SUPREME COURT OF QUEENSLAND

CITATION: John Holland Pty Ltd v Walz Marine Services Pty Ltd & Ors [2011] QSC 39

PARTIES: JOHN HOLLAND PTY LTD

ACN 004 282 268

(applicant)

v

WALZ MARINE SERVICES PTY LTD

ACN 107 611 361

(first respondent)

and

ADJUDICATE TODAY PTY LTD

ACN 109 605 021

(second respondent)

and

MAX TONKIN

(third respondent)

FILE NO/S: B11237/10

DIVISION: Trial Division

PROCEEDING: Application for Review

ORIGINATING

COURT: Supreme Court, Brisbane

DELIVERED ON: 11 March 2011

DELIVERED AT: Brisbane

HEARING

DATES: 18 November, 24 November 2010

JUDGE: Margaret Wilson J

ORDER: THE COURT ORDERS BY CONSENT THAT:

1. the application filed on 19 October 2010 be dismissed;

2. the first respondent’s application filed on 29 October 2010 be dismissed;

3. the applicant pay on a standard basis the costs of the first respondent of:

(a) the application filed on 19 October 2010; and

(b) the first respondent’s application filed on 29 October 2010;

4. the Registrar pay by cheque payable to the first respondent, Walz Marine Services Pty Ltd, the sum of $1,803,504.28 paid into the Court Suitors Fund by the applicant pursuant to an order made on 27 October 2010, together with any accretions due; and

5. within fourteen days of the applicant being notified that the first respondent has received the money referred to in order 4 above and of the amount of the accretions received pursuant to that order, the applicant shall pay to the first respondent interest calculated at the daily rate of $474.98 from 19 November 2010 to the date on which the first respondent has received the money referred to in order 4 above (in clear funds), less any accretions received by the first respondent under that order.

CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – where applicant company constructing wharf and coal loading facility – where first respondent subcontractor for marine works – where first respondent submitted claims for delay and disruption costs pursuant to subcontract – where first respondent made adjudication application under the Building and Construction Industry Payments Act 2004 – where adjudicator allowed the claim – where applicant applied for order that the decision be quashed or set aside – where applicant applied alternatively for declaration that decision is void or for order restraining the first respondent from enforcing or relying on decision – whether adjudicator erred in not applying his mind to the task of valuation of claims as required

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF CERTAIN CONTRACTS – where adjudicator held that subcontract entitled first respondent to delay and disruption costs for delay caused by inclement weather occurring after date for substantial completion – whether adjudicator erred in his interpretation of the subcontract

Building and Construction Industry Payments Act 2004 (Qld) ss 17, 18, 21, 24, 26, 27 Judicial Review Act 1991 (Qld), ss 18, 48 Supreme Court Act 1995 (Qld) s 128

Supreme Court of Queensland Act 1991 (Qld) s 68(5)

Uniform Civil Procedure Rules 1999 (Qld) r 781

Asian Pacific Building Corporation Pty Ltd v Aircon Duct Fabrication Pty Ltd [2010] VSC 300, cited

Bezzina Developers Pty Ltd v Deemah Stone (Qld) Pty Ltd [2008] 2 Qd R 495, applied

Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2003] NSWSC 1019, cited

Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 272 ALR 750, cited

Coordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd [2005] NSWCA 228, cited David Hurst Constructions Pty Ltd v Durham [2008]

NSWSC 318, cited

Kirk v Industrial Court of New South Wales (2010) 239 CLR 531, cited

Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2011] QCA 22 at [52] – [66], cited

COUNSEL: JK Bond SC and G Beacham for the applicant

P Dunning SC and P Franco for the respondents

SOLICITORS: DLA Phillips Fox Lawyers for the applicant

Clayton Utz for the respondents

MARGARET WILSON J :

[1] On 5 October 2010 an adjudicator made an adjudication decision under the Building and Construction Industry Payments Act 2004 (" BCIPA ") in a dispute between the applicant ("John Holland") and the first respondent ("Walz"). In this proceeding the applicant seeks –

(1) a prerogative order pursuant to s 43 of the Judicial Review Act 1991 (" JR Act ") quashing the decision;

(2) an order pursuant to s 20 of the JR Act quashing or setting aside the decision;

(3) alternatively, an order that a writ of certiorari issue to remove into the Supreme Court and quash the decision;

(4) alternatively –

(a) a declaration that the decision is void;

(b) an order restraining Walz from enforcing or otherwise relying upon the decision.

[2] The proceeding was listed on the Commercial List and heard over two days – 18 and 24 November 2010.

Overview

[3] John Holland was the main contractor for the construction of a new wharf and coal loading facility at Abbot Point in North Queensland. Walz was a specialist subcontractor for marine works. The contract between them was a lump sum contract for $12.5 million with provision for variations in certain circumstances.

[4] The sub-contract work was required to be finished by the Date for Substantial Completion. Clause 35 was concerned with extensions of time for substantial completion and clause 36 was concerned with delay and disruption costs.

[5] Walz submitted a payment claim pursuant to s 17 of BCIPA for $2,264,218.16 dated 6 August 2010, in which it made various claims for delay and disruption costs, styled "variations".

[6] The application before the Court is concerned with variations 100 – 104 and 108 – 137, which were claims for delay and disruption made "... pursuant to clause 36.2 of the contract ... and ... further, or alternatively, pursuant to clause 36.1 of the contract." The relevant delay events occurred after the Date for Substantial Completion.

[7] The construction of the new wharf and coal loading facility included the construction of an extension to the existing wharf, located approximately one kilometre out to sea from the land. Walz was required ( inter alia ) to drive piles into the seabed and install head stocks on the piles to create a bridging point, a strong point and three mooring dolphins. It also had to install galleries and trestles associated with two new conveyors being installed by John Holland. The work involved the use of a self-elevating platform ("SEP") barge to perform the marine works. The location of the works out to sea and the use of the SEP meant that the works were highly susceptible to the effects of rain, wind, lightning and waves.

[8] The contract contained provisions for the payment of delay costs where delay was caused by inclement weather events meeting certain thresholds.

[9] In its payment schedule pursuant to s 18 of BCIPA , John Holland contended that on the proper construction of the contract Walz was not entitled to the delay costs claimed. It did not contend that inclement weather events meeting the thresholds had not occurred. However, in its adjudication response it submitted that those thresholds had not been met.

[10] The adjudicator rejected the claim under clause 36.1. He rejected John Holland’s arguments about the construction of clause 36.2. He rejected its submissions that the thresholds had not been met, on the basis they were reasons for rejecting the claim not included in the payment schedule. He allowed the claim under clause 36.2 in an amount of $1,115,316.88.

[11] John Holland contends that the adjudicator fell into jurisdictional error by not applying his mind to the valuation of the claim as he was required to do.

[12] John Holland also contends that the adjudicator made another error (one within jurisdiction) – that he erred in concluding that clause 36.2 allowed Walz to claim for delay costs where the delay event occurred after the Date for Substantial Completion.

The Scope of this Ruling

[13] John Holland seeks various forms of relief in the alternative, including relief under two parts of the JR Act – prerogative relief under part 5 and a statutory order of review under part 3.

[14] Section 18 of that act provides –

" 18 Operation of other laws

(1) This Act has effect despite any law in force at its commencement.

(2) However, this Act does not –

(a) affect the operation of an enactment mentioned in schedule 1, part 1; or

(b) apply to decisions made, proposed to be made, or required to be made, under an enactment mentioned in schedule 1, part 2."

Part 3 division 2 of BCIPA, which is concerned with the adjudication of disputes, is among those enactments mentioned in schedule 1 part 2 of the JR Act .

[15] In the alternative, John Holland seeks declaratory relief pursuant to s 128 of the Supreme Court Act 1995 (Qld).

[16] In Kirk v Industrial Court of New South Wales the High Court held that State legislation depriving a State Supreme Court of legislative power to grant relief for jurisdictional error on the part of inferior courts and tribunals is constitutionally invalid. Subsequently the New South Wales Court of Appeal considered the impact of Kirk on that State’s analogue of BCIPA in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd . When the present application was heard, the impact of Kirk on Queensland’s BCIPA was under consideration by the Court of Appeal Division of this Court in Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd .

[17] Counsel for John Holland urged me to consider questions concerning the validity and interpretation of s 18(2) of the JR Act in light of Kirk . I was reluctant to do so because of the wide implications of a decision upon such questions, and considered that they might better be determined by the Court of Appeal upon referral by the Trial Division.

[18] Counsel for Walz submitted that this was an appropriate case for the exercise of the discretion in s 48 of the JR Act to dismiss the application. In the view I took, that discretion did not arise if decisions under part 3 division 2 of the BCIPA were validly excluded from review under the JR Act .

[19] In the upshot, I informed counsel that I would determine whether the adjudicator had made any error of law and if he had, whether it was a jurisdictional error, and then receive further submissions on how the application ought to proceed.

[20] Since the hearing, the Court of Appeal has delivered its decision in Northbuild. Their Honours discussed the impact of Kirk and the appropriate procedure for obtaining prerogative relief in this State in obiter dicta.

[21] Accordingly, I shall consider these questions –

(a) whether the adjudicator erred in not applying his mind to the task of valuation of the claims as he was required to do;

(b) if he erred in that way, whether his error was jurisdictional; and

(c) whether he erred in his interpretation of the contract, and then hear further from counsel.

Scheme of the legislation

[22] The BCIPA provides for progress payments to contractors whether or not the relevant contract makes provision for progress payments, and establishes a procedure for the making and recovery of such claims and their speedy adjudication where they are disputed. The scheme of the legislation was comprehensively discussed by White JA in Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd .

[23] By s 17 –

" 17 Payment claims

(1) A person mentioned in section 12 who is or who claims to be entitled to a progress payment (the claimant ) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment (the respondent ).

(2) A payment claim—

(a) must identify the construction work or related goods and services to which the progress payment relates; and

(b) must state the amount of the progress payment that the claimant claims to be payable (the claimed amount); and

(c) must state that it is made under this Act.

... ... ..."

[24] By s 18 –

" 18. Payment schedules

(1) A respondent served with a payment claim may reply to the claim by serving a payment schedule on the claimant.

(2) A payment schedule—

(a) must identify the payment claim to which it relates; and

(b) must state the amount of the payment, if any, that the respondent proposes to make ( the scheduled amount ).

(3) If the scheduled amount is less than the claimed amount, the schedule must state why the scheduled amount is less and, if it is less because the respondent is withholding payment for any reason, the respondent’s reasons for withholding payment.

…………."

[25] The next step is the making of an adjudication application under s 21, which provides–

"21. Adjudication application

(1) A claimant may apply for adjudication of a payment claim (an adjudication application ) if—

(a) the respondent serves a payment schedule under division 1 but—

(i) the scheduled amount stated in the payment schedule is less than the claimed amount stated in the payment claim; or

(ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount; or

(b) …

………

(3) An adjudication application—

(a) must be in writing; and

(b) must be made to an authorised nominating authority chosen by the claimant; and

(c) must be made within the following times—

(i) for an application under subsection (1)(a)(i)— within 10 business days after the claimant receives the payment schedule;

(ii) for an application under subsection (1)(a)(ii)— within 20 business days after the due date for payment;

(iii) for an application under subsection (1)(b)—within 10 business days after the end of the 5 day period referred to in subsection (2)(b); and (d) must identify the payment claim and the payment schedule, if any, to which it relates;

and

(e) must be accompanied by the application fee, if any, decided by the authorised nominating authority; and

(f) may contain the submissions relevant to the application the claimant chooses to include."

[26] The respondent may give an adjudication response pursuant to s 24, which provides –

"24. Adjudication responses

………….

(2) The adjudication response—

(a) must be in writing; and

(b) must identify the adjudication application to which it relates; and

(c) may contain the submissions relevant to the response the respondent chooses to include.

…………….

(4) The respondent can not include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule served on the claimant.

……………."

[27] Thus, the issues to be decided by the adjudicator are defined in the payment claim and the payment schedule. The respondent must state its reasons for wholly or partially withholding payment in the payment schedule. While the parties may make submissions in support of their respective positions in the adjudication application and the adjudication response respectively, the respondent cannot use the adjudication response as a vehicle to advance reasons for withholding payment which it failed to include in its payment schedule.

[28] The adjudicator’s role is prescribed in ss 26 and 27, which provide –

" 26 Adjudicator’s decision

(1) An adjudicator is to decide—

(a) the amount of the progress payment, if any, to be paid by the respondent to the claimant (the adjudicated amount ); and

(b) the date on which any amount became or becomes payable; and

(c) the rate of interest payable on any amount.

(2) In deciding an adjudication application, the adjudicator is to consider the following matters only—

(a) the provisions of this Act and, to the extent they are relevant, the provisions of the Queensland Building Services Authority Act 1991 , part 4A;

(b) the provisions of the construction contract from which the application arose.

(c) the payment claim to which the application relates, together with all submissions, including relevant documentation, that have been properly made by the claimant in support of the claim;

(d) the payment schedule, if any, to which the application relates, together with all submissions, including relevant documentation, that have been properly made by the respondent in support of the schedule;

(e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates.

(3) The adjudicator’s decision must—

(a) be in writing; and

(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.

27 Valuation of work etc. in later adjudication application

(1) Subsection (2) applies if, in deciding an adjudication application, an adjudicator has, under section 14, decided—

(a) the value of any construction work carried out under a construction contract; or

(b) the value of any related goods and services supplied under a construction contract.

(2) The adjudicator or another adjudicator must, in any later adjudication application that involves the working out of the value of that work or of those goods and services, give the work, or the goods and services, the same value as that previously decided unless the claimant or respondent satisfies the adjudicator concerned that the value of the work, or the goods and services, has changed since the previous decision."

[29] By s 31 an adjudication certificate may be filed as a judgment for a debt and enforced in a court of competent jurisdiction. Subsection 31(4) provides:–

"(4) If the respondent commences proceedings to have the judgement set aside, the respondent—

(a) is not, in those proceedings, entitled—

(i) to bring any counterclaim against the claimant; or

(ii) to raise any defence in relation to matters arising under the construction contract; or

(iii) to challenge the adjudicator’s decision; and

(b) is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final decision in those proceedings."

[30] However, an adjudication does not finally determine the rights of the parties.

Section 100 provides:–

" 100 Effect of pt 3 on civil proceedings

(1) Subject to section 99, nothing in part 3 affects any right that a party to a construction contract—

(a) may have under the contract; or

(b) may have under part 2 in relation to the contract; or

(c) may have apart from this Act in relation to anything done or omitted to be done under the contract.

(2) Nothing done under or for part 3 affects any civil proceedings arising under a construction contract, whether under part 3 or otherwise, except as provided by subsection (3).

(3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal—

(a) must allow for any amount paid to a party to the contract under or for part 3 in any order or award it makes in those proceedings; and

(b) may make the orders it considers appropriate for the restitution of any amount so paid, and any other orders it considers appropriate, having regard to its decision in the proceedings."

Thus, a party may "claw back" progress payments which it is forced to make through the adjudication process in subsequent civil proceedings.

Relevant provisions of contract

[31] So far as presently relevant clauses 35.5 and 36 of the contract were in the following terms:

" 35.5 Extension of Time for Substantial Completion

35.5.1 Delay Events

Subject to Clauses 35.5.2 to 35.5.6, the Subcontractor shall only be entitled to an extension of time for Substantial Completion if there is a delay to the Works reaching Substantial Completion by the date for Substantial Completion and the delay is caused by:

a) any of the following events occurring on or before the Date for Substantial Completion:

i) Industrial conditions being strikes or lockouts, which are in the reasonable opinion of the Main Contractor’s Representative, beyond the Subcontractor’s control and were not caused or contributed to by the Subcontractor;

ii) Inclement Weather and its effects but only where the relevant inclement weather thresholds set out in Annexure Part D of these General Conditions are first satisfied.

b) any of the following events whether occurring before, on or after the Date for Substantial Completion:

i) delays caused by:

• the Principal;

• the Superintendent;

• the Main Contractor;

• the Main Contractor’s Representative;

• employees, consultants, other contractors or agents of any of the above.

ii) latent conditions;

iii) variations directed under Clause 40;

iv) directions by municipal, public or statutory authorities but not where the direction arose from the failure of the Subcontractor to comply with a requirement referred to in Clause 14.1;

v) delays by municipal, public or statutory authorities not caused by the Subcontractor;

vi) any breach of the Contract by the Main Contractor;

vii) any other cause which is expressly stated in the Subcontract to be a cause for an extension of time for Substantial completion;

viii) changes in the law; or

ix) claims referred to in clause 17.1(v).

Where more than one event causes concurrent delays and the cause of at least one of those events, but not all of them, is not a cause referred to in a) and b) in the preceding paragraph, then to the extent that the delays are concurrent, the Subcontractor shall not be entitled to an extension of time for Substantial Completion.

Where more than one event causes concurrent delays and to the extent that the cause of those events are of a type referred to in a) or b) in the preceding paragraph, then to the extent that the delays are concurrent, the Subcontractor shall only be entitled to an extension of time for Substantial Completion for one of those events. In determining whether the Subcontractor is or will be delayed in reaching Substantial Completion regard shall not be had to whether the Subcontractor can, by committing extra resources or incurring extra expenditure, make up the time lost.

For the avoidance of doubt, an Extension of Time for Substantial Completion will only be granted if the Subcontractor can demonstrate to the Main Contractor’s Representative, that the Works the subject of the delay event

a) were on the critical path at the time of the delay; or

b) as a result of the delay, the critical path is affected.

...

35.5.6 Inclement Weather

Inclement Weather means any of the following:

a) wet weather (rainfall) and its effects;

b) lightning and its effects;

c) hail and its effects;

d) strong wind and its effects;

e) high wave height and its effects;

f) a tropical cyclone and its effects; or

g) fog and its effects.

The Subcontractor will not be entitled to any extension of time, any costs, any expenses or any other remedy on account of Inclement Weather unless the thresholds nominated in Annexure Part D of these General Conditions are first satisfied and the notification required by Clause 35.5.2.1 or, if no extension of time is claimed, clause 36.2 is given." (Emphasis added).

" 36. DELAY AND DISRUPTION COSTS

36.1 Subcontractor’s Delay Costs where Subcontractor entitled to an extension of time

The Subcontractor shall only be entitled to delay or disruption costs, if the Subcontractor is entitled to an extension of time for Substantial Completion pursuant to Clause 35.5.1(a)(ii) or (b)(i) in which case the Main Contractor shall pay the Subcontractor extra costs calculated in accordance with the Inclement Weather Charge RateMatrix in Annexure Part D of these General Conditions, as approved by the Main Contractor’s representative.

...

36.2 Subcontractor’s Delay Costs where Subcontractor not entitled to an extension of time

The Subcontractor shall also be entitled to delay or disruption costs, even if the Subcontractor is not entitled to an extension of time for Substantial Completion pursuant to Clause 35.5 where the delay is caused as a result of an event specified in Clause 35.5.1(a)(ii), in which case the Main Contractor shall pay the Subcontractor extra costs calculated in accordance with the Inclement Weather Charge Rate Matrix in Annexure Part D of the General Conditions, as approved by the Main Contractor’s Representative.

No entitlement shall exist for delay and disruption costs referred to in this Clause 36.2 where a delay that is caused as a result of an event specified in Clause 35.5.1(a)(ii) is concurrent with a delay caused by a Subcontractor, its employees, agents or subcontractors or for which a Subcontractor is not entitled to an extension of time pursuant to Clause 35.5. For example, where Inclement Weather is concurrent with a Subcontractor caused delay such as materials not being delivered to site due to the Subcontractor’s lack of performance, there would be no entitlement to delay and disruption costs.

If an Inclement Weather event occurs for which the Subcontractor seeks to claim delay or disruption costs under this Clause 36.2, the Subcontractor shall:

a) upon the commencement of the Inclement Weather event give the Main Contractor’s Representative oral notice of the existence of the Inclement Weather event with a view to the contractor and the Main Contractor’s Representative agreeing the existence of an Inclement Weather event, and the Subcontractor’s employee, agents and subcontractors and the Subcontractor’s Plant & Equipment affected by the Inclement Weather event;

b) upon the conclusion of the Inclement Weather event, give the Main Contractor’s Representative oral notice of the conclusion of the Inclement Weather event with a view to the Subcontractor and the Main Contractor’s Representative agreeing the duration of the Inclement Weather event and the Subcontractor’s employee, agents and subcontractors and the Subcontractor’s Plant & Equipment affected by the Inclement Weather event;

c) within 1 Business Day of the oral notice given under paragraph b), confirm in writing the outcome of the discussions between the Subcontractor and the Main Contractor’s Representatives; and

d) submit any claim for delay or disruption costs in writing to the Main Contractor’s Representative within 7 Business Days of the Inclement Weather event ceasing and which sets out:

i) the relevant Inclement Weather event;

ii) the date the Inclement Weather event commenced;

iii) the date the Inclement Weather event ceased;

iv) the period of the Inclement Weather event;

v) the activity or activities on the affected Inclement Weather event;

vi) the delays costs claimed, including sufficient evidence, details and the calculations for the Main Contractor’s Representative to verify the claim; and

vii) any other relevant facts on which the claim is based"

[32] Annexure Part D to the contract contained a description of the respective thresholds for wet weather, lightning, hail, strong wind, high wave height, tropical cyclone, and fog to be satisfied as an inclement weather event. For example, "high wave height" was described in these terms:

"5. High Wave Height

For marine-borne operations, including initial mobilisation of goods and floating plant at or remote from the Site, including the self elevating platform, tugs and barges to the Site, where the observed significant wave height is in excess of 0.57 m for jacking and moving operations by the self elevating platform, and 0.8 m for material supply by water, and 1.0 for all other marine operations. The extent of the delay and/or disruption shall be measured in two hourly blocks. Significant wave height is defined as the mean height of the highest one-third of the waves.

Significant wave height will be measured over a minimum period of 30 minutes by information from the wave recorder located at the Site. Where the wave rider buoy is inoperable or unable to record the wave height, significant wave height will be measured over a minimum period of 30 minutes by observations against a tide board position located at an agreed position near the workfront to reflect true ambient sea conditions."

Then there was a matrix by which delay costs were to be calculated. It was in these terms:

Payment Claim

[33] The payment claim took the form of a two-page document identifying the claim in the following terms:–

"2. The amount claimed in this payment claim is $2,264,218.16 (plus GST) consisting of:

(a) $411,556 for the value of work carried out by Walz in the performance of the Contract to the date of this Payment Claim pursuant to Clause 42.1 of the Contract;

(b) delay costs:

(i) in the amount of $251,984.78 for claim numbers 6, 14-16, 18, 19, 53 and 55, pursuant to clause 36.1 of the Contract; and

(ii) the amount of $1,204,969.25 for claim numbers 25, 32, 42, 62, 100-104 and 108- 137,

A. pursuant to clause 36.2 of the Contract; and

B. further, or alternatively, pursuant to clause 36.1 of the Contract;

(c) variation costs in the amount of $395,708.13 for claim numbers 36, 41, 68, 69 and 97 pursuant to clause 40.5(1) of the Contract; and (d) GST on the above amounts."

[34] There was then reference to supporting documentation – a spreadsheet providing a complete reconciliation of the amounts claimed under the contract to date, highlighting in blue the amounts previously claimed and paid and leaving unhighlighted those amounts claimed by the payment claim together with a series of documents in support of each of the claim numbers referred to in paragraph 2(b). The two-page claim document said ( inter alia ):–

"7. In respect of Walz’s claim for delay costs at subparagraph 2(b)(ii)(A), Walz is entitled to the claimed delay costs pursuant to clause 36.2 of the Contract for Inclement Weather (clause 35.51(a)(ii) of the Contract) in respect of claim numbers 25, 32, 42, 62, 100-104 and 108-137. Documents in support of Walz’s claim under this provision can be found behind the relevant tabs at Annexure B.

8. Further, or alternatively, in respect of claim numbers 25, 32, 42, 62, 100-104 and 108-137, Walz is entitled to the claimed delay costs on the basis of extension of time claims pursuant to clause 36.1 of the Contract and the documents in support of these extension of time claims can be found behind the relevant tab at Annexure B."

[35] Taking variation 100 as an example, the supporting documentation consisted of a document which described the work and the total amount claimed, followed by another document identifying the date the delay commenced, the event, the cause of the delay, the possible delay (i.e. duration) and then a break-up of the amount claimed in accordance with the Annexure Part D of the contract.

[36] The documents in support of claim 100 also included schedules of employees on duty on the day in question, and wave height observations.

Payment Schedule

[37] The payment schedule consisted of a one-page summary which identified the total amount claimed and the scheduled amount (which was nil). The reasons for withholding payment were set out in an attached schedule.

[38] Part A of the schedule contained a general introduction in which John Holland said ( inter alia ):–

"4. Walz’s claims for time related variations and inclement weather events suffer from a number of fundamental flaws; namely:

4.1 For all the claims submitted in its Payment Claim, Walz has failed to comply with the contractual preconditions to entitlement and payment for extensions of time and delay costs set out in the Subcontract.

4.2 Walz has failed to submit extension of time claims as required under the Subcontract at all."

...

6. As a result of Walz’s delays in completing the works under the Subcontract, the completion of John Holland’s work under the Main Contract was affected...

7. Despite Walz failing to complete the works by the Date for Substantial of Completion due to its own poor management and progress of the works, in its Payment Claim, Walz now seeks to claim the benefit of its own delay and has claimed $1,115,316.88 for inclement weather events which occurred after 9 December 2009...

8. John Holland further points out that even if all of Walz’s claims for extensions of time were accepted (which is denied) regardless of whether the works on the critical path were affected, this would only extend the hypothetical corrected date for Substantial Completion to 3 March 2010...

9. Accordingly, for the reasons set out in this Payment Schedule, the amount payable to Walz is $Nil ."

This was followed by a schedule in the following terms:

[39] Part B of the payment schedule contained reasons for withholding payment for claims for variations and inclement weather. There was a table dealing with the variations seriatim . Against numbers 100-137 the following summary of reasons for the scheduled amount being Nil was provided:–

"For all of these inclement weather claims, Walz is not entitled to any EOTs because:

• Pursuant to clause 35.5.1(a) of the Contract, to claim any entitlement, the event must occur on or before the Date for Substantial Completion (i.e. 9 December 2009).

• All of these claims relate to events which occurred after the Date for Substantial Completion.

• Walz is not entitled to delay costs calculated on the basis of Annexure D of the Contract as:

• Pursuant to clause 36.2 of the Contract, no entitlement exists for delay or disruption costs where a delay caused by inclement weather is concurrent with a delay caused by the subcontractor.

• All of these claims are for inclement weather events after the Date for Substantial Completion.

• Accordingly, Walz was in culpable delay from 9 December 2009 onwards due to its own poor management and progress of the Contract works. Walz should never have been on site beyond 9 December 2009.

• Therefore Walz is not entitled [to] any delay or disruption costs for inclement weather beyond 9 December 2009 as any such delays were concurrent with Walz’s own culpable delay.

• In any event, Walz did not comply with clause 35.5.2.1 which pursuant to clause 36.4 is a condition precedent to disruption/delay costs entitlement."

[40] The following then appeared:–

" 12. Walz’s Failure to Comply with Contractual Preconditions to Entitlement and Payment

Walz has not complied with the mandatory contractual preconditions for an extension of time or for delay and disruption costs for ALL relevant time related variations and inclement weather claims in its Payment Claim as summarised in the above table.

...

Entitlement to Delay or Disruption Costs

25. Clause 36 establishes the entitlement to claim delay or disruption costs.

26. Clause 36.1 states:

'36.1 Subcontractor’s Delay Costs where the Subcontractor entitled to an extension of time

The Subcontractor shall only be entitled to delay or disruption costs, if the Subcontractor is entitled to an extension of time for Substantial Completion pursuant to Clause 35.5.1(a)(ii) or (b)(i)...'

27. Clause 36.4 states:

'it shall be a condition precedent to any entitlement of the Subcontractor to the payment of delay costs under Clause 36.1 that the Subcontractor has complied strictly with the requirements of Clause 35.5.2.1.'

28. As stated above, every claim by Walz for an extension of time and delay or disruption costs in its Payment Claim has failed to comply with these mandatory preconditions.

29. Accordingly John Holland withholds payment for the time related variation and inclement weather claims totalling $1,852,662.16 on the basis that in line with the case authorities discussed above, Walz is not entitled to any extensions of time or delay costs due to its failure to comply with the mandatory contractual preconditions set out in the Subcontract.

Annexure D of the Subcontract

30. Annexure Part D of the Subcontract sets out the 'Delay Costs Charge Rate Matrix' ( Delay Costs Matrix ) which provides the basis to calculate any delay and disruption costs pursuant to clause 36 of the Subcontract. The Delay Costs Matrix provides for Type 1, Type 2 and Type 3 costs. The Delay Costs Matrix notes that Type 1 costs are only to be claimed ' when critical path works are impacted for each day for which an extension of time to the Date for Practical Completion is granted .'

31. John Holland notes that Walz has claimed these Type 1 costs for all the time related variations and inclement weather claims included in its Payment Claim. As stated above, it is John Holland’s position that Walz is not entitled to any extensions of time. Thus, Walz is not entitled to any Type 1 costs for any of its claims."

[41] Later, the following appeared:

" VARIATIONS #100-#104, #108-#137 (INCLUSIVE)

234. Documentation referred to in the below submissions in support John Holland’s position for these variation claims is attached at Tab 8 .

235. These 35 claims are all inclement Weather claims for delays which occurred after the Date for Substantial Completion under the Subcontract (9 December 2009). The total cost claimed by Walz is $1,115,316.88.

Date for Substantial Completion

...

Subcontract Conditions Relating to Inclement Weather

...

Walz’s Argument Based on Clause 36.1

...

Walz’s Argument Based on Clause 36.2

250. In relation to Walz’s reliance on clause 36.2 of the Subcontract, even if Walz is not entitled to an extension of time for Substantial Completion, Walz is entitled to claim delay or disruption costs only in circumstances where:

250.1 The delay is caused as a result of an inclement weather event where the relevant inclement weather thresholds set out in Annexure Part D are satisfied.

250.2 The delay caused as a result of inclement weather is not concurrent with a delay caused by the Subcontractor.

251. John Holland rejects Walz’s claim for delay costs on the basis of clause 36.2 as any delays caused by inclement weather were concurrent with the delays caused by Walz in failing to achieve Substantial Completion by the Date for Substantial Completion of 9 December 2009.

252. Pursuant to clause 33.2 of the Subcontract, Walz was obliged to not depart from the construction program attached to the Subcontract or a construction program furnished to John Holland’s representative.

253. Since early 2009, Walz continually fell behind the program and recovery programs were required in order to reduce further impacts on the Program. Examples of John Holland’s dissatisfaction with the slippage behind the Subcontract program are John Holland’s letters to Walz on 9 September 2009 (Ref J4094/313/MB Letter 8) and 3 March 2009 (Ref J4094/150/MB Letter 11).

254. In its letter dated 9 September 2009, John Holland noted that at that stage, Walz was 61 days behind program and John Holland had incurred substantial extra costs in the order of $5 million as a result of Walz caused delays.

255. Pursuant to clause 35.2 of the Subcontract, Walz was obliged to complete the wor[k]s by 9 December 2009. Walz is therefore in breach of the Subcontract by failing to complete the works by the contracted date. At the time these inclement weather events occurred, John Holland should not have been on site. Walz did not complete the physical works until 8 April 2010 and Substantial Completion was certified on 29 July 2010.

256. Accordingly, if Walz had fulfilled its contractual obligation to complete the Subcontract works by 9 December 2009 and had not breached the Subcontract, these inclement weather claims would never have arisen.

257. Therefore Walz is precluded from relying on clause 36.2 to claim delay costs for the inclement weather claims as clearly any delays caused by inclement weather events after 9 December 2009 were concurrent with the culpable delay of Walz, who due to its own poor management and poor performance, failed to complete the works by the contractual date for Substantial Completion." (Emphasis added.)

Adjudication application

[42] The adjudication application consisted of an application form, submissions containing over 400 paragraphs and statutory declarations by three people. There were various attachments to the statutory declaration of Mr Smith including a tabbed bundle of documents relating to each of the variations in issue.

[43] In this material Walz gave details of the inclement weather events relied upon. Its counsel submitted to this Court that it did so in the context of John Holland having alleged in the payment schedule that Walz had not given due notification of the events. He said that the particulars of the inclement weather events were provided in order to demonstrate that John Holland was not prejudiced by the late notice: it knew about the events all along. In paragraphs 354 – 357 Walz said:–

"354. Stephen Smith and Michael Baumgart give evidence of the occurrence of the inclement weather, the activities that were delayed by the inclement weather, and the duration of the delay: statutory declaration of Stephen Grant Smith from paragraph 28; Michael Baumgart paragraphs 55 to 64.

355. The inclement weather delayed Walz because:

(a) it was unable to perform works as scheduled;

(b) it could not carry out other work under the Subcontract because the only work that [was] available to be performed was works as scheduled.

356. The amounts claimed are calculated in accordance with Annexure Part D Delay Costs Charge Rate Matrix.

357. John Holland does not in its payment schedule dispute:

(a) the occurrence of the inclement weather;

(b) the delay to Walz;

(c) the duration of the delay; or (d) the quantification of the delay costs. Although there is no factual basis on which John Holland could dispute those matters, it is in any event prevented from now raising those matters as a reason for withholding payment by reason of section 24(4) of the Payments Act."

Adjudication response

[44] John Holland responded to this material in its adjudication response. In particular it said in paragraph 96:

"96.3 Contrary to its arguments in its Adjudication Application, for particular claims:

...

96.3.2 The weather event did not meet the required thresholds under the Subcontract; or

...

96.4 For all of the claims submitted in its Payment Claim, Walz has failed to comply with the contractual preconditions to entitlement and payment for extensions of time and delay costs set out in the Subcontract.

...

96.6 Walz was not prevented in any way from relying upon the mandatory contractual preconditions.

97. John Holland’s response to Walz legal arguments relating to extensions of time and time related costs is set out below."

[45] Later in the adjudication response John Holland said:–

"5.3 Delay and disruption costs – clause 36.1

163. In response to paragraph 99 of the Adjudication Application, John Holland reiterates that the claims which are the subject of Walz’s Payment Claim and Adjudication Application have been rejected by John Holland, in the exercise of its discretion acting honestly and fairly.

164. This is because Walz has failed to demonstrate it has any entitlement to the claims the subject of this Adjudication for a combination of the following reasons:

164.1 Walz’s failure to comply with notice requirements under the Subcontract.

164.2 Walz’s failure to demonstrate with requisite supporting information and programming evidence that the works, the subject of the delay event were on the critical path or as a result of the delay, the critical path is affected.

164.3 Some specific claims do not qualify as an event for which Walz is entitled to extensions of time and/or delay costs.

...

166. However, in order for the Adjudicator to make his own assessment of the claims for extensions of time and delay costs, the Adjudicator would have to go through the following logical steps:

166.1 Determine whether there was a delay event entitling Walz to an extension of time. In the case of inclement weather, the Adjudicator would need to determine whether the weather event exceeded the thresholds stipulated in Annexure Part D to AS2545-1993.

166.2 Determine whether the delay event disrupted the progress of the works.

166.3 Determine whether the delay event disrupted progress to work activities on the critical path. Pursuant to clause 35.5.1 of the Subcontract, an extension of time for Substantial Completion will only be granted if the Subcontractor can demonstrate that the Works the subject of the delay event:

166.3.1 were on critical path at the time of the delay; or

166.3.2 as a result of the delay, the critical path is affected.

166.4 It is only the impact of the activities on the longest critical path that would cause delay to the completion of the works...

166.5 The Adjudicator must determine if delay costs are payable under the Subcontract and apply the applicable rates provided in the 'Delay Costs Charge Rate Matrix' in Annexure Part D of the Subcontract."

[46] John Holland repeated its contention that the claims 100 – 104 and 108 – 137 did not qualify as an event for which Walz was entitled to an extension of time and/or delay costs in paragraph 390.3. In paragraph 392 it contended:–

"392 For claims V100-104 and V108-V137 it will be apparent from the documentation behind each relevant Tab contained in Walz’s Adjudication Application that Walz has failed for each claim to:

392.1 Substantiate that the inclement weather thresholds set out in Annexure Part D of the Subcontract have been met (apart from 8 claims).

392.2 Set out the delay costs claimed, including sufficient evidence, details and calculations for the Main Contractor’s Representative to verify the claim.

392.3 Attach a revise[d] program for the Works which identifies the impact of the delay and the new date on which the Subcontract anticipates reaching Substantial Completion."

[47] John Holland went on to contend that the adjudicator had to be satisfied that Walz had proved its entitlement to the amounts it claimed by way of payment claim and adjudication application (paragraph 405). It submitted:–

"407 John Holland submits that Walz has failed to satisfy its burden of proof in relation to the extensions of time and delay costs that it is now claiming for claims V100-104 and V108-137.

408 It also needs to be pointed out that in accordance with the principles set out in Multiplex Constructions Pty Limited v Luikens & Ors ( attached at Tab E2 Folder 1 ), Walz is precluded from introducing new factual and legal bases and information to support its Adjudication Application which were not contained within its Payment Claim. To the extent that Walz seeks to do so, the Adjudicator is not entitled to have any regard to them.

409 John Holland notes that in Walz’s Adjudication Application, it has produced weather data for the first time to substantiate some of its claims for V100-104 and V108-137.

Accordingly, in submitting its Payment Schedule, John Holland was not in a position to comment on the merits of Walz’s inclement weather event claims to the extent that no weather data was provided. To this extent, the Adjudicator should not have regard to this weather data in making his or her assessment.

410 In the alternative, John Holland is not precluded from commenting on the merits of Walz’s claims as Walz has produced new material in its Adjudication Application which John Holland is rightfully entitled to respond to in its Adjudication Response.

411 In line with the decision of Hervey Bay (JV) Pty Ltd v Civil Mining and Construction Pty Ltd and Ors , the Adjudicator is entitled to make his own assessment of the claims for extensions of time and delay costs.

412 However, in order for the Adjudicator to properly assess Walz’s claims for V100-104 and V108-137, the following logical steps would need to be followed:

412.1 Determine whether there was a weather event entitling Walz to an extension of time. The Adjudicator would need to determine whether the weather event exceeded the thresholds stipulated in Annexure Part D to AS2545-1993.

412.2 Determine whether the inclement weather event disrupted the progress of the works.

412.3 Determine whether the inclement weather event disrupted progress to work activities on the critical path. Pursuant to clause 35.5.1 of the Subcontract, an extension of time for Substantial Completion will only be granted if the Subcontractor can demonstrate that the Works the subject of the delay event:

412.3.1 were on critical path at the time of the delay; or

412.3.2 as a result of the delay, the critical path is affected.

412.4 It is only the impact to the activities on the longest critical path that would cause delay to the completion of the works. An impact to any activity on other path(s) or any activity which are not critical at all, would only cause delay to the progress but not to the completion and an extension of time is therefore not necessary.

412.5 Determine if delay costs are payable under the Subcontract, and apply the applicable rates provided in the 'Delay Costs Charge Rate Matrix' in Annexure Part D of the Subcontract. Different costs are payable depending on whether Walz was entitled to an extension of time or not for inclement weather events."

[48] In paragraphs 413 – 430 John Holland submitted that Walz had fallen short of proving an entitlement to claims V100 – 104 and V108 – 137 (apart from a small number of them) for the following reasons:

"413 ...

Incorrect Description of the Claims

414 Most of the alleged inclement weather events listed in the table at paragraph 353 of Walz’s Adjudication Application incorrectly describe the nature of the alleged inclement weather event when compared with the statutory declarations of Stephen Smith and Michael Baumgart.

Weather Data and Thresholds

415 It can be seen from the Merits Table attached at Tab E3 Folder 1 that even if John Holland’s primary arguments are put to one side, out of the 35 inclement weather claims, only 8 of these claims satisfy the thresholds for inclement weather events set out in Annexure Part D of the Subcontract. Accordingly, the remaining 27 claims should be disregarded by the Adjudicator in determining whether Walz is entitled to any extensions of time or delay costs.

416 The remaining 27 claims fail to satisfy the thresholds for inclement weather for a combination of the following reasons:

416.1 Walz has failed to provide any weather data at all to substantiate its claim.

416.2 Walz has provided incomplete data or data which does not meet the minimum measuring requirements pursuant to Annexure Part D of the Subcontract.

416.3 In numerous instances, Walz has provided Bureau of Meteorology (BOM) data from Bowen to demonstrate an inclement weather event. The distance between Bowen, where the weather data was collected by BOM, and Abbot Point is approximately 36km. With that distance, it would be difficult to accept that any weather condition in Bowen would mean the same in Abbot Point, particularly in relation to rain fall. There were two rain gauges on Site where all parties (including other subcontractors) were free to collect data. Walz should have used that data to determine an Inclement Weather event.

No Critical Path Analysis

417 Pursuant to clause 35.5.1 of the Subcontract, in order to claim an extension of time, Walz must satisfy John Holland that the works, the subject of the delay event were on the critical path or as a result of the delay, the critical path is affected.

...

423 Accordingly, Walz’s claims for V100-104 and V108-137 fail to set out at all whether affected activities were critical or non-critical and the impacts on program. The Adjudicator is given absolutely no guidance from Walz in order to make an assessment as to whether Walz is entitled to extensions of time.

...

Incorrect Calculation of Delay Costs

425 ...

426 John Holland notes, that for claims V100-104 and V108-137 (apart from claims V102 and V120) Walz has included amounts for Type 1, 2 and 3 costs.

427 As the Delay Costs Matrix makes clear, Walz is only entitled to claim Type 1 costs where Walz is entitled to an extension of time. Accordingly, for inclement weather claims V100-104 and V108-137, Walz is only permitted to claim Type 1 costs for those claims for which it demonstrates that activities on the critical path were affected, for which an extension of time should be granted.

428 As set out above, Walz has failed to demonstrate which claims relate to activities that were on the critical path and thus have not justified its claim to Type 1 costs.

429 It would appear that Walz has simply claimed all Type1, 2 and 3 costs for every claim (apart from V102 and V120) without conducting any critical path analysis to justify claiming such delay costs.

430 Accordingly, Walz has incorrectly calculated its delay costs due to its flawed application of the Type 1, 2 and 3 costs in the Delay Costs Matrix."

[49] In paragraphs 431 – 436 John Holland submitted that some of these claims should not be allowed because they related to delay after 8 March 2010, which was the date by which Walz asserted it had achieved Substantial Completion.

Adjudicator’s decision

[50] The adjudicator said:–

"200. The Respondent makes no submissions in the payment schedule to challenge whether the inclement weather events met the thresholds specified in Annexure Part D, the extent of the inclement weather, the extent of delay caused, nor the delay costs claimed.

201. In fact, the opposite appears to be the case. In paragraph 7 of the payment schedule, the Respondent referred to the Claimant claiming $1,115,316.88 'for inclement weather events which occurred after 9 December 2009.' On page 21 of the payment schedule, in relation to 'all of these inclement weather claims’, the Respondent states ‘All of these claims are for inclement weather events after the Date for Substantial Completion.' [Respondent’s underlining.] This is repeated in paragraph 235.

202. Therefore, in my view, the submissions in paragraphs 413 to 430 in the adjudication response are barred by virtue of s 24(4) of the Act, as they are reasons for rejecting the claims that were not included in the payment schedule. These submissions cannot be considered.

203. The costs claimed appear to be based on the rates set out in Annexure Part D. In my view, the reference to delay or disruption costs in clause 36.2 can only be a reference to the delay or disruption costs referred to in clause 36.1. Pursuant to clause 36.1 the costs are to be calculated in accordance with the 'Inclement Weather Charge Rate Matrix in Annexure D'. Accordingly I am satisfied that the amount claimed is appropriate under the contract.

204. In relation to the Respondent’s submissions in paragraphs 431 to 436, I accept the Respondent’s contention that there was work under the contract remaining after 8 March 2010, and that this was completed by 8 April 2010. In my view, the proper construction of clause 36.2 gives the Claimant an entitlement to claim delay or disruption costs caused by inclement weather events occurring up until all of the work reached Substantial Completion.

205. Accordingly, I accept that the Claimant is entitled to the delay costs as claimed in respect of Variation claims 100 to 104 and 108 to 137."

Did the adjudicator misconceive his role?

[51] Counsel for John Holland submitted that the adjudicator erred in not examining the claim to see if the elements of the claim for delay and disruption had been established. He submitted that the adjudicator leapt from his rejection of the submissions in paragraphs 413 – 430 of the adjudication response to, in effect, treating it as a default claim, giving no consideration at all to the elements of the claim.

[52] I do not accept that that is what the adjudicator did. Having rejected John Holland’s submissions, and properly so, he then considered whether he could be satisfied that inclement weather events meeting the thresholds had occurred, and if they had occurred, how the costs should be calculated and whether the costs claimed had been calculated correctly.

[53] In paragraphs 200 and 201 he observed that John Holland had not disputed the occurrence of inclement weather events meeting the relevant thresholds, the extent of the inclement weather, the extent of the delay caused or the delay costs claimed in its payment schedule. He treated the absence of an express challenge and the factual premises from which John Holland’s other submissions had proceeded as implied admissions – a reasoning process sanctioned by the Court of Appeal in Bezzina Developers Pty Ltd v Deemah Stone (Qld) Pty Ltd.

[54] Adjudication of a claim requires, as a minimum, determination of whether the construction work the subject of the claim has been performed and its value. There may be room for argument about the extent of an adjudicator’s function where there is no payment schedule. But where there is a payment schedule as well as a payment claim, the factual and legal issues for his adjudication are defined by those documents. If the validity of the claim depends on certain acts, the respondent’s failure expressly to put those facts in issue in the payment schedule may amount to an admission of them. In Bezzina Developers Pty Ltd v Deemah Stone (Qld) Pty Ltd , where the respondent contended in its payment schedule that a value of "nil" should be ascribed to the claim because certain deductions ought be made from the amount claimed, the adjudicator properly treated the payment schedule as impliedly admitting the claimant’s valuation of the work.

[55] In paragraph 203 the adjudicator dealt with the quantification of the claims. There were three steps in his reasoning:

(i) recognition that the costs were to be calculated in accordance with the matrix in Annexure D;

(ii) observation that the costs claimed appeared to be based on the rates set out in Annexure D; and

(iii) resultant satisfaction that the amount claimed was appropriate.

That was the correct approach.

[56] The conciseness with which the adjudicator described how he reached his conclusion that the amount claimed was appropriate is in contrast with the detailed exposition of his reasoning process in relation to other aspects of his adjudication decision. But it would be wrong to treat his conciseness as indicative of his not having done what was required of him in reaching his decision.

[57] The adjudicator’s duty was to provide a speedy interim determination on the papers. The legislative scheme allowed for the possibility of error on his part. While his decision would be enforceable by the mechanism of an adjudication certificate which might be filed as a judgment debt, there was the safety net of s 100, by which John Holland would have the opportunity to recover a progress payment it was forced to make as a result of the adjudicator’s decision.

[58] A great deal of time and expenditure was undoubtedly invested in the preparation of the claim and payment schedule and the adjudication application and adjudication response. The thoroughness with which they were presented bordered on prolixity. I understand that this is a feature of many adjudications under BCIPA. While I appreciate that the quantum of progress claims made under the Act can be very high, and that the outcome of the adjudication can have serious consequences for the liquidity of either or both parties, I doubt that the Legislature envisaged such a development. The adjudication process may be more suited to comparatively small, uncomplicated claims than to large, complex claims.

[59] I conclude that the adjudicator did not misconceive his role. He did not make the first error of law alleged against him. It is not necessary for me to determine whether such an error would have been an error of jurisdiction.

Error in the interpretation of clause 36.2?

[60] The adjudicator held that clause 36.2 entitled Walz to delay and disruption costs for delay caused by inclement weather that occurred after the Date for Substantial Completion. John Holland contends that he erred in law in finding that clause 36.2 entitled Walz to delay and disruption costs for any delays suffered after the Date for Substantial Completion.

[61] I have set out the relevant provisions of the contract at paragraph [31] of these reasons for judgment. The events which might entitle Walz to an extension of time and the procedures which it had to follow to avail itself of such an entitlement were set out in clause 35.5. Then the circumstances in which Walz might be entitled to delay and disruption costs were prescribed in clause 36.

[62] By clause 36.1 Walz was only entitled to delay or disruption costs if it was entitled to an extension of time pursuant to clause 35.5.1(a)(ii) or (b)(i) – that is, for delay caused by inclement weather meeting the thresholds in Annexure Part D or by the Principal, the Superintendent, the Main Contractor, the Main Contractor’s Representative or other subcontractors, or employees, consultants, other contractors of agents of any of them.

[63] Clause 36.2 provided an exception to clause 36.1. Where delay was "caused as a result of an event specified in Clause 35.5.1(a)(ii)", Walz was entitled to delay or disruption costs, even if it was not entitled to an extension of time pursuant to clause 35.5. But by the second paragraph of cl 36.2, there was no entitlement where the delay was concurrent with a delay caused by Walz, its employees, agents or subcontractors or a delay for which it was not entitled to an extension of time pursuant to clause 35.5.

[64] What was the "event specified in Clause 35.5.1(a)(ii)"? Was it merely inclement weather, or was it inclement weather that occurred on or before the Date for Substantial Completion?

[65] The sub-clause was in these terms –

" 35.5.1 Delay Events

Subject to Clauses 35.5.2 to 35.5.6, the Subcontractor shall only be entitled to an extension of time for Substantial Completion if there is a delay to the Works reaching Substantial Completion by the date for Substantial Completion and the delay is caused by:

a) any of the following events occurring on or before the Date for Substantial Completion:

i) ...

ii) Inclement Weather and its effects but only where the relevant inclement weather thresholds set out in Annexure Part D of these General Conditions are first satisfied."

[66] Contrary to the submissions of counsel for John Holland, I am satisfied that the words "occurring on or before the Date for Substantial Completion" do not specify the event – they are concerned only with the timing of a relevant event.

[67] Walz was entitled to an extension of time for delay caused by inclement weather if that weather occurred on or before the Date for Substantial Completion: clause 35.5.1. By clause 36.1, Walz was not entitled to costs for delay if it was not entitled to an extension of time – in other words, it was not entitled to costs for delay occasioned by inclement weather occurring after the Date for Substantial Completion. But clause 36.2 was an exception to clause 36.1: pursuant to it, Walz was entitled to costs for delay occasioned by inclement weather occurring after the Date for Substantial Completion.

[68] What of the second paragraph of clause 36.2?

"No entitlement shall exist for delay and disruption costs referred to in this Clause 36.2 where a delay that is caused as a result of an event specified in Clause 35.5.1(a)(ii) is concurrent with a delay caused by a Subcontractor, its employees, agents or subcontractors or for which the Subcontractor is not entitled to an extension of time pursuant to Clause 35.5. For example, where Inclement Weather is concurrent with a Subcontractor caused delay such as materials not being delivered to site due to the Subcontractor’s lack of performance, there would be no entitlement to delay and disruption costs." (Emphasis added.)

[69] Counsel for John Holland submitted that where the claim is with respect to delay after the Date for Substantial Completion has passed, the inclement weather delay is inevitably concurrent with delay caused by the Subcontractor because it is concurrent with delay that:

(a) did not attract an extension of time;

(b) has resulted in Walz being in breach of its contractual obligation to complete the work by the Date for Substantial Completion.

The submission continued that once the Date for Substantial Completion had passed, Walz was in breach of contract if it had not brought the works to Substantial Completion. If clause 36.2 allowed a delay claim to be made in such circumstances, it would permit Walz to take advantage of its own breach of contract. Moreover, it would impinge on John Holland’s right to liquidated damages for delay (clause 35.6(a)):

"When these matters are taken into account, the scheme provided for in clause 36 is clear. If an event of delay affects work on the 'critical path' and therefore the Date for Substantial Completion, Walz may claim an extension of time, and delay and disruption costs under clause 36.1. If work is delayed by inclement weather but that work is not on the critical path, then although Walz cannot claim an extension of time, it can still claim for delay and disruption under clause 36.2."

[70] The second paragraph of clause 36.2 is concerned with concurrence of delay caused by an event for which no-one is responsible and some other delay caused by Walz or someone for whom it is responsible – not with the concurrence of inculpable inclement weather delay and a breach of contract by Walz. That the Date for Substantial Completion has passed does not necessarily mean there is culpable concurrent delay: for example, the delay event which resulted in the works not being completed may have occurred many months before, or Walz may not have claimed an extension of time to which it was entitled.

[71] By allowing Walz to claim delay or disruption costs resulting from inclement weather in circumstances where it is not entitled to an extension of time (clause 36.2), the parties allocated the risk of inclement weather to John Holland. It is consistent with that risk allocation that Walz be entitled to delay costs that would have the practical effect of reducing the net liquidated damages payable to John Holland for delay in reaching Substantial Completion.

[72] In short, the adjudicator did not err in holding that clause 36.2 entitled Walz to delay and disruption costs for delay caused by inclement weather that occurred after the Date for Substantial Completion.

Conclusion

[73] The adjudicator made neither the jurisdictional error nor the error of construction for which John Holland contends.

[74] I will hear the parties on how the Court should proceed to determine the application.

Addendum

[75] The parties subsequently consented to orders in these terms:

1. that the application filed on 19 October 2010 be dismissed;

2. that the first respondent’s application filed on 29 October 2010 be dismissed;

3. that the applicant pay on a standard basis the costs of the first respondent of:

(a) the application filed on 19 October 2010; and

(b) the first respondent’s application filed on 29 October 2010;

4. that the Registrar pay by cheque payable to the first respondent, Walz Marine Services Pty Ltd, the sum of $1,803,504.28 paid into the Court Suitors Fund by the applicant pursuant to an order made on 27 October 2010, together with any accretions due; and

5. that within fourteen days of the applicant being notified that the first respondent has received the money referred to in order 4 above and of the amount of the accretions received pursuant to that order, the applicant shall pay to the first respondent interest calculated at the daily rate of $474.98 from 19 November 2010 to the date on which the first respondent has received the money referred to in order 4 above (in clear funds), less any accretions received by the first respondent under that order.