JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM : COMMERCIAL & CIVIL

ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA)

CITATION : MCC MINING (WESTERN AUSTRALIA) PTY LTD

and THIESS PTY LTD [2010] WASAT 140

MEMBER : JUSTICE J A CHANEY (PRESIDENT)

HEARD : 23 SEPTEMBER 2010

DELIVERED : 1 OCTOBER 2010

FILE NO/S : CC 1224 of 2010

BETWEEN : MCC MINING (WESTERN AUSTRALIA) PTY LTD

Applicant

AND

THIESS PTY LTD

Respondent

Catchwords:

Construction Contracts - Adjudication - Adjudicator declining to dismiss application for adjudication - Whether right of review available – Whether question of law should be referred to Supreme Court

Legislation:

Commercial Arbitration Act 1984 (NSW)

Commercial Arbitration Act 1985 (WA), s 33

Construction Contracts (Security of Payments) Act 2009 (NT), s 48(3)

Construction Contracts Act 2004 (WA), s 26, s 31(2), s 31(2)(a), s 31(2)(a)(iv),

s 31(3), s 32(2)(b), s 43, s 43(2), s 45, s 46

State Administrative Tribunal Act 2004 (WA), s 25(2), s 27, s 47(1), s 59(10),

s 59(10)(b), s 105, s 108(3), s 111(3)

Interpretation Act 1984 (WA)

Supreme Court Act 1935 (WA), s 7, s 7(4), s 41, s 58

Result:

Application dismissed

Category: B

Representation:

Counsel:

Applicant : Mr M Feutrill

Respondent : Mr B Dharmanda

Solicitors:

Applicant : Allens Arthur Robinson

Respondent : Minter Ellison

Case(s) referred to in decision(s):

AJ Lucas Operations Pty Ltd v Mac-Attack Equipment Hire Pty Ltd [2009] NTCA 4

Cockatoo Dockyard Pty Ltd v Commonwealth of Australia (No 3) - (1994) 35 NSWLR 689

Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229

Devaugh Pty Ltd v Lamac Developments [2000] WASC 314

Diploma Construction Pty Ltd v Windslow Corporation Ltd [2005] WASC 74

Downer Construction (Australia) Pty Ltd v Energy Australia (2007) 69 NSWLR 72

Independent Fire Sprinklers (NT) Pty Ltd v Sunbuild Pty Ltd [2008] NTSC 46

Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134

Miles v Palm Bridge Pty Ltd [2001] WASC 113

O'Donnell Griffin Pty Ltd v John Holland Pty Ltd 2009 WASC 19

[2010] WASAT 140

REASONS FOR DECISION OF THE TRIBUNAL :

Summary of Tribunal's decision

1 MCC Mining (Western Australia) Pty Ltd sought a review of a decision of an adjudicator under the Construction Contracts Act 2004 (WA) not to dismiss the application for adjudication that had been made by Thiess Pty Ltd. The Tribunal had previously decided that decisions of that character were not open to review in the Tribunal. On the basis of the Tribunal's earlier decision on the point, Thiess Pty Ltd sought dismissal of MCC Mining (Western Australia) Pty Ltd's review application.

2 MCC Mining (Western Australia) Pty Ltd in turn sought to have the question of law, specifically whether it had any right to seek review, referred to the Court of Appeal for determination. It agreed that the correctness of the Tribunal's earlier decision was attended by sufficient doubt to warrant a request to the Court of Appeal to deal with the question.

3 The Tribunal considered the argument raised by MCC Mining (Western Australia) Pty Ltd to demonstrate that the Tribunal's earlier decision was wrong but was unpersuaded by that argument. It determined that the application should be dismissed on the basis that no right of review was available to MCC Mining (Western Australia) Pty Ltd in the Tribunal. The Tribunal considered that the appropriate course for MCC Mining (Western Australia) Pty Ltd to follow was to seek leave to appeal the dismissal of its application.

Introduction

4 On 3 August 2010, Mr R K F Davis made an adjudication pursuant to the Construction Contracts Act 2004 (WA) (CC Act) in which he determined that MCC Mining (Western Australia) Pty Ltd (MCC) was liable to pay Thiess Pty Ltd (Thiess) an amount of $7,309,740.88 with interest for certain works done by Thiess in connection with a development of MCC's Sino Iron Project at Cape Preston. In making his determination, Mr Davis rejected submissions by MCC that the application for adjudication should be dismissed on various bases including that the application had not been served within 28 days after the dispute arose, as required by s 26 of the CC Act.

5 On 20 August 2010, MCC brought this application pursuant to s 46(1) of the CC Act for review of the decision by the adjudicator not to dismiss the application.

6 In Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134 , ( Match Projects ) the Tribunal concluded that it was not open to seek a review under s 46(1) of the CC Act in relation to a decision by an adjudicator not to dismiss an application for adjudication. On the basis of that decision, Thiess sought the dismissal of MCC's application.

7 MCC argued that the question, of whether any right of review exists in relation to a refusal by an adjudicator to dismiss an application for adjudication, is unsettled, and sought an order that that question of law be referred to the Court of Appeal pursuant to s 59(10) of the State Administrative Tribunal Act 2004 (WA) (SAT Act). In addition, it sought to amend the grounds of its application to this Tribunal to include some additional contentions, and sought an order for a stay of the adjudicator's determination pursuant to s 25(2) of the SAT Act.

The application to amend

8 Depending on the outcome of the application of Thiess to dismiss the application and the application for referral to the Court of Appeal, it is clear that the matter will be pursued one way or the other in the Supreme Court. MCC sought to amend the application prior to determination of those issues so that, in whatever form the matter might proceed to the Supreme Court, it can there be considered in light of the actual case which MCC seeks to put in the Tribunal should the Tribunal have jurisdiction to entertain it. But for the arguments as to jurisdiction, Thiess did not identify any reason why the proposed amendment ought not be granted, and acknowledged that no prejudice to it arises from the amendment.

9 In those circumstances, it is appropriate that whatever further proceedings may arise in relation to this matter, they should be dealt with in the context of the claim which MCC seeks to agitate. It is appropriate therefore that that the proposed amendments be allowed, and an order was made to that effect at the hearing of these applications.

Applications for dismissal or referral

10 The right of review which is sought to be exercised by MCC is that contained in s 46(1) of the CC Act. Section 46 provides:

Review, limited right of

(1) A person who is aggrieved by a decision made under section 31(2)(a) may apply to the State Administrative Tribunal for a review of the decision.

(2) If, on a review, a decision made under section 31(2)(a) is set aside and, under the State Administrative Tribunal Act 2004 section 29(3)(c)(i) or (ii), is reversed the adjudicator is to make a determination under section 31(2)(b) within 14 days after the date on which the decision under section 31(2)(a) was reversed or any extension of that time consented to by the parties.

(3) Except as provided by subsection (1) a decision or determination of an adjudicator on an adjudication cannot be appealed or reviewed.

11 The functions of an adjudicator are set out in s 31 of the CC Act. Section 31(2) and s 31(3) are relevant for present purposes. They provide:

(2) An appointed adjudicator must, within the prescribed time or any extension of it made under section 32(3)(a) -

(a) dismiss the application without making a determination of its merits if -

(i) the contract concerned is not a construction contract;

(ii) the application has not been prepared and served in accordance with section 26;

(iii) an arbitrator or other person or a court or other body dealing with a matter arising under a construction contract makes an order, judgment or other finding about the dispute that is the subject of the application; or

(iv) satisfied that it is not possible to fairly make a determination because of the complexity of the matter or the prescribed time or any extension of it is not sufficient for any other reason;

(b) otherwise, determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment, or to return any security and, if so, determine -

(i) the amount to be paid or returned and any interest payable on it under section 33; and

(ii) the date on or before which the amount is to be paid, or the security is to be returned, as the case requires.

(3) If an application is not dismissed or determined under subsection (2) within the prescribed time, or any extension of it made under section 32(3)(a), the application is to be taken to have been dismissed when the time has elapsed.

12 Thiess argues that the only decision that can be made under s 31(2)(a) is a decision to dismiss an application. In this case, Mr Davis did not dismiss the application, but rather made a determination under s 32(2)(b). Thiess contends that, in the absence of a decision 'made under s 31(2)(a)', there is no right to apply to the Tribunal for a review.

13 Submissions by that effect were upheld by the Tribunal in Match Projects at [43] - [62], the Tribunal disagreeing with the obiter dicta conclusion to the opposite effect by Beech J in O'Donnell Griffin Pty Ltd v John Holland Pty Ltd 2009 WASC 19 ( O'Donnell Griffin )

14 In reaching its conclusion in Match Projects , the Tribunal relied on the following considerations:

1. That fact that s 46(2) supports the construction that a reference in s 46(1) to s 31(2)(a) can only be a reference to a decision made to dismiss the application;

2. The distinction between the use of the words 'decision' and 'determination' in the CC Act;

3. The requirement to give written reasons in relation to a determination, or an application to dismiss under s 31(2)(a) but not for a decision not to dismiss;

4. The bias of the CC Act towards facilitating the flow of money pending final determination of the rights of the parties which is consistent with limiting the review right to dismissals of adjudication applications;

5. The mechanism of the Act which contemplates for the ultimate rights of the parties to be determined through arbitration or litigation.

15 MCC opposes the application for dismissal on the basis that the decision in Match Projects should not be followed.

16 MCC identified the threshold issue in relation to the application for dismissal as being whether the application should be summarily dismissed as frivolous, vexatious, misconceived or lacking in substance pursuant to s 47(1) of the SAT Act. Section 47 is not, however, the basis upon which Thiess makes its application. Its application is essentially that, for the reasons expressed in Match Projects , the Tribunal should find that MCC has no right of review in relation to Mr Davis' determination. Thiess argues that it is not enough for the applicant to assert that its position is arguable, but rather invites the Tribunal to reject MCC's argument.

17 In response, Counsel for MCC contended that s 46(1) ought to be construed as conferring a right of review in relation to a decision not to dismiss an application for adjudication. He relied upon an argument not raised in Match Projects . That argument relied upon the provisions of s 43 of the CC Act.

18 Counsel referred to decisions on comparable legislation in other jurisdictions suggesting that decisions of adjudicators purporting to exercise jurisdiction without reasonable foundation are invalid, and are susceptible to review and capable of being set aside. He relied on AJ Lucas Operations Pty Ltd v Mac-Attack Equipment Hire Pty Ltd [2009] NTCA 4 ( AJ Lucas Operations ). That case concerned the Construction Contracts (Security of Payments) Act 2009 (NT) (Northern Territory Act) which has provisions substantially the same as the CC Act. The court concluded that s 48(3) of Northern Territory Act (which is equivalent to s 46(3) of the CC Act) does not prevent the Supreme Court from declaring a determination of an adjudicator void for jurisdictional error where the adjudicator wrongly construed the Act so as to give himself jurisdiction. Mildren J was a member of the court in AJ Lucas Operations . His Honour had earlier decided the case of Independent Fire Sprinklers (NT) Pty Ltd v Sunbuild Pty Ltd [2008] NTSC 46 ( Independent Fire Sprinklers ) to which reference was made by the Tribunal in Match Projects (see [54]). In Independent Fire Sprinklers , Mildren J observed that the Northern Territory Act provides 'only for a limited appeal if the adjudicator dismisses the application and not otherwise'. In AJ Lucas Operations , His Honour repeated that conclusion (at [13]) when he said:

Section 48(3) of the Act contains a privative clause. Except as provided by s 48(1) (which applies only where the adjudicator dismisses the application under s 33(1)(a)), a decision of an adjudicator cannot be appealed or reviewed. However, given the nature of the tribunal which the Act provides for, this provision does not prevent the Court from declaring that a determination is void for jurisdictional error of a kind where the tribunal wrongly construes the Act.

19 Riley and Southwood JJ agreed with Mildren J's conclusion on that point.

20 Reference was also made to Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229 ( Coordinated Construction ) at [47] and Downer Construction (Australia) Pty Ltd v Energy Australia (2007) 69 NSWLR 72 ( Downer Construction ) at [87] as supporting the view that decisions for adjudicators are susceptible to review. Those cases concern legislation which is not identical to the CC Act, and accordingly are of limited assistance. But in any event, the decision in Coordinated Construction does no more than to suggest that prerogative relief may be available in relation to determinations by adjudicators under the relevant NSW legislation. The passage cited in the Downer Construction decision confirms that a reasonable but erroneous decision by an adjudicator does not invalidate the determination. Neither is, in my view, of assistance in construing the provisions of s 46 of the CC Act.

21 MCC argued that s 43(2) of the CC Act supports the contention that the legislature intended that a right of review of a decision not to dismiss an application under s 31(2)(a) should exist. Reliance was placed on the decisions in Cockatoo Dockyard Pty Ltd v Commonwealth of Australia (No 3) - (1994) 35 NSWLR 689 ( Cockatoo Dockyard ) at 694 - 296; Diploma Construction Pty Ltd v Windslow Corporation Ltd [2005] WASC 74 at para 7 - 9 and 17; Devaugh Pty Ltd v Lamac Developments [2000] WASC 314 at para 14-16; Miles v Palm Bridge Pty Ltd [2001] WASC 113 at para 7. Those cases concerned enforcement of awards following arbitration, pursuant to s 33 of the Commercial Arbitration Act 1985 (WA) which is in substantially the same terms as s 43 of the CC Act.

22 In Cockatoo Dockyard , Rolfe J dealing with the equivalent provision of the NSW Commercial Arbitration Act 1984 , said (at 695 - 696):

Prima facie, and so much was conceded by Mr Bennett, a party with the benefit of an award can seek to enforce it by resort to s 33. It is necessary for a party resisting an order under s 33 to establish a reason why the award should not be enforced. A reason may be that the Court considers the award is arguably vitiated by appealable error, or by other circumstances making it susceptible of being set aside in accordance with a provision of the Act. In other words it may well be an appropriate exercise of the Court's discretion not to grant leave if an application for leave to appeal is on foot or if an application has been made to set aside to award, for example, on the ground of misconduct. However unless an attempt is being made to have the award set aside I have difficulty envisaging other circumstances in which the discretion can be exercised. Certainly I do not regard s 33 as a 'back door' method of appealing against an award in so far as it constitutes a decision by the arbitrator how he should exercise his discretion.

23 In Diploma Construction , McKechnie J observed (at para 7 - 9):

In Cockatoo Dockyard Pty Ltd v Commonwealth of Australia (No 3) [1994] 35 NSWLR 689 Rolfe J observes that apart from circumstances where there is an attempt to set aside an award by an appeal:

'...it is difficult to envisage other circumstances in which the discretion not to grant leave can be exercised.'

That may be so, but lack of imagination does not completely define the discretion.

I accept, with respect, the judgment of Rolfe J in Cockatoo Dockyard where he said:

'In my opinion s 33 of the Act does not provide another method whereby a party may call in question the award of an arbitrator and, although perhaps under another guise, provide the Court with a power to reverse what the arbitrator has done.'

24 The other two decisions cited are consistent with those observations.

25 It is argued that s 43 of the CC Act, being substantially in the same terms as s 33 of the Commercial Arbitration Act 1985 , must necessarily give rise to the same considerations as apply to applications for leave under the latter provision. Because, it is argued, the discretion to grant leave under s 33 of the Commercial Arbitration Act 1985 is effectively limited to circumstances where there is an attempt to set aside the award, there must be circumstances where it is possible to set aside an adjudication which is sought to be enforced under the CC Act. That review must take place either within the framework of s 46(1) of the CC Act or by way of judicial review.

26 Having considered those submissions, I am not persuaded that I should depart from the view expressed in Match Projects . I do not accept that the considerations which may arise in an application for leave under s 43 of the CC Act are necessarily coextensive with the considerations applicable under s 33 of the Commercial Arbitration Act 1985 . That is because there is an essential difference between an adjudication under the CC Act, and an award under the Commercial Arbitration Act 1985 . The latter is a binding determination of the rights and liabilities of the parties in respect of the issues the subject of the arbitration. An adjudication under the CC Act is not of that character. Whilst a determination is binding on the parties, confers rights on contractors in the event of non - payment, and may be enforceable as an order of a court of relevant jurisdiction, it does not finally determine the rights of the parties. The parties retain the right to have their ultimate rights and liabilities determined through arbitration or by a court, with any ultimate award or orders providing for an adjustment between the amount paid under a determination and the amount finally found to be due under the contracts - see s 45 CC Act. That distinction may give rise to considerations in the context of an application for leave to enforce a determination under the CC Act which are not applicable to the Commercial Arbitration Act 1985 .Whether that proves to be the case will necessarily await decisions on questions of leave under s 43 of the CC Act which is still a relatively new provision.

27 But even apart from that distinction, the possible existence of an entitlement to prerogative relief against an adjudicator does not, in my view, lead to an inference that s 46(1) contemplates a review of a decision not to dismiss an application for adjudication. A review in the Tribunal's review jurisdiction of such a decision potentially involves far wider considerations than would be applicable on an application for judicial review. A review by the Tribunal involves a hearing de novo potentially involving the consideration of new material whether or not it exists at the time of the decision of the adjudicator - SAT Act s 27. Where an application is made to dismiss an application for adjudication on the ground contained in s 31(2)(a)(iv) questions of jurisdictional error will not arise. To assume the legislature intended to confer a right of review in relation to a refusal to dismiss an application because it had in mind that a refusal to grant leave to enforce the determination could only occur where such a review had been commenced is to read into the act a relationship between s 43 and s 46 which does not exist.

28 Apart from reliance on the effect of s 43, MCC relies on the conclusion reached in O'Donnell Griffin. In Match Projects , the Tribunal gave detailed consideration to the conclusions reached in O'Donnell Griffin . Nothing said in the applicant's submissions causes me to alter the view which I joined in expressing in Match Projects in relation to that decision.

29 It follows that I am of the view that s 46(1) of the CC Act does not confer on MCC a right to have the adjudicator's refusal to dismiss the application subjected to review by the Tribunal. That conclusion should lead to the dismissal of the present proceeding, unless it is appropriate to desist from reaching a conclusion and instead refer the matter under s 59(10) of the SAT Act to the Supreme Court.

Referral of question of law

30 Section 59(10) enables the President of the Tribunal to refer a question of law 'to the Supreme Court for decision by the Supreme Court as long as it is not a question of mixed law and fact'. As previously noted, MCC sought an order that the question of construction of s 46(1) be referred to the Court of Appeal given the apparent conflict between the Tribunal's decision in Match Projects , and the decision in O'Donnell Griffin . It makes that submission on the basis that that course is more time and cost effective and it is in the public interest that the question be resolved.

31 The argument that referral is more cost effective was based on the proposition that there would be delay in fully ventilating the arguments as to the jurisdictional issue. I do not accept that contention. In the context of the respondent's application to dismiss the application by MCC, MCC had the opportunity to put forward its arguments as to why it considered the Tribunal's conclusions in Match Projects were wrong. The question is a discrete question of construction of the CC Act. The respondent was entitled to make its application for dismissal in the way it did, and to be given the opportunity to argue that application, as it was. That argument took place within two days of the first directions hearing in the Tribunal. There is no reason why the argument could not be fully ventilated at the hearing of the dismissal application.

32 MCC also argued that, if it were to receive an adverse decision, an appeal is likely and the matter is of such nature that leave to appeal is likely to be granted. That is a proposition with which I agree. I do not agree, however, that those procedures will delay the ultimate resolution of the jurisdictional issue. It is not apparent to me that procedures in relation to the referral of a question of law to the Court of Appeal are likely to result in a more speedy hearing than an application for leave to appeal and the hearing of an appeal. Either course, I am not persuaded that any significant delay is likely to result in the matter proceeding by way of appeal, rather than by way of referral.

33 In relation to public interest, MCC submits that the framing of a jurisdictional issue by way of referral to the Court of Appeal would provide 'greater scope to deal with the broader issue of the scope of review of adjudicators' determinations under the CC Act while dealing with the narrower issue of the Tribunal's jurisdiction under s 46(1)'. As I understand that submission it is that, in the context of argument as to the effect of s 43 on the proper construction of s 46, consideration of the question of the availability of prerogative relief in relation to adjudicators' decisions would arise for consideration. I am not sure why it is said that the same issues would not arise in the context of an appeal against a decision of the Tribunal on the question of construction of s 46(1).

34 In any event, any referral of a question of law could only be of the question of law actually arising in the Tribunal proceedings. The question of law involves the proper construction of s 46(1). It does not directly involve 'the broader issue of the scope for review of adjudicators' determinations under the CC Act'.

35 MCC submit that any decision of the Court of Appeal resulting from a referral would provide certainty to the operation of s 46 which would have a benefit to the construction industry as a whole, and not merely the parties to this application. The same certainty would follow from a decision of the Court of Appeal in relation to an appeal from a decision of the Tribunal on the point. At the time of hearing of these matters, the Tribunal (and the parties), were aware that a decision of the Tribunal, differently constituted, which adopted the Tribunal's conclusion in Match Projects it already the subject of an application for leave to appeal to the Court of Appeal. It is apparent that either that matter, or this matter if MCC's application is dismissed, will ultimately provide the required certainty to the construction industry.

36 An issue arose at the hearing as to whether or not it is open to the President, under s 59(10) of the SAT Act, to refer a question to the Court of Appeal, as distinct from the General Division of the Supreme Court. Thiess submits that the reference to 'the Supreme Court' in s 59(10)(b) is a reference to a single judge of the Court. Thiess notes the separate references in s 105 of the SAT Act to the Court of Appeal on one hand, and 'the Supreme Court exercising its other jurisdiction' on the other. It also notes that the Interpretation Act 1984 (WA) separately defines the Supreme Court and the Court of Appeal. It notes the provisions of s 7(4) and s 41 of the Supreme Court Act 1935 (WA), which contemplates that the jurisdiction of the Court is to be exercised by a single judge unless the Court of Appeal is required to hear the matter. Thiess argues that s 58 of the Supreme Court Act 1935 (WA) which prescribes the jurisdiction of the Court of Appeal, does not require referrals from the Tribunal to be heard by the Court of Appeal.

37 MCC argues that the President of the Tribunal may refer a question of law to one or more judges of appeal on the basis that the Supreme Court Act 1935 (WA) establishes the Supreme Court and provides, by s 7, that the exercise of the Court's jurisdiction is divided between the General Division and the Court of Appeal. Thus, it is argued, a reference to the Supreme Court can be a reference to either division of the Court. MCC notes that the expression 'Supreme Court' is used in s 108(3) and s 111(3) of the SAT Act in a way which suggests reference to either division of the Supreme Court.

38 In view of the conclusion I have reached on the arguments put forward in favour of referral of the question, it is not necessary for me to determine whether it is open for me, as President of the Tribunal, to refer a matter to the Court of Appeal. The potential for argument on the point before the Court of Appeal is a factor against MMC's contention that referral would be more cost effective and efficient than permitting the matter to proceed by way of appeal.

39 In considering MCC's application for referral, I am mindful of the fact that, in Match Projects , the Tribunal gave lengthy and detailed consideration to the very question of law which MCC seeks to have referred. Having reached a considered decision on the point, and not having been persuaded by MCC's fresh argument that a different conclusion should be reached in this matter, the appropriate challenge for that position is by way of appeal.

40 For those reasons, I am of the view that it is not appropriate in this case to refer the question to the Supreme Court. Thiess is entitled to an order for dismissal of the application on the basis of want of jurisdiction.

Stay of adjudicator's decision

41 In light of the conclusion that the application should be dismissed, the application for a stay falls away. I would add, however, that even if I had declined to dismiss the application and referred the question of law to the Court of Appeal, I would not have been inclined to grant a stay pursuant to s 25(2) of the SAT Act. That is because I was informed that an application for enforcement of the adjudicator's determination is listed before the Master of the Supreme Court within the next few weeks. An order of the Tribunal staying the adjudicator's decision would pre-empt any decision on the application for leave to enforce the determination pursuant to s 43 of the CC Act. The CC Act contemplates that supervision of the enforcement of the determination is a matter for a court of competent jurisdiction, and it is difficult to see circumstances in which it would be appropriate for the Tribunal to effectively deprive the relevant court of that function.

Orders

1. The application is dismissed.

I certify that this and the preceding [41] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

JUSTICE J A CHANEY, PRESIDENT