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  4. Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No. 2) - [2021] QSC 231

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Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No. 2)[2021] QSC 231

Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No. 2)[2021] QSC 231

SUPREME COURT OF QUEENSLAND

CITATION:

Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No. 2) [2021] QSC 231

PARTIES:

TOTAL LIFESTYLE WINDOWS PTY LTD ACN 148 837 665

(applicant)

v

ANIKO CONSTRUCTIONS PTY LTD ACN 622 863 932

(first respondent)

AND

COLIN HAMMOND BOND (J1071042)

(second respondent)

FILE NO/S:

7978/21

DIVISION:

Trial Division

PROCEEDING:

Originating Application BS7978/21

ORIGINATING COURT:

Supreme Court (at Brisbane)

DELIVERED ON:

10 September 2021

DELIVERED AT:

Brisbane

HEARING DATE:

13 August 2021

JUDGE:

Freeburn J

ORDERS:

  1. 1.It is declared that the revised adjudication decision of the second respondent dated 27 June 2021, in relation to adjudication matter QBCC 733622, is void to the extent of paragraphs 73 to 84 and 85(c) of the decision.
  2. 2.The parties be heard on costs.

CATCHWORDS:

CONTRACT – BUILDING AND CONSTRUCTION CONTRACTS IN AUSTRALIA – BUILDING INDUSTRY FAIRNESS (SECURITY OF PAYMENT) REGULATION 2018 (QLD) – ADJUDICATION APPLICATIONS – CONFLICTS OF INTEREST – LIMITATIONS ON SUBMISSIONS AND ACCOMPANYING DOCUMENTS FOR PARTICULAR ADJUDICATION APPLICATIONS

Where Total was contracted to supply and install aluminium framed windows – Where Total suspended works due to lack of payment by Aniko – Where Aniko allegedly engaged a new contractor to complete Total’s outstanding work – Where the matter was the subject of four payment claims, two applications to the Queensland Supreme Court, and three adjudications – Whether adjudicator made a jurisdictional error – Whether either Total or Aniko bore the onus of proving work was removed/not removed – whether the adjudicator failed to properly consider Mr Morrison’s evidence – Whether the court has power to remit the matter to adjudication

Building Industry Fairness (Security of Payment) Act 2017 (Qld)

Building and Construction Security of Payment Act 2002 (Vic)

Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410, applied.

Annie Street JV Pty Ltd v MCC Pty Ltd [2016] QSC 268, considered.

Heavy Plant Leasing Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2013] QCA 386, considered.

Illawarra Retirement Trust v Denham Constructions Pty Ltd [2015] NSWSC 1173, considered.

Intero Hospitality Projects Pty Ltd v Empire Interior (Australia) Pty Ltd [2008] QCA 83, considered.

John Holland Pty Ltd v TAC Pacific Pty Ltd [2010] 1 Qd R 302, considered.

Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd [2021] QSC 30, applied.

Laing O'Rourke Australia Construction v H&M Engineering & Construction Pty Ltd [2010] NSWSC 818, applied.

Maxstra Constructions Pty Ltd v Joseph Gilbert [2013] VSC 243, considered.

QCLNG Pipeline Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2011] QSC 292, considered.

Richard Crookes Construction Pty Ltd v CES Projects (Aust) Pty Ltd [2016] NSWSC 1229, considered.

Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd [2021] QSC 92, considered.

COUNSEL:

M Bland for the applicant

K McAuliffe-Lake for the first respondent

No appearance by the second respondent.

SOLICITORS:

QBM Lawyers for the applicant

Short Punch & Greatorix for the first respondent

TABLE OF CONTENTS

INTRODUCTION3

CHRONOLOGY4

PARAGRAPH 73 – FIRST JURISDICTIONAL ERROR?6

The Principle6

The Background7

The Arguments9

What does ‘must not consider’ mean?10

Dissecting the adjudicator’s process of reasoning12

Has the adjudicator considered the prohibited defence/reason?15

What defences were raised in the payment schedule?17

Who had the onus?19

Paragraph 83 of the Revised Adjudication Decision21

PARAGRAPHS 78 & 79 – SECOND & THIRD JURISDICTIONAL ERRORS?21

The Arguments21

What was the adjudicator approach?23

Was there a failure to properly consider Mr Morrison’s evidence?25

PARAGRAPH 81 – FOURTH JURISDICTIONAL ERROR?27

The Issue27

The adjudicator’s decision29

ABSENCE OF GOOD FAITH30

JURISDICTION TO REMIT MATTER TO ADJUDICATION30

Submission of the First Respondent30

REASONS

INTRODUCTION

  1. [1]
    The main purpose of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the ‘Act’) is to help people working in the building and construction industry in being paid for the work they do.[1]  This is to be achieved by establishing a procedure for the adjudication of disputed payment claims.[2] The Act’s purpose is to provide an expeditious, interim determination.[3]
  2. [2]
    Those high hopes have been shattered, at least in this litigation. Here there have been at least four contested payment claims, three adjudications, and now two applications to this court. In spite of all of that strife and disputation, not one dollar claimed by the subcontractor against the builder/contractor has been the subject of a final determination.[4]

CHRONOLOGY

  1. [3]
    Total Lifestyle Windows Pty Ltd (‘Total’) agreed to supply and install aluminium framed windows and doors at an apartment building being constructed by Aniko Constructions Pty Ltd in Labrador (‘Aniko’).  The contract comprises Total’s revised quotation number 18.006-Rev 2 dated 7 June 2018 and Aniko’s purchase order number MP-32 dated 11 June 2018.[5]
  2. [4]
    There was a dispute about the time for payment.  That was decided by an adjudicator.[6]
  3. [5]
    On 25 February 2019 Total issued a payment claim under the Act claiming $250,994.  Then, on 25 March 2019 Total issued a second payment claim for $342,143.  There was a further, third, payment claim issued on 30 April 2019 claiming $182,983.[7]
  4. [6]
    The amounts claimed under the February 2019 and March 2019 payment claims remained substantially due as at 2 May 2019.  And so, Total acted on both of those payment claims and gave notices to Aniko suspending its work in supplying and installing the windows.[8]  Total claims that the notices of suspension became operative on 8 May 2019.
  5. [7]
    On 10 May 2019 Total returned to the site, but merely to collect its materials and tools.
  6. [8]
    On 14 May 2019 Total’s Managing Director emailed Aniko saying: ‘I have heard that Aniko have engaged another company to continue or complete glazing works on the Project. Is this true?’ Aniko’s Acting General Manager replied immediately, but in a non-responsive way, saying: ‘The matter is now in the hands of our lawyers. George is overseas and I expect to speak with him in the next few days. After speaking with George and our Solicitor, I shall be willing to discuss the matter further.’[9] 
  7. [9]
    On 16 May 2019 Total wrote to Aniko saying: ‘We confirm that you have engaged Tweed Coast Glass Pty Ltd to complete our works under the Contract.’ They referred to the suspension of the works and claimed that Aniko had no contractual right to engage an alternative contractor to complete the remainder of Total’s works.  That conduct was alleged to be a repudiation which Total accepted.  For its part, Aniko says that it did not conclude any contractual arrangement with Tweed Coast Glass until 20 May 2019, although its material establishes that the negotiations with Tweed Coast Glass commenced from about 13 May 2019.[10]
  8. [10]
    On 13 June 2019 an adjudicator ruled in favour of Total’s February 2019 payment claim, allowing that claim to the extent of $341,894.  On 26 June 2019 the adjudicator decided to allow $175,587 in respect of the March 2019 payment claim.[11]
  9. [11]
    In July 2019 Aniko paid the amounts of those two adjudication decisions.
  10. [12]
    On 8 November 2019 Total issued a further payment claim which had three components:
  1. (a)
    supply and installation of windows/doors on Levels 13 and 14 of the building - $53,532 for Level 13 and US$16,000 for Level 14;
  2. (b)
    return of retention funds - $60,989;
  3. (c)
    loss and expenses associated with the removal of the work from the contract - $107,873.
  1. [13]
    Aniko’s response was to deliver a payment schedule on 29 November 2019 which proposed that Aniko pay ‘$0.00’ in respect of this November 2019 payment claim.
  2. [14]
    On 3 February 2020 Total brought an adjudication application in respect of the November 2019 payment claim and, on 26 February 2020, Aniko served its adjudication response.
  3. [15]
    The adjudicator, Mr C H Bond, delivered an adjudication on 15 March 2020.[12]  This time Total was unsuccessful.  Mr Bond decided that Aniko did not owe any sums under the November 2019 payment claim.  On 2 April 2020 Martin J heard an application by Total that Mr Bond’s decision was invalidated by jurisdictional errors.
  4. [16]
    On 10 May 2021 Martin J delivered his judgment and found that certain discrete parts of Mr Bond’s adjudication decision were affected by jurisdiction error.  His Honour remitted the proceeding back to Mr Bond.
  5. [17]
    On 27 June 2021 Mr Bond then revised his adjudication and decided, again, that no sum was due by Aniko to Total.
  6. [18]
    Yet again, Total asserts that Mr Bond’s decision in his revised adjudication decision is affected by jurisdictional error.  Five jurisdiction errors are alleged.  It is necessary to deal with each of those alleged jurisdictional errors and to then deal with a further question that was raised in argument concerning the court’s jurisdiction to remit.

PARAGRAPH 73 – FIRST JURISDICTIONAL ERROR?

The Principle

  1. [19]
    One of the mechanisms the Act uses to limit disputes is to prohibit an adjudicator from considering a reason for withholding payment which has not been included in the payment schedule.[13] As Muir JA explained in Heavy Plant Leasing Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd: ‘The  adjudicator  lacked  authority  to  decide  an adjudication application, where a payment schedule existed and was relied on by the respondent  to  the  application,  other  than  by  reference  to  that  payment  schedule.’[14]
  2. [20]
    Thus, Aniko was restricted to the defences or reasons for non-payment it had raised in the payment schedule, and the adjudicator was prohibited from considering any new defence or reason not raised in the payment schedule.  An adjudicator’s consideration of a reason or defence not raised in the payment schedule is a jurisdictional error.[15]
  3. [21]
    Total argues that, at paragraph 73 of his revised adjudication, the adjudicator has considered such a prohibited reason and has thereby considered a reason he was required to ignore.[16]

The Background

  1. [22]
    It is necessary to explain the background to this part of the dispute – which centres on Total’s suspension of its work on the project.
  2. [23]
    Total’s payment claim dated 8 November 2019 stated that on 8 May 2019 Total suspended its supply and installation of windows and doors in the apartment building.  That suspension was based on the non-payment of the prior payment claims dated 25 February and 25 March 2019 and the right to suspend works under s 98(3) of the Act.[17]
  3. [24]
    In its payment schedule, Aniko conceded that Total’s works were validly suspended by reason of the non-payment, or the late payment, of the two payment claims.
  4. [25]
    Having suspended its works on 8 May 2019, it appears that there were then no communications between Aniko and Total. Aniko, of course, had a choice. First, it could have paid Total’s claims, or otherwise secured Total’s claims on terms satisfactory to Total. Second, it could have pursued other means of having the Project’s glazing work completed. Aniko chose the latter. From about 13 May 2019 Aniko commenced discussions with an alternative supplier, Tweed Coast Glass.[18]  
  5. [26]
    At this point, as explained above, on 14 May 2019 Total’s Managing Director emailed Aniko saying: ‘I have heard that Aniko have engaged another company to continue or complete glazing works on the Project. Is this true?’ Aniko’s Acting General Manager replied immediately, but in a non-responsive way, saying: ‘The matter is now in the hands of our lawyers. George is overseas and I expect to speak with him in the next few days. After speaking with George and our Solicitor, I shall be willing to discuss the matter further.’[19] 
  6. [27]
    Thus, it can be seen that Aniko chose not to respond in a substantive way to Total’s allegation that Aniko was pursuing an alternative contractor for the balance of the glazing work.
  7. [28]
    It appears that there was then no further communication between Aniko and Total, although Aniko was proceeding with discussions with its alternative contractor, Tweed Coast Glass. In fact, on 14 May 2019 Aniko asked Tweed Coast Glass for the documentation to enable it to pay a $50,000 deposit to Tweed Coast Glass. Then, on 15 May 2019, Tweed Coast Glass provided a quotation to Aniko, and Aniko reciprocated with a purchase order.
  8. [29]
    On 16 May 2019, Total emailed Aniko saying that it had ‘confirmed’ that Aniko had unlawfully taken work included in Total’s contract and had engaged another contractor to perform and complete Total’s works.  That was said to have occurred ‘during the suspension of works protected by the Act.’[20]
  9. [30]
    Total’s case was that it had then written to Aniko asserting that Aniko’s conduct was a repudiation and electing to accept that repudiation.[21]
  10. [31]
    Paragraph 42 of Aniko’s adjudication response stated that ‘it wasn’t until 20 May 2019 that [Aniko] entered into a Contract with another entity.’  That reason/defence, Total submits, was not included in Aniko’s payment schedule which made no mention of when Aniko contracted with the other entity.
  11. [32]
    In his adjudication Mr Bond said this:
  1. 73.The respondent provides evidence in the forms of Statutory Declarations in the Adjudication Response from the respondent’s representatives: Scott McGuren, paragraph 5-8; Statutory Declaration of Bobbie Walker, paragraphs 4-7; and Statutory Declaration of Nathan Edward McGregor paragraphs 5-1; that state that the respondent did not enter into a Contract with another entity until 20th May 2019.
  2. 74.At paragraph 46 of the Adjudication Response the respondent states that there was no legal relationship between the respondent and the third party [i.e. Tweed Coast Glass] until 20 May 2019, that is capable of satisfying the “removal” of work in the context of section 98(3) of the Act.  The word ‘remove’ denotes a positive and successful act of the respondent.
  3. 75.The respondent’s position as of 16 May 2019, when the claimant purported to terminate the Contract and thus ending the suspension period, no works had been removed from the Contract by the respondent.
  4. 76.The claimant states in clause 205 of the adjudication application that they elected to terminate the subcontract.
  5. 77.They key evidence provided by the claimant in relation to the timing of the engagement of third parties is contained in the Andrew Morrison statement dated 3 February 2020.

[emphasis added]

The Arguments

  1. [33]
    Total complains that the reference to the evidence that the respondent did not enter into a contract with another entity until 20 May 2019 means that the adjudicator has considered a prohibited matter contrary to s 88(3) of the Act.
  2. [34]
    On the other hand, Aniko contends that:
    1. (a)
      the adjudicator has retained in the revised adjudication decision a bland recitation of what was provided to him by Aniko, but he did not ‘consider’ the reasons contained in that material in arriving at the conclusions stated at paragraphs [82] and [83];
    2. (b)
      the bare listing of material provided to the adjudicator does not of itself evidence ‘consideration’ of the reasons contained in that material;
    3. (c)
      the adjudicator does not discuss what he makes of the material, or whether one account is preferred over another;
    4. (d)
      merely stating that this evidence was before him is not relevantly ‘considering’ the issue;
    5. (e)
      nor does the adjudicator consider or compare Total’s case against Aniko, instead the adjudicator goes on to consider Total’s case on the point only;
    6. (f)
      there is no ‘consideration’ of the material in any meaningful sense of the word.
  3. [35]
    The conclusion that the adjudicator arrived at was that:

[82] I therefore do not consider that the claimant [Total] has provided any supporting evidence to demonstrate that the respondent [Aniko] has removed any works during the suspension period.  I consider that the onus of proof was with the claimant [Total] to provide sufficient evidence that works had been removed by the respondent [Aniko] during the suspension period. 

  1. [36]
    Before assessing whether the adjudicator did ‘consider’ the prohibited reason it is necessary to examine two matters in a little detail.  First, what is it that the legislation is targeting when it prohibits an adjudicator’s ‘consideration’ of a defence or reason not raised in the payment schedule?  Second, it is necessary to dissect the adjudicator’s process of reasoning to see if, in fact, the adjudicator has ‘considered’ a new defence or reason. 

What does ‘must not consider’ mean?

  1. [37]
    Section 88(3) of the Act requires that the adjudicator ‘not consider’ a reason included in an adjudication response which was not included in the payment schedule. Precisely when does an adjudicator ‘consider’ a defence or reason? On one side of the line will be situations where the adjudicator does not mention the ‘new defence’ at all, or where the adjudicator explicitly states that he or she declines to consider a ‘new defence’. On the other side of the line will be cases where the ‘new defence’ is expressly relied on by the adjudicator as one of the reasons for the adjudicator’s decision, or where the ‘new defence’ is relied on implicitly in arriving at the decision. 
  2. [38]
    As will be seen, this case occupies the grey area in between.
  3. [39]
    However, staying with the legislation for the moment, the evident intention is that the adjudicator exclude any ‘new defence’ from his consideration of the adjudication. The concept of an adjudicator ‘considering’ a new defence does not require the adjudicator to regard the new defence as decisive or even as a factor influencing the adjudicator’s ultimate decision. After all, the intention of the legislature is to exclude the adjudicator’s consideration of the topic. That serves the objective of the Act which is to establish an efficient procedure for the adjudication of disputed payment claims, and to do so by requiring that the adjudicator not consider ‘new defences’ that might be raised after the initial exchange of payment claim and payment schedule. In other words, the objective is to narrow the scope of the adjudicator’s focus to the defences in the payment schedule.
  4. [40]
    That said, an adjudicator does not ‘consider’ a new defence merely if it is noted incidentally, or in passing. The word ‘consider’ has an intellectual component to it requiring a contemplation of the new defence, or a positive ‘having regard to’ the new defence.[22]
  5. [41]
    Importantly on this topic, it is worth quoting the reasons of McDougall J in Laing O'Rourke Australia Construction v H&M Engineering & Construction Pty Ltd:

[38] As a matter of plain English, the obligation to ‘consider’ something requires that it be given attention, or looked at on its merits (see, for example, the Australian Oxford Dictionary, Second Edition, 2004). Thus, in Tickner v Chapman [1995] FCA 1726; (1995) 57 FCR 451, Black CJ, speaking of a statutory obligation on a minister of the Crown to consider representations made to him, said at 464 that ‘the consideration of a representation involves an active intellectual process directed at that representation’. In the same case, Burchett J said at 476 that the obligation required ‘the Minister… to apply his own mind to the issues raised by [the representations]’, which involved obtaining ‘an understanding of the facts and circumstances set out in them, and of the contentions they urged based on those facts and circumstances’. Kiefel J said at 495 that the obligation ‘requires that the Minister have regard to what is said in the representations, to bring his mind to bear upon the facts stated in them and the arguments or opinions put forward and to appreciate who is making them’.

[39] In my view, the obligation to consider various matters imposed by s 22(2) of the Act should be read in the same way: namely, as requiring an active process of intellectual engagement…[23] [emphasis added] 

Dissecting the adjudicator’s process of reasoning

  1. [42]
    The adjudicator set himself the task of deciding whether works were removed by Aniko during the suspension of the works. The components to the adjudicator’s reasons are as follows:[24]
    1. (a)
      Step 1: The adjudicator noted that Aniko had conceded that the works were validly suspended by reason of the non-payment of the two payment claims;
    2. (b)
      Step 2: The adjudicator also noted that, in its adjudication response,[25] Aniko had provided evidence in the form of statutory declarations from three witnesses to the effect that Aniko did not enter into a contract with Tweed Coast Glass until 20 May 2019;
    3. (c)
      Step 3: The adjudicator records Aniko’s submission that there was no legal relationship between Aniko and Tweed Coast Glass until 20 May 2019 that was capable of constituting the removal of the work from Total’s contract;
    4. (d)
      Step 4: To constitute a removal there needed to be a positive and successful act of Aniko;
    5. (e)
      Step 5: The adjudicator noted Aniko’s position that, as at 16 May 2019, when the contract was terminated by Total, no works had been removed from Total’s contract;
    6. (f)
      Step 6: The ‘key’ evidence provided by Total as to the timing of Tweed Coast Glass’ engagement is contained in Mr Morrison’s statement – evidence which the adjudicator sets out;
    7. (g)
      Step 7: The adjudicator refers to two emails which he says do not provide evidence that Aniko engaged Tweed Coast on 14 May 2019;
    8. (h)
      Step 8: The adjudicator refers to a letter from Tweed Coast Glass of 14 June  2019 which identifies items not completed (presumably by Total), the hours of work carried out by Tweed Coast Glass to that point, and the adjudicator notes that Tweed Coast Glass do not state that their work on the job commenced prior to 20 May 2019;
    9. (i)
      Step 9: The adjudicator therefore concluded that:
      1. Total had not provided supporting evidence to demonstrate that Aniko had removed any works during the suspension period;
      2. Total had the onus of proving that works had been removed by Aniko but Total had not discharged that onus by proving that works were removed in the suspension period;
      3. Total was therefore seeking to include losses that were incurred by reason of the alleged repudiation of the contract by Total rather than losses incurred as a result of the suspension of the works and work being removed from Total’s contract pursuant to s 98(3) of the Act.    
  2. [43]
    There is a conceptual difficulty with much of this. The initial factual question which the adjudicator considered was the correct one under the Act, namely, whether works were removed from Total’s contract by Aniko during the suspension of the works – thereby triggering the right to loss and expense under s 98(3) of the Act.[26] However, at the urging of Aniko, the adjudicator then proceeded to replace that question with a related, but different, question as to whether a contract was concluded between Aniko and Tweed Coast Glass after the termination on 16 May 2019.[27] And, the adjudicator also seems to have added another complication by considering precisely when Tweed Coast Glass started work.[28]
  3. [44]
    Conflating those issues obscured the issue of fact for resolution, namely whether Aniko removed works from the contract. Resolving that issue of fact may well have involved looking at what happened on the site. Did Aniko, for example, take steps to remove Total’s access to the site, and/or to give Tweed Coast Glass access to the site? Or it may have required looking at the status of Total. Having suspended its work, was Aniko taking steps to re-engage Total? Or was there ‘radio silence’ in the sense that Aniko was making no attempt to have Total complete its work? Also relevant, of course, was the engagement of Tweed Coast Glass. Had they been engaged and on what terms?[29] Had a price been agreed? Had they ordered glass for the project from suppliers, or started work, or started planning or engaging staff?  
  4. [45]
    And so, putting aside for the moment the requirement in s 88(3) of the Act that the adjudicator not consider a ‘new defence’, in considering the factual issue of whether Aniko ‘removed’ the balance of Total’s contract, it was relevant for the adjudicator to consider whether, and when, a formal contract was concluded between Aniko and Tweed Coast Glass. But Aniko and the adjudicator appear to have regarded the issues as conterminous. At the least, the steps in the adjudicator’s reasoning, set out above, show that the timing of the engagement of Tweed Coast Glass was the central plank in the adjudicator’s consideration of the broad issue of whether work was removed in the suspension period.
  5. [46]
    That rather ignores the possibility that the work could have been ‘removed’ from Total’s scope of work prior to the coming into existence of a formal, concluded contract between Aniko and Tweed Coast Glass. Indeed, Tweed Coast Glass may have been committed to the project well before a formal contract was concluded. It may have been many weeks or months before the contract with Tweed was formally agreed and executed.
  6. [47]
    Also ignored is the self-evident principle that a principal must permit the contractor to carry out the whole of the work, unless there is a power to omit work in the contract.[30]
  7. [48]
    It will be remembered that s 98(3) raises a factual question.  Has Aniko ‘removed’ any part of the work or supply from Total’s contract? Certainly, there is no suggestion that Aniko, by any express words, removed the balance of Total’s work under the contract. Thus, the question was whether, by its words or conduct, Aniko removed the balance of Total’s work. That was a factual issue that required an examination of all of the relevant circumstances.
  8. [49]
    Here, the circumstances were that Aniko had ceased to pay Total its payment claims, Total had suspended its work and had left the site, Aniko was not in communication with Total regarding payment or a return to site, and (it appears, unbeknownst to Total) Aniko was in the process of engaging a new contractor to carry out the balance of Total’s work. The adjudicator was required to make an assessment as to whether those facts constituted a ‘removal’ of work. That assessment has an analogy with the principles of repudiation and the underlying concept of readiness and willingness.[31]

Has the adjudicator considered the prohibited defence/reason?

  1. [50]
    Returning to the adjudicator’s reasoning, the crucial steps for present purposes are steps 2 and 3. In step 3, the adjudicator records Aniko’s submission that no legal relationship was formed between Aniko and Tweed Coast Glass until 20 May 2019 and that therefore there was no ‘removal’ of any work from Total’s contract until 20 May 2019. That submission by Aniko was based on the evidence listed  in step 2. The adjudicator then examined Total’s evidence on the point and concluded that Total had not adduced evidence to demonstrate that Aniko had removed any works during the suspension period.
  2. [51]
    That process of reasoning plainly does have regard to both the evidence and submissions of Aniko to the effect that there was no ‘removal’ of any work because the contract with Tweed Coast Glass was not concluded until 20 May 2019. It is not a passing reference or (as Aniko submits) a bland recitation of what was provided to the adjudicator by Aniko, or a bare listing of material. The adjudicator expressly has regard to the evidence and submissions of Aniko.
  3. [52]
    It may be true that the adjudicator regarded the lack of evidence from Total as ‘key’ or decisive. But that does not diminish the fact that the adjudicator had regard to the evidence and submissions of Aniko that there was no ‘removal’ by reason of the absence of a concluded contract.
  4. [53]
    Thus, to borrow the words used by McDougall J in the passage from Laing O'Rourke quoted above, the adjudicator has considered the ‘new defence’ in that he has given it attention, has had regard to it, and has applied an active intellectual process to the ‘new defence’.
  5. [54]
    It is worth noting the circumstances. In May 2021, Martin J found that certain discrete parts of Mr Bond’s first adjudication decision were affected by jurisdiction error because Mr Bond considered issues not raised in the payment schedule. His Honour remitted the proceeding back to the adjudicator. In that context it is surprising that the adjudicator did not confine his re-consideration to the issues raised by Aniko in the payment schedule. Certainly also, the adjudicator did not explicitly say that he declined to consider Aniko’s evidence and submissions that there was no ‘removal’ by reason of the absence of a concluded contract with Tweed Coast Glass prior to 16 May 2019.
  6. [55]
    Instead, the adjudicator proceeded to have regard to the evidence and submissions of Aniko to the effect that there was no ‘removal’ because of the absence of such a concluded contract, and to have regard to the ‘key’ evidence of Mr Morrison on the point. In those circumstances, if the adjudicator was intending to refer to Aniko’s  evidence and submissions only for the purpose of noting the context, then one would have expected him to say so.
  7. [56]
    It is true that the adjudicator did not weigh the Aniko evidence against the evidence of Mr Morrison for Total. But the absence of such a weighing exercise is not particularly persuasive in circumstances where the adjudicator viewed the evidence of Aniko as consistent with Total’s evidence. In fact, the adjudicator’s approach was to:
    1. (a)
      record Aniko’s submission and evidence to the effect that there was no ‘removal’ of any work because the contract with Tweed Coast Glass was not concluded until 20 May 2019; and
    2. (b)
      scrutinise Total’s evidence for evidence that Aniko had in fact engaged Tweed Coast Glass before 16 May 2019.
  8. [57]
    In other words, in his revised decision, the adjudicator decided that Aniko’s evidence supported the view that there was no ‘removal’ of any work because the contract with Tweed Coast Glass was not concluded until after the suspension period, and, even Total’s own evidence did not support the conclusion that Aniko concluded a contract with Tweed Coast Glass before 16 May 2019.
  9. [58]
    That approach appears to have been driven by the adjudicator’s stance that it was Total that bore the onus of proving that works had been removed by Aniko in the suspension period. The issue of the onus or burden of proof is discussed below.
  10. [59]
    Curiously, that approach of the adjudicator overlooks the reason why the adjudication had been remitted back to him. Two of the three jurisdiction errors found by Martin J involved the adjudicator considering ‘new defences’ not included in Aniko’s payment schedule. Rather than confining his re-consideration to the defences raised in the payment schedule, the adjudicator appears to have proceeded on the basis that he was entitled to assess the ‘removal’ issue with a focus on what it was that Total had proved in its evidence. 

What defences were raised in the payment schedule?

  1. [60]
    Aniko’s payment schedule raised a large number of defences to the claim for the loss and expenses incurred by reason of the removal of the remainder of Total’s works.[32] Aniko’s payment schedule included the following defences:[33]
    1. (a)
      Total’s claim did not fall within the ambit of s 98(3) of BIFA, as Total sought to include losses that resulted from an alleged repudiation of the construction contract, rather than a loss or expense incurred as a result of the removal of work from the contract during the suspension;
    2. (b)
      Total failed to identify the alleged construction work, or related goods or services, that were removed from the contract by Aniko during the suspension;
    3. (c)
      Aniko could not respond to the quantum claimed for loss and expense, as Total failed to attach the project budget documentation to their payment claim;
    4. (d)
      Total’s claims for items procured but not installed before the termination of the contract, demobilisation costs following the suspension of works, and costs and preliminaries during the suspension period were misguided for several reasons unrelated to the date on which the third party was engaged;[34] and
    5. (e)
      Total cannot claim damages as Total was not ready and willing to perform the works, due to the materials required for level 14 being withheld in China.
  2. [61]
    Thus, the payment schedule did not include Aniko’s defence (raised in Aniko’s adjudication response) that there was no concluded contract with Tweed Coast Glass within the suspension period.
  3. [62]
    That is not the end of the issue. As explained above, there is a conceptual difficulty in the way the questions were posed by Aniko and the adjudicator. The narrow question, of whether a contract was concluded with Tweed Coast Glass within the suspension period, appears to have been substituted for the broader question of whether works were removed from Total’s contract by Aniko during the suspension of the works.[35] Is that broader question comprehended by the defences in the payment schedule?
  4. [63]
    None of the five defences raised in the payment schedule (summarised above) directly raise that argument. The defence that comes closest is defence (b) above. The precise defence is that:

(Total) has not identified the construction work or related goods and services to which the progress claim relates in relation to the Loss and Expenses Claim, as it has not identified the alleged works (or any) that was removed from the Contract by (Aniko) during the suspension.

  1. [64]
    That is a little vague, but the focus of that defence appears to be a failure by Total to properly identify the actual work, goods or services said to have been removed. In other words, the substance of the complaint is to the effect of: ‘you have not identified what it is that was removed’. That complaint does not fairly and properly disclose to Total[36] the broader issue which they sought to argue in the adjudication response, namely, ‘there was no removal of work during the suspension period’. In short, a complaint that ‘you have not identified what was removed’ is different from a complaint that ‘there was no removal.’[37]
  2. [65]
    And so, the adjudicator has considered:
    1. (a)
      the narrow issue of whether a contract was concluded with Tweed Coast Glass within the suspension period; and
    2. (b)
      the broad issue of whether works were removed from Total’s contract by Aniko during the suspension of the works.
  3. [66]
    However, neither the narrow nor broad issue were fairly raised by Aniko in its payment schedule. It follows that, contrary to s 88(3) of the Act, the adjudicator considered a prohibited defence raised in the adjudication response.

Who had the onus?

  1. [67]
    It will be recalled that, in step 9 above, the adjudicator concluded Total had the onus of proving that works had been removed by Aniko but Total had not discharged that onus by proving that works were removed in the suspension period record that he declines to act on that evidence or submission.
  2. [68]
    Even though this is not a review of the merits of the adjudicator’s decision,[38] it is relevant to examine the adjudicator’s view of the onus and whether it has been discharged. That is because the adjudicator’s approach was to:
    1. (a)
      have regard to Aniko’s evidence and submission that no work was removed in the suspension period (because no contract with Tweed Coast Glass was concluded until 20 May 2019);
    2. (b)
      examine the ‘key’ evidence adduced by Total as to the timing of Tweed Coast Glass’ engagement;
    3. (c)
      conclude that Total’s evidence did not discharge Total’s onus of proving that Aniko had removed work.
  3. [69]
    Some observations can be made about the adjudicator’s view that Total had not discharged that onus. The first is that whilst it might be accepted that Total bore the legal and evidential burden, the burdens of persuasion became virtually irrelevant because both parties went into evidence on the issue.[39] Total, for its part, adduced evidence that it had suspended the work for non-payment, and then had discovered that Aniko had engaged another glass contractor, and then sent an email to Aniko asking if that was true but received no substantive response. Aniko, for its part, admitted negotiating with Tweed Coast Glass from 13 or 14 May 2019,[40] but denied any concluded contract until 20 May 2019.
  4. [70]
    The second is that, in discharging the burden, it was obvious that Total was not likely to be in a position to tender direct evidence as to when Aniko committed to Tweed Coast Glass and therefore removed the balance of the work from Total’s contract. That evidence was all within Aniko’s control.
  5. [71]
    The third observation, and the one that is important for present purposes, is that this examination as to whether Total had discharged the onus of proving that the work had been removed from Total’s scope by a concluded contract with Tweed Coast Glass ignores the requirements of s 88(3). Aniko had not raised that defence in its payment schedule. Aniko’s payment schedule raised a number of defences. The adjudicator was restricted to those. Wherever the onus lay, the adjudicator was prohibited from considering a new defence raised for the first time in the adjudication response.
  6. [72]
    It did not matter that the adjudicator was unconvinced by Total’s evidence on the issue. That issue was not raised in the payment schedule and therefore the adjudicator considered a prohibited matter.

Paragraph 83 of the Revised Adjudication Decision

  1. [73]
    Both parties made submissions about paragraph 83 of the adjudicator’s revised decision. There the adjudicator said:

[83] I therefore concur with the respondent in paragraph 14 of payment schedule that the claimant was seeking to include losses that result from an alleged repudiation of the Contract by the claimant rather than an alleged loss or expense incurred as a result of the suspension of the works and the respondent removing the work from the construction contract during that suspension. I consider that such a claim does not fall within the ambit of section 98(3) of BIFA.  

  1. [74]
    That paragraph is a conclusion based on the adjudicator’s earlier finding that the evidence did not establish removal of the balance of the work.[41] The conclusion here virtually repeats a significant part of paragraph 14 of the payment schedule.
  2. [75]
    However, the adjudicator’s conclusion in paragraph 83 is plainly based on the reasoning explained above. That reasoning includes consideration of a prohibited new defence. Thus, this conclusion is affected by jurisdiction error.

PARAGRAPHS 78 & 79 – SECOND & THIRD JURISDICTIONAL ERRORS?

The Arguments

  1. [76]
    Total’s second and third complaints about the adjudicator’s decision can be dealt with together.
  2. [77]
    In paragraphs 78 and 79 of his revised adjudication decision, the adjudicator said:

[78] At paragraph 21 of this statement Mr Morrison states that “on or about 10-11 May 2019 I learned that a different and other trade contractor had been invited to quote for the remaining work under the subcontract. On a date only specifically known to the Respondent and not revealed by the other trade contractor in its communication dated 14 June 2019…the Respondent accepted the other trade contractor’s price to complete the remaining work under the Claimant’s subcontract and immediately instructed the other trade contractor to commence performance. From the information I was able to obtain, I verily believe the Respondent accepted the quotation and instructed the other trade contractor (Tweed Coast Glass) to commence on or about 14 May 2019.” 

[79] In the same paragraph Mr Morrison states that “on 15 May 2019 I personally contacted the other trade contractor and confirmed that they had already attended the site and performed inspections, and provided quotations for completing the entirety of the works at the Project. On 16 May 2019, I received confirmation from Tweed Coast Glass that they had received a purchase order to perform the remaining work, and that the quotation they had provided had been accepted by the Respondent with the instruction to immediately proceed with the remaining works.” 

  1. [78]
    Thus, those paragraphs recite Mr Morrison’s evidence to the effect that Aniko engaged Tweed Coast Glass. Total compares those two paragraphs of the adjudicator’s revised decision with paragraph 82 of that decision where the adjudicator states: ‘I therefore do not consider that the claimant has provided any supporting evidence that the respondent has removed any works during the suspension period.’
  2. [79]
    Total argues that whilst the adjudicator has recited that evidence of Mr Morrison, the adjudicator then fails to have any regard to that evidence or to arrive at a conclusion by a process that considers the matters set out in s 88(2).[42] Therefore, it is argued that the adjudicator has failed to properly consider a relevant matter he was required to consider under s 88(2) and that is a jurisdictional error.[43]
  3. [80]
    On the other hand, Aniko argues that:

Reading the paragraph [i.e. paragraph 82] in context, the adjudicator considered the Applicants evidence and merely rejected the conclusion advanced in Mr Morrison’s evidence, having had regard to the supporting documents. The words “not providing any supporting evidence” follow a relatively fulsome discussion of the Applicant’s evidence said to address this point, convey that the adjudicator did not accept that the evidence provided proved what it was said to prove, as he was entitled to do.[44]

  1. [81]
    Aniko supports that last proposition, namely that the adjudicator was entitled to reject evidence, by referring to the following passage from the reasons of White JA in Northbuild Constructions Pty Ltd v Central Interior Linings Pty Ltd:

It is clear that the adjudicator considered Northbuild’s submissions about the value of the work but did not accept them.  He was entitled not to do so.  It was not a rejection on a whim; he gave a proper reason for doing so. His Honour was correct.[45]

  1. [82]
    The analogy with Northbuild is misplaced. In that case the adjudicator considered the submissions, rejected them, and gave reasons for doing so. Here, the adjudicator considers the evidence of Mr Morrison, at least in the sense that he sets out that evidence. But he does not then accept or reject that evidence, and he does not give reasons for doing so.

What was the adjudicator approach?

  1. [83]
    The adjudicator’s approach in this part of his revised adjudication decision can be summarised in this way:
    1. (a)
      The key evidence about the timing of the engagement of Tweed Coast Glass was Mr Morrison’s evidence;
    2. (b)
      Mr Morrison deposed to learning of Tweed Coast Glass[46] having been invited to quote, that quote having been accepted, and Tweed Coast Glass was immediately instructed to commence work, and Mr Morrison believes the instructions were to commence on 14 May 2019;
    3. (c)
      Mr Morrison deposed to contacting Tweed Coast Glass on 15 May 2019 and confirming they had already attended the site, and performed inspections, and provided a quotation;
    4. (d)
      Mr Morrison’s evidence was that on 16 May 2019 he received confirmation from Tweed Coast Glass that they had received a purchase order to complete the remaining glazing work and that their quotation had been accepted;
    5. (e)
      There was an exchange of emails on 14 May 2019 (set out above) where Total said: ‘I have heard that Aniko have engaged another company to continue or complete glazing works on the Project. Is this true?’ and Aniko replied saying: ‘The matter is now in the hands of our lawyers…’;
    6. (f)
      Those emails did not provide evidence that Aniko had engaged another company on 14 May 2019;
    7. (g)
      Similarly, Tweed Coast Glass’ letter to Aniko of 14 June 2019[47] sets out Tweed Coast Glass’ work but does not record that work commenced prior to 20 May 2019; and
    8. (h)
      Therefore, the adjudicator concluded, Total had not provided any supporting evidence to demonstrate that Aniko has removed any works during the suspension period. 
  2. [84]
    That is an odd conclusion. First, the ‘key’ evidence of Mr Morrison (i.e. paragraphs (b), (c) and (d) above) is set out in some detail, but that key evidence is neither accepted nor rejected. That is in contradistinction to the exchange of emails (i.e. paragraph (e) above), which the adjudicator expressly found did not provide evidence that Aniko had engaged another company on 14 May 2019.[48] It also contrasts with the letter of 14 June 2019 which the adjudicator found did not record that work commenced prior to 20 May 2019.
  3. [85]
    Second, the evidence of Mr Morrison (i.e. paragraphs (b), (c) and (d) above), if accepted, would be reasonably compelling evidence that Tweed Coast Glass had been engaged at least by 16 May 2019. In the circumstances, that conduct of engaging another contractor was conduct which was inconsistent with the continuation of Aniko’s contract with Total. It was at least some evidence that Aniko was not ready and willing to proceed with Total’s contract.
  4. [86]
    Third, there were grounds upon which the evidence of Mr Morrison, or at least parts of it, might have been rejected by the adjudicator. For example, some of the evidence lacks detail and is stated as Mr Morrison’s belief. But the adjudicator says nothing about the veracity of that evidence.
  5. [87]
    Fourth, there is, once again, a conceptual difficulty with much of this. The question which the adjudicator considered here was whether works were removed from Total’s contract by Aniko during the suspension of the works – thereby triggering the right to loss and expense under s 98(3) of the Act.  However, the adjudicator seems to have conflated or merged that question with a related, but different, question as to whether a contract was concluded between Aniko and Tweed Coast Glass after the termination on 16 May 2019. As explained above, the conclusion of a contract between Aniko and Tweed Coast Glass does not necessarily determine when the work was removed from Total’s contract. As explained above, many facts might be relevant to that issue.

Was there a failure to properly consider Mr Morrison’s evidence?

  1. [88]
    As Bond J explained in Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd:

Adjudicators under the Payment Act do not have to get the answer right, but if it is demonstrated that they have not gone about their task by carrying out the active process of intellectual engagement with the issues and the submissions before them that the Payment Act requires, then they will have fallen into jurisdictional error because they will not have done the very thing s 88(2) of the Payment Act required them to do.[49]

  1. [89]
    Further, the adjudicator is obliged to include the reasons for the decision.[50] Failure to meet this obligation amounts to a jurisdictional error by the adjudicator.[51]
  2. [90]
    Here, it is difficult to know what the adjudicator has done with the evidence of Mr Morrison. It is possible that Aniko are right in their submission that the adjudicator intended to reject Mr Morrison’s evidence. That is possible given his subsequent conclusion that Total had not ‘provided any supporting evidence to demonstrate that (Aniko) has removed any works during the suspension period’. But, if that is what was intended, the problem is that there are no reasons for rejecting that evidence.
  3. [91]
    Another possibility is that the adjudicator thought that merely reciting this part of the evidence of Mr Morrison spoke for itself, perhaps indicating that the evidence of Mr Morrison was not ‘supporting evidence’ that Aniko had removed any works during the suspension period. It is difficult to see how that could be so. Mr Morrison was not privy to the arrangements between Aniko and Tweed Coast Glass but he at least had some information, including information from Tweed Coast Glass, and he had directly asked Aniko for its response. In the circumstances, particularly where Aniko was speaking to another contractor, and was not seeking to re-engage Total, Aniko’s response that it was talking to its lawyers rather suggested that Total and Aniko were not likely to have a continuing relationship.
  4. [92]
    Of course, the adjudicator is not obliged to accept or reject every piece of evidence, and to give reasons for doing so. It is often difficult to discern the dividing line between a deficiency of reasons which demonstrates that the adjudicator has not discharged his or her task as contemplated by s 88, and that which does not go so far.[52]
  5. [93]
    Ordinarily, the adjudicator’s failure to state that he accepts or rejects evidence such as Mr Morrison’s evidence, and his failure to state reasons for accepting or rejecting that evidence, would not qualify as a jurisdictional error.[53] However, there are three reasons why that mistake assumes some importance.
  6. [94]
    First, the adjudicator’s approach to this part of his revised adjudication decision appears to be to acknowledge the evidence and submissions of Aniko on the ‘new defence’, and then to focus on the ‘key’ or decisive evidence of Mr Morrison to see whether it overcomes the onus of proof resting on Total. And so, the adjudicator himself regarded the lack of evidence from Total as ‘key’ or decisive. But the adjudicator has not explained whether that key evidence of Mr Morrison was accepted or rejected, or given reasons for his acceptance or rejection, or regarded that evidence as insufficient to discharge what he saw as the onus.
  7. [95]
    Second, that ‘key’ or decisive evidence apparently leads to the adjudicator’s conclusion that Total had not provided any supporting evidence to demonstrate that (Aniko) has removed any works during the suspension period. That conclusion that there was not ‘any’ supporting evidence flies in the face of the evidence of Mr Morrison, which the adjudicator quotes, which plainly supports the view that Tweed Coast Glass had been engaged. In particular, Mr Morrison says, in terms, that Aniko accepted the quotation and instructed the other trade contractor (Tweed Coast Glass) to commence on or about 14 May 2019.
  8. [96]
    And so, the basis for the adjudicator’s conclusion is something of a mystery. Particularly in circumstances where Total had not been paid its payment claims, it had validly suspended its work, and it had left site, and in the meantime Aniko was taking steps to engage a replacement glass contractor. The absence of a reasoned conclusion raises a concern about the process of intellectual engagement with the issues and the submissions. 
  9. [97]
    Third, the difficulties in understanding this part of the adjudicator’s reasoning appear to be part of the conceptual problems identified earlier. The adjudicator’s focus, no doubt influenced by Aniko’s submissions, was whether a contract was concluded between Aniko and Tweed Coast Glass after the termination on 16 May 2019. That focus obscured the real and broader factual question of whether works were removed from Total’s contract by Aniko during the suspension of the works – thereby triggering the right to loss and expense under s 98(3) of the Act.
  10. [98]
    It follows that the adjudicator’s active process of intellectual engagement with the issues has miscarried. He has acknowledged the evidence of Mr Morrison but his reasons do not disclose whether his intention was to accept that evidence, or (more likely) to reject that evidence, or explain the reasons for doing so. The basis for the conclusion is not explained.  And, the question being addressed by the adjudicator obscures the correct question under s 98(3) of the Act. And further, as explained, the consideration of this issue was a ‘new defence’ and therefore prohibited by s 88(2) of the Act.
  11. [99]
    For those reasons, in this respect, the adjudicator has fallen into jurisdictional error.

PARAGRAPH 81 – FOURTH JURISDICTIONAL ERROR?

The Issue

  1. [100]
    Paragraph 81 of the adjudicator’s revised decision states:

The letter identified as NM-1 from Tweed Coast Glass to (Aniko)…This letter identifies the items not completed on levels 3-12. It also confirms that 540.5 hours had been taken to complete items up to and including 12 June 2019 with an approx. 300 hours left to complete the work. Tweed Coast Glass do not state that work was commenced prior to 20 May 2019.

  1. [101]
    Total complains that the focus of that paragraph is the date the work was commenced, when the correct question which s 98(3) of the Act required the adjudicator to address was whether Total had incurred a loss or expense because Aniko had removed part of the work from the contract.
  2. [102]
    Aniko supports the adjudicator’s decision by pointing out that:
    1. (a)
      Section 98(3) only entitles Total to loss and expense if work is removed from a contract during the suspension;
    2. (b)
      In paragraph [71] of the revised adjudication decision the adjudicator set out the central question which was whether works were removed by Aniko during the suspension;
    3. (c)
      Paragraph [81] of the revised adjudication decision does observe that the Tweed Coast Glass letter omits any mention of work commencing prior to 20 May 2019.
    4. (d)
      The purpose of that letter, as expressed in the letter itself, was to identify the works that were completed by Tweed Coast Glass;
    5. (e)
      That letter was tendered by Total in the adjudication as evidence of work being removed during the suspension (i.e. prior to 16 May 2019) but the letter does not make any mention of when Tweed Coast Glass’ work was commenced;
    6. (f)
      Immediately after paragraph 81, the adjudicator says: ‘Therefore I do not consider that (Total) has provided any supporting evidence to demonstrate that (Aniko) has removed any works during the suspension period.’
    7. (g)
      It is clear that the adjudicator has addressed whether work was removed during the suspension as required by s 98(3) and not whether the work said to be removed commenced prior to 20 May 2019.
  3. [103]
    On its face, the letter of 14 June 2019 appears only to record the works that were completed by that point. The letter is not evidence as to when the work was commenced. However, the letter was certainly some evidence that, at some prior point, Aniko had secured a new contractor to perform the work comprehended by Total’s contract.    

The adjudicator’s decision

  1. [104]
    As explained above, there is something of conceptual difficulty in the way the adjudicator approached the issue raised by s 98(3). When one reads paragraphs 65 to 84 of the revised adjudication decision it is clear that, in deciding whether work was removed during the suspension period, the adjudicator’s primary focus has been whether Aniko’s contract with Tweed Coast Glass was concluded before 20 May 2019. The adjudicator had that primary focus because Aniko’s submission in its adjudication response, but not in its payment schedule, was that it was not until 20 May 2019 that Aniko entered into a contract with Tweed Coast Glass and, for that reason, no work was removed during the suspension period.[54]
  2. [105]
    There was also a secondary focus on when Tweed Coast Glass’ work commenced. Certainly, if the evidence was that Tweed Coast Glass had commenced work on site during the suspension period, that would have provided some compelling evidence that Aniko had removed that work from Total’s contract.[55]
  3. [106]
    Neither the primary focus (on when the contract was concluded) or the secondary focus (on when the work commenced) were apt to produce a proper examination of the real issue of whether Aniko removed the balance of the work from Total’s contract.  And, as it happens, neither the primary focus nor the secondary focus are matters raised by Aniko in its payment schedule. On that basis alone this part of the adjudicator’s reasoning is a jurisdictional error.
  4. [107]
    Even putting aside the problem that the adjudicator was required not to consider these ‘new defences’, it was necessary for the adjudicator to properly decide the issue of whether the works were in fact removed from Total rather than substituting in, or conflating that issue, with the question of when a formal contract was concluded with Tweed Coast Glass, or with the question of precisely when Tweed Coast Glass commenced work.
  5. [108]
    It seems clear that the adjudicator was considering the letter of 14 June 2019, and what it evidenced about the commencement of work, as part of his conceptual approach described above. And so, whilst a mistake about the letter would not ordinarily qualify as a jurisdictional error,[56] the issue about commencement of work was not an issue raised in the payment schedule and it is part of the approach described above.
  6. [109]
    The decision here turned upon the fact that the adjudicator’s process of reasoning lay outside the scope of what was intended by the statute.[57]
  7. [110]
    It follows that, in my view, in paragraph 81 of his decision the adjudicator has addressed a ‘new defence’ contrary to s 88(3) of the Act and has addressed the wrong question, or has failed to properly consider the correct question.

ABSENCE OF GOOD FAITH

  1. [111]
    Subsequent to the hearing of the application, the parties advised my associate by email that Total withdrew its allegations concerning this issue. Therefore, it is not necessary for me to embark upon that issue.                 

JURISDICTION TO REMIT MATTER TO ADJUDICATION

Submission of the First Respondent

  1. [112]
    During oral submissions a further issue arose concerning how the court should dispose of applications, like the present, when a finding has been made that the adjudicator has ventured beyond his or her jurisdiction.
  2. [113]
    In the earlier episode of this case,[58] Martin J made a finding that certain aspects of the adjudication decision were beyond jurisdiction and remitted the adjudication application to the adjudicator, to be decided according to law.  Aniko submit that Martin J’s decision is not the ‘typical course’ and that the court has no power to remit the proceeding back to the adjudicator.
  3. [114]
    Aniko relies on s 101(4) of the Act which reads:
  1. (4)
    If, in any proceedings before a court in relation to any matter arising under a construction contract, the court finds that only a part of an adjudicator’s decision under this chapter is affected by jurisdictional error, the court may –
  1. (a)
    identify the part affected by the error; and
  2. (b)
    allow the part of the decision not affect by the error to remain binding on the parties to the proceeding.
  1. [115]
    That subsection does not assist Aniko’s argument. It merely facilitates the continuing effect of parts of an adjudication decision not affected by a jurisdictional error.
  2. [116]
    In any event, it is difficult to reconcile Aniko’s submission with Maxstra Constructions Pty Ltd v Joseph Gilbert.[59]  There, admittedly in an obiter comment, Vickery J said that remitting a matter to an adjudicator was ‘the usual form of relief when certiorari is granted.’[60] Similarly, in SSC Plenty Road Pty Ltd v Construction Engineering (Aust) Pty Ltd[61] the same judge found, in relation to comparative Victorian legislation,[62] that the court has a discretionary power to determine whether a matter should be remitted back to the adjudicator or to a different adjudicator.
  3. [117]
    Similarly, Muir JA assumed that the court was entitled to remit a proceeding to another adjudicator in Intero Hospitality Projects Pty Ltd v Empire Interior (Australia) Pty Ltd.[63]
  4. [118]
    The court has, in my view, an inherent and discretionary power to remit the proceeding back to the adjudicator.  However, I propose not to exercise that power here.
  5. [119]
    In deciding how to dispose of a proceeding like this, a variety of factors are relevant to the discretion. Where the error is a confined, identified error ‘it is appropriate to identify the error and then remit the matter to be dealt with in a way that corrects that specific error’.[64]  However, where the adjudication determination is quashed on the basis that the adjudicator lacked jurisdiction to deal with the matter, then the matter should not be remitted back to adjudication.[65]
  6. [120]
    Here, it seems to me that there is little utility in remitting the proceeding to the adjudicator for a third time. Neither party argued that that was the appropriate order. And, importantly, an adjudicator’s ‘decision as to monies to be paid is not final, but a decision on account.’[66] Thus, the costs, expenditure and delay incurred already has been incurred in relation to what are, in reality, provisional findings. The parties may wish to take steps to resolve their disputes in a more final way.
  7. [121]
    It is therefore appropriate to make orders declaring the relevant parts of the revised adjudication decision to be void. The paragraphs of the revised adjudication decision affected are paragraphs 73 to 84 and 85(c).
  8. [122]
    I will hear the parties on costs.

Footnotes

[1]  Section 3(1) of the Act.

[2]  Section 3(2) of the Act. In the Second Reading speech for the predecessor Act (Building and Construction Industry Payments Act 2004) the Minister explained: ‘The important benefits of the rapid adjudication process are that it allows for a prompt interim decision on disputed payments, encourages communication between the parties about disputed matters and provides parties with a much faster and cheaper alternative to resolve the dispute without entering the court system. The adjudication process also allows unpaid parties to suspend work or the supply of goods until payment of the adjudicated amount is received.’

[3]  That was the view taken by Muir JA in relation to the Act’s predecessor: Intero Hospitality Projects Pty Ltd v Empire Interior (Australia) Pty Ltd [2008] QCA 83 at [54]. The view applies equally to the present Act.

[4]  The decisions of an adjudicator under the Act are provisional. That is the effect of s 101 of the Act which preserves the parties’ rights under their contract and provides that a court or tribunal must take into account any amounts paid under chapter 3 of the Act. See also Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd [2021] QSC 30 at [23] (Dalton J).

[5]  Adjudication Application (page 34 to the Affidavit of Mr Morrison).

[6]  Ibid at [6].

[7]  In fact, this payment claim was issued on 25 April 2019 and served on 26 April 2019 claiming $173,587.  But that claim was withdrawn and replaced with a claim on 30 April 2019 for $182,983.

[8]  Sections 78 and 98 of the Act give a right to suspend.  I have not considered whether there is a separate right to suspend under the contract.

[9]  Mr Morrison’s affidavit at page 106.

[10]  See Mr McGregor’s statement (at page 139 of the Morrison affidavit).

[11]   An amount appears to have been paid in the meantime.

[12]  Mr Bond is the second respondent but took no part in the proceeding.

[13]  See s 82(4) which prevents the respondent from raising any ‘new reasons’ in its adjudication response.  And see also s 88(3) which provides that the adjudicator must not consider a reason that is prohibited from being included in the adjudication response by s 82. The scheme of this part of the Act was explained by Bond J in Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410 at [15]. See also s 69(c) of the Act which requires a respondent to include its reasons for withholding payment in its payment schedule.

[14]  [2013] QCA 386 at [59]. That was a case decided on the basis of the previous version of the Act: the Building and Construction Industry Payments Act 2004 (Qld).

[15] Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410 at [36].

[16]  Total’s written submissions at [10]-[11].

[17]  There is no common law right to suspend works for non-payment, unless the express terms of the contract entitle the contractor to do so: Powell-Smith & Sims, ‘Determination and Suspension of Construction Contracts’, at 170. The Act, of course, provides a statutory basis for suspension.

[18]  The evidence about the conversations is a little vague. Mr McGuren, the General Manager of Tweed Coast Glass says there were discussions on 14 May 2019. Mr McGregor, an employee of the Aniko Group says that there were discussions between 13 and 19 May 2019. See pages 139 and 182 of the exhibits to Mr Morrison’s affidavit.

[19]  Mr Morrison’s affidavit at page 106.

[20]  Payment Claim at [4] (page 2 to the Affidavit of Mr Morrison).  The reference to ‘protected by the Act’ presumably refers to the protection afforded to the claimant under s 98(4) which provides that the claimant is not liable for any loss or damage suffered by the respondent by reason of the suspension of work.

[21]  Payment Claim at [5] (page 2 to the Affidavit of Mr Morrison).

[22]  See Macquarie Concise Dictionary 3rd ed at 237. See also Kiefel J’s discussion of the intellectual process required by legislation that required that a Minister ‘consider’ a report in Tickner v Chapman (1995) 57 FCR 451 at 495G.

[23]  [2010] NSWSC 818 at [38], [39].

[24]  By explaining the adjudicator’s reasons in terms of steps, I am not suggesting that the steps in the adjudicator’s reasons are sequential in the sense that each step leads to the next. The intention is merely to identify the various components of the reasoning.

[25]  The material in the adjudication response was a ‘new defence’ because the same issue had not been raised in the payment schedule.

[26]  This initial question appears to be a part of steps 4, 5 & 9.

[27]  See steps 2, 3, 6 & 7.

[28]  See step 8.

[29]  It is possible that Aniko, for example, could have dealt with Tweed Coast Glass on the basis that: ‘we are presently in dispute with Total; if our contract with Total falls over, then would you take over Total’s work, and on what terms?’ But there is no evidence to that effect.

[30] Hudson’s Building and Engineering Contracts, 14th ed at [3-103].

[31]  Carter, Peden & Tolhurst, Contract Law in Australia, 5th ed at [30-28].

[32]  The payment schedule is at pages 18-30 of the exhibits to Mr Morrison’s affidavit; see, in particular, the defences raised at [14]-[19] of the payment schedule.

[33]  Payment schedule [14]-[20]; Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd [2021] QSC 92 at [25].

[34]  Ibid [25](d).

[35]  The conflation of the two questions also appears in Aniko’s adjudication response: ‘The right to claim loss and damages relates to work taken out of the Claimant’s hands. No work was taken out of the Claimant’s hands, because the Claimant purported to terminate on 16 May 2019 and the Respondent did not enter into a binding contract with another party until 20 May 2019’ (at page 119 of Mr Morrison’s affidavit).

[36]  The test appears to be whether the defence raised in the payment schedule fairly alerts the claimant to the defences it has to meet. That was the approach of Martin J in Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd [2021] QSC 92 at [31] where His Honour spoke of whether the defence in the payment schedule was sufficient to alert the claimant to the scope of the dispute.

[37]  In fact, it is conceivable that a party in Aniko’s position might concede that there was removal of work but still assert that the work removed is not identified or properly identified.

[38]  As Bond J pointed out in Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410 at [22], [23] the Building Industry Fairness (Security of Payment) Act 2017 (Qld) does not contain any provision for appeal from an adjudicator’s decision, or any other mechanism by which the adjudicator’s decision may be reviewed for error and an adjudicator’s decision is not reviewable under the Judicial Review Act 1991 (Qld). However, an adjudicator’s decision may be reviewed for jurisdictional error by the adjudicator in the performance of the adjudication function and that a State Supreme Court persuaded of the existence of such error might grant declaratory or injunctive relief based on the invalidity of the decision. See also Acciona at [35].

[39]  See the discussion in Heydon, Cross on Evidence, Australian (loose-leaf edition) at [7010]: ‘Burdens of persuasion affect the outcomes only of cases in which the trier of fact thinks the plaintiff’s and the defendant’s positions equally probable. Burdens of persuasion are, in other words, tie-breakers. If the trier of fact, having heard all the evidence, comes to a definite conclusion, there is no occasion to invoke a burden of persuasion.’ See also McDougall J’s discussion of the role of onus in a similar context in Illawarra Retirement Trust v Denham Constructions Pty Ltd [2015] NSWSC 1173 at [75]. 

[40]  See the discussion above. There is a quotation from Aniko purchase order addressed to Tweed Coast Glass dated 15 May 2019 which is signed as ‘approved’ by Aniko on 20 May 2019. See the statement of Mr McGregor at [6] (at page 139 of Mr Morrison’s affidavit). 

[41]  No findings of the adjudicator establish that Total was seeking losses arising from the repudiation. However, it seems to be assumed that the losses being sought can be characterised as either losses arising from the repudiation or as arising from the removal or works under s 98(3) of the Act.

[42] Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410 at [35].

[43]  Section 88(2) of the Act provides that: ‘In deciding an adjudication application, the adjudicator is to consider the following matters only…(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.’

[44]  Outline of the first respondent at [15].

[45]  [2012] 1 Qd R 525 at [113].

[46]  The actual expression used is ‘the other trade contractor’ but for simplicity I have simplified that to ‘Tweed Coast Glass’. There was no other trade contractor and so it can safely be assumed the references are to Tweed Coast Glass.

[47]  By mistake, the letter was dated 14 June 2018.

[48]  The adjudicator’s view of the non-responsive email from Aniko on 14 May 2019 is rather surprising. If, in truth, Tweed Coast Glass had not been engaged, it would have been an easy thing for Aniko to say so. Especially in circumstances where there was an existing contract with Total. Of course, the adjudicator’s approach here is to focus on the narrow issue of when the contract was concluded.     

[49]  [2020] 4 Qd R 410 at [35].  His Honour refers to and relies on Laing O'Rourke Australia Construction Pty Ltd v H&M Engineering & Construction Pty Ltd [2010] NSWSC 818, [34]–[39] (McDougall J), followed by P Lyons J in QCLNG Pipeline Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2011] QSC 292 [110]–[123].

[50]  Section 88(5)(b) of the Act.

[51] Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410 at [37]; Sierra Property Qld Pty Ltd v National Construction Management Pty Ltd [2016] QSC 108 at [56]–[67] (Jackson J); Annie Street JV Pty Ltd v MCC Pty Ltd [2016] QSC 268 at [23] (Flanagan J).

[52] Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410 at [40]; Annie Street JV Pty Ltd v MCC Pty Ltd [2016] QSC 268 at [29] (Flanagan J).

[53]  Adjudicators are not required to get each answer right. See Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410 at [35]; Laing O'Rourke Australia Construction v H&M Engineering & Construction [2010] NSWSC 818 at [39]; John Holland Pty Ltd v TAC Pacific Pty Ltd [2010] 1 Qd R 302 at [66].

[54]  See, for example, paragraph 42 of Aniko’s adjudication response (page 126 of Mr Morrison’s exhibits).

[55]  It is not in dispute that Tweed Coast Glass were retained to complete the balance of the work the subject of Total’s contract. The dispute was when that occurred.

[56]  Adjudicators are not required to get each answer right. The court will not interfere where an incorrect view is taken of a piece of evidence. The adjudicator is required to undertake their task by applying an active process of intellectual engagement with the issues and the submissions as s 88(2) of the Act requires. See Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410 at [35]; Laing O'Rourke Australia Construction v H&M Engineering & Construction [2010] NSWSC 818 at [39]; John Holland Pty Ltd v TAC Pacific Pty Ltd [2010] 1 Qd R 302 at [66].

[57]  See QCLNG Pipeline Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2011] QSC 292 at [114].

[58] Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd [2021] QSC 92.

[59]  [2013] VSC 243.

[60]  Ibid at [72].

[61]  [2015] VSC 680.

[62] Building and Construction Security of Payment Act 2002 (Vic).

[63]  [2008] QCA 83 at [54].

[64] INPEX Operations Australia Pty Ltd & Anor v JKC Australia LNG Pty Ltd & Anor (No 2) [2017] NTSC 61 at [14].

[65] Richard Crookes Construction Pty Ltd v CES Projects (Aust) Pty Ltd [2016] NSWSC 1229 at [73].

[66] Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd [2021] QSC 30 at [23].

Close

Editorial Notes

  • Published Case Name:

    Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No. 2)

  • Shortened Case Name:

    Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No. 2)

  • MNC:

    [2021] QSC 231

  • Court:

    QSC

  • Judge(s):

    Freeburn J

  • Date:

    10 Sep 2021

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] 4 Qd R 410
10 citations
Jump To
Cite 1 - [2020] 4 Qd R 410
Cite 2 - [2020] 4 Qd R 410
Cite 3 - [2020] 4 Qd R 410
Cite 4 - [2020] 4 Qd R 410
Cite 5 - [2020] 4 Qd R 410
Cite 6 - [2020] 4 Qd R 410
Cite 7 - [2020] 4 Qd R 410
Cite 8 - [2020] 4 Qd R 410
Cite 9 - [2020] 4 Qd R 410
Cite 10 - [2020] 4 Qd R 410
Annie Street JV Pty Ltd v MCC Pty Ltd [2016] QSC 268
3 citations
Jump To
Cite 1 - [2016] QSC 268
Cite 2 - [2016] QSC 268
Cite 3 - [2016] QSC 268
Heavy Plant Leasing Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2013] QCA 386
2 citations
Jump To
Cite 1 - [2013] QCA 386
Cite 2 - [2013] QCA 386
Illawarra Retirement Trust v Denham Constructions Pty Ltd [2015] NSWSC 1173
2 citations
Jump To
Cite 1 - [2015] NSWSC 1173
Cite 2 - [2015] NSWSC 1173
INPEX Operations Australia Pty Ltd & Anor v JKC Australia LNG Pty Ltd & Anor (No 2) [2017] NTSC 61
1 citation
Jump To
Cite 1 - [2017] NTSC 61
Intero Hospitality Projects Pty Ltd v Empire Interior (Australia) Pty Ltd [2008] QCA 83
3 citations
Jump To
Cite 1 - [2008] QCA 83
Cite 2 - [2008] QCA 83
Cite 3 - [2008] QCA 83
John Holland Pty Ltd v TAC Pacific Pty Ltd[2010] 1 Qd R 302; [2009] QSC 205
3 citations
Jump To
Cite 1 - [2010] 1 Qd R 302
Cite 2 - [2010] 1 Qd R 302
Cite 3 - [2010] 1 Qd R 302
Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd [2021] QSC 30
3 citations
Jump To
Cite 1 - [2021] QSC 30
Cite 2 - [2021] QSC 30
Cite 3 - [2021] QSC 30
Laing O'Rourke Australia Construction Pty Ltd v H&M Engineering & Construction Pty Ltd [2010] NSWSC 818
5 citations
Jump To
Cite 1 - [2010] NSWSC 818
Cite 2 - [2010] NSWSC 818
Cite 3 - [2010] NSWSC 818
Cite 4 - [2010] NSWSC 818
Cite 5 - [2010] NSWSC 818
Maxstra Constructions Pty Ltd v Joseph Gilbert [2013] VSC 243
3 citations
Jump To
Cite 1 - [2013] VSC 243
Cite 2 - [2013] VSC 243
Cite 3 - [2013] VSC 243
Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd[2012] 1 Qd R 525; [2011] QCA 22
1 citation
Jump To
Cite 1 - [2012] 1 Qd R 525
QCLNG Pipeline Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2011] QSC 292
3 citations
Jump To
Cite 1 - [2011] QSC 292
Cite 2 - [2011] QSC 292
Cite 3 - [2011] QSC 292
Richard Crookes Construction Pty Ltd v CES Projects (Aust) Pty Ltd [2016] NSWSC 1229
2 citations
Jump To
Cite 1 - [2016] NSWSC 1229
Cite 2 - [2016] NSWSC 1229
Sierra Property Qld Pty Ltd v National Construction Management Pty Ltd [2016] QSC 108
1 citation
Jump To
Cite 1 - [2016] QSC 108
SSC Plenty Road v Construction Engineering (Aust) (No 2) [2015] VSC 680
1 citation
Jump To
Cite 1 - [2015] VSC 680
Tickner v Chapman (1995) 57 FCR 451
2 citations
Jump To
Cite 1 - (1995) 57 FCR 451
Cite 2 - (1995) 57 FCR 451
Tickner v Chapman [1995] FCA 1726
1 citation
Jump To
Cite 1 - [1995] FCA 1726
Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd [2021] QSC 92
4 citations
Jump To
Cite 1 - [2021] QSC 92
Cite 2 - [2021] QSC 92
Cite 3 - [2021] QSC 92
Cite 4 - [2021] QSC 92

Cases Citing

Case NameFull CitationFrequency
Insite Construction Services Pty Ltd v Daniels Civil Pty Ltd [2023] QSC 33 2 citations
Paladin Projects Pty Ltd v Visie Three Pty Ltd [2024] QSC 230 1 citation
Procon Developments (Australia) Pty Ltd v Hi-Cal Bricklaying [2025] QSC 67 2 citations
Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 3) [2021] QSC 2383 citations
1

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