respondent bore the burden of proof, I have decided that [HPS] is liable for rooms where the windows were wet and water has tracked to walls and there is no other water shown or recorded to have entered the room.
  1. Similarly, in the context that [Prime] has failed to provide any reasonable apportioning the cost of damage rectification for each room where there was water shown to be entering through a window and from a corridor, and given that [Prime] bore the burden of proof, I have decided that [Prime] is liable for rooms where the windows were wet and water has tracked to walls and there is water shown or recorded to have entered the room from another source.”
  1. [30]
    The adjudicator proceeded on the basis of the annotated drawings of Mr Stevens:

“192. I accept the annotated drawings of Mr Stevens for the purposes of determining the water damaged areas and the source of the ingress of water and, therefore, determining liability as between the parties.  I note that [HPS] has raised no objections to the accuracy of that record.”

  1. [31]
    The inconsistency between Mr Stevens’ drawings and the payment schedule was identified by the adjudicator as follows:

“193. I reviewed the table of costs attached to the payment schedule and cross referenced rooms where, by Mr Stevens’ annotated drawings, [HPS] could [have] had no liability because it was recorded as being dry.  I noted that there [are] many instances where the annotated drawings indicate no liability, yet a claim for rectification was made against [HPS] by way of the payment schedule table of costs.  For example; Room 104 was indicated as being dry yet [Prime] charged 100% of $2,167.50 to [HPS].  Similarly, for rooms numbered; 106, 109, 115, 116, 201, 202, 205, 207, 211, 215, 216, 217, 221, 223, 224, 225.  I did not complete checking every room as it is immaterial for the purposes of this decision but it does support my conclusion that the respondent’s table of costs was inaccurate and did not even follow its own records as to damage caused by either party.”

The alleged jurisdictional errors

  1. [32]
    Prime seeks to establish five jurisdictional errors:
  1. The adjudicator failed to consider genuinely the totality of Prime’s evidence regarding the water damage to rooms.[13]  In this respect Prime alleges that there was a third category of room to which the adjudicator did not have regard, namely, “rooms initially thought to be dry, but subsequently found to be suffering from water damage”.[14]
  1. As a consequence of the first jurisdictional error, the adjudicator committed a second jurisdictional error, namely a failure to afford natural justice in that the adjudicator failed to give Prime notice of his intention to make a decision on a basis not contended for in the material.[15]
  1. The adjudicator declined to provide any assessment with respect to rectification costs in rooms on levels 8 and 12 of the hotel tower.[16]
  1. In rejecting Prime’s basis of apportionment, the adjudicator both failed to have regard to relevant material, including the report of the quantity surveyor, Mr Welsh, and failed to give adequate reasons.[17]
  1. The adjudicator, in concluding that Prime’s methodology of apportioning general costs was inadequate, failed to consider genuinely the relevant material.[18]

Principles applicable to the determination of jurisdictional error

  1. [33]
    An adjudicator’s decision may be declared void if it is affected by jurisdictional error.[19]
  2. [34]
    Section 88 of the BIF Act deals with an adjudicator’s decision.[20]  Section 88(1) states what an adjudicator is to decide, which includes deciding the amount of a progress payment, if any, to be paid by the respondent to the claimant.
  3. [35]
    Section 88(2) provides that in deciding an adjudication application, the adjudicator is to consider the following matters only:

“(a) the provisions of this chapter and, to the extent they are relevant, the provisions of the Queensland Building and Construction Commission Act 1991, part 4A;

  1. (b)
    the provisions of the relevant construction contract;
  1. (c)
    the payment claim to which the application relates, together with all submissions, including relevant documents, that have been properly made by the claimant in support of the claim;
  1. (d)
    the payment schedule, if any, to which the application relates, together with all submissions, including relevant documents, that have been properly made by the respondent in support of the schedule;
  1. (e)
    the results of any inspection carried out by the adjudicator of any matter to which the claim relates.”
  1. [36]
    Section 88(5) outlines the requirements for an adjudicator’s decision:

“(5) The adjudicator’s decision must—

  1. (a)
    be in writing; and
  1. (b)
    include the reasons for the decision, unless the claimant and the respondent have both asked the adjudicator not to include the reasons in the decision.”
  1. [37]
    Section 89 permits an adjudicator to correct clerical mistakes:

“(1) This section applies if the adjudicator’s decision includes—

  1. (a)
    a clerical mistake; or
  1. (b)
    an error arising from an accidental slip or omission; or
  1. (c)
    a material miscalculation of figures or a material mistake in the description of a person, thing or matter mentioned in the decision; or
  1. (d)
    a defect of form.
  1. (2)
    The adjudicator may, on the adjudicator’s own initiative or on the application of the claimant or respondent, correct the decision.
  1. (3)
    The adjudicator may, if requested by the registrar, correct the decision.”
  1. [38]
    In Craig v South Australia, the High Court stated:[21]

“… [J]urisdictional error will occur where an inferior court disregards or takes account of some matter in circumstances where the statute or other instrument establishing it and conferring its jurisdiction requires that that particular matter be taken into account or ignored as a precondition of the existence of any authority to make an order or decision in the circumstances of the particular case.”

  1. [39]
    In Annie Street JV Pty Ltd v MCC Pty Ltd & Ors,[22] the Court considered jurisdictional error in the context of s 26 of the Building and Construction Industry Payments Act 2004 (Qld):

[24] The reasons for a decision under s 26(3)(b) should reflect a genuine consideration of the matters identified in s 26(2). As observed by Palmer J, when considering the equivalent provision to s 26(3) in the Building and Construction Industry Security of Payments Act 1999 (NSW) (the NSW Payments Act) in Brookhollow Pty Ltd v R & R Consultants Pty Ltd:[23]

‘The extent to which an adjudicator must give reasons for the determination in accordance with s.22(3)(b) reflects the extent of his or her duty to give consideration to the matters required by s.22(2). In a fully contested adjudication in which several issues have been raised, the adjudicator’s reasons should demonstrate that he or she has endeavoured in good faith to consider those issues, in compliance with the requirements of s.22(2)(c) and (d).’[24]

[25] In SSC Plenty Road Pty Ltd v Construction Engineering (Aust) Pty Ltd[25] Vickery J identified that the requirement to give reasons for the decision means that an adjudicator must proceed to make the critical findings: This process, according to his Honour involves:

‘(j) The adjudicator must proceed to make critical findings by:

  1. (i)
    fairly assessing and weighing the whole of the evidence which is relevant to each issue arising for determination at the adjudication;
  1. (ii)
    drawing any necessary inferences from the evidence, or from the absence of any controverting material provided by the respondent, including an inference that if there is no controverting material, no credible challenge can be made to the value of the claim advanced by the claimant. Such an inference may be considered in the context of the evidence as a whole;
  1. (iii)
    arriving at a rational conclusion founded upon the evidence;
  1. (iv)
    in so doing, is not called upon to act as an expert; and
  1. (v)
    is not entitled to impose an onus on either party to establish a sufficient basis for payment or a sufficient basis for withholding payment.

(k) Pursuant to s 23(3) of the Act,[26] the adjudicator must include in an adjudication determination both the reasons for the determination and the basis upon which any amount or date has been decided. In providing these reasons the adjudicator must summarise the central reasons for the making of the critical findings in the adjudication determination with as much completeness as the time permitted under the Act will allow.’[27]

[26] Jurisdictional error may also occur where findings or conclusions have no basis, are bare conclusions and do not reveal due consideration. In such circumstances the decision would be set aside –

‘… being insufficiently supported by reason, they appear to be an improper exercise of the power conferred or arbitrary or there was no evidence or other material sufficient to justify the making of the decision or the decision was so unreasonable that no reasonable person would have so exercised the power.’[28]

[27] Similarly, if one party’s evidence is rejected for no reason or on no other ground than a bare conclusion that one party’s evidence is preferred over another does not constitute the giving of reasons for a decision.[29]  As observed by Keane JA (as his Honour then was) in Camden v McKenzie:[30]

‘The appellants contend … that adequate reasons for judgment will refer to the evidence which was important to the determination of the matter, and will set out material findings of fact, giving the judge's reasons for his or her findings of fact, and stating the basis on which the judge has come to prefer one body of evidence over a competing body of evidence.

As a general rule, observance of these requirements is necessary to demonstrate that litigation has been determined fairly and rationally.  Adherence to these requirements ensures that rights of appeal are not rendered meaningless, and that a party affected by a decision adverse to his or her interests is not left with a justified sense of grievance that the case has not been properly considered. In short, these standards promote the conscientious public discharge of the responsibilities of a judge to litigants, as well as to the community, which has a vital interest in the integrity of the judicial process.’(Citations omitted).

[28] Camden concerned reasons for judgment of a trial judge. The distinction between giving reasons in a curial process rather than an adjudication process was noted by McDougall J in Bauen Constructions v Westwood Interiors:[31]

‘Although adjudicators work under significantly greater time pressures than judges, and their reasons should not be scrutinised with the attention to detail to which the reasons of trial judges and intermediate appellate courts are subjected in ultimate courts of appeal, nonetheless the reasons must indicate why it was that the adjudicator arrived at the determination given in accordance with s 22(1). Just as there is with judges, so too with adjudicators there is a presumption that the stated reasons are all of the reasons for coming to the conclusion expressed.’

The jurisdictional error identified by McDougall J in Bauen was that the determination revealed no intellectual justification for the decision that was made.[32]

[29] In considering the adjudicator’s reasons for decision in the present case, there is an important distinction to keep in mind between an error committed within jurisdiction and jurisdictional error. As observed by Brereton J in City of Ryde v AMFM Constructions Pty Ltd & Anor:[33]

‘… the inadequacy, insufficiency, inconsistency or illogicality of reasons for a decision, even when the governing statute requires a decision-maker to give reasons in conjunction with and contemporaneously with the decision, does not of itself amount to jurisdictional error. The significance of the reasons, or their inadequacy, is that in the context of the surrounding material they may reveal jurisdictional error, or that the adjudicator has not performed the task of determining an adjudicated amount by reference to the specified relevant factors in accordance with s 22 of the Act.’

[30] Where however, the reasons do not reveal any foundation or logical basis for the decision, then there has been a failure to exercise jurisdiction.[34]

[31] A denial of natural justice may constitute jurisdictional error. Such a denial of natural justice would occur where a decision is made on a basis not advanced by either party.[35] [footnotes included]”

  1. [40]
    In Avopiling (NSW) Pty Ltd v Menard Bachy Pty Ltd, Sackar J considered the requirements of an adjudicator to give reasons as follows:[36]

“34. As I have already observed s 22(3) requires the adjudicator to give reasons for the determination. There is clearly no requirement for the reasons to be lengthy elaborate or detailed. The reasons should be sufficient to show that the adjudicator has engaged actively with the dispute and dealt with it in a way that is reasoned, not perverse, arbitrary or capricious: Bergemann v Power [2011] NSWSC 1039 at [67] per McDougall J.

  1. The Act imposes (unless the parties agree to extend time) an extremely compressed timeframe for the determination to be made. The nature and extent to which an adjudicator is to deal with any issue will be a product to a large extent of how it is presented and explained by a party participating in the process. It should be acknowledged that, the adjudicator is afterall chosen because of his or her technical and specialised knowledge.
  2. Within a very limited timeframe the adjudicator is entitled to consider not only the substance but the form of what is submitted. The adjudicator does not have time for second guessing and overly subtle submissions. In turn there is an obligation upon the parties to be concise, explicit and constructive. A party who is less than constructive or clear in the way materials are presented may not be in a position to complain about a terse or seemingly cryptic response from an adjudicator. As Samuels JA said in Mifsud v Campbell [1991] 21 NSWLR 725 at 728 and when speaking of judicial duty to provide reasons (although I consider similar notions apply here):

It is an incident of judicial duty for the judge to consider all the evidence in the case. It is plainly unnecessary for a judge to refer to all the evidence led in the proceedings or to indicate which of it is accepted or rejected. The extent of the duty to record the evidence given and the findings made depend, as the duty to give reasons does, upon the circumstances of the individual case.

  1. No mechanical formula can be given in determining the precise form the reasons are to take. There is clearly no need to refer to all of the evidence, in the reasons. It has to be clear enough that the relevant evidence or point has been considered. Any issue which is critical should be adverted to, but again the extent to which it needs to be dealt with will be a matter of degree and depends to what extent the issue is canvassed by the parties themselves. It is not necessary for explicit findings to be made on each disputed question of fact provided it is clear by inference what is found. It is often said that subjecting every statement of reasons with a ‘fine tooth comb’ will inevitably lead to the exposure of inadequacies often of no relevance. A statement of reasons should be looked at as a whole. Beale v Government Insurance Office (NSW) [1997] 48 NSWLR 430, per Meagher JA at 441 - 444. What I have said must be of course viewed in the context of the specific requirements of s 22.
  2. The content of the adjudication is obviously the most relevant source as to whether the adjudicator has or has not performed the relevant statutory functions. It is to be recalled that the process may or may not be interactive and will be conducted generally, entirely in writing. Provided it is apparent that the adjudicator has considered pertinent issues in good faith, very considerable latitude in my view should be afforded to an adjudicator as to the manner and form of the determination. To become too pedantic about the way in which the adjudicator has drafted a determination is to introduce an element of artificiality such as might well defeat the object and purpose of the Act and the aim of the process entirely. On the other hand the mere fact an adjudicator blandly says he or she has read ‘all of the submissions and accompanying documents’ or simply that he or she is ‘satisfied’ without more in relation to a particular issue under consideration may not, subject to viewing the determination as a whole survive as adequate reasons. As I have said it will always be a matter of degree. Shell Refining (Australia) Pty Ltd v AJ Mayr Engineering Pty Ltd [2006] NSWSC 94 at [25] and [26] per Bergin J (as she then was), and McDougall J in Leighton at [94].”

The first jurisdictional error

  1. [41]
    The first jurisdictional error asserted by Prime is that the adjudicator excluded a third category of rooms, namely those initially thought to be dry, but subsequently found to be suffering from water damage.  Prime submits that this third category of rooms was excluded by the adjudicator on the basis of an apparent inaccuracy in the table of costs produced by Prime.  The apparent inaccuracy is between the annotated drawings of Mr Stevens and Prime’s payment schedule.  The inaccuracy is set out in paragraph 193 of the adjudicator’s decision, which is referred to in [31] above.
  2. [42]
    Prime submits that there was no such inaccuracy because the reason for the difference between the “dry rooms” in the floor plans created contemporaneously after the storm[37] and the table of damaged rooms[38] is stated in Mr Stevens’ statutory declaration.[39]  The relevant paragraphs of Mr Stevens’ statutory declarations are 142 and 143:

[142] In some cases, a number of rooms marked ‘dry’ on the above map I prepared later did have concealed water damage which showed either a few days to a few weeks after the event.  For example, room 101 is marked dry, but was later found to have water damage.  In these minor cases where underlying damage was found after the event, Prime undertook a further analysis on a case by case basis to determine the culpable party.

[143] For example, if there was damage around the windows but nowhere else in that room, the damage was attributable to HPS.  It is was the case that there was damage in the middle of the room with no connections to the windows, then by adopting a conservative approach this damage would be allocated to Prime’s responsibility.  In circumstances where it was observable that the damage was caused by an adjoining room which had already been established as one party’s responsibility, then the same culpability would apply to that adjoining room.”

  1. [43]
    Prime refers to the fact that the adjudicator does not refer to these two paragraphs of Mr Stevens’ statutory declaration in interpreting the floor plans marked up by Mr Stevens and Prime’s payment schedule.[40]  It follows, according to Prime, that the only conclusion that can be drawn from paragraph 193 of the adjudicator’s decision is that he did not have regard “to the explanation or to the fact that the maps constituted part only of [Prime’s] evidence as to water damage.”[41]  This therefore constitutes a failure on the part of the adjudicator to consider the matters in s 88(2)(c) of the BIF Act, namely “the payment claim to which the application relates, together with all submissions, including relevant documents, that [had been] properly made by the claimant in support of the claim.”
  2. [44]
    I do not accept Prime’s submissions.  First, the adjudicator was aware of, and identified, the requirements of s 88(2), including s 88(2)(c).[42]  It is also evident that the adjudicator referred to and described the payment schedule and the adjudication response.  The adjudication response not only included Prime’s submissions, but also Mr Stevens’ statutory declaration.  As outlined in [20] above, the adjudicator considered Mr Stevens’ statutory declaration.  There is no sound basis for a finding that the adjudicator failed to consider genuinely either Prime’s payment schedule or Mr Stevens’ statutory declaration.
  3. [45]
    Secondly, the adjudicator’s primary findings set out in [28] above, were based on Mr Stevens’ 10 annotated drawings and photographs of each room of the building that were taken between 11.30 am and 4.30 pm on 10 December 2018.  Even if the adjudicator erred in having regard to these contemporaneous records for the purposes of determining whether HPS was required to indemnity Prime for water damage, such an error is one committed within jurisdiction.  The annotated drawings of Mr Stevens did not extend to the “third category” of rooms.  The drawings could not, therefore, be relied upon by the adjudicator for the purposes of assessing liability in respect of the third category of rooms.  Further, as correctly submitted by HPS, the evidence of Mr Stevens in paragraphs 142 and 143 of his statutory declaration provided an insufficient basis for the adjudicator to determine any such liability:[43]

“[Paragraph 142] does not identify evidence of the ‘underlying damage’ which was ‘found after the event’ (nor does the balance of Mr Stevens’ affidavit).  Mr Stevens also does not elucidate what ‘further analysis on a case by case basis’ Prime undertook to assign liability for such damage between itself and HPS.  No photographs or other contemporaneous documents, similar to that which was provided in RS-12 and RS-11, was provided in relation to the ‘third category’ of rooms.

It is also difficult to reconcile Mr Stevens’ statement at paragraph 142 of his statutory declaration that the ‘third category’ of rooms were ‘minor cases’ with the fact that the Claim Sheet apportions liability to HPS for rectification works in at least 16 rooms (on levels 1 and 2 alone) which were marked as ‘dry’ on RS-12.  The ‘third category’ of room, if it exists, is clearly not confined to ‘minor cases’.”

  1. [46]
    Thirdly, the adjudicator’s reliance on the contemporaneous records is generally consistent with the submissions made by Prime to the adjudicator.  These submissions are 63 pages in length.[44]  Prime’s submissions to the adjudicator in relation to the deduction claim were only three pages of the 63 pages.  The submissions sought to summarise the evidence of Mr Stevens and the quantity surveying report of Mr Welsh.  Paragraph 242 of the submissions refers to Prime attending the project on 10 December 2018 to assess the damage.  It refers to Mr Stevens’ site inspection and the damage being documented by the creation of maps for each level.  In paragraph 242(b) Prime outlined to the adjudicator what Mr Stevens’ maps recorded:

“(i) hotel rooms which are dry, and not affected by water ingress;

  1. hotel rooms/other areas which are wet due to water ingress via windows;
  2. areas wet due to the Alimak void; and
  3. water paths which extended down the corridors and where the water ingress ceased.”
  1. [47]
    The submission continues at paragraph 242(c):

“At the time of the inspection, it was straightforward to determine whether the water had entered onto the floor through the windows or via another opening (not being the Claimant’s responsibility) such as the Alimak.  This is because, upon visual inspection, it was clear where water had entered the building by following the path of the water ingress.”

  1. [48]
    The submissions then refer to Prime engaging Interline Pty Ltd to undertake the bulk of the rectification works as a result of the damage incurred.  In performing these works, Interline would record detailed day sheets evidencing the specific areas of each level that required rectification.
  2. [49]
    Referring to Prime’s submissions to the adjudicator, HPS submits that Prime did not invite the adjudicator to consider the “third category” of room.  Accordingly, it may not be inferred that the adjudicator did not perform his duty in accordance with s 88(2)(c) to consider all submissions including relevant documents.[45]
  3. [50]
    HPS refers to the observations of Sackar J in Avopiling set out in [40] above, in particular his Honour’s observations at [35]:

“The nature and extent to which an adjudicator is to deal with any issue will be a product to a large extent of how it is presented and explained by a party participating in the process.”

In its submissions to the adjudicator, Prime did not specifically refer him to paragraphs 142 and 143 of Mr Stevens’ statutory declaration, and nor did Prime draw the adjudicator’s attention to evidence concerning the “third category” of rooms.  I accept HPS’s submission that in such circumstances it is not the adjudicator’s role to trawl through all of the material “to try and find some evidence which supports a case which Prime doesn’t present in their written submissions to him”.[46]

  1. [51]
    The fact that the adjudicator did not refer to paragraphs 142 and 143 of Mr Stevens’ statutory declaration does not, in light of the submissions made by Prime to him, reveal jurisdictional error.

The second jurisdictional error

  1. [52]
    The second jurisdictional error is contingent on Prime establishing the first jurisdictional error.[47]  The alleged breach of natural justice is that the adjudicator failed to inform either Prime or HPS that he intended to proceed on the basis that there was no liability with respect to the “dry rooms” because there was no water damage suffered in those rooms.  Prime submits:

“Finding that there was no liability with respect to the ‘dry rooms’ because there was no water damage suffered in those rooms was not a contention put forward by either party.  Further, such a finding is simply not open on the evidence provided by both parties which accepted the existence of damage but raised a dispute as to cause and liability.  [The adjudicator] did not decide the dispute between the parties because he decided the premise for the dispute (being the existence of water damage) did not exist.”[48]

  1. [53]
    The submission, in my view, mischaracterises the adjudicator’s reasoning.  The adjudicator was aware that Prime’s payment schedule sought amounts for the costs of rectification for water damage to rooms that had previously been marked as dry by Mr Stevens.  HPS, as is evident from paragraph 145 of the adjudicator’s decision, contended that it had no liability for rectification work to the rooms in the hotel tower (whether those rooms were later marked as dry, or otherwise, in RS-12).[49]  The issue that was to be determined was whether HPS was liable to Prime for the water damage.  The adjudicator’s decision demonstrates his resolution of that issue.
  2. [54]
    Further, as already observed, the adjudicator, in determining HPS’s liability to Prime, made a factual determination based on the contemporaneous evidence, namely Mr Stevens’ 10 annotated drawings and photographs of each room taken on 10 December 2018.  The approach of the adjudicator in this respect was generally consistent with the submissions that Prime had made to him.
  3. [55]
    The second alleged jurisdictional error is not established.

Third jurisdictional error

  1. [56]
    This alleged error relates to the adjudicator declining to assess rectification costs for the rooms on levels 8 and 12 of the hotel tower.
  2. [57]
    Prime contends that the adjudicator declined to provide any assessment with respect to levels 8 and 12 because, as appears from paragraph 194 of the adjudicator’s decision, annotated drawings of levels 8 and 12 were not provided.[50]  Prime, however, asserts that there was evidence before the adjudicator with respect to levels 8 and 12 that should have been considered.  The available evidence consisted of drawings of levels 8 and 12 annexed to the statutory declaration of Mr Stevens.[51]  These drawings are different to the annotated maps created by Mr Stevens on 10 December 2018.  Mr Stevens describes the nature of the drawings for levels 8 and level 12 in paragraph 403(b)(ii) of his statutory declaration as being created from documentation marked up by Interline, which demonstrated what areas of those floors required rectification.  Mr Stevens states:

“Upon review of this documentation and cross-referencing the Interline markups against my own records for the other levels, the areas of damage were almost identical.  Given the typical nature of the other floor plans, Prime found that cross-referencing these two documents produced a reliable resource to attributing culpability to each party.”

  1. [58]
    It is unsurprising, in my view, that the adjudicator did not refer to Interline’s drawings of rectification works on levels 8 and 12.  First, unlike the contemporaneous drawings, Interline’s drawings of levels 8 and 12 do not identify which rooms had wet corridors and wet windows, which rooms had wet windows only and which openings had no windows.  Nor do the Interline drawings show the entry point of water on each level and how it tracked through the corridor and the rooms.  The only relevance of the Interline drawings for levels 8 and 12 is that they identify the rectification work carried out by Interline to rooms situated on those two levels.  The drawings in themselves do not assist in identifying HPS’s responsibility for water damage on those two levels.  In short, the Interline drawings are not a record of water damage to rooms on levels 8 and 12; they record the rectification work undertaken by Interline.
  2. [59]
    Secondly, in determining HPS’s liability to indemnify Prime for water damage, it is evident that the adjudicator chose to rely on the contemporaneous drawings compiled by Mr Stevens on 10 December 2018.  The fact that the adjudicator did not refer or rely on Interline’s drawings of levels 8 and 12 is consistent with how the adjudicator decided the issue, namely, by reference to contemporaneous documents.  If any error was committed by the adjudicator in failing to refer to Interline’s drawings, it was an error committed within jurisdiction. 
  3. [60]
    Thirdly, Prime’s written submissions to the adjudicator referred only to Mr Stevens’ contemporaneous drawings.  The submissions did not alert the adjudicator to Interline’s drawings of rectification work for levels 8 and 12.  Nor was the adjudicator specifically referred to paragraph 403(b) of Mr Stevens’ statutory declaration.  In those circumstances, I accept HPS’s submission that it was not incumbent on the adjudicator “to go hunting for evidence that might support water damage on levels 8 and 12.”[52] 
  4. [61]
    Fourthly, the mere fact that the Interline drawings for levels 8 and 12 were referred to in the quantity surveying report of Mr Welsh does not affect any conclusion that, if an error was committed, it was one within jurisdiction.  Mr Welsh’s report was quite limited and added nothing to Mr Stevens’ contemporaneous drawings.  Mr Welsh, at paragraph 29 of his report, simply refers to the fact that marked up plans had been provided for levels 8 and 12 based upon records from Prime’s subcontractor, Interline.[53]  In paragraph 6 of his report, Mr Welsh opined that the methodology adopted by Prime for quantifying the cost of rectifying the damage and identifying the proportions of the damage, which it concluded was the responsibility of HPS, was appropriate in the circumstances.[54]  The general opinion of Mr Welsh does not support a conclusion that the adjudicator committed jurisdictional error by choosing to rely on the contemporaneous records, including Mr Stevens’ marked up maps and photographs, to the exclusion of the Interline drawings.
  5. [62]
    The third alleged jurisdictional error is not established.

The fourth jurisdictional error

  1. [63]
    The fourth alleged jurisdictional error is that the adjudicator, in rejecting Prime’s basis of apportionment, failed to have regard to relevant material, including Mr Welsh’s report, and failed to give adequate reasons.
  2. [64]
    In considering this ground, it is important to recognise the basis of the adjudicator’s decision concerning to the issue of apportionment.  The adjudicator noted HPS’s assertion that it was Prime who bore the onus of proof to show the causal connection between HPS’s conduct in carrying out the work under the contract and the relevant loss or damage.[55]  The adjudicator noted that Mr Stevens, as Prime’s expert, had been instructed to determine whether the damage claimed by Prime resulted from water ingress through the windows or whether it resulted from water entering the building from other locations.[56]  He noted that cl 17.1 of Annexure 1 to the contract required a causative link between the damage suffered and the direct effects and the consequential effects of carrying out the works under the contract.[57]  This issue was to be determined by having regard “to the surrounding circumstances”.  The adjudicator noted two particular circumstances:

“(a) which purported defective work caused the damage; and/or

  1. (b)
     if there were no defects, what other things did [HPS] do in carrying out the works that caused the damage.”[58]
  1. [65]
    He considered that if the evidence showed that defects in the windows or other things done or caused by HPS in carrying out the installation of windows had caused the damage to the gyprock walls, then it would be liable for the cost to rectify the damage pursuant to cl 17.1.[59]  The adjudicator found that none of the work conducted by HPS had been defective.[60]  He was, however, persuaded that adhesive tape and piles of debris on internal drains and in the window frames had been sufficient to reroute the internal watercourse within the windows and water that would otherwise have flowed to the outside of the building had leaked into rooms and had tracked to adjacent gyprock walls and had caused damage.[61]  The adjudicator was therefore persuaded that some water had entered through completed windows, the water had tracked to adjacent completed gyprock walls and that water had caused damage to those walls, which had to be rectified.  It also appeared to the adjudicator that significant quantities of water had entered the building from other openings and had also caused damage.[62]  This led to the adjudicator’s primary finding that where the windows had been wet and water had tracked to walls and there had been no other water entering the room, then HPS was liable for the costs of rectifying that room.[63] 
  2. [66]
    This primary finding reflects the adjudicator’s appreciation that Prime bore the onus of proof for the purposes of establishing causation between the conduct of HPS in the installation of the windows and the water damage.  Consistent with this approach, the adjudicator observed that Prime “must prove the extent of the damage actually caused by the water that entered through the windows”.[64]  He found that Prime had failed to provide any “reasonable apportioning [of] the cost of damage rectification for each room where there was water shown to be entering through a window and from a corridor”.[65]  The basis of this finding is expressly identified by the adjudicator by reference to Prime’s burden of proof:[66]

“… [G]iven that [Prime] bore the burden of proof, I have decided that [HPS] is liable for rooms where the windows were wet and water has tracked to walls and there is no other water shown or recorded to have entered the room.”

  1. [67]
    The adjudicator’s reasons, in my view, reveal a sufficient process of reasoning by reference to Prime’s onus of proof in rejecting the apportionment suggested by Prime.
  2. [68]
    It is evident from Prime’s claim sheet[67] that Prime sought to allocate responsibility for damage by various percentages attributable either to itself or HPS.  HPS’s liability is therefore identified in percentages that vary between 77 per cent and 25 per cent, although a number are marked at 50 per cent.
  3. [69]
    Prime submits that, having provided the adjudicator with photos, maps, invoices and a detailed claim sheet, there was an appropriate basis for determining the apportionment of rectification costs for the relevant rooms where water entered through the windows and other openings.[68]  The approach adopted by Prime was supported by Mr Welsh’s opinion that such an approach to apportioning damage was appropriate.  The adjudicator, as previously observed, did not refer to Mr Welsh’s report at all.  Prime therefore criticises the adjudicator for limiting his findings by reference to the contemporaneous records.  The difficulty with this submission, however, is that the adjudicator has revealed his reasoning for rejecting Prime’s suggested apportionments.  Whether erroneously or not, the adjudicator determined that Prime had not discharged its onus of proof so as to make HPS liable to indemnify it for rectification costs where there was more than one source of water ingress.  Even if the adjudicator erred in this respect, it was an error within jurisdiction.
  4. [70]
    Prime also refers to paragraph 191 of the adjudicator’s decision, where he states that:

“Where general costs were stated without a basis of apportionment, the respondent is not entitled to claim the entire amount for the stated reasons.”

The general costs appear in the claim sheet of the payment schedule under the heading “General Material/Administration/General Labour (as per summary page)”.[69]  These general costs are not specific to any particular room but were utilised for the rectification works as a whole.[70]  At paragraph 404 of his statutory declaration, Mr Stevens explains:[71]

“A total percentage was then tallied for all areas affected by the Storm Event for each party based on the above exercise. [emphasis in original]”

  1. [71]
    The process undertaken by Prime for determining the culpability of HPS and Prime for the cost of rectification is outlined in paragraph 403 of Mr Stevens’ statutory declaration.  For the determination of the appropriate percentage, Mr Stevens, for levels 1 to 7 and 9 to 11, relied on the contemporaneous drawings made on 10 December 2018, and for levels 8 and 12, he relied on the marked-up Interline drawings.
  2. [72]
    While the claim sheet annexed to the payment schedule identified a range of percentages for Prime’s suggested apportionment, its submissions before the adjudicator did not reflect such a range.  The issue was submitted to the adjudicator in the following terms:[72]

“In the event that water ingress through the Alimak travelled through the corridor and connected with a path of water through entry via the defective windows installed, making it more difficult to determine how much water had entered through each opening, the project manager:

  1. recorded that the water and damage suffered was due to an area outside of [HPS’s] liability; or
  2. attributed a split percentage, being 50% for [HPS] due to the water ingress from the windows, and 50% attributable to [Prime] for the water ingress from the Alimak.”

This was Prime’s only submission to the adjudicator as to its methodology for apportioning liability where there were multiple sources of water ingress.  The submissions did not refer to Mr Stevens’ method of apportionment, which I have outlined above.  That method of apportionment was, however, simply based on the contemporaneous drawings for levels 1 to 7 and 9 to 11 and the Interline drawings for levels 8 and 12.

  1. [73]
    Although the reasoning of the adjudicator was brief, he determined the issue of apportionment on the basis of Prime’s onus of proof.  The determination, in my view, reflects “a genuine consideration” of the matters identified in s 88(2)(c).  Further, in light of the submissions made to the adjudicator by Prime, the observation of Sackar J in Avopiling at [35] is equally relevant here:[73]

“The nature and extent to which an adjudicator is to deal with any issue will be a product to a large extent of how it is presented and explained by a party participating in the process.”

  1. [74]
    The fact that the adjudicator determined that the matter turned upon the onus of proof does not, in itself, suggest that he had failed to consider the material.  In his reasons he specifically referred to Prime’s payment schedule and Mr Stevens’ statutory declaration.  To the extent he made no specific reference to Mr Welsh’s quantity surveying report, the effect of this report was summarised in Prime’s written submissions to the adjudicator.  The adjudicator had been provided with approximately 14 folders of material and the deduction claim was only one aspect of a much larger claim.  Although the adjudicator was granted an extension by the parties, that extension was sought in circumstances where the adjudicator had injured his knee, which had caused him to be unavailable for work.[74]  In light of those circumstances, the observations of Philip McMurdo J (as his Honour then was) in Caltex Refineries (Qld) Pty Ltd v Allstate Access Australia Pty Ltd are applicable:[75]

“The fifth and remaining ground was that Mr Hillman did not consider much of the evidence which the Caltex parties had provided on the factual questions of the condition of the alleged damaged equipment.  The suggested basis for this ground was the reason in each case of Mr Hillman, where he referred to some but not other relevant evidence.  From this it was said that the Court should infer that Mr Hillman had not considered, in particular, the so-called Addendum Report by a Mr Topolinsky and other evidence going to the availability of Allstates ‘audit’ of the stocks of equipment.

Allstate conceded here that the adjudicator’s reasons had not referred expressly to this further report or the evidence of a Mr Edwards about the audit.  But Allstate contended that this did not found an inference that the evidence was not considered.  In his decisions, Mr Hillman stated that he had considered, amongst other things, ‘all submissions (including any relevant documentation) that had been duly made by the respondent.’

The amount of material was very extensive and it was a daunting task for the adjudicator to come to terms with it within the very short period of time which was allowed to him.  Mr Hillman may not have comprehended the material but I was not persuaded that, contrary to the statements in his decisions, he had not considered it.”

  1. [75]
    The adjudicator here not only referred to the payment schedule and Mr Stevens’ statutory declaration but also specifically referred to the requirements of s 88(2)(c) of the BIF Act.[76]
  2. [76]
    In relation to the fourth alleged jurisdictional error, Prime also asserts that the adjudicator made no mention of an apparent recorded agreement between it and HPS to the effect that apportionment of damage would be based on the cause of the damage (window or corridor).[77]  This complaint can be dealt with briefly.  First, the alleged agreement is not referred to or evidenced in Prime’s payment schedule.  Secondly, HPS had objected to the inclusion of evidence of the purported agreement on the basis that the discussions were subject to without prejudice privilege.[78]  This privilege claim is still maintained by HPS.[79]  Thirdly, I accept HPS’s submissions that even if the recordings are admissible, and it was appropriate for the adjudicator to have regard to them they do not demonstrate any “apparent agreement between the parties”.  This is evident from the fact that HPS has denied any liability to indemnify Prime for water damage arising from the storm event.[80]
  3. [77]
    Prime has failed to establish the fourth alleged jurisdictional error.

The fifth jurisdictional error

  1. [78]
    This error relates to Prime’s deductions for costs of “pelmets/ceilings/window reveals” (pelmet claim).  These costs are set out in Prime’s payment schedule under the heading “General Material/Administration/General Labour (as per summary page)”.[81]
  2. [79]
    Prime submits that the adjudicator committed jurisdictional error because nowhere in his decision does he deal with this claim.  According to Prime, “[i]t is not a hidden claim, it is dealt with separately in the [p]ayment [s]chedule, the [a]djudication [r]esponse and the statutory declaration of Mr Stevens.”[82]
  3. [80]
    It may be accepted that the adjudicator does not refer to this claim in his reasons.  This failure does not, however, establish jurisdictional error.  While the pelmet claim is not specifically identified by the adjudicator, he did find that where general costs were stated without a basis of apportionment, Prime was not entitled to claim the entire amount.[83]
  4. [81]
    I accept, as submitted by HPS, that the adjudicator’s reference to “general costs” is to costs that are not on a room-by-room basis but covers all the general costs pertaining to general administration, skip bins, labour management supervision and also the pelmet claim.  The costs are “general” in the sense that they are not allocated room-by-room.[84]
  5. [82]
    Prime, in its written submissions to the adjudicator, submitted:[85]

“In terms of quantifying the damage that was caused by the defective windows, [Prime] determined that:

  1. [HPS’s] culpability was 66.54% for general material/administration/general labour, which forms the bulk of the backcharge;
  2. [HPS’s] culpability was 100% for pelmets, ceilings, reveals, mechanical, painting, electrical;
  3. [HPS] was culpable for a certain percentage of the skip bins, general supply/equipment hire, Prime staff costs, GH app R/PTS labour, painting and electrical.”
  1. [83]
    The adjudicator erred in observing that Prime was claiming 100 per cent for all general costs when it was in fact claiming 66.5 per cent for some general costs, and 100 per cent for the pelmet claim.  This is not a jurisdictional error.
  2. [84]
    Prime’s complaint is that the adjudicator did not specifically deal with the pelmet claim.  The adjudicator did, however, deal with the apportionment of general costs, which includes the pelmet claim.
  3. [85]
    The fact that the adjudicator did not refer to the documentation and particular paragraphs of Mr Stevens’ statutory declaration does not establish that this material was not considered by the adjudicator.  For reasons already identified above, it is evident from the adjudicator’s decision that he considered Prime’s written submissions, the payment schedule and Mr Stevens’ statutory declaration.
  4. [86]
    The alleged fifth jurisdictional error is not established.

Severance

  1. [87]
    After hearing this application both parties filed submissions with respect to severance.  Those submissions proceeded upon the assumption of a finding of jurisdictional error.  As I have found that none of the five alleged jurisdictional errors are established, it is unnecessary to consider the issue of severance.

Disposition

  1. [88]
    I make the following orders:
  1. The originating application is dismissed.
  2. The sum of $1,072,568.28 paid into Court by the applicant pursuant to the order of Ryan J made 4 October 2019 be paid out to the solicitors for the first respondent.
  3. The applicant pay the first, second and third respondents’ costs of the proceedings.

Footnotes

[1]Affidavit of Kirsty Ellen Smith filed 4 October 2019, paragraph 5(a).

[2]Affidavit of Kirsty Ellen Smith filed 4 October 2019, paragraph 5(b)-(d).

[3]Exhibit KES-14 to the affidavit of Kirsty Ellen Smith filed 4 October 2019 (adjudicator’s decision).

[4]Adjudicator’s decision, paragraph 7.

[5]BIF Act, s 85(1)(b).

[6]Exhibit KES-23 to the affidavit of Kirsty Ellen Smith filed 10 October 2019.

[7] Adjudicator’s decision, paragraph 167.

[8]Adjudicator’s decision, paragraph 170.

[9]Adjudicator’s decision, paragraph 171.

[10]Adjudicator’s decision, paragraph 177.

[11]Adjudicator’s decision, paragraph 179.

[12]Adjudicator’s decision, paragraph 181.

[13]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 43.

[14]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 40; First Respondent’s Outline of Submissions filed 18 October 2019, paragraph 30.

[15]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 48. 

[16]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 53.

[17]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 67.

[18]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 75.

[19]Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525, 537 [6] per Margaret McMurdo P, 542-543 [33] per Chesterman JA and 555-556 [78] per White JA.

[20]Section 88 of the BIF Act is in almost identical terms to its predecessor s 26 of the Building and Construction Industry Payments Act 2004 (Qld).

[21](1995) 184 CLR 163, 177 per curiam.

[22][2016] QSC 268.

[23][2006] NSWSC 1 at [66].

[24]Section 22 referred to by Palmer J is the equivalent of s 26 of the Act.

[25][2015] VSC 631 at [101].

[26]The equivalent to s 26(3) of the Act.

[27]Cited with approval in Richard Crookes Constructions Pty Ltd v CES Projects (Aust) Pty Ltd [2016] NSWSC 1129 at [23] per McDougall J.

[28]See Re Rich Rivers Pty Ltd and Independent FM Radio Pty Ltd v Australian Broadcasting Tribunal & Goulburn Valley Broadcasters Pty Ltd [1989] FCA 132 at [49]-[50] per Davies J; Queensland Bulk Water Supply Authority v McDonald Keen Group Pty Ltd & Anor [2009] QSC 165 at [32]-[33] per P Lyons J, cited with approval in John Holland Pty Limited v TAC Pacific Pty Ltd & Ors [2009] QSC 205 at [21] per Applegarth.

[29]W195/01A v Minister for Immigration & Multicultural Affairs [2002] FCA 396 at [34]-[36] per Lee J.

[30][2008] 1 Qd R 39, 47-48 at [30]-[31].

[31][2010] NSWSC 1359 at [23]; John Holland Pty Limited v TAC Pacific Pty Limited [2010] 1 Qd R 302, 323‑324 at [66]-[67] per Applegarth J.

[32][2010] NSWSC 1359 at [40].

[33][2011] NSWSC 1469 at [9].

[34]State Water Corporation v Civil Team Engineering Pty Ltd [2013] NSWSC 1879 at [126] per Sackar J; Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393 at [177] per McDougall J.

[35]John Holland Pty Limited v TAC Pacific Pty Ltd [2010] 1 Qd R 302, 321 at [57] per Applegarth J; Caltex Refineries (Qld) v Allstate Access (Australia) Pty Ltd [2014] QSC 223 at [38] per Philip McMurdo J.

[36] [2012] NSWSC 1466, [34]-[38].

[37]Exhibit KES-7 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, pages 417-419.

[38]Exhibit KES-3 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, pages 170-175.

[39]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 41.

[40]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 42.

[41]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 42.

[42]Adjudicator’s decision, paragraph 37; see [15] above.

[43]First Respondent’s Outline of Submissions filed 18 October 2019, paragraphs 32-33.

[44]Exhibit KES-6 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, pages 334-396.  Prime’s submissions in relation to the deduction claim are only three pages long (paragraphs 241-251).

[45]Transcript of Proceedings, 18 October 2019, 1-38 ll 5-21.

[46]Transcript of Proceedings, 18 October 2019, 1-41 ll 14-21.

[47]Transcript of Proceedings, 18 October 2019, 1-12 ll 23-27.

[48]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 45.

[49]First Respondent’s Outline of Submissions filed 18 October 2019, paragraph 42.

[50]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 50.

[51]Exhibit KES-21 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, pages 7 (level 8) and 11 (level 12).

[52]Transcript of Proceedings, 18 October 2019, 1-44 ll 20-21.

[53]Exhibit KES-9 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, page 523. 

[54]Exhibit KES-9 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, page 520.

[55]Adjudicator’s decision, paragraph 156(b).

[56]Adjudicator’s decision, paragraph 164(d).

[57]Adjudicator’s decision, paragraph 167.

[58]Adjudicator’s decision, paragraph 168.

[59]Adjudicator’s decision, paragraph 169.

[60]Adjudicator’s decision, paragraph 177.

[61]Adjudicator’s decision, paragraph 180.

[62]Adjudicator’s decision, paragraph 181.

[63]Adjudicator’s decision, paragraph 185.

[64]Adjudicator’s decision, paragraph 187.

[65]Adjudicator’s decision, paragraph 189.

[66]Adjudicator’s decision, paragraph 189.  See also paragraph 190.

[67]Exhibit KES-3 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, pages 170-175.

[68]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 59.

[69]Exhibit KES-3 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, pages 175-178.

[70]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 69.  Mr Stevens, at paragraph 407 of his statutory declaration, refers to these general costs: Exhibit KS-7 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, page 470.

[71]Exhibit KES-7 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, page 469.

[72]Exhibit KES-6 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, page 384.

[73]See [40] and [50] above.

[74]Exhibit AT-1 to the affidavit of Alison Kim Swee Teh sworn 14 October 2019.

[75][2014] QSC 223, [63]-[65].

[76]See [15] above.  Adjudicator’s decision, paragraph 37.

[77]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 57; Exhibit KES-7 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, page 429.

[78]Exhibit KES-11 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, pages 602-604.

[79]First Respondent’s Outline of Submissions filed 18 October 2019, paragraph 55(b).

[80]First Respondent’s Outline of Submissions filed 18 October 2019, paragraph 55(c).

[81]Exhibit KES-3 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, page 175.

[82]Submissions on Behalf of the Applicant filed 10 October 2019, paragraph 78.

[83]Adjudicator’s decision, paragraph 191.

[84]Transcript of Proceedings, 18 October 2019, 1-39 ll 30-34.

[85]Exhibit KES-6 to the affidavit of Kirsty Ellen Smith filed 4 October 2019, page 384.

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Editorial Notes

  • Published Case Name:

    Prime Constructions (Qld) Pty Ltd v HPS (Qld) Pty Ltd

  • Shortened Case Name:

    Prime Constructions (Qld) Pty Ltd v HPS (Qld) Pty Ltd & Ors

  • MNC:

    [2019] QSC 301

  • Court:

    QSC

  • Judge(s):

    Flanagan J

  • Date:

    13 Dec 2019

Litigation History

No Litigation History

Appeal Status

No Status