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Chevron Park Pty Ltd v Groupline Constructions Pty Ltd[2024] QSC 202

Chevron Park Pty Ltd v Groupline Constructions Pty Ltd[2024] QSC 202

SUPREME COURT OF QUEENSLAND

CITATION:

Chevron Park Pty Ltd v Groupline Constructions Pty Ltd & Ors [2024] QSC 202

PARTIES:

CHEVRON PARK PTY LTD

(ACN 650 297 126)

(applicant)

v

GROUPLINE CONSTRUCTIONS PTY LTD

(ACN 168 247 621)

(first respondent)

and

JOHN LANGTON

(second respondent)

and

THE ADJUDICATION REGISTRAR (QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION)

(third respondent)

FILE NO/S:

BS 7830/24

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

18 September 2024

DELIVERED AT:

Brisbane

HEARING DATE:

7 August 2024

JUDGE:

Treston J

ORDER:

  1. The application is dismissed.
  2. The applicant is to pay the first respondent’s costs of the application on the standard basis.
  3. The second and third respondents are granted liberty to apply on three days’ notice should they seek an order as to costs.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where the applicant, as principal, entered into a contractual relationship with the first respondent in relation to the construction of a residential building – where the first respondent served a payment claim on the applicant – where the  first respondent delivered to the applicant a payment schedule containing a lower net certified amount – where the dispute was thereafter adjudicated – where, prior to the adjudication, the applicant made payments that it contended were in respect of the payment claim – whether the proper construction of the phrase “to be paid” in s 88 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) requires the adjudicator  to reconcile the amount claimed against the amounts known to have been paid in respect of the amount claimed

ADMINISTRATIVE LAW – JUDICIAL REVIEW – where the applicant contended that the adjudicator failed to afford procedural fairness by not seeking submissions on what he found to be a jurisdictional point, not seeking submissions on what he regarded as new reasons, and failing to decide the correct amount to be paid and in doing so failed to provide adequate reasons – whether the adjudication decision should be set aside on the basis that the adjudicator failed to afford procedural fairness

Building Industry Fairness (Security of Payment) Act 2017 (Qld) s 3, s 65, s 66, s 67, s 68, s 69, s 70, s 73, s 76, s 77,      s 79, s 82, s 83, s 88

Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd (2020) QR 410, cited

BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd (2022) 108 NSWLR 350, cited

Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393, cited

Demex Pty Ltd v McNab Building Services Pty Ltd [2023] NSWCA 261, cited

John Holland Pty Ltd v TAC Pacific Pty Ltd [2009] QSC 205

Lendlease Building Pty Ltd v BCF Airport Systems Pty Ltd & Ors [2024] QSC 164, cited

Livingstone Shire Council v EarthTEC Pty Ltd & Ors [2018] QSC 271, cited

Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd [2023] QSC 218, cited

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd & Anor (2018) 264 CLR 1, cited

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, cited

Re: Association of Architects of Australia; Ex parte Municipal Officers Association of Australia (1989) 63 ALJR 298, cited

Syntech Resources Pty Ltd v Peter Campbell Earthmoving (Aust) Pty Ltd & Ors [2011] QSC 293, cited

SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152, cited

Taylor v Public Service Board (NSW) (1976) 137 CLR 208, cited

COUNSEL:

SB Whitten for the applicant

JP Hastie for the first respondent

SOLICITORS:

CDI Lawyers for the applicant

Shand Taylor for the first respondent

Introduction

  1. [1]
    This is a proceeding brought by Chevron Park Pty Ltd (Chevron), in which Chevron seeks a declaration that an adjudication decision issued on 6 June 2024 in the amount of $1,420,090.24 (inclusive of GST) be declared void in whole or in part. 
  2. [2]
    On 23 December 2021, Chevron as principal, entered into a contractual relationship with the first respondent, Groupline Constructions Pty Ltd (Groupline) in relation to the construction of a residential building known as the Greenwich Project (the contract). Work has been carried out under the contract since that time.
  3. [3]
    On 16 January 2024, Groupline served a payment claim No. 19 (PC19) on Chevron in the sum of $2,947,990.33 (including GST).  The details of PC19 were as follows:

Chevron Park Pty Ltd v Groupline Constructions Pty Ltd [2024] QSC 202

  1. [4]
    It subsequently became clear that there was some miscalculation in that claim (the detail of which is not relevant for present purposes), and the true value of the claim was $2,462,119.03 including GST.[1]
  2. [5]
    On 31 January 2024, Chevron delivered a payment schedule No. 19 (PS19) to Groupline of the net certified amount of $919,007.91 including GST:

Chevron Park Pty Ltd v Groupline Constructions Pty Ltd [2024] QSC 202

  1. [6]
    The agreed reference date was 28 December 2023.
  2. [7]
    The parties agreed, and the adjudicator determined, that in accordance with s 88(1)(b) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the Payment Act), the due date for payment (of any amount properly due) was 7 February 2024.
  3. [8]
    On 6 March 2024, Groupline applied for adjudication of PC19 pursuant to s 79 of the Payment Act in relation to PC19. 
  4. [9]
    On 12 March 2024, the adjudicator accepted the appointment as adjudicator pursuant to s 81(1) of the Payment Act.
  5. [10]
    On 6 June 2024,[2] the adjudicator made his decision, and the adjudicated amount was $1,420,090.24 (including GST) (the Adjudication Decision), calculated as follows:

Chevron Park Pty Ltd v Groupline Constructions Pty Ltd [2024] QSC 202

…

Chevron Park Pty Ltd v Groupline Constructions Pty Ltd [2024] QSC 202

  1. [11]
    The adjudicator therefore adopted the correct amount claimed by Groupline as set out at [4] above, $2,462,119.03 including GST, and Chevron’s net certified amount of $919,007.91 including GST set out at [5] above.
  2. [12]
    There is, in substance, only one complaint made by Chevron about the adjudication. It is confined to the question of the necessity for the Adjudicator to take into account part payments that Chevron has made during the contract.
  3. [13]
    The first part of the complaint is that before the adjudication application was made, Chevron had made payments which it contends were in reduction of the amount claimed PC19 the subject of the Adjudication Decision.  Specifically, Chevron contends that:
    1. as at 28 December 2023, it had paid $11,063,539.41 excluding GST (or $12,169,893.35 including GST); and
    2. a further $58,256.91 excluding GST (or $64,082.60 including GST) which was paid on 10 January 2024.
  4. [14]
    Groupline agrees that those payments were made on the dates set out above.  It classifies those payments as the “Past Payments”.  In doing so, Groupline seeks to identify that those payments were all ones preceding the date of PC19 given on 16 January 2024.
  5. [15]
    Chevron contends that the adjudicator has failed to take these payments into account “at all”.
  6. [16]
    The second part of Chevron’s complaint relates to the fact that post-dating PC19 (16 January 2024) and PS19 (31 January 2024), further payments were made by Chevron, being:
    1. $716,759.70 (excluding GST) which Chevron asserts, and Groupline accepts, was:
      1. the amount which Chevron certified as being payable to Groupline in PS19; and
      2. in fact, paid on 8 February 2024.
    2. $10,896.62, $28,662.15 and $8,250 (all excluding GST) in respect of certain variations which were paid on 15 February 2024.
  7. [17]
    Groupline refers to these as the “Subsequent Payments”. In doing so, Groupline seeks to identify that those payments were all ones post-dating PC19 (16 January 2024) and PS19 (31 January 2024).
  8. [18]
    There is a dispute as to whether the amounts in [16](b) above were in fact in respect of PC19 or PC20,[3] but for the purpose of these proceedings only, I will proceed (without deciding) on the basis that the payments were in respect of PC19.  For reasons which will become apparent, it does not change the outcome.
  9. [19]
    I have adopted the terminology of the Past Payments and Subsequent Payments in respect of the amounts and dates referred to above.
  10. [20]
    The primary issue is that Chevron contends that the adjudicator was obliged to take the Past Payments and the Subsequent Payments into account when making the Adjudication Decision because it submits that the adjudicator’s role:
    1. involved a determination of how much of the amount claimed is remaining to be paid at the date of the decision; and
    2. is to determine the balance “to be paid” after reconciling the accounts and deducting the payments already made.
  11. [21]
    Although the originating application seeks an order that the Adjudication Decision is affected by jurisdictional error and is void, the written and oral submissions pressed that it was “void to the extent of the amount in excess of the proper adjudicated amount”. Chevron contends that “proper calculation of the adjudicated amount” is $314,301.84.[4]
  12. [22]
    The approach arises out of Chevron’s construction of the words “to be paid” in section 88(1)(a) of the Payment Act, which I return to below. 
  13. [23]
    Chevron identifies that there are three reasons to set aside the Adjudication Decision:
    1. first, that the adjudicator failed to consider submissions that were properly made regarding payments that were made both before and after PC19 had been provided (the consideration ground);
    2. second, that the adjudicator failed to afford procedural fairness by:
      1. not seeking submissions on what he found to be a jurisdictional point;
      2. not seeking submissions on what he regarded as new reasons; and
      3. failing to decide the correct amount to be paid and in doing so failed to provide adequate reasons;

(together, the natural justice ground); and

  1. third, that the adjudicator failed to provide adequate reasons (the reasons ground) which overlaps with 23(b)(iii) above.
  1. [24]
    In accordance with the usual practice, the second and third respondents took no part in the proceeding and will abide the order of the court.

Summary of appeal

  1. [25]
    Unlike many such proceedings, no part of the appeal is in relation to the works performed. The only issue in the appeal is whether the adjudicator ought to have taken into account the Past Payments and the Subsequent Payments that Chevron alleges it has paid in reduction of PC19. 
  2. [26]
    In summary form, what is in issue is the proper construction of s 88 of the Payment Act.  This question involves the consideration of not just the matters which the adjudicator is to consider (s 88(2)) or not consider (s 88(3)), but more specifically, how the adjudicator ought to decide the amount of the progress payment, if any, to be paid in order to reach a decision regarding “the adjudicated amount” within the meaning of s 88(1)(a).
  3. [27]
    Chevron submits that in deciding the adjudicated amount, it is “axiomatic that there must be a reconciliation of the amount claimed against amounts known to be paid in respect of the amount claimed”.  If it were otherwise, Chevron submits, it would lead to “absurd results” where an adjudication certificate could be issued for a “grossly incorrect amount” ultimately leading to an incorrect sum for judgment and interest.
  4. [28]
    I do not accept that construction. The adjudication amount is a point in time analysis of the sums which were owed by reference to a payment claim made. Naturally there will be circumstances where payments (whether they be part payments, pre-payments or otherwise) will need to be taken into account, but the inflexible approach that Chevron’s submission adopts is not to be read into s 88. Furthermore, s 93 of the Payment Act addresses the ‘absurdity’ issue which Chevron identifies. I deal with each of those issues in more detail below.

Jurisdictional error under the Payment Act

  1. [29]
    There is no provision to appeal an adjudicator’s decision under the Payment Act. Accordingly, a decision can, most commonly, only be reviewed for jurisdictional error by the adjudicator in the performance of the adjudication function.
  2. [30]
    What constitutes jurisdictional error under the Payment Act was set out by Bond J, as his Honour then was, in Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd,[5] as follows:
    1. the valid exercise of an adjudicator’s jurisdiction is conditioned on the decision having complied with at least the “basic and essential” statutory requirements of the Payment Act at ss 64, 68, 70, 75, 79(4), 80, 81, 88 and 150;[6]
    2. the valid exercise of an adjudicator’s jurisdiction is conditioned on the adjudicator having arrived at their conclusion by a process which considers the matters set out in s 88(2) of the Payment Act, noting:[7]
      1. the valid exercise of the adjudicator’s jurisdiction is not conditioned on the adjudicator reaching what is objectively the correct conclusion of all the questions of fact or law required by the consideration of the matters set out in s 88(2);
      2. the question is not whether the court would have come to the same conclusion as the adjudicator, but whether the adjudicator arrived at their conclusion by a process which failed to consider the matters set out in s 88(2);
      3. an error in the identification of the terms of the contract or their interpretation will not be a jurisdictional error;
      4. there is a difference between an error which is not a jurisdictional error and that which is; and
      5. if it can be demonstrated that the adjudicator has 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 that s 88(2) requires them to do.
    3. the valid exercise of the adjudicator’s jurisdiction is conditioned on the adjudicator having arrived at their conclusion by a process which does not involve consideration of the matter set out in s 88(3)(b), being those matters which the adjudicator is required to ignore;[8]
    4. failure to provide written reasons for the decision in compliance with s 88(5)(b) is a jurisdictional error;[9]
    5. a valid exercise of an adjudicator’s jurisdiction requires the adjudicator having provided parties with “the necessary level of procedural fairness”;[10] and
    6. the valid exercise of the adjudicator’s jurisdiction is conditioned on the adjudicator having made a good faith attempt to perform the function specified in s 88.[11]

The Payment Act

  1. [31]
    Chevron’s argument is based upon the construction of the words “to be paid” in s 88. The starting point for the statutory interpretation of the Payment Act is to construe the relevant provisions so that they are consistent with the language and purpose of all the provisions of the statute.[12]
  2. [32]
    The main purpose of the Payment Act is described in s 3 as being an Act to help people working in the building and construction industry in being paid for the work they do.  Two of the ways in which that purpose is to be achieved is firstly by the granting of an entitlement to progress payments, whether or not the contract makes provision for the progress payments[13] and secondly, by establishing a procedure for the making of payment claims, responding to payment claims, the adjudication of disputed payment claims and the recovery of amounts claimed.[14] 
  3. [33]
    Similar pieces of legislation exist throughout Australia and each of these pieces of legislation broadly aims to improve payment and dispute resolution processes in the building and construction industry.[15]  At its core, the Payment Act was enacted to address the issue of payment problems in the construction industry and to ensure that sub-contractors were paid fairly and promptly.  The Payment Act therefore intends to provide greater protection to sub-contractors and improve efficiency of the payment and dispute resolution process.
  4. [34]
    Chapter 3 of the Act deals with progress payments.
  5. [35]
    Section 68 of the Payment Act defines the meaning of a payment claim:

“68 Meaning of payment claim

  1. A payment claim, for a progress payment, is a written document that—
  1. identifies the construction work or related goods and services to which the progress payment relates; and
  1. states the amount (the claimed amount) of the progress payment that the claimant claims is payable by the respondent; and
  1. requests payment of the claimed amount; and
  1. includes the other information prescribed by regulation…”.
  1. [36]
    Section 69 of the Payment Act defines the meaning of payment schedule:

“69 Meaning of payment schedule

A payment schedule, responding to a payment claim, is a written document that—

  1. identifies the payment claim to which it responds; and
  1. states the amount of the payment, if any, that the respondent proposes to make; and
  1. if the amount proposed to be paid is less than the amount stated in the payment claim—states why the amount proposed to be paid is less, including the respondent’s reasons for withholding any payment; and
  1. includes the other information prescribed by regulation.”
  1. [37]
    By s 73 of the Payment Act, a progress payment under a construction contract becomes payable either on the date on which the contract specifies it to be so, or if the contract does not so specify, on the day that is 10 business days after the day a payment claim for the progress payment is made.[16]
  2. [38]
    The procedure for claiming progress payments is then contained in Part 3 so that the claimant who is or claims to be entitled to a progress payment may give a payment claim to the person who, under the relevant construction contract, is or may be liable to make the payment.
  3. [39]
    Section 76 of the Payment Act provides a timeframe for a person who receives a payment claim to respond to it, being the first of the period identified in the construction contract or, alternatively, 15 days after the payment claim is given to them.[17]  The respondent is not required to give a payment schedule in response if the amount in the payment claim is paid in full on or before the due date for the progress payment[18] but if the respondent does give a payment schedule, then the respondent must still pay the claimant the amount proposed in the payment schedule no later than the due date for the progress payment to which the payment schedule relates.[19]
  4. [40]
    If a payment schedule is not given in response to a payment claim, then the respondent becomes liable for the amount of the payment claim on the due date.[20]
  5. [41]
    The consequences of failing to pay a claimant are either that the claimant may recover the unpaid portion of the amount owed from the respondent as a debt in a court of competent jurisdiction or may apply for adjudication of the payment claim under Part 4.[21]  The adjudication procedure was that which was adopted in this case.
  6. [42]
    A claimant who applies for an adjudication must do so pursuant to s 79 of the Payment Act.  The adjudication application must be in the approved form and made within the time limit for doing so, specified as 30 business days after the later of the events specified in s 79(2)(b)(i).  The adjudication application must be accompanied by submissions relevant to the application. The claimant must give the adjudication application and a copy of the submissions to the respondent within four business days after making the adjudication application.[22]  The adjudicator must accept or reject the referral within four business days after the referral is made.[23]  Once the adjudicator has accepted the adjudication application, the respondent may give a response to the application which must be in writing, identify the application to which it relates and include submissions relevant to the response that the respondent chooses to include.[24]  However, the adjudication response must not include any reasons, defined as new reasons, for withholding payment that were not included in the payment schedule when given to the claimant.[25] 
  7. [43]
    As can be seen from the above summary, there are very strict timeframes for a respondent who receives a payment claim which apply to those matters preliminary to, and as part of, the adjudication process.  Those strict timeframes are continued in s 83 of the Payment Act, which provides the time for making the adjudication response depending on whether it is a standard payment claim or a complex payment claim.
  8. [44]
    All of this demonstrates that the adjudication procedure is heavily regulated and governed by short time frames.
  9. [45]
    The objects and purposes of the Payment Act, which is in similar, but not identical, terms throughout Australia, is to ensure that persons who undertake to carry out construction work under a construction contract are entitled to receive and able to recover progress payments in relation to carrying out that work.[26]  In doing so, security of payment legislation was enacted to “reform payment behaviour in the construction industry” and designed to “stamp out the practice of developers and contractors delaying payment to subcontractors and suppliers”.[27]
  10. [46]
    In Probuild’s case, the High Court described it as follows:
  1. “39.As was described in Southern Han Breakfast Point Pty Ltd (In liq) v Lewence Construction Pty Ltd, the Security of Payment Act was the subject of substantial amendments in 2002.  Introducing the Bill for the Building and Construction Industry Security of Payment Amendment Act 2002 (NSW), the responsible Minister stated:

‘[The Security of Payment Act] was designed to ensure prompt payment and, for that purpose, [the Security of Payment Act] set up a unique form of adjudication of disputes over the amount due for payment.  Parliament intended that a progress payment, on account, should be made promptly and that any disputes over the amount finally due should be decided separately.  The final determination could be by a court or by an agreed alternative dispute resolution procedure.  But meanwhile the claimant’s entitlement, if in dispute, would be decided on an interim basis by an adjudicator, and that interim entitlement would be paid.’

The Security of Payment Act does not speak of “interim” entitlements and payments, but the label aptly reflects how the statutory entitlement interacts with any underlying contractual liability.  In that respect, the statutory entitlement established by the Security of Payment Act stands in marked contrast to the sort of final determination provided for in the legislative scheme considered in Hockey v Yelland, the effect of which was permanent.

  1. Third, underpinning the ‘interim’ statutory entitlement is an understanding that ‘[c]ash flow is the lifeblood of the construction industry’.  Put another way, any interruption to the cash flow of a person carrying out construction work is apt to create the risk of financial failure.  Consistent with that understanding, the procedure in Pt 3 is designed to operate quickly.  So much is apparent from the detailed time limits that apply at each stage and have been described earlier in these reasons.  These time limits are ‘carefully calibrated’.  The time limits have been rightly described as imposing ‘brutally fast’ deadlines on the claimant, the respondent and the adjudicator to ensure the prompt resolution of payment disputes.
  1. Moreover, the time frames are not conducive to lengthy consideration by an adjudicator of detailed submissions on all questions of law.  Indeed, as a result of the combined operation of ss 20(1) and 21(3) of the Security of Payment Act, an adjudicator can have as few as five business days after receiving the respondent’s response to the adjudication application to determine the amount of the progress payment to be paid by the respondent and the date on which it becomes payable.  In that limited time, the adjudicator must consider the provisions of the Security of Payment Act, the provisions of the construction contract from which the application arose, the payment claim (and any accompanying submissions and documentation), the payment schedule (and any accompanying submissions and documentation) and the results of any inspection carried out by the adjudicator.”

(footnotes omitted) (emphasis added)

  1. [47]
    After elsewhere describing the objects of the legislation to provide a speedy and effective means of ensuring cash flow to builders from the parties with whom they contract, the High Court concluded:
  1. “44.Having regard to the above matters, it is right to say that the Security of Payment Act creates an entitlement that is ‘determined informally, summarily and quickly, and then summarily enforced without prejudice to the common law rights of both parties which can be determined in the normal manner’.”

(footnotes omitted) (emphasis added)

  1. [48]
    The same principles were applied by Sullivan J in this court recently in Lendlease Building Pty Ltd v BCF Airport Systems Pty Ltd & Ors,[28] where his Honour said:[29]
  1. “[103]
    The purpose and object of the [Payment Act] is to provide a quick and inexpensive interim procedure for builders to be paid for their work.  This is an important and relevant consideration for construing how individual provisions within the [Payment Act] operate.  This includes whether they give rise to jurisdictional facts.” (emphasis added)
  1. [49]
    In doing so, his Honour followed the New South Wales Court of Appeal, sitting as a five-bench appellate court in BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd.[30] There, the court approved the observation of Spigelman CJ in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd,[31] where his Honour had observed “that the purpose of the legislative scheme is best served by restricting the scope of intervention by the courts”.[32]
  2. [50]
    In the context of the provisions of the Act, and the authorities as to how the purposes of the Act ought best to be achieved, I turn to consider the grounds upon which Chevron contends the adjudicator’s decision ought to be declared void for jurisdictional error.

Consideration ground

  1. [51]
    At the heart of the consideration ground is Chevron’s construction of s 88. That section provides:

“88 Adjudicator’s decision

  1. (1)
    An adjudicator is to decide—
  1. (a)
    the amount of the progress payment, if any, to be paid by the respondent to the claimant (the adjudicated amount); and
  2. (b)
    the date on which any amount became or becomes payable; and
  3. (c)
    the rate of interest payable on any amount.
  1. (2)
    In deciding an adjudication application, the adjudicator is to consider the following matters only—
  1. (a)
    the provisions of this chapter and, to the extent they are relevant, the provisions of the Queensland Building and Construction Commission Act 1991, part 4A;
  2. (b)
    the provisions of the relevant construction contract;
  3. (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;
  4. (d)
    the payment schedule, if any, to which the application relates, together with all submissions, including relevant documents, that have been properly made by the respondent in support of the schedule;
  5. (e)
    the results of any inspection carried out by the adjudicator of any matter to which the claim relates.
  1. (3)
    However, the adjudicator must not consider any of the following—
  1. (a)
    an adjudication response, to which the adjudication application relates, that was not given to the adjudicator within the time required under section 83;
  2. (b)
    a reason included in an adjudication response to the adjudication application, if the reason is prohibited from being included in the response under section 82.
  1. (4)
    Also, the adjudicator may disregard an adjudication application or adjudication response to the extent that the submissions or accompanying documents contravene any limitations relating to submissions or accompanying documents prescribed by regulation.
  1. (5)
    The adjudicator’s decision must—
  1. (a)
    be in writing; and
  2. (b)
    include the reasons for the decision, unless the claimant and the respondent have both asked the adjudicator not to include the reasons in the decision…”.
  1. [52]
    Chevron submits that s 88(1) of the Payment Act provides that the adjudicator is to decide the amount of the progress payment, if any, to be paid by the respondent to the claimant, which necessarily requires the adjudicator to consider not just the construction work to which the payment claim relates, but also whether any of the amounts claimed have been discharged, either by payments made or by operation of statute.[33] Chevron submits that means the adjudicator should have deducted from the adjudicated amount both the Past Payments and the Subsequent Payments.
  2. [53]
    Chevron emphasises the words “to be paid” in s 88(1)(a). In deciding the adjudicated amount “to be paid” pursuant to s 88, Chevron submits that it is “axiomatic” that there must be “reconciliation” by the adjudicator of the amount claimed against the amounts known to have been paid in respect of the amount claimed.
  3. [54]
    That submission arises in the factual context of the Past Payments and the Subsequent Payments which I have set out at [13] to [17] above, and which I do not repeat here.
  4. [55]
    I do not accept that construction of s 88(1) for the following reasons.
  5. [56]
    First, pursuant to s 88(1)(a), the adjudicator is to decide “the amount” of the progress payment to be paid; that is the adjudicated amount.  The adjudicated amount is linked to the payment claim (pursuant to s 68), and the payment schedule (pursuant to s 69) which responds to the payment claim.  By s 68, the amount is expressly linked to the identified “construction work” or “related goods and services” to which the progress claim relates. Those are each defined terms under the Payment Act.[34]  The adjudication therefore is in respect of the work which has been done or is claimed to be done under the payment claim. 
  6. [57]
    Naturally, because building construction, and therefore payments, are progressive, there is sometimes overlap, in general terms, between work the subject of one payment claim and the next payment claim. That does not mean that the work claimed, and paid for, in respect of a previous payment claim may be offset in some way against the new work claimed in the payment claim in question. Generally speaking, amounts which have been paid prior to a particular payment claim being made are in respect of previous payment claims.
  7. [58]
    Second, Chevron’s construction reads into s 88(1)(a) words which do not appear there.  Chevron contends that s 88 requires a determination of how much of the claimed amount “is remaining to be paid at the date of the decision”.  No such words appear in, or can be read into, s 88(1). 
  8. [59]
    To the extent that the section identifies the date on which any amount became or becomes payable, s 88(1)(b) identifies that the adjudicator must decide that date; but the date is identified by reference to other provisions of the Act.  Specifically, s 67 provides the definition of a “reference date” for a construction contract, which means a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out, or related goods and services supplied under the contract.[35]  PC19 was concerned with a reference date of 28 December 2023.  The date was not in dispute. The date was not the date the adjudicator made his decision (6 June 2024) as submitted by Chevron, nor could it be having regard to the mandatory considerations to which the adjudicator must have turned his mind pursuant to s 88(2). 
  9. [60]
    Third, the Subsequent Payments which Chevron contends ought to have been taken into account by the adjudicator post-dated the reference date.  Nothing on a fair reading of s 88 suggests that the adjudicator ought to take into account events which post-dated the date to which the adjudicator was required to turn his mind, even if they were the subject of submissions. 
  10. [61]
    Fourth, it further follows that the adjudicator’s decision cannot have regard to the Subsequent Payments when the terms of s 88(3) are considered.  That is because the adjudication response which is provided by a respondent must not include any new reasons for withholding payment that were not included in the payment schedule given to the claimant.[36]  As much was made clear by Bond J in Acciona where his Honour described that the legislative intention was clear that there were certain matters which the adjudicator “must not” consider because the respondent was prohibited from raising them.[37] 
  11. [62]
    It follows that Chevron was not entitled to include reference to reasons which arose after the date upon which it delivered its payment schedule, which was 31 January 2024.  In circumstances where none of the Subsequent Payments were made until February 2024, Chevron could not properly have adduced that evidence in any event.
  12. [63]
    Aside from the construction issue, there is a further factual issue in that the Past Payments pre-dated PC19. Chevron contends that it had made those payments in reduction of the amount claimed in the payment claim the subject of the decision.[38]  Groupline accepted only that the amounts and the dates in [13] were correct. It did not accept that the amounts were in discharge of PC19. Chevron did not make clear on the evidence how payments that pre-dated to the payment claim in question were in reduction of a claim not yet made.
  13. [64]
    As part of the “Consideration Ground”, but also by reference to the “Natural Justice Ground” which I deal with below, Chevron consistently referred to the adjudicator’s “refusal to consider” the Past Payments and Subsequent Payments which Chevron had made in reduction of the adjudicated amount, and further to the fact that the adjudicator had “ignored” reference to the Past Payments and Subsequent Payments.
  14. [65]
    Those submissions cannot be substantiated.  The clearest example of this is contained in [97] to [99] of the Adjudication Decision, which provides:

“Prior and Subsequent Payments

  1. The respondent argues that payment amounts, including those purportedly made prior to, and after the payment claim date are required to be taken into account when deciding the adjudicated amount.
  1. In reference to section 88(1) of the Act, the adjudicator’s role is to decide the amount of the progress payment due with respect to the payment claim in question.  It follows that accounting for and verifying amounts paid and payable against the decided amount is outside of the adjudicator’s jurisdiction.
  1. In reference to s 82(4) of the Act, subsequent payments against disputed items may also be regarded as new reasons for lesser payment of the payment claim in question and cannot be given regard in this decision”.

(footnote omitted) (emphasis in original)

  1. [66]
    Elsewhere in his decision, the adjudicator made reference to the fact that there was a discrepancy between the parties in the amount which had been paid, observing that the payment claim had provided a figure of $10,944,838.12 whereas the figure listed in the payment schedule in the “net recommendation for payment” was a sum of $11,043,344.25.
  2. [67]
    The adjudicator was therefore aware not only of the discrepancy in the figures, but also of the explanation for it.  The adjudicator went on at [443] to make reference to the statutory declaration of Mr Widdicomb where the dispute as to the incorrect amount also appears.  The paragraph bears setting out:
  1. “[443]
    The claimant has provided reference to the D Widdicomb Declaration whereby it is stated that the confirmed amount received by the claimant at 28 December 2023 is $10,944,838.12.  The respondent noted in its response that this ‘failed to take into account the further amounts paid … after receipt of the Payment Claim’.  As noted previously, the adjudicator is to decide the amount payable at the date of the claim. 

Therefore, the amount previously paid at the time of the claim, is decided at $10,944,838.12.  It will be for the parties to verify and reconcile their accounting records in this respect”.

(footnotes omitted)

  1. [68]
    The adjudicator therefore knew and understood that there was a dispute regarding the amounts which had been paid in respect of the payment claim.  He expressly declined to reconcile it himself, concluding that it would be a matter for the parties to verify and reconcile their accounting records.  It is therefore incorrect to submit that the adjudicator failed to take into account the prior payments or that he ignored them. Rather, the adjudicator expressly made reference to the payments but declined to carry out the accounting exercise which Chevron had urged upon him.  Having considered the issue, he rejected Chevron’s construction and resolved the question in favour of Groupline.  It was open for him to do so, and Chevron has not demonstrated that it was a jurisdictional error to do so.
  2. [69]
    So far as the Subsequent Payments are concerned, no error of reasoning is discerned.  Primarily, the issue of the Subsequent Payments is dealt with by ss 88(2) and (3) of the Payment Act.  Those provisions identify the matters which the adjudicator is, and is not, to consider.  The Subsequent Payments formed no part of the matters before the adjudicator because they formed no part of the payment schedule or the submissions relevant to them.  That is because at the time of the payment schedule (31 January 2024) none of the Subsequent Payments had been made, the first of them not being made until 8 February 2024.  Further, by virtue of s 82(4), the adjudication response must not include any reasons, described as “new reasons” for withholding payment that were not included in the payment schedule when given to the claimant. 
  3. [70]
    It was not therefore open to the adjudicator to consider those Subsequent Payments. 
  4. [71]
    I reject Chevron’s construction that the adjudicator was necessarily required to consider those amounts and reconcile them against the amount claimed.  That submission is not supported by a proper construction of ss 82(4) or 88(2) and (3).
  5. [72]
    I turn to the question of whether the term “submissions … and relevant documents” in ss 88(2)(c) and (d) captures the submissions that Chevron made in relation to the Past Payments and the Subsequent Payments. Whilst s 88(2) prevents the adjudicator from considering a matter not identified in the subsection, I accept it does not exclude from consideration something which comes within those matters, and that the language of the section does not preclude from consideration a statutory provision raised in a payment schedule or a properly made submission.[39]
  6. [73]
    A properly made submission however must be one that does not fall foul of s 88(3). Any submissions therefore that contained new reasons are still excluded from consideration.
  7. [74]
    Chevron contended that the decision of Livingstone Shire Council v EarthTEC Pty Ltd & Ors[40] was instructive on this issue.  In that case, EarthTEC had served a payment claim under the 2004 Payment Act[41] seeking some $2.7 million in respect of a particular progress claim.  Sometime thereafter, the contractual relations between EarthTEC and the Livingstone Shire Council were terminated.  Notices of claims of charge pursuant to the Subcontractors’ Charges Act 1974 (Qld) were then served on the council by some of EarthTEC’s subcontractors.  As a result of those notices of claims of charge from EarthTEC’s subcontractors, the council paid some $1.15 million into court.  The council argued that the amounts paid into court in satisfaction of the notices of charge should be taken into account when calculating the adjudicated amount.  Lyons SJA concluded that the adjudicator ought to have taken the charges into account because otherwise a respondent would be required to pay monies to the claimant in circumstances where “the underlying obligation to pay those monies no longer exists”, and that would be “a serious interference with the rights of a respondent”.[42]  Chevron places significant reliance on EarthTEC’s case contending that the payments, both the Past Payments and the Subsequent Payments, ought to be treated in the same way as Lyons SJA treated them there.
  8. [75]
    EarthTEC is distinguishable.  In EarthTEC, the adjudicator expressly did not consider the submissions that were made in relation to the contractor charges.  Lyons SJA found he was wrong to do so and was not precluded from doing so by virtue of the equivalent to s 88(2).  Here, by contrast, the adjudicator considered the submissions but rejected them.  Whilst I have found he was right to do so, even if I had concluded that he was not, I could not have found that he had refused to consider the submissions in the way in which the adjudicator had in EarthTEC’s case.
  9. [76]
    Second, the provision that was being considered by Lyons SJA under the 2004 Payment Act was in relation to s 26(2) of that Act.  That was a provision which required the adjudicator to consider “the following matters only …”, which is the equivalent to s 88(2).  Her Honour was not considering any equivalent to s 88(3). Her Honour did not therefore have to turn her mind to the issue of new reasons which squarely arises here.
  10. [77]
    For the reasons set out above, the consideration ground fails.

The natural justice ground

  1. [78]
    There is considerable overlap between the natural justice ground and the consideration ground, Chevron having identified that each of those grounds stems from the adjudicator’s “refusal to consider the part-payments that Chevron had made in reduction of the adjudicated amount”.
  2. [79]
    It can be accepted that the adjudicator was obliged to accord the parties procedural fairness when exercising his powers of adjudication under the Act.[43]  Ordinarily, dispute upon this ground centres around the scope of that obligation.
  3. [80]
    Procedural fairness requires that those liable to be affected by a decision ought to be given the opportunity of first being heard.[44]  As the High Court explained in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs:[45]

“…as Lord Diplock said in F Hoffmann-La Roche & Co Ag v Secretary of the State for Trade and Industry:

‘the rules of natural justice do not require the decision maker to disclose what he is minded to decide so that the parties may have a further opportunity of criticising his mental processes before he reaches a final decision.  If this were a rule of natural justice only the most talkative of judges would satisfy it and trial by jury would have to be abolished.’

Procedural fairness does not require the Tribunal to give an applicant a running commentary upon what it thinks about the evidence that is given.  On the contrary, to adopt such a course would be likely to run a serious risk of conveying an impression of prejudgment”.

(citation omitted)

  1. [81]
    There has been no denial of natural justice in the circumstances of this case where the submissions made by Chevron were received and considered, but rejected.  The adjudicator did not, for example, decide the dispute on the basis for which neither party contended in the way considered by Applegarth J in John Holland Pty Ltd v TAC Pacific Pty Ltd,[46] nor did the adjudicator unilaterally discard material before him in the way described by Daubney J in Syntech Resources Pty Ltd v Peter Campbell Earthmoving (Aust) Pty Ltd & Ors.[47]
  2. [82]
    As to the question of not seeking submissions on what he found to be a jurisdictional point, Chevron submits that in the adjudication decision at [90], the adjudicator considered that accounting for and verifying amounts paid and payable against the decided amount was outside the adjudicator’s jurisdiction. Chevron contends that the adjudicator ought to have advised the parties that he was considering determining that that submission was outside his jurisdiction, and called for further submissions as to whether the submission was within jurisdiction or not. 
  3. [83]
    This ground must fail.  The adjudicator did not refuse to consider submissions which were made about the Past Payments and the Subsequent Payments.  He in fact expressly dealt with those issues as I have set out at [66] above.  The adjudicator rejected the Subsequent Payments on the basis that they must be regarded as new reasons[48] given that they post-dated PS19.  That was a valid exercise of the adjudicator’s jurisdiction demonstrated by him arriving at a conclusion which properly considered the matters in s 88(2) and refusing to consider matters which he concluded were within s 88(3).
  4. [84]
    It was unnecessary for the adjudicator to advise the parties that he was considering the submission was outside his jurisdiction, and to seek further submissions on that ground, when Chevron had already made submissions directed to the issue.  Chevron knew that the reconciliation of accounts was a basis upon which the dispute centred, and so sought to cast its submissions as an entitlement to expand, elaborate and further explain its reasons for withholding payment.[49]  
  5. [85]
    It is always relevant to enquire whether the party or his legal representative should have apprehended that the issue was, or might become, a live issue as Gaudron J said in Re: Association of Architects of Australia; Ex parte Municipal Officers Association of Australia.[50]  Here, Chevron should have reasonably apprehended that the issue of the past and subsequent payments was a live one.  The fact that Chevron did so apprehend the issue, or ought to have, is a matter which would be substantially against the natural justice argument generally. The adjudicator was not required to give Chevron “a running commentary”[51] on what he intended to do and provide an opportunity for it to make further submissions. That is particularly so in the context of the short timeframes prescribed by the legislation.  In Demex Pty Ltd v McNab Building Services Pty Ltd,[52] Kirk JA, with whom Mitchelmore and Adamson JJA agreed, noted that the general requirement of procedural fairness that might ordinarily be applied to a decision-maker exercising statutory power is attenuated in the context of an Act such as this.[53]  Kirk JA said:[54]

“… it should be understood that only if there has been a substantial denial of procedural fairness by an adjudicator in determining an adjudication application will there be jurisdictional error under the Act.  Put another way, the content of the requisite procedural fairness is reduced … This approach reflects the fact that the Act provides for a ‘rough and ready’ process …”.

  1. [86]
    Even if there had been a denial of natural justice, it is not a material one where I have found there to be no error in the adjudication calculation.
  2. [87]
    This ground must fail. 

The reasons ground

  1. [88]
    Ultimately, the failure to give reasons was barely pressed, but I have already dealt with the substance of it at [66] to [71] above. The adjudicator’s reasons at [97] to [99] are all that was required to comply with the legislative requirement to deal with the submissions regarding the Past Payments and the Subsequent Payments. Even if those reasons are inadequate (which I do not find them to be), the inadequacy of reasons does not itself amount to a jurisdictional error[55] in the environment of providing reasons within a relatively short timeframe.
  2. [89]
    Under this ground, it is appropriate that I deal with the ‘absurdity’ submission that I referred to at [27] above. Chevron’s submission is that if an adjudicator can ignore notice of payments made after the adjudication application had been made but not yet decided, such a confined construction would lead to absurd results because the adjudication certificate would be issued for a ‘grossly incorrect amount’. In turn, that would lead to an incorrect judgment sum and interest. That submission ignores s 93(2) of the Payment Act which provides that the adjudication certificate must be accompanied by an affidavit stating that “the whole or a part of the adjudicated amount has not been paid” at the time the certificate is filed. By s 93(3) judgment can only be obtained for the unpaid part of the adjudicated amount. While Chevron submits that is a ‘unilateral affair’, being an affidavit sworn only by the claimant, it is a procedure well known to this court,[56] and there is nothing unusual about such an approach.
  3. [90]
    The application is dismissed.
  4. [91]
    The applicant will be ordered to pay the first respondent’s costs of the application on the standard basis.

Footnotes

[1]See the figure contained in paragraph [10] below extracted from the Adjudication Decision.

[2]An extension of time was required for this time frame, which was agreed.

[3]Which was made on 28 January 2024.

[4]Chevron submissions at [62] and [63].

[5](2020) QR 410.

[6]Ibid at 422 [34].

[7]Ibid at 422–3 [35].

[8]Ibid at 424 [36].

[9]Ibid at 426 [37].

[10]Ibid at 427–8 [41] and the cases referred to therein.

[11]Ibid at 428 [42].

[12]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69] citing Taylor v Public Service Board (NSW) (1976) 137 CLR 208 at 213 per Barwick CJ.

[13]Section 3(2)(b).

[14]Section 3(2)(c)(i)–(iv).

[15]See, for example, Building and Construction Industry Security of Payment Act 1999 (NSW); Building and Construction Industry Security of Payment Act 2002 (Vic); Construction Contracts Act 2004 (WA); Construction Contracts (Security of Payments) Act 2004 (NT); Building and Construction Industry Security of Payment Act 2009 (SA); Building and Construction Industry (Security of Payment) Act 2009 (ACT); Building and Construction Industry Security of Payment Act 2009 (Tas).

[16]Sections 73(1)(a) and (b).

[17]Sections 76(1)(a) and (b).

[18]Section 76(2).

[19]Section 76(3).

[20]Section 77.

[21]Sections 78(1) and (2).

[22]Section 79(4).

[23]Section 81(1), unless the adjudicator has a reasonable excuse.

[24]Section 82(3).

[25]Section 82(4).

[26]Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd & Anor (2018) 264 CLR 1 at 6 [1].

[27]Ibid at 15 [36].

[28][2024] QSC 164.

[29]Ibid at [103].

[30](2022) 108 NSWLR 350.

[31](2010) 78 NSWLR 393.

[32]Ibid at 406–7 [51].

[33]In respect of the latter, for instance, where the principal is required to withhold payment under s 126 of the Payment Act.

[34]See s 65 (definition of “construction work”) and s 66 (definition of “related goods and services”).

[35]Section 67 provides for alternative dates, not relevant in the circumstances here. 

[36]Section 82(4).

[37](2020) QR 410 at 424 [36].

[38]Chevron submissions at [9].

[39]Livingstone Shire Council v EarthTEC Pty Ltd [2018] QSC 271 at [29].

[40][2018] QSC 271.

[41]Building Construction Industry Payments Act 2004 (Qld).

[42]Ibid at [33]. 

[43]Demex Pty Ltd v McNab Building Services Pty Ltd [2023] NSWCA 261.

[44]Ibid at [12].

[45](2006) 228 CLR 152 at 166 [48].

[46][2009] QSC 205.

[47][2011] QSC 293.

[48]Adjudicator’s decision at [99].

[49]Chevron’s adjudication response of 22 April 2024 at [138].

[50](1989) 63 ALJR 298.

[51]Szbel’s case at 166 [48].

[52][2023] NSWCA 261.

[53]Per Kirk JA at [30].

[54]Ibid at [32].

[55]Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd [2023] QSC 218 per Applegarth J at [26] and [28].

[56]UCPR r 283.

Close

Editorial Notes

  • Published Case Name:

    Chevron Park Pty Ltd v Groupline Constructions Pty Ltd & Ors

  • Shortened Case Name:

    Chevron Park Pty Ltd v Groupline Constructions Pty Ltd

  • MNC:

    [2024] QSC 202

  • Court:

    QSC

  • Judge(s):

    Treston J

  • Date:

    18 Sep 2024

  • Selected for Reporting:

    Editor's Note

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) QR 410
3 citations
Jump To
Cite 1 - (2020) QR 410
Cite 2 - (2020) QR 410
Cite 3 - (2020) QR 410
BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd (2022) 108 NSWLR 350
2 citations
Jump To
Cite 1 - (2022) 108 NSWLR 350
Cite 2 - (2022) 108 NSWLR 350
Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393
2 citations
Jump To
Cite 1 - (2010) 78 NSWLR 393
Cite 2 - (2010) 78 NSWLR 393
Demex Pty Ltd v McNab Building Services Pty Ltd [2023] NSWCA 261
3 citations
Jump To
Cite 1 - [2023] NSWCA 261
Cite 2 - [2023] NSWCA 261
Cite 3 - [2023] NSWCA 261
John Holland Pty Ltd v TAC Pacific Pty Ltd[2010] 1 Qd R 302; [2009] QSC 205
2 citations
Jump To
Cite 1 - [2009] QSC 205
Cite 2 - [2009] QSC 205
Lendlease Building Pty Ltd v BCS Airport Systems Pty Ltd [2024] QSC 164
2 citations
Jump To
Cite 1 - [2024] QSC 164
Cite 2 - [2024] QSC 164
Livingstone Shire Council v EarthTEC Pty Ltd [2018] QSC 271
3 citations
Jump To
Cite 1 - [2018] QSC 271
Cite 2 - [2018] QSC 271
Cite 3 - [2018] QSC 271
Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd(2023) 16 QR 336; [2023] QSC 218
2 citations
Jump To
Cite 1 - [2023] QSC 218
Cite 2 - [2023] QSC 218
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1
2 citations
Jump To
Cite 1 - (2018) 264 CLR 1
Cite 2 - (2018) 264 CLR 1
Project Blue Sky v Australian Broadcasting Authority (1998) 194 C.L.R 355
2 citations
Jump To
Cite 1 - (1998) 194 C.L.R 355
Cite 2 - (1998) 194 C.L.R 355
Re Association of Architects of Australia; ex parte Municipal Officers Association of Australia (1989) 63 ALJR 298
2 citations
Jump To
Cite 1 - (1989) 63 ALJR 298
Cite 2 - (1989) 63 ALJR 298
SBZEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152
2 citations
Jump To
Cite 1 - (2006) 228 CLR 152
Cite 2 - (2006) 228 CLR 152
Syntech Resources Pty Ltd v Peter Campbell Earthmoving (Aust) Pty Ltd [2011] QSC 293
2 citations
Jump To
Cite 1 - [2011] QSC 293
Cite 2 - [2011] QSC 293
Taylor v Public Service Board (N.S.W.) (1976) 137 C.L.R 208
2 citations
Jump To
Cite 1 - (1976) 137 C.L.R 208
Cite 2 - (1976) 137 C.L.R 208

Cases Citing

Case NameFull CitationFrequency
Bright Days Herston Pty Ltd v ATG Project & Property Solutions Pty Ltd [2025] QSC 147 3 citations
York Property Holdings Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2025] QSC 44 2 citations
1

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