SUPREME COURT OF QUEENSLAND
CITATION: | Wiggins Island Coal Export Terminal Pty Ltd v Monadelphous Engineering Pty Ltd & Ors [2015] QSC 307 |
PARTIES: | WIGGINS ISLAND COAL EXPORT TERMINAL PTY LIMITED (applicant) v MONADELPHOUS ENGINEERING PTY LTD (first respondent) MUHIBBAH CONSTRUCTION PTY LTD ACN 073 412 012 (second respondent) AUSTRALIAN BUILDING & CONSTRUCTION DISPUTE RESOLUTION SERVICE PTY LTD ACN 165 369 077 (third respondent) KENNETH SPAIN (fourth respondent) |
FILE NO/S: | SC No 10576 of 2014 |
DIVISION: | Trial Division |
PROCEEDING: | Originating Application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 30 October 2015 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 4 August 2015; Further written submissions 13 August 2015; 20 August 2015 |
JUDGE: | Philip McMurdo J |
ORDER: | The originating application is dismissed. |
CATCHWORDS: | CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where the where the applicant challenged an adjudicator’s decision under the Building and Construction Industry Payments Act 2004 (Qld) – applicant argued the adjudicator had no power to order the applicant to pay any sum of money to the respondents because the relevant construction work was excluded from the operation of the Act by s 3(4) – whether the fabrication of equipment including a Shiploader and Tripper in Malaysia was a contract for construction work a type excluded from operation of the Act by s 3(4) – whether fabrication of the equipment fell within the definition of “construction work” in s 10 or “related goods and services” in s 11 – where the equipment was regarded as components to form part of the wharf structure, which was subject of another contract between the parties – close connection between the operation within s 10(1)(e) and construction work of a kind within s 10(1)(a), (b) or (c) – where even though the fabrication of equipment was carried out outside Queensland, the contract was providing for part of the construction of a structure in Queensland – where the operation of the Act was not displaced by s 3(4) and the adjudicator had jurisdiction – where the applicant argued, in the alternative, that the adjudicator failed to consider the applicant’s submissions and evidence in a way that involved jurisdictional error – applicant argued the adjudicator wrongly concluded that applicant’s adjudication response went beyond the reasons for withholding payment identified in its payment schedule – no finding that the adjudicator’s treatment of the applicant’s submissions and evidence involved a jurisdictional error but if there was an error it was not one which affected the validity of the adjudicator’s decision – where the applicant was not denied natural justice by being deprived of an opportunity to explain why the evidence was properly included in its adjudication response ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – JURISDICTIONAL MATTERS – where the applicant argued the adjudicator had no jurisdiction to order it to pay any sum to the respondents because the relevant construction work was excluded from the operation of the Building and Construction Industry Payments Act 2004 (Qld) by s 3(4) – where the operation of the Act was not displaced by s 3(4) and the adjudicator had jurisdiction – applicant argued the adjudicator failed to consider its submissions and evidence in a way that involved jurisdictional error – no finding that the adjudicator’s treatment of the applicant’s submissions and evidence involved a jurisdictional error but if there was an error it was not one which affected the validity of the adjudicator’s decision ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – PROCEDURAL FAIRNESS – whether the applicant was denied natural justice by being deprived of an opportunity to explain why the evidence was properly included in its adjudication response – where the applicant was not denied natural justice Building and Construction Industry Payments Act 2004 (Qld), s 3(4), s 10, s 11, s 18, s 24, s 26 Building and Construction Industry Security of Payment Act 1999 (NSW) Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394, cited John Holland Pty Ltd v Roads & Traffic Authority of New South Wales [2007] NSWCA 19, followed McNab Developments (Qld) Pty Ltd v MAK Construction Services Pty Ltd [2015] 1 Qd R 350; [2014] QCA 232, applied Monadelphous Engineering Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2014] QCA 330, considered Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, followed Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2010] QSC 95, cited Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525; [2011] QCA 22, applied Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd [2011] NSWSC 165, distinguished Peter’s of Kensington v Seersucker Pty Limited [2008] NSWSC 897, considered Technical Products Pty Ltd v State Government Insurance Office (Qld) (1988) 167 CLR 45, cited |
COUNSEL: | A B Crowe QC, with M Hindman for the applicant G A Thompson QC, with K E Downes QC for the first and second respondents No appearance for the third or fourth respondents |
SOLICITORS: | Minter Ellison for the applicant CDI Lawyers for the first and second respondents No appearance for the third or fourth respondents |
The equipment
The contract
“At the invitation of the Principal [WICET], the Contractor [MMM] has submitted its tender for the PE96 Fabrication and Supply of Stacker and Gantry package on the Wiggins Island Coal Export Terminal project.”
The parties incorporated the general conditions of contract described as AS2124-1992 with some amendments. They amended the definition of “work under the Contract” within those conditions so that the term was defined to mean:
“… the work which the Contractor is or may be required to execute under the Contract and includes the design, manufacture, supply and Delivery of the Equipment …”
The term “Equipment” was defined as follows:
“Equipment means the goods to be supplied by the Contractor under the Contract which are to be handed over to the Principal or a person designated by the Principal.”
By cl 3.1 of the Conditions, the Contractor was to execute and complete the work under the Contract.
“The Contractor shall supply the Equipment and use the materials and standards of workmanship required by the Contract. …”
“… All works associated with the supply, manufacture, protective treatment, workshop testing, offsite pre-assembly and commissioning, delivery to site, onsite installation/hook-up and completion of commissioning for shiploader SL1 and its towed tripper.”
“27.1Possession of Site
The Principal shall … give the Contractor possession of the Site or sufficient of the Site to enable the Contractor to commence work under the Contract that it is required to perform on Site. …”
That clause was one of several provisions which made it clear that the equipment was to be fabricated at a different place from the Site which (according to the standard conditions) meant the lands or other places to be made available to the contractor by the principal for the purpose of the contract. Another of those provisions was cl 30A which provided for the shipping of the equipment from “its place of fabrication”. It provided that the contractor was to make the equipment available for inspection at the place of fabrication by the principal and for a sequence of steps by which any defects identified by the inspection would be rectified prior to shipment. By cl 30A.1B, the contractor was to then deliver the equipment to “the Place for Delivery …”.
The adjudicator’s jurisdiction
“a contract, agreement or other arrangement under which one party undertakes to carry out construction work for, or to supply related goods and services to, another party.”
“(1)Construction work means any of the following work -
(a)the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures, whether permanent or not, forming, or to form, part of land;
(b)the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, powerlines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for land drainage or coast protection;
(c)the installation in any building, structure or works of fittings forming, or to form, part of land, including heating, lighting, airconditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems;
(d)the external or internal cleaning of buildings, structures and works, so far as it is carried out in the course of their construction, alteration, repair, restoration, maintenance or extension;
(e)any operation that forms an integral part of, or is preparatory to or is for completing, work of the kind referred to in paragraph (a), (b) or (c), including -
(i)site clearance, earthmoving, excavation, tunnelling and boring; and
(ii)the laying of foundations; and
(iii)the erection, maintenance or dismantling of scaffolding; and
(iv)the prefabrication of components to form part of any building, structure or works, whether carried out on-site or off-site; and
(v)site restoration, landscaping and the provision of roadways and other access works; …”
“(1)Related goods and services, in relation to construction work, means any of the following -
(a)goods of the following kind -
(i)materials and components to form part of any building, structure or work arising from construction work;
(ii)plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work; …”
“(4)This Act does not apply to a construction contract to the extent it deals with construction work carried out outside Queensland or related goods and services supplied for construction work carried out outside Queensland.”
“33.Section 11(1)(a)(i) refers to material or components to form part of any building structure or work arising from construction work. I consider that the Shiploader is a component of the wharf upon which it is to operate and is provided in respect of construction work carried out within Queensland. I am therefore satisfied that the Shiploader is related goods supplied for construction work.”
WICET argues that this was erroneous reasoning because the Shiploader, upon its installation upon the wharf, is not a “component of the wharf” or part of the structure which is the wharf.
“34.In addition, as noted above, I am satisfied that the contract was formed in Queensland for work to be carried out in Queensland. I am also satisfied that the Act does not seek to split components out of a contract in respect of components that may be procured outside of Queensland for work that is undertaken in Queensland. I consider that the decision of Ball J in the case of Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd supports this view. I am satisfied that the shiploader was supplied in respect of construction work carried out inside Queensland at the Port of Gladstone.”
The reasoning in that paragraph was foreshadowed by this earlier paragraph of the adjudicator’s reasons:
“28.It is common practice for works within a contract which deals with Queensland based construction works to have a component of the works that may be sourced or manufactured outside of Queensland. I am satisfied that section 3(4) of the Act does not contemplate excising out sections of a contract just because parts of the scope of works were procured outside of Queensland. I have reviewed the decision of Ball J in Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd and I am not satisfied that the decision of Ball J supports the respondent’s position. Rather I find that the decision of Ball J is supportive of the claimant’s position.”
“27In my opinion, the contract between Olympia and Hansen Yuncken dealt with construction work outside New South Wales or at least with related goods and services supplied in respect of that construction work. Under the contract, Olympia was to refurbish a building in the Jervis Bay Territory. Necessarily, the work had to be performed in that territory. The fact that goods were sourced in New South Wales and work was carried out in New South Wales in connection with the contract does not mean that the contract between Olympia and Hansen Yuncken dealt with construction work in New South Wales. At most, all that could be said was that the contract for the construction work dealt with related goods and services which were supplied in New South Wales because the contract left it open - or, indeed, given the location of the Jervis Bay Territory, contemplated - that goods and services of that description would be supplied. The goods and services actually supplied in New South Wales were related goods and services to construction work carried on in the Jervis Bay Territory because the goods and services consisted of materials and components which formed part of the work on the Geelong building or the provision of labour in connection with the fabrication of those materials and components. The SOP Act does not apply to those related goods and services by reason of s 7(4)(b) of the Act.”
“[20]The location of the shiploader on a rail on the site of the wharf adjacent to the water and its function compel the conclusions that it is or forms part of a ‘maritime structure’ within the meaning of item 19 …”
Similarly, Fraser JA remarked that “the shiploader has the same function and may even be regarded as being part of the wharf upon which it moves on fixed rails …”.[9]
Extension of time claims
“18Payment schedules
(1)A respondent served with a payment claim may reply to the claim by serving a payment schedule on the claimant.
(2)A payment schedule -
(a)must identify the payment claim to which it relates; and
(b) must state the amount of the payment, if any, that the respondent proposes to make (the scheduled amount).
(3)If the scheduled amount is less than the claimed amount, the schedule must state why the scheduled amount is less and, if it is less because the respondent is withholding payment for any reason, the respondent's reasons for withholding payment.”
“(4)If the adjudication application is about a standard payment claim, the adjudication response can not include any reasons for withholding payment unless those reasons were included in the payment schedule when served on the claimant.”
“[68]Section 14(3) requires that if the respondent to a payment claim has ‘any reason’ for ‘withholding payment’, it must indicate that reason in the payment schedule. To construe the phrase ‘withholding payment’ as meaning ‘withholding payment only by reason of a set-off or cross claim’ is to put a gloss on the words which their plain meaning cannot justify. The phrase, in the context of the subsection as a whole, simply means ‘withholding payment of all or any part of the claimed amount in the payment claim’. If the respondent has any reason whatsoever for withholding payment of all or any part of the payment claim, s 14(3) requires that that reason be indicated in the payment schedule and s 20(2B) prevents the respondent from relying in its adjudication response upon any reason not indicated in the payment schedule. Correspondingly, s 22(d) requires the adjudicator to have regard only to those submissions which have been ‘duly made’ by the respondent in support of the payment schedule, that is, made in support of a reason for withholding payment which has been indicated in the payment schedule in accordance with s 14(3).”
“If a respondent does not propose to pay any amount included in the payment claim for any reasons said to justify non-payment of that amount, then in my opinion that is withholding payment and the reasons are reasons for withholding payment. It does not matter whether the reasons relate to non-performance of work, bad work, set-offs, or cross-claims of any kind, contractual provisions limiting the claimant’s right to payment or statutory provisions limiting the claimant’s right to payment, or indeed any other suggested justification. Any other view would do violence to the language ‘withholding payment for any reason’, and be contrary to the plain purpose of s 20(2B) to avoid new submissions being introduced late in a process going ahead on a brief and strict timetable. I agree with what Palmer J said on this matter in Multiplex Constructions Pty Ltd v Luikens…”.
“(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.”
WICET accepts that any submission or documentation which went beyond the limitation imposed by s 24(4) would not be “properly made” under s 26(2)(d). But it argues that the Evans & Peck Report and the submissions in reliance upon it did not exceed the limit imposed by s 24 so that the adjudicator was entitled and indeed bound to consider this material.
“338.Both parties have provided specialist consultant reports to assist in supporting their respective positions in respect of the extension of time claims:
“54In my opinion, there may be a sense in which s 22(2) is breached if there is any relevant provision of the Act or provision of the contract which is not considered by the adjudicator, or indeed if there is any one of what may be numerous submissions duly made to the adjudicator which is not considered. However, in my opinion a mere failure through error to consider such a provision of the Act or of the contract, or such a submission, is not a matter which the legislature intended would invalidate the decision.
55The relevant requirement of s 22(2) is that the adjudicator consider the provisions of the Act, the provisions of the contract and submissions duly made. If an adjudicator does consider the provisions of the Act and the contract which he or she believes to be relevant, and considers those of the submissions that he or she believes to have been duly made, I do not think an accidental or erroneous omission to consider a particular provision of the Act or a particular provision of the contract, or a particular submission, could either wholly invalidate a determination, or invalidate it as regards any part affected by the omission. One could express this by saying that such an accidental or erroneous omission does not amount to a failure to comply with s 22(2), so long as the specified classes of considerations are addressed; or alternatively, if one takes the view that s 22(2) does require consideration of each and every relevant provision of the Act and the contract and each and every submission duly made, the intention of the legislature cannot have been that this kind of mistake should invalidate the determination. In a case where there were 1,000 submissions duly made, an accidental failure to consider one of them could not reasonably be considered as invalidating a whole determination; and there is no basis for partial invalidation of a determination, that is, invalidation only of that part affected by the omitted submission.”
“It was said in the passage in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, quoted by McDougall J that a decision may be a nullity if a tribunal has refused to take into account something it was required to take into account, or based its decision on something it had no right to take into account. However, in Craig v South Australia (1995) 184 CLR 163 at 177 the High Court said that this would involve jurisdictional error if compliance with the requirement in question was made a pre-condition of the existence of any authority to make the decision. I do not think that compliance with the requirements of s 22(2) are made such pre-conditions, for the same reasons as I considered the determination not to be subject to challenge for mere error of law on the face of the record. The matters in s 22(2), especially in pars (b), (c) and (d), could involve extremely doubtful questions of fact or law: for example, whether a particular provision, say an alleged variation, is or is not a provision of the construction contract; or whether a submission is ‘duly made’ by a claimant, if not contained in the adjudication application (s 17(3)(b)), or by a respondent, if there is a dispute as to the time when a relevant document was received (s 20(1) and s 22(2)). In my opinion, it is sufficient to avoid invalidity if an adjudicator either does consider only the matters referred to in s 22(2), or bona fide addresses the requirements of s 22(2) as to what is to be considered.”
(footnote included)
“… that the scope of the payment schedule and the identification of submissions ‘duly made’ by the Respondent in support of the schedule are matters to be objectively determined by this Court. In my view they are not: they are matters to be determined by the adjudicator. If, as appears to be accepted by both parties, the adjudicator did not address the second response, it may have been for one of a number of reasons, namely:
(a)he did not think it fell within the scope of the payment schedule and that to be taken into account it should have done;
(b)it did not need to fall within the scope of the payment schedule, but for some other reason it was not ‘duly made’;
(c)The submission was inconsistent with the scheme of the Building Payment Act, which required the adjudicator to determine what work had been undertaken under the contract and what was the value of the work.”
Basten JA continued:
“[71]… So long as it is part of the function of the adjudicator to determine such matters and so long as it is within the power of the adjudicator to act in accordance with his own determination, even if a court might have reached a different conclusion, there is no basis for saying that the adjudication was invalid.
[72]As I sought to explain in Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229 at [43]-[48], in my view the power to resolve these questions has been conferred on the adjudicator.”
“In summary, what is required of an adjudicator is that he or she make a genuine attempt to understand and apply the relevant contract and to exercise the power in accordance with the Act.”
Conclusion
[1] Affidavit of B D Millar sworn 1 April 2015 [21].
[2] Clause 1.2.
[3] [2011] NSWSC 165.
[4] Ibid 14 [26].
[5] Ibid 14-15 [27].
[6] WICET’s written submissions [51].
[7] [2014] QCA 330.
[8] Queensland Building and Construction Commission Regulation 2003 (Qld) Sch 1AA, Item 19.
[9] [2014] QCA 330, 9-10 [21].
[10] [2008] NSWSC 897.
[11] Ibid [39].
[12] Ibid [22], citing Technical Products Pty Ltd v State Government Insurance Office (Qld) (1988) 167 CLR 45, 47.
[13] [2008] NSWSC 897 [39].
[14] [2003] NSWSC 1140.
[15] [2007] NSWCA 19.
[16] Ibid [33].
[17] Ibid.
[18] WICET’s payment schedule, Attachment A, 21.
[19] Ibid.
[20] Evans & Peck Report [130].
[21] Adjudicator’s decision [345], set out above at [54].
[22] [2007] NSWCA 19.
[23] (2004) 61 NSWLR 421, 442 [56]; [2004] NSWCA 394 [56].
[24] [2007] NSWCA 19 [71].
[25] [2012] 1 Qd R 525, 564 [107]; [2011] QCA 22, 33 [107] (White JA, with whom McMurdo P agreed).
[26] [2015]1 Qd R 350, 381-383 [89]-[92]; [2014] QCA 232, 25-28 [89]-[92] (Morrison JA).
[27] Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2010] QSC 95, 6 [11], cited by White JA in Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R 525, 564 [107].
