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[2025] QSC 212
The applicant engaged the first respondent to complete design and construct works. The first respondent issued a payment claim pursuant to that agreement for $22 million, but the applicant certified the sum payable as $13.5 million. Part of the $8.7 million disparity was comprised of a sum for variations of $681,445.37. The first respondent applied for adjudication in respect of the payment claim, but limited the adjudication to the variations and not to the balance of the $8.7 million. The applicant, having paid the disputed amount of $681,445.37 plus interest, applied for a declaration that the adjudication application was taken to have been withdrawn under s 97(1)(b) Building Industry Fairness (Security of Payment) Act 2017. The first respondent contended that that section is only engaged where the whole amount the subject of the adjudication application (namely, the balance of the $8.7 million), is paid. Justice Treston considered that the section ought not to be interpreted as requiring the adjudicator to consider matters that are expressly not in issue. Her Honour accordingly made a declaration that the adjudication application was taken to be withdrawn on the applicant’s payment of $681,445.37 plus interest.
Treston J
4 June 2025 (delivered ex tempore)
Background
The applicant engaged the first respondent to design and construct a train maintenance and stabling facility. [2]. On 24 February 2025, the first respondent served the applicant a payment claim under the Building Industry Fairness (Security of Payment) Act 2017 for approximately $22 million. [3]. On 17 March 2025, the applicant served a payment schedule certifying the sum payable as $13.5 million. [3]. Part of the $8.7 million disparity included a sum for variation claims numbered 41 and 53 of $681,445.37. [3], [9].
The first respondent applied for adjudication in respect of the payment claim. [4]. Its submissions and material in support were limited to the dispute about variations numbered 41 and 53, and do not refer to any other part of the outstanding $8.7 million under the payment claim. [7]–[10]. Specifically, the material did not attempt to identify the work for which the $8.7 million was claimed but not paid, nor what was said to be the basis for an entitlement to payment other than that which was contained in the payment claim. [14]. Accordingly, the only decision which was sought by the adjudication application pertained to those two variations in the sum of $681,445.37. [13].
Having been served the first respondent’s adjudication application, the applicant paid to the first respondent the amount of $681,445.37, including interest. [15]. At the time of the payment, the adjudicator had not made a decision on the adjudication. [15]. By this proceeding, the applicant applied for a declaration pursuant to s 97(1)(b) of the Act that the adjudication application is taken to have been withdrawn because it paid the ‘amount stated in the payment claim the subject of the adjudication application’. [15].
Construction of s 97
Justice Treston commenced by noting that the application turned on the determination of whether the adjudication application is taken to have been withdrawn within the meaning of s 97(1)(b) in circumstances where the amount paid by the applicant was only in respect of the variations in issue. Or, whether the section is only triggered if the applicant pays the total amount of the payment claim, being $8.7 million. [19].
The respondent submitted that s 97(1)(b) should be interpreted as only being engaged where the whole amount of the payment claim has been paid because:
(1)that construction fits comfortably with the adjudicator’s obligation to consider every element of the payment claim; [21];
(2)the manner in which the claimant puts its adjudication application does not derogate from the adjudicator’s obligation to determine the amount of the statutory progress payment; [22];
(3)the words of the section refer to the amount of the payment claim itself and not just particular amounts addressed in the adjudication application or submissions in support of it. [24].
Justice Treston did not accept this construction. [25]. Her Honour considered that the purpose of s 97(1)(b) is to deem adjudication applications withdrawn where there has been satisfaction of the amount in dispute. [25]. Considering the terms of s 97(1)(b) specifically, her Honour considered that the first respondent’s construction effectively gave no work to do to the words “the subject of the adjudication application”. On the first respondent’s construction, the clause could have ended after “stated in the payment claim”. [27].
In considering the Act more generally and its explanatory memorandum, her Honour found that the process is intended to be fast and efficient. Accordingly, the section ought not to be interpreted as requiring the adjudicator to consider things that are not genuinely in issue. [30]. In the context of an analysis of the sections of the Act, “[i]t would be an onerous construction of the legislation if the adjudicator was required to consider matters pertaining, in this case, to some $8.7 million worth of claims where the submissions on both sides had been confined to $681,445.37 worth”. [34].
Accordingly, her Honour found that s 97(1)(b) is directed to situations in which the amount paid satisfies the amount actually in dispute on an adjudication application. [35]. Her Honour made a declaration that the adjudication application was taken to have been withdrawn. [38].
N Powys