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  •   Notable Unreported Decision

J Hutchinson Pty Ltd v Cada Formwork Pty Ltd

 

[2014] QSC 63

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Application

DELIVERED ON:

7 April 2014

DELIVERED AT:

Brisbane 

HEARING DATE:

23 August 2013; 17 – 18 September 2013

JUDGE:

Peter Lyons J

ORDER:

 

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 and the first respondent had a contract for the performance by the first respondent of formwork services for a construction project – where the first respondent made an adjudication application under the Building and Construction Industry Payments Act 2004 (Qld) – where an adjudication decision was made by the third respondent in favour of the first respondent – where the third respondent relied on documents that had not been provided to the applicant – where those documents were not submitted to the third respondent as part of the first respondent’s adjudication application – whether the third respondent failed to comply with the requirements of natural justice – whether the third respondent contravened s 26(2) of the Act – whether the third respondent was, in the circumstances, required to identify the legal source of the first respondent’s entitlement to payment – whether the third respondent was, in the circumstances, required to assess the value of the work performed by the first respondent under the contract with the applicant – whether the adjudication decision is void

ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – PROCEDURAL FAIRNESS – HEARING – NATURE OF HEARING – OPPORTUNITY TO PRESENT CASE – where the third respondent decided an adjudication under the Building and Construction Industry Payments Act 2004 (Qld) in favour of the first respondent – where the applicant submitted that the third respondent substantially relied on documents submitted on behalf of the first respondent – where the applicant had not been provided those documents and had not had an opportunity to address the material contained therein – whether there has been a failure to comply with the requirements of natural justice – whether the adjudication decision is void

PROCEDURE – MISCELLANEOUS PROCEDURAL MATTERS – DECLARATIONS – APPROPRIATE FORM OF RELIEF – DISCRETION OF COURT – OTHER CASES – where an adjudication decision under the Building and Construction Industry Payments Act 2004 (Qld) is void – whether the Court has discretion to grant relief – whether the applicant is, in the circumstances, entitled to restitution of money paid pursuant to the adjudication decision

Acts Interpretation Act 1954 (Qld) , s39(1)(b)

Building and Construction Industry Payments Act 2004 (Qld), s 13, s 14, s 17, s 21(3), s 24, s 26(2), s 100, s 103

Judicial Review Act 1991 (Qld), s 18(2)

Bezzina Developers Pty Ltd v Deemah Stone (Qld) Pty Ltd [2008] 2 Qd R 495; [2008] QCA 213, followed

BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2012] QSC 346, distinguished

BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394, followed

Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394, followed

Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd (2005) 63 NSWLR 385; [2005] NSWCA 228, cited

Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; [1972] HCA 61, followed

John Holland Pty Limited v TAC Pacific Pty Limited [2010] 1 Qd R 302; [2009], cited

Kioa v West (1985) 159 CLR 550; [1985] HCA 81, followed

Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; [2002] HCA 11, cited 

Pacific General Securities Ltd v Soliman & Sons Pty Ltd (2006) 196 FLR 388; [2006] NSWSC 13, considered

Plaintiff M61/2010 E v Commonwealth (2010) 243 CLR 319; [2010] HCA 41, cited

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28,  followed

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

Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252; [2010] HCA 23, cited

Tasker v Fullwood [1978] 1 NSWLR 20, cited

COUNSEL:

K E Downes QC for the applicant

The first respondent appeared on its own behalf with the assistance of Mr B Lewis as McKenzie friend

No appearances for the second and third respondents

SOLICITORS:

Holding Redlich for the applicant

The first respondent appeared on its own behalf with the assistance of Mr B Lewis as McKenzie friend

No appearances for the second and third respondents

[1] The applicant (Hutchinson) seeks a declaration that an adjudication decision (decision) made by the third respondent under the provisions of the Building and Construction Industry Payments Act 2004 (Qld) (BCIP Act) is void; or alternatively an order that it be set aside or permanently stayed.  It also seeks an order for the repayment of monies paid by it to the first respondent (CADA) pursuant to the decision.  In essence, Hutchinson alleged that the decision was made in breach of the requirement to provide natural justice because the third respondent received and considered evidence without Hutchinson’s knowledge.  It also alleged that in doing so, the third respondent failed to comply with s 26(2) of the BCIP Act.  It also alleged that he failed to perform his statutory obligation to assess CADA’s claim; and to have regard to certain submissions made on behalf of Hutchinson.  Each of these things were said to have had the consequence that the decision was void.

Background

[2] Hutchinson had entered into a contract to construct residential units at 30 Goondoon Street, Gladstone.  On 15 November 2012, it entered into a contract with CADA, for the performance by CADA of formwork services for the project.

[3] On 13 May 2013, CADA issued to Hutchinson three documents, each in the form of a payment claim under the BCIP Act.  Each was accompanied by a tax invoice describing the work the subject of the claim, and stating the amount claimed.  By about this time, the relationship between Hutchinson and CADA had broken down, Hutchinson having engaged another formwork contractor, Action Formwork, to provide formwork services for the project.

[4] On 27 May 2013, Hutchinson served a payment schedule under the BCIP Act on CADA.  On 3 June 2013, CADA lodged an adjudication application under the Act with the second respondent.  It served a copy of the adjudication application on Hutchinson on 5 June 2013.

[5] In the first part of June 2013, Mr Richard Jones, on behalf of CADA, engaged in a series of email communications with the second respondent.  On 10 June, he sent an email to the second respondent (10 June email) enclosing a site instruction dated 5 February 2013 (February site instruction).  The February site instruction itself is not particularly informative; but the email explained that it demonstrated that delays were due to wet weather, for which Hutchinson accepted responsibility; and it stressed the importance of the site instruction.  There is some dispute about whether there was a related communication to Hutchinson, to which I shall return later in these reasons.

[6] On 11 June 2013, the third respondent was nominated as the adjudicator.  He was provided with the adjudication application, together with the emails from Mr Jones, including the 10 June email and the February site instruction.

[7] On 13 June 2013, Hutchinson delivered its adjudication response to the third respondent, and served a copy on CADA. 

[8] On 21 June 2013, the third respondent completed his adjudication decision.  He determined that CADA was entitled to an amount of $222,625.70, including GST; together with interest from 27 May 2013.  He determined that Hutchinson should pay the fees associated with the adjudication. 

[9] On 27 June 2013, Hutchinson commenced these proceedings.  On 2 July 2013 it paid to CADA the sum of $233,333.92, being the adjudication amount and interest, as well as fees associated with the adjudication.

[10] On 25 July 2013, Hutchinson’s solicitors received from the second respondent a number of documents, including the emails between the second respondent and Mr Jones in June 2013, and in particular the 10 June email and the February site instruction.

BCIP Act provisions

[11] Section 12 gives to a person who has undertaken under a construction contract to carry out construction work, a right to progress payments.  Under s 13, the amount of each payment in such a case is either the amount calculated under the construction contract, or, if the contract does not provide for it, the value of the construction work which has been carried out.  Section 14 provides that construction work is to be valued under the contract, where the contract makes provision for this; and otherwise is to be valued having regard to the contract price for the work; any other rates or prices stated in the contract; any agreed variations affecting these prices or rates; and the cost of rectifying defective work.

[12] The BCIP Act contains a series of provisions intended to give effect to the right to a progress payment.  Thus s 17 makes provision for the service of a payment claim by the person claiming the progress payment, described as the claimant, on the person, described as the respondent, said to be liable to make the payment.  Section 18 provides for the respondent to reply, by serving a payment schedule.  This must be done (for present purposes) within 10 business days after the payment schedule is served[1].  Where, in a payment schedule, a respondent states that it will pay less than the full amount claimed in the payment claim, then the claimant may apply under s 21 for adjudication of the payment claim.  The adjudication application must be made (in a case like the present case) within 10 business days after the claimant receives the payment schedule[2].  It may “contain the submissions relevant to the application the claimant chooses to include”[3].  A copy of the adjudication application must be served on the respondent[4].

[13] The application is made to an authorised nominating authority[5], who must refer the application, as soon as practicable, to an adjudicator[6]

[14] A respondent may give the adjudicator a response to the claimant's adjudication application within (for present purposes) five days after receiving a copy of the application[7].  The adjudication response may “contain the submissions relevant to the response the respondent chooses to include”[8].  However, a respondent cannot include in its adjudication response, any reasons for withholding payments “unless those reasons have already been included in the payment schedule served on the claimant”[9].  A copy of the adjudication response must be served on the claimant[10].  An adjudicator is not permitted to consider adjudication in response, unless it is served within the time specified in the BCIP Act[11]

[15] Amongst the powers conferred on an adjudicator for the purpose of deciding an adjudication application is a power to ask for further written submissions.  If an adjudicator exercises this power, he must give the other party an opportunity to comment on the submissions[12]; although he may set deadlines for further submissions and comments[13].  An adjudicator may also call a conference of the parties[14].

[16] Section 26 is of some significance.  It is as follows:

 

26Adjudicator’s decision

(1)An adjudicator is to decide—

(a)the amount of the progress payment, if any, to be paid by the respondent to the claimant (the adjudicated amount); and

(b)the date on which any amount became or becomes payable; and

(c)the rate of interest payable on any amount.

(2)In deciding an adjudication application, the adjudicator is to consider the following matters only—

(a)the provisions of this Act and, to the extent they are relevant, the provisions of the Queensland Building Services Authority Act 1991, part 4A;

(b)the provisions of the construction contract from which the application arose;

(c)the payment claim to which the application relates, together with all submissions, including relevant documentation, that have been properly made by the claimant in support of the claim;

(d)the payment schedule, if any, to which the application relates, together with all submissions, including relevant documentation, that have been properly made by the respondent in support of the schedule;

(e)the results of any inspection carried out by the adjudicator of any matter to which the claim relates.

(3)The adjudicator’s decision must—

(a)be in writing; and

(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.”

[17] The adjudicator has a limited power to correct mistakes in the decision[15].  Where an adjudicator determines that an amount is payable to a claimant, then the respondent must pay that amount within five business days after the adjudicator’s decision is served on the respondent[16].  A successful claimant may obtain an adjudication certificate, which may be filed as a judgment for a debt, and enforced, in a court of competent jurisdiction[17].

[18] Section 100 of the BCIP Act has the effect that an adjudication decision does not affect any right of a party to a construction contract, including any right in relation to any thing done or omitted to be done under the contract; nor does it affect any civil proceedings, save that allowance must be made for an amount paid consequential on an adjudication decision, and, in appropriate cases, a restitution order might be made in respect of an amount paid in those circumstances.  An adjudication determination, and a payment made pursuant to it, accordingly has a provisional character[18].

[19] Section 103 is also of some significance in that case.  It is as follows:

 

103Service of notices

(1)A notice or other document that under this Act is authorised or required to be served on a person may be served on the person in the way, if any, provided under the construction contract concerned.

(2)Subsection (1) is in addition to, and does not limit or exclude, the Acts Interpretation Act 1954, section 39 or the provisions of any other law about the service of notices.”

[20] Finally, s 18(2) of the Judicial Review Act 1991 (Qld) (JR Act), read with schedule 1, part 2 of that Act, provides that the JR Act does not apply to decisions under part 3 division 2 of the BCIP Act, where provision for making an adjudication decision is found.

Contentions of parties

[21] For Hutchinson it was submitted that the receipt and consideration by the third respondent of the 10 June email and the February site instruction was in breach of the rules of natural justice.  In considering those documents, the third respondent acted contrary to s 26(2) of the BCIP Act.  Accordingly, the adjudication decision was of no effect.

[22] It was submitted that the third respondent failed to perform his role under the BCIP Act, because “he failed to assess the merits of the Payment Claim”, simply allowing it after rejecting contentions made on behalf of Hutchinson.  Thus he failed to consider whether the amount claimed was a proper amount on the basis of the value of the construction work carried out; and he failed to identify and find a legal source for the entitlement to the claim by CADA for payment.  Accordingly he committed jurisdictional error, with the consequence that his decision was of no effect.

[23] Further, and in breach of his obligations under the BCIP Act, the third respondent ignored Hutchinson’s submissions concerning the maximum value that could be payable to CADA, calculated by reference to the fact that it had done work only on the lower four floors of the building.  He thus failed to exercise his powers in good faith.

[24] For each of these reasons, Hutchinson submitted that the adjudication decision was void and should be set aside; and that CADA should be ordered to repay the money paid to it under that decision, with interest.

[25] CADA was not legally represented.  It submitted that the 10 June email and the February site instruction had been sent to Hutchinson by Mr Jones.  It submitted that these documents supported the statutory declaration of Bruce Peell[19], showing that poor ground conditions and wet weather caused a major delay; and that CADA was doing work outside its scope of works.  It submitted that there was a further substantial body of evidence to similar effect.  It submitted that the third respondent acted lawfully in reviewing the submissions and materials provided by Hutchinson and CADA.  It also submitted that the February site instruction was not the only piece of evidence showing that wet weather and ground conditions caused the delay in the project; nor could it be said that it was “the contributing factor in (the third respondent’s) decision”.

[26] For CADA it was submitted that the third respondent did not ignore Hutchinson’s submissions or evidence.  It submitted that the payment claimed identified the construction work, and the third respondent found that Hutchinson understood the works to which the Payment Claim related.  The amount payable could not be worked out in the manner put forward by Hutchinson, as the floors were not of equal size.  There was evidence before the third respondent that the price was based on a rate per square metre.  The third respondent adequately addressed the evidence and submissions put before him on behalf of Hutchinson

[27] At this point, it is convenient to deal with the evidence relating to the sending of the 10 June email and the February site instruction.

Evidence regarding the communication of the 10 June email to Hutchinson

[28] Hutchinson relied on an affidavit, sworn 16 September 2013, of Mr Nicholas Colthup, a contract administrator employed by Hutchinson, that Hutchinson did not receive by post from Mr Jones a copy of the 10 June email or the February site instruction.  He confirmed the evidence in an affidavit from Mr Jang sworn 30 August 2013, on information and belief from Mr Colthup, that had Hutchinson received the email and site instruction, he would have sworn a statutory declaration to be submitted to the third respondent stating that over excavation, wet weather, and poor ground conditions did not hinder the construction programme, being accounted for in an extension of time granted to CADA by Hutchinson; and that the site instruction was not relevant to the delay caused by CADA, which was due to its lack of progress and lack of resources.

[29] Mr Jang, without objection, gave evidence on information and belief from Mr Tim Easterbrook that, had Hutchinson received the 10 June email and the February site instruction prior to the adjudication decision being handed down, he would have instructed Hutchinson’s solicitors to communicate an objection to the third respondent to any consideration of those documents, relying on s 26 of the BCIP Act; and that, if the third respondent intended to have regard to the email and site instruction, he should also receive and consider further material from Mr Colthup and Mr Dowling; and that Hutchinson’s claimed deductions did not relate to delays caused by over excavation, wet weather or poor ground conditions, so that the site instruction was irrelevant.

[30] In the same affidavit, Mr Jang also gave evidence, on information and belief from Mr Dowling, to which there was no objection, that if Hutchinson had received a copy of the 10 June email and the February site instruction prior to the adjudication decision, Mr Dowling would have sworn a statutory declaration for submission to the third respondent stating that he signed the site instruction and was the site manager for Hutchinson for the project; the delays caused by over excavation, wet weather and poor ground conditions had been accounted for in an extension of time granted by Hutchinson to CADA; and these delays were not the delays which lead to the claims relied upon by Hutchinson against CADA.

[31] In his affidavit sworn 16 August 2013, Mr Easterbrook gave evidence that Hutchinson did not receive by post from Mr Jones a copy of the 10 June email or the February site instruction.  He confirmed his instructions to Mr Jang, referred to a little earlier in these reasons.  He also gave evidence that Mr Dowling was currently in Bali on annual leave.

[32] At the hearing, Mr Jones gave oral evidence in relation to the sending of documents to Hutchinson and Mr Jang in 2013.  He was shown a copy of an email chain between him and an employee of the second respondent which apparently included an email of 11 June 2013, enclosing a notice from Hutchinson terminating its contract with CADA (termination notice).  The document shown to Mr Jones became exhibit 1.  On it was a handwritten note including the words “Sent postage paid”, recording the time as 4.35pm on 11 June 2013, with a reference to “Five Dock”.  Mr Jones gave evidence that the handwriting was his[20]; and its purpose was to record the sending of documents to Mr Easterbrook in Gladstone[21].  He had sought confirmation from the second respondent that the documents would be forwarded to the third respondent, before he sent them to Mr Easterbrook[22].  His recollection was that he sent the site instruction and an email from a Mr Brad Lewis, which in turn included an email from Mr Colthup, accompanying the termination notice[23].  The documents were sent to Mr Easterbrook at 30 Goondoon Street, Gladstone[24].  He subsequently stated in cross-examination that he sent only the site instruction, and the notice terminating the contract, as they were “the only relevant items”[25].

[33] Mr Jones also gave evidence that he was experienced in relation to making adjudication applications, and understood that, if a document went to the third respondent, it was also necessary for the document to go to Hutchinson[26]

[34] In cross-examination, it was put to him that he had not sent the 10 June email and its attachment to Hutchinson, a proposition with which he disagreed[27].

[35] The ultimate effect of Mr Jones’ evidence was that he posted a copy of the February site instruction, and the termination notice, to Mr Easterbrook, at 30 Goondoon Street, Gladstone, on 11 June 2013.  However, he did not send the 10 June email to anyone associated with Hutchinson

[36] There is some reason to be cautious about Mr Jones’ evidence.  His correspondence displayed hostility to Hutchinson.  He did not produce a copy of the covering letter which he said he sent to Mr Easterbrook with the site instruction and termination notice[28].  However, the latter seems to me to be of less significance in this case, than it would be in a case where a witness is called by a party who is legally represented.  Moreover, Mr Jones appeared to appreciate the significance of sending to Hutchinson documents which were to be considered by the third respondent.  Accordingly, I am prepared to accept his evidence that he sent the documents.

[37] On the other hand, I accept that they were not received by Mr Easterbrook, or by anyone associated with the project on behalf of Hutchinson.  No attempt was made to cross-examine Mr Easterbrook, or any other person from whom evidence on this point derived.  The evidence of Mr Easterbrook that, had he been aware that the site instruction and termination notice had been sent to the third respondent, he would have objected to any consideration of them, seems to me very likely to be true.  I also consider it likely that Hutchinson would have also sought to make submissions and provide evidence about the significance of these documents, in particular of the site instruction.

[38] Section 103 of the BCIP Act has been reproduced earlier in these reasons.  Clause 7A of the contract provided that a notice served under the BCIP Act is to be served to the “fax point”, the relevant telephone number being identified at Item 18A of the contract[29].  There is no suggestion that Mr Jones used this method of service.

[39] Clause 7 of the contract deemed documents to have been given and received, if addressed or delivered “to the relevant address in the Subcontract or last communicated in writing to the person giving the notice”[30].  The address in the Subcontract for Hutchinson was 584 Milton Road, Toowong.  There was no evidence to indicate a subsequent communication of a relevant address for Hutchinson.  On Mr Jones’ evidence, the site instruction and termination notice were not sent to the relevant address.

[40] Section 39(1)(b) of the Acts Interpretation Act 1954 (Qld) (AI Act) relevantly provides that a document might be served on a body corporate by posting it to the head office, a registered office, or a principal office of the body corporate.  There was no evidence to show that the address to which Mr Jones sent documents on 11 June 2013 satisfied any of these descriptions.  Indeed, the address was the construction site.

[41] No other statutory or contractual provision was identified as being relevant to the effect of Mr Jones’ sending the letter to Mr Easterbrook.  It follows that CADA is unable to rely upon s 103 of the BCIP Act to demonstrate service of the 10 June email and the February site instruction on Hutchinson.

BCIP Act, natural justice, and availability of remedies

[42] There has been some divergence of views about the source of an obligation to accord natural justice.  In Kioa v West[31] Mason J stated,

 

“… there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention”.

[43] His Honour’s reference to “administrative decisions” is explained by the context of the case; there is no reason to think that the proposition does not apply to any exercise of a statutory decision-making power where the decision has the effect described in the early passage just quoted.

[44] In the same case, Brennan J identified the basis of the obligation to observe the rules of natural justice as statutory.  Thus his Honour said the power of a court judicially to review such a decision on the ground that the principles of natural justice have not been observed is derived from “the legislature’s intention that observance of the principles of natural justice is a condition of the valid exercise of the power”[32].  It would appear that the view of Brennan J has ultimately prevailed[33]; though more recently the High Court was not prepared to say whether the identification of the root of the obligation to accord natural justice remained an open question[34].  The identification of the source of the obligation will usually not matter[35].  For that reason, and because the construction-based approach provides a more obvious explanation as to how rules developed under the general law might impinge upon the effect of, and in turn be affected by, statutory provisions, that is the approach I intend to take.

[45] As will be apparent from the statement of Mason J quoted a little earlier, a statutory provision might modify or exclude the obligation to accord natural justice.  Thus when considering whether a decision made in the purported exercise of a statutory power is of no effect, by reason of a failure to accord natural justice, a question regularly arises as to whether the obligation has been excluded or modified by statute[36].  The rules of natural justice (or principles of procedural fairness) are only excluded “by plain words of necessary intendment”[37].

[46] In Kioa, Brennan J said that a person whose interests might be affected by a decision “must be given an opportunity to deal with relevant matters adverse to (the person’s) interests which the repository of the power proposes to take into account in deciding upon its exercise”[38].  Thus the person should be given the opportunity to deal with “adverse information that is credible, relevant and significant to the decision to be made”[39].

[47] However, not every failure to comply with this requirement would result in a grant of relief by a court.  If it were shown that, even if the natural justice requirement had been complied with, the decision maker could not have come to a different conclusion, then relief will not be granted[40].  In a particular case, an applicant for relief may have to show, in order to get relief, that, if the applicant had been given the opportunity, evidence could have been provided which might have affected the result[41]

[48] It was not suggested that the application must fail because if there was a failure to comply with the rules of natural justice, that was not the fault of the third respondent.  Accordingly, it is not necessary to consider this matter further, beyond noting that there is some authority for the proposition that a decision might be vitiated by reason of a failure to comply with the requirements of natural justice, which is not the fault of the decision maker; and cases to the contrary effect are often cases which are not akin to litigation between parties, unlike an adjudication determination[42].

[49] In Kioa, in the passage earlier quoted, Brennan J stated that observance of the requirements of natural justice was a condition of the valid exercise of the relevant decision-making power[43].  As I read them, the reasons of Gaudron and Gummow JJ in Aala[44], as well as of Callinan J[45], held that a breach of the rules of natural justice had the consequence that the subsequent decision was of no effect[46].

[50] There is nothing in the BCIP Act which would exclude the requirements of natural justice.  Some of its provisions[47] are consistent with these requirements.  Other provisions of the BCIP Act[48] may, in some circumstances, impinge on the requirements; but the extent to which that might occur is clear from the terms of these provisions.  The constraints imposed on an adjudicator by the BCIP Act, in my view; do not by implication exclude the operation of the requirements of natural justice.  Indeed, the power given to the adjudicator to call for further submissions would seem to be consistent with these requirements[49].

[51] In Brodyn Pty Ltd v Davenport[50] Hodgson JA held, with respect to the analogous legislative provisions in force in New South Wales, that a “substantial denial of the measure of natural justice that the Act requires to be given” resulted in the absence of something which was essential for the existence of a determination; and accordingly what purports to be a determination, made in those circumstances, is void[51].  Those views were adopted by Applegarth J in John Holland Pty Limited v TAC Pacific Pty Limited[52].

[52] I am therefore of the view that where there has been a failure to comply with the requirements of natural justice, a decision made by an adjudicator under the provisions of the BCIP Act will be of no effect.

[53] There has never been any substantial doubt that, notwithstanding the provisions of s 18(2) of the JR Act, this court has power to declare a purported decision to be void or of no effect in an appropriate case.  One such case is where there has been a breach of the requirements of natural justice.  Further, it has been established that s 18(2) of the JR Act does not preclude the grant of prerogative relief[53].

Breach of natural justice requirements?

[54] Amongst the matters raised by Hutchinson in its Payment Schedule were matters described as deductions for back charges, and Hutchinson’s claim for liquidated damages[54].  These were considered separately by the third respondent in his decision.  Hutchinson had contended that it was entitled to deduct $231,072.10 from the amounts claimed by CADA for back charges, being additional costs incurred by Hutchinson for remedying CADA’s defective work, and providing additional assistance to it to carry out the work it had done, in part to make up for delays caused by CADA[55].  In rejecting Hutchinson’s submissions on this topic, the third respondent relied on “site instructions indicating formworks to be undertaken as a result of delays resulting from, over excavation, wet weather and poor ground conditions”[56].  The language just quoted matches rather closely the language found in the February site instruction.  No other relevant site instruction was identified in the material otherwise before the third respondent.  Shortly after the passage just quoted, the third respondent concluded that he was not satisfied that the construction programme was behind schedule as a result of CADA’s actions[57].

[55] Hutchinson had also submitted that it was entitled to deduct $291,000 from any amount payable to CADA, by way of liquidated damages by reason of CADA’s being behind with its construction programme[58].  In considering that submission, the third respondent repeated the passage relating to site instructions, set out above[59].  Shortly thereafter, he reached a conclusion adverse to Hutchinson.

[56] The third respondent has placed substantial reliance on the February site instruction attached to the 10 June email.  It could not be said that his decision could not have been different, had it not been provided to him.  Nor, in light of the evidence relied on by Hutchinson referred to previously, could it be said that his decision could not have been different if Hutchinson had had the opportunity to address the site instruction.

[57] In my view, Hutchinson has not had a proper opportunity to address the material sent to and relied upon by the third respondent.  Those responsible for conducting the adjudication on behalf of Hutchinson did not see the 10 June email, nor the attached February site instruction, prior to the adjudication decision.  Indeed, the email was not posted by Mr Jones to anyone associated with Hutchinson.  I have already indicated that I accept the evidence given on behalf of Hutchinson to the effect that it did not receive Mr Jones’ letter, enclosing the site instruction.

[58] It follows that there has been a failure to comply with the requirements of natural justice, which has the effect that the adjudication determination is of no effect. 

Breach of s 26(2) of BCIP Act?

[59] This provision limits the matters which an adjudicator might consider.  Material originating from a claimant is limited to the payment claim, “together with all submissions, including relevant documentation, that have been properly made by the claimant in support of the claim”.  No doubt this extends to submissions requested by the adjudicator under s 25(4).  Otherwise, it refers to submissions contained in an adjudication application, in accordance with s 21(3).

[60] The uncontradicted evidence of Mr Jang is that the Payment Schedule was served on CADA on 27 May 2013[60].  The time for lodgement of the adjudication application expired, at the earliest, on 10 June 2013, the day on which Mr Jones sent the 10 June email with the February site instruction to the second respondent.  The BCIP Act does not prescribe a time for service of an adjudication application on a respondent[61].  The question whether the third respondent could not consider the June email and the February site instruction therefore can not be answered simply by reference to time limits imposed by the BCIP Act.

[61] It seems to me that, for the purposes of s 26(2) of the BCIP Act, a properly made submission is one made in a manner provided for in that Act.  The only provision relevant for present purposes is found in s 21(3)(f), to the effect that submissions relevant to the adjudication application may be contained in the application; read with s 21(3)(b), which provides that the adjudication application is to be made to an authorised nominating authority.  It is apparent from s 26(2) that a submission may include relevant documentation.  On a literal reading of these provisions, however, the 10 June email and accompanying site instructions did not constitute, or form part of, a “properly made” submission.

[62] The question which then arises is whether, by considering those documents, the third respondent has acted inconsistently with s 26(2), in a way which would deprive his decision of legal effect.  It seems to me that, consistent with what was said in Project Blue Sky Inc v Australian Broadcasting Authority[62], it becomes necessary to ask whether it was a purpose of s 26(2) that consideration of these documents should invalidate the decision; and that in answering this question, regard is to be had to the language of s 26(2), and the scope and object of the statute.  The High Court in Project Blue Sky approved the approach taken in Tasker v Fullwood[63], a decision of the New South Wales Court of Appeal.  The court there held that in determining the validity of the act in question, regard is to be had to the nature of the provision not complied with, its place in the legislative scheme, and the extent of the failure to observe its requirement.

[63] As mentioned earlier in these reasons, an obvious purpose of s 26(2) is to limit the matters to which an adjudicator might have regard, in determining an adjudication application.  The limitation is significant, not only because it gives effect to the legislative intent that a decision be made quickly, but also because, so far as it permits the adjudicator to consider material originating from a party to the adjudication application, it limits that consideration to material which is to be served on the other party.  Accordingly, at least in the case of material from the claimant, it limits the adjudicator’s consideration to material to which the respondent has had an opportunity to respond.  Where an adjudicator considers something which is not a properly made submission of a claimant, and to which a respondent has not had an opportunity to respond, then it seems to me that the scope and object of the statutory provisions will generally have the consequence that the determination is invalid.  However, this may depend upon the significance of the material thus considered.  It seems to me that the approach taken under the rules of natural justice to the consideration of evidence about which one party has not had an opportunity to comment would provide an appropriate guide.  Here, the site instruction and the email which described its significance, were obviously matters of some importance.  Hutchinson would have provided material in response.  Accordingly, I would hold that the breach of s 26(2) invalidates the third respondent’s adjudication determination.

Failure to carry out statutory task

[64] In dealing with these submissions, it seems to me helpful to identify with some precision the relevant requirements of the BCIP Act.  A person who accepts an appointment as an adjudicator is required to decide the adjudication application[64].  In particular, an adjudicator is required to decide the amount of the progress payment (and some related matters)[65].

[65] It is clear that an adjudicator is required to consider (amongst other things) the payment schedule, together with properly made submissions (including relevant documentation) in support of the schedule[66].  It may be accepted that the obligation extends to consideration of a respondent's adjudication response.  That is apparent, at least from the provisions of s 24 of the BCIP Act.  The reference in s 26(2)(d) to submissions, including relevant documentation in support of the schedule may well have been intended to include the adjudication response, which, by s 24(4) is limited, so far as reasons for withholding payment are concerned, to such reasons as are included in a respondent's payment schedule.

[66] Against that background, I turn to consider the matters raised on behalf of Hutchinson.  The first relevant submission is that the third respondent failed to assess the merits of CADA's payment claim, and to identify and find a legal source for the entitlement by the claimant for the claim.  Reference was made to submissions in the adjudication response to the effect that CADA had not provided any explanation, calculation, or break down of the claimed amount, which was unsupported.

[67] The third respondent’s reasons at an early point refer to the payment schedule, identifying Hutchinson’s contentions by reference to six matters[67].  These reflect headings in Hutchinson’s payment schedule[68].  In the payment schedule, paragraph 17 asserted that the payment claim did not comply with s 17(2) of the BCIP Act, because it did not adequately identify how the amounts claimed had been calculated (it was also said that it did not adequately identify the construction works)[69].  The third respondent concluded that the payment claim showed how the amounts claimed were calculated[70].  No other part of the payment schedule goes to the assessment of the amount claimed by CADA, as distinct from matters which Hutchinson contended it was entitled to deduct from any payment otherwise owing.

[68] To the extent that the matters relied upon from the adjudication response might be said to go to the calculation of the amounts claimed, in my view the third respondent considered and dealt with them.  To the extent that they went beyond matters raised in the payment schedule, they would appear not to form part of a properly made submission, by virtue of s 24(4), and accordingly, the third respondent would not be required to consider them.

[69] Senior Counsel for Hutchinson submitted that the third respondent failed to perform his statutory function under the BCIP Act, because he failed to assess the merits of the payment claim, simply allowing it in full.  She supported that submission by reference to the decision of Brereton J in Pacific General Securities Ltd v Soliman & Sons Pty Ltd[71].  She emphasised a statement by his Honour to the effect that an adjudication determination as a minimum will involve determining whether the construction work identified in the Payment Claim has been carried out, and what is its value; and another statement to the effect that if an adjudicator allows a claim in full after rejection of the submissions by the respondent, without determining whether the construction work was carried out and without valuing it, there would be jurisdictional error resulting in invalidity.

[70] Somewhat surprisingly, I was not referred to the consideration of the decision by the Court of Appeal of this State in Bezzina Developers Pty Ltd v Deemah Stone (Qld) Pty Ltd[72].  In that case, the payment schedule nominated a scheduled amount of nil.  It did so, having set out various amounts which the respondent to the payment claim said it was entitled to deduct, the total of which exceeded the amount of the payment claim[73].  The adjudicator considered, and rejected, the contentions in the payment schedule for the deductions.  It was submitted that he erred thereafter “by simply accepting the sum claimed by (the contractor) rather than embarking upon a valuation of the work”[74].  That submission was rejected at first instance and on appeal. 

[71] In Bezzina, Fraser JA (with whom McMurdo P and Keane JA agreed) observed[75]:

“Whilst a particular adjudication might involve a valuation, the express obligation imposed by s 26 is ‘to decide’, not ‘to inquire’.”

[72] In Bezzina, Fraser JA concluded that the adjudicator construed the payment schedule as implicitly admitting the contractor's valuation of the work[76].  His Honour then referred to the “tentative view” of Hodgson JA in Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd[77], adopted by Brereton J in Pacific General Securities.  Fraser JA observed that the case was distinguishable, because it did not deal with a case where a respondent raises grounds for denying a claim and confines the dispute to those particular grounds.  It seems to me that this will occur, in the context of the limitation on the matters to be considered by an adjudicator imposed by s 26(2) of the BCIP Act, at least in most cases where, in a payment schedule, a respondent identifies reasons for withholding payments which do not put in issue the valuation of the work set out in the Payment Claim.  It also seems to me to follow from the decision in Bezzina that the wide statements of Hodgson JA and Brereton J are to be accepted as the law in this State.

[73] In the present case, the Payment Schedule did not challenge the valuation attributed to the works by CADA in the Payment Claim.  On that basis, it seems to me that the third respondent was not required to carry out any assessment of the value of the work which was the subject of the Payment Claim.

[74] The third respondent found that the payment claim adequately identified the work to which it related; and that Hutchinson understood the subject of the claim[78].  He also noted that Hutchinson did not deny that the work was undertaken by CADA[79].  He appears to have made an express finding that the work was carried out[80].  His reasons included the following:

 

Amount Due to Claimant

97.The Claimant has identified all additional costs as specifically claimed.

98.The Claimant has calculated the costs pursuant to the terms of the Construction Contract and these costs were set out in the Payment Claim and the documents in support of such claims were annexed to its submissions.

99.The Claimant has the onus of satisfying me as to the value of work which I have agreed with.”[81]

[75] The payment claim consists of some six sheets, three of which set out separate amounts said to be payable, and for each of those amounts there is a tax invoice identifying the work, the amount of the contract price remaining after previous invoices, and the amount remaining after the invoice in question.  In the context of the reasons set out above, and the contents of the payment claim, it is clear that the references to “costs” in paragraphs 97 and 98 are references to amounts claimed for the works referred to in the payment claim.  In my view, the paragraphs set out above demonstrate that the third respondent turned his mind to the assessment of the value of the work, the subject of the Payment Claim.

[76] The submission that the adjudicator was required to identify the legal source of CADA’s entitlement to payment was based on passages from the decision of Applegarth J in BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[82].  His Honour was there dealing with a payment claim which included a claim for costs incurred by the claimant, which were referred to as termination costs.  The respondent had put in issue whether such costs were payable under the contract; and if they were, whether the right to claim them had arisen by the reference date.  It was accepted that the right had not arisen under the contract by that date.  Nevertheless the adjudicator included them in the adjudicated amount.  In my view, his Honour’s statements about the need to identify the source of entitlement to the payment the subject of the claim need to be understood in that context.  They are consistent with the identification in s 13 of the BCIP Act of the amounts to which a claimant may be entitled.  I do not read them as holding, in a case like the present one where the claim is simply for payment for work done under the contract, that an adjudication decision will be invalid if it does not include an express finding as to the legal source of the claimant’s entitlement to payment.

[77] However, my conclusions on the earlier grounds relied upon by Hutchinson make it unnecessary for me to come to a final view about the submissions at present under consideration, and I do not propose to do so.

Relief

[78] In Forster v Jododex Australia Pty Ltd[83], Gibbs J (as he then was) stated that it was neither possible nor desirable to fetter the broad discretion to grant declaratory relief, by laying down rules as to the manner of its exercise.  The following appears in an English text on the topic:[84]

 

“A most important feature of the declaratory judgment is that it is a flexible and discretionary remedy.  This helps to explain its increasing popularity with litigants and judges both in the private and public law fields.  Its flexible and discretionary nature enables the court to exercise precise control over the circumstances and terms in which relief is granted.  Although a claimant or an applicant may have proved his case, he still has to persuade the court both that it should in its discretion make a declaratory judgment and, if it does, that the terms he seeks are appropriate.” (references omitted)

[79] Likewise, the granting of prerogative relief, even where there has been a denial of natural justice, is discretionary[85].  Nevertheless, in a case where a decision is affected by want or excess of jurisdiction, and the applicant for relief is a party aggrieved by the decision, relief will be granted “almost as of right”[86]

[80] These considerations lead to the conclusion that relief should be granted in the present case. 

[81] That conclusion is confirmed by the decision of the Court of Appeal in BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[87].  In that case, the primary judge had found jurisdictional error, but refused relief.  Muir JA (with whom the other members of the court agreed) referred to decisions of the High Court[88] where it was held that a decision involving jurisdictional error is properly regarded, in law, as no decision at all[89].  His Honour then held that declaratory relief was a “remedy dictated by the finding of jurisdictional error”[90].  He also held that the primary judge erred in law in withholding such relief[91].

[82] It follows that Hutchinson’s application should be granted.  I would propose therefore to grant a declaration to give effect to my determination.

[83] When a judgment of a court is reversed on appeal, or when a superior court quashes the order of an inferior court, the successful party is entitled to restitution of any monies paid pursuant to the order which has been reversed or quashed[92].  This approach has been held to be applicable when money has been paid pursuant to an adjudication determination, subsequently held to be invalid[93].  On that basis, it would be appropriate to order CADA to refund the money paid to it pursuant to the adjudication certificate.  Again, the correctness of that approach has been confirmed in BM Alliance.[94]

Conclusion

[84] I have found that the third respondent's adjudication determination was void because the requirements of natural justice have not been complied with.  It was also void because it was made contrary to the provisions of s 26(2) of the BCIP Act.  Accordingly I propose to make an appropriately-framed declaration; and to order CADA to repay money paid to it by Hutchinson pursuant to the adjudication determination. 

[85] I shall hear submissions about the form of the orders to be made.

Footnotes

[1] See s 18(4)(b)(ii) of the BCIP Act.

[2] See s 21(3)(c)(i) of the BCIP Act.

[3] See s 21(3)(f) of the BCIP Act.

[4] See s 21(5) of the BCIP Act.

[5] See s 21(3)(b) of the BCIP Act.

[6] See s 21(6) of the BCIP Act.

[7] See s 24(1)(a) of the BCIP Act.

[8] See s 24(2)(c) of the BCIP Act.

[9] See s 24(4) of the BCIP Act.

[10] See s 24(5) of the BCIP Act.

[11] See s 25(2) of the BCIP Act.

[12] See s 25(4)(a) of the BCIP Act.

[13] See s 25(4)(b) of the BCIP Act.

[14] See s 25(4)(c) of the BCIP Act.

[15] See s 28 of the BCIP Act.

[16] See s 29(2) of the BCIP Act.

[17] See ss 30, 31 of the BCIP Act.

[18] See Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA Pty Ltd) & Ors [2007] QSC 333 at [48].

[19] Apparently that found at p 347 of the exhibits to the Affidavit of Peter Ji Won Jang sworn 29 July 2013 (1 Jang).

[20] T 1-28, line 30; T 1-38, line 26.

[21] T 1-38, lines 22-30.

[22] T 1-29, lines 39-47; T 1-37, lines 34-37; T 1-38, line 46 to T 1-39, line 2.

[23] T 1-29, lines 15-16; see 1 Jang pp 800-801.

[24] T 1-29, line 47 to T 1-30, line 2; T 1-44, lines 27-28.

[25] T 1-41, line 4.

[26] T 1-39, lines 16-17.

[27] T 1-46, lines 1-2.

[28] See T 1-45, lines 30-45.

[29] See 1 Jang p 20.

[30] See 1 Jang p 20.

[31] (1985) 159 CLR 550 (Kioa), 584; see also 632-633. This and a number of other authorities which will be referred to are helpfully discussed in Aronson and Groves, Judicial Review of Administration Action (Lawbook Co, 5th ed, 2013) (Aronson and Groves) ss 7.4 and 7.16.

[32] Kioa at 609.

[33] Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 (Saeed) at [12].

[34] Plaintiff M61/2010 E v Commonwealth (2010) 243 CLR 319 (Offshore Processing Case) at [74].

[35] See Aronson and Groves at p 411.

[36] See Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 (Aala) at [41]; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 at [90].

[37] Annetts v McCann (1990) 170 CLR 596, 598; Saeed at [14]-[15]; Offshore Processing Case at [74].

[38] Kioa at 628.

[39] Kioa at 629; Saeed at [19].

[40] Aronson and Groves at pp 477-480.

[41] See Applicant Naff of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 221 CLR 1 at [34]; and in particular at [74]-[76].

[42] See Aronson and Groves at pp 481-484.

[43] Kioa at 609.

[44] At [41] and [59]; see also Gleeson CJ at [4]-[5] and Hayne J at [169].

[45] At [210].

[46] See also Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 (Bhardwaj).

[47] For example s 21(3)(d), (3)(f), (5); s 24(1), (2)(c), (5); s 25(1), (4); s 26(2)(c), (2)(d).

[48] For example s 24(4), s 25(2).

[49] Compare Saeed at [23].

[50] (2004) 61 NSWLR 421 (Brodyn).

[51] Brodyn at [52], [55].

[52] [2010] 1 Qd R 302 at [19].

[53] Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525 at [75], [78], [6].

[54] See 1 Jang pp 115-116.

[55] See 1 Jang p 772 paras 53, 64.

[56] 1 Jang p 773 para 66.

[57] 1 Jang p 773 para 68.

[58] 1 Jan p 775 para 91.

[59] 1 Jang p 775 para 93.

[60] 1 Jang para 5; and p 120.

[61] See s 21(5) and s 24(1).

[62] (1998) 194 CLR 355 at [93] (Project Blue Sky).

[63] [1978] 1 NSWLR 20, 24-25.

[64] See s 23(2) of the BCIP Act.

[65] See s 26(1) of the BCIP Act.

[66] In QCLNG Pipeline Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2011] QSC 292 at [111]-[117] I referred to cases which suggested that this obligation might derive from s 26(2), or its equivalent in other jurisdictions; but that the source of the obligation might preferably be identified in other provisions of the BCIP Act. At least in the present case, which approach is correct is of no significance.

[67] 1 Jang p 768 paras 10 and 11.

[68] See 1 Jang pp 112-117.

[69] 1 Jang p 115.

[70] 1 Jang p 771 para 43.

[71] (2006) 196 FLR 388 (Pacific General Securities) at [86].

[72] [2008] 2 Qd R 495 (Bezzina).

[73] See Bezzina at [27]-[28].

[74] Bezzina at [26].

[75] At [34].

[76] Bezzina at [32].

[77] (2005) 63 NSWLR 385.

[78] 1 Jang pp 770-771, paras 41-43.

[79] 1 Jang pp 776, para 102.

[80] 1 Jang p 771, para 43.

[81] 1 Jang p 775.

[82] [2012] QSC 346, [52]-[57].

[83] (1972) 127 CLR 421, 437.

[84] Zamir & Woolf, The Declaratory Judgment (Sweet & Maxwell, 3rd ed, 2002) p 123, para 4.001.

[85] Aala at [5].

[86] R v Ross-Jones; Ex parte Green (1984) 156 CLR 185, 194 per Gibbs CJ; discussed in Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd [2013] NSWSC 657 at [7].

[87] [2013] QCA 394 (BM Alliance).

[88] Bhardwaj; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476.

[89] At [62]-[64].

[90] At [75].

[91] At [77]. I confess to some difficulty in identifying the precise error of law; though perhaps his Honour had in mind that a discretionary judgment could be set aside if it is “unreasonable or plainly unjust”: see House v R (1936) 55 CLR 499, 505.

[92] Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659, 661-662.

[93] John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 66 NSWLR 624, 633-634; Go Electrical Pty Ltd v Class Electrical Services Pty Ltd [2013] NSWSC 517.

[94] At [77].

Close

Editorial Notes

  • Published Case Name:

    J Hutchinson Pty Ltd v Cada Formwork Pty Ltd & Ors

  • Shortened Case Name:

    J Hutchinson Pty Ltd v Cada Formwork Pty Ltd

  • MNC:

    [2014] QSC 63

  • Court:

    QSC

  • Judge(s):

    P Lyons J

  • Date:

    07 Apr 2014

  • White Star Case:

    Yes

Litigation History

No Litigation History

Appeal Status

No Status