JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM : COMMERCIAL & CIVIL
ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA)
CITATION : GEORGIOU GROUP PTY LTD and MCC MINING (WESTERN AUSTRALIA) PTY LTD [2011] WASAT 120
MEMBER : MR C RAYMOND (SENIOR MEMBER)
MS L WARD (MEMBER)
HEARD : 29 MARCH 2011 AND 12 APRIL 2011
DELIVERED : 5 AUGUST 2011
FILE NO/S : CC 11 of 2011
CC 163 of 2011
BETWEEN : GEORGIOU GROUP PTY LTD
Applicant
AND
MCC MINING (WESTERN AUSTRALIA) PTY LTD
Respondent
Catchwords:
Construction Contracts Act 2004 (WA) - Whether repetition of claims in subsequent progress claims are new claims - Whether the legislation or contract permits repetition of claims - Whether previous adjudications required dismissal under s 31(2)(a)(iii)
Legislation:
Construction Contracts Act 2004 (WA), s 3, s 4, s 4.3, s 6, s 9, s 10, s 11, s 25, s 25(b), s 26, s 26(1), s 26(2)(c), s 31(2)(a), s 31(2)(a)(i) - (iv), s 31(2)(b), s 38, s 41, s 45(1), s 45(3), s 46(1), s 46(3), s 53, Pt 2 Div 2
Construction Contracts (Security of Payments) Act 2004 (NT)
Result:
In respect of one application for review the decisions under review affirmed and the application otherwise dismissed In respect of one application for review the decision under review varied and directions given and otherwise dismissed
Category: B
Representation:
Counsel:
Applicant : Mr S Davis
Respondent : Mr MJ Feutrill
Solicitors:
Applicant : Minter Ellison
Respondent : Corrs Chambers Westgarth
Case(s) referred to in decision(s):
AJ Lucas Operations v Mac-Attack Equipment Hire [2009] NTCA 4
K & J Burns Electrical Pty Ltd v GRD Group (NT) Pty Ltd & Anor [2011] NTCA 1
Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134
Merym Pty Ltd and Methodist Ladies College [2008] WASAT 164
Silent Vector Pty Ltd T/As Sizer Builders and Squarcini [2008] WASAT 39
Thiess Pty Ltd v MCC Mining (Western Australia) Pty Ltd [2011] WASC 80
REASONS FOR DECISION OF THE TRIBUNAL :
Summary of Tribunal's decision
1 The applicant made two applications pursuant to s 46(1) of the Construction Contracts Act 2004 (WA) for the review of two separate decisions to dismiss applications for adjudication in relation to a contract entered into between the parties for the construction of a tailings dam at Cape Preston in Western Australia. The applications were consolidated.
2 The central issue in the review of both adjudication applications was whether a claim for excavation of substantially the same volume of rock fill could be repeated, if supplemented with additional information to support the claim and if it applied a different rate of charge for the work. The Tribunal considered the differing views expressed by the Northern Territory Court of Appeal in relation to similar legislation in AJ Lucas Operations v Mac-Attack Equipment Hire [2009] NTCA 4 and K & J Burns Electrical Pty Ltd v GRD Group (NT) Pty Ltd & Anor [2011] NTCA 1 as well as earlier decisions of the Tribunal in Silent Vector Pty Ltd T/As Sizer Builders and Squarcini [2008] WASAT 39 and Merym Pty Ltd and Methodist Ladies College [2008] WASAT 164.
3 The Tribunal concluded that the predominant feature of a payment claim, relevant to the circumstances of the matter, was a claim for payment for the carrying out of work under the contract. Further, that a payment dispute arose when the claim for that work was not paid in full when it became due to be paid, or the claim had been rejected or wholly or partly disputed. The mandatory time limit within which it was thereafter necessary to make an application for adjudication, non-compliance with which required the application to be dismissed, would be rendered otiose if a claim for the same work could be repeated. The Tribunal concluded that on a proper construction of the legislation a repeated claim for the same work is not permitted.
4 In any event, the Tribunal also considered the terms of the contract and concluded that its terms, express or implied, did not permit the repetition of claims.
5 The Tribunal further concluded that an 'adjudicator' was not included within the description 'an arbitrator or other person or a court or other body' within s 31(2)(a)(iii) of the Construction Contracts Act 2004 . Therefore the decisions of the adjudicators could not be supported on the basis of a contention that, if contrary to the above findings, the adjudicators had erred in dismissing the adjudication applications, the applications should in any event have been dismissed under that provision. The Tribunal also held that it was not entitled to revisit the issue considered in both adjudications as to whether or not the contract was a construction contract. Both adjudicators had made positive findings to that effect and had entered into the merits of the dispute (other than in relation to the parts dismissed under s 31(2)(a) of the Construction Contracts Act 2004 ). Consequently the respective decisions not to dismiss on this basis could not be reviewed in accordance with Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134.
6 The Tribunal affirmed the decision under review in respect of the first adjudication.
7 In relation to the second adjudication the Tribunal found that the adjudication had erred in dismissing the entire claim based on a particular rate and should have made a determination in respect of the volume of material excavated since the previous progress claim at the rate in question. The decision under review was therefore varied and appropriate consequential orders made.
The applications
8 The applicant made two applications to the Tribunal. Both applications are pursuant to s 46(1) of the Construction Contracts Act 2004 (WA) (CC Act) and are for the review of two decisions to dismiss by two adjudicators as follows:
1) Application CC 11 of 2011 made on 5 January 2011 relates to the adjudication made on 8 December 2010 in relation to Progress Claim 7 (PC7) made under the construction contract entered into between the parties.
2) Application CC 163 of 2011 made on 9 February 2011 relates to the adjudication made on 20 January 2011 in relation to Progress Claim 9 (PC9) made under the construction contract entered into between the parties.
9 It should be noted that the respondent disputes that the contract between the parties is a construction contract as defined. Although there are subsequent references in these reasons to a 'construction contract' that is for convenience only. We address later the issue concerning whether or not the contract is a 'construction contract'.
10 The Tribunal ordered on 24 March 2011 that both applications be consolidated into the one proceeding and be heard together. The Tribunal heard the applications on 29 March 2011 and 12 April 2011.
11 In these reasons the applicant will be referred to as the contractor and the respondent as the principal. All references to sections of legislation are references to sections of the CC Act, unless the context indicates to the contrary. All references to dollar amounts are exclusive of GST.
The issues raised in the applications
12 The main issues raised in these applications are:
1) Whether the adjudicators have rejected claims on their merits or under s 31(2)(a)(ii) of the CC Act.
2) Whether a monthly progress claim under the contract can include claims for work done which were previously rejected.
3) Whether claiming a new payment rate and supplementing the claim with a different report supporting that rate for the same work creates a new payment dispute under the CC Act.
13 Under s 46(1) the Tribunal is limited to reviewing only an adjudicator's decision to dismiss an application for adjudication under s 31(2)(a). The Tribunal does not have jurisdiction to review determinations made by the adjudicator on the merits under s 31(2)(b) (see s 46(3)). Each of the subparagraphs in s 31(2)(a)(i) - (iv) is disjunctive and, therefore, if any one ground for dismissal is established then the application for adjudication must be dismissed.
The construction contract - amended form of AS 4000-1997
14 On 23 March 2010 the principal and the contractor entered into a contract for the construction of a tailings dam for the Sino Iron Pty Ltd project located at Cape Preston in the Pilbara in northern Western Australia.
15 The terms of the contract included the general conditions of contract in the amended standard form AS 4000-1997 (contract). The 'Contract Sum' is specified to be a lump sum of $25,249,191 with the date for practical completion being 15 November 2010. During the course of carrying out the works, and pursuant to the general conditions of contract, the contractor submitted monthly progress claims to the principal's appointed superintendent under the contract.
16 The contract includes provision in cl 37 for monthly progress claims. Clause 37.1 and Item 28 of Annexure Part A AS 4000-1997 (Item 28) require the contractor to claim payments progressively for the work under construction (WUC as defined in the contract). Under the contract each progress claim shall include details of the value of the WUC done and of the amount due. The times for progress claims are the last day of each month 'for WUC done to the day' [sic] of each month (Item 28).
17 In response to a monthly progress claim the superintendent's options under cl 37 of the contract are, in summary, to:
1) request further information in support of the claim, where they consider that the information submitted is insufficient, and thereby delay the issue of a payment certificate (cl 37.1);
2) issue a progress certificate within 14 days of receiving the progress claim and give reasons for any differences (cl 37.2); or
3) not issue a payment certificate within 14 days and then the relevant progress claim is deemed to be the relevant progress certificate (cl 37.2).
18 The payment under the progress certificate is to be made by the principal within seven days of receiving the progress certificate (cl 37.2). Subclause 37.4 of the contract deals with the final payment claim and certificate. The final payment claim is defined very widely and is stated to be a progress claim 'together with all other claims whatsoever …'. Variations to the contract are dealt with in cl 36 of the contract and provide that the contractor shall not vary the WUC except as directed in writing, and the superintendent may so direct. Clause 42 deals with dispute resolution under the contract.
Form of progress claims made under the contract
19 The progress claims made under the contract are all in a similar format and are made monthly.
20 The progress claims made by the contractor under the contract are in the form of a spreadsheet which has a number of columns headed: Description, Contract Sum, Previous Period, Previous to Date, This Period, Total to Date.
21 By way of example, in relation to Item 2.2 in Progress Claim 5 (PC5) under 'Description', the contractor is required to 'clear, grub and strip topsoil to 150 mm depth'; under 'Contract Sum', in relation to 185 hectares, at a rate of $5,400.15 per hectare. This gives the contractor a total sum under the contract for this work of $999,027.75.
22 Each progress claim then lists under the heading 'Previous Period' a subheading of 'Qty Complete' and 'Amount Certified'. In relation to Item 2.2 of PC5, these amounts are 'Qty Complete' of 40.62 (hectares) and 'Amount Certified' of $219,348.69.
23 Each progress claim then lists under the heading 'Previous to Date' a subheading of 'Qty Complete' and 'Amount Certified'. In relation to Item 2.2 of PC5, these amounts are 'Qty Complete' of 122.42 (hectares) and 'Amount Certified' of $661,086.36.
24 Each progress claim then lists under the heading 'This Period' a subheading of 'Qty Complete Invoice' and 'Invoice Amount'. The column under the heading 'This Period' is shaded in yellow. In relation to Item 2.2 of PC5, these amounts are 'Qty Complete Invoice' of 2.87 hectares and 'Invoice Amount' of $15,498.43; that is, the contractor is claiming for clearing 2.87 hectares under the contract at the given rate and in the period of PC5, which is the work done in the period since PC4 was made.
25 Each progress claim then lists under the heading 'Total to Date' a subheading of 'Qty Complete' and 'Amount Certified'. In relation to Item 2.2 of PC5, these amounts are 'Qty Complete' of 125.29 (hectares) and 'Amount Certified' of $676,584.79. It is the 'Total to Date' column which indicates the totality of the work claimed to have been done by the contractor under the contract.
Progress Claims 5 and 6
26 The applications before the Tribunal deal with only one item under the contract, namely, Item 5.2A, claimed together with many other items of claim in both Progress Claim 7 (PC7) and Progress Claim 9 (PC9). However, an understanding of the preceding progress claims made in PC5 and Progress Claim 6 (PC6), made in relation to Item 5.2A, is necessary to understand the basis of the claims made in PC7 and PC9.
27 Item 5.2A is listed in the progress claims in the 'Description' column as one of the unapproved variations. The contract sum in relation to Item 5.2A is stated to be 1,330,000 cubic metres of rock fill.
28 By way of background, PC5 and PC6 in relation to Item 5.2A are summarised as follows:
1) PC5 included under the heading 'This Period' a subheading of 'Qty Complete Invoice' and 'Invoice Amount'. The column under the heading 'This Period' is shaded in yellow. In relation to Item 5.2A of PC5, these amounts are 'Qty Complete Invoice' of 1,112,377 cubic metres at the rate of $13.02 per cubic metre and an 'Invoice Amount' of $14,483,148.54.
2) Payment Certificate 5 was issued by the superintendent on 10 August 2010 and it makes no express reference to Item 5.2A. Payment Certificate 5 relevantly states:
MCCM agrees to pay Item 1.0 through to Item 7.3, including the claimed amount of CV 01 and CV 02.
MCCM rejects claims for items so-called Variations GG01 through to GG019 based on the status of these Variation [sic] being unapproved or rejected.
3) PC5 was the subject of adjudication by Mr John Fisher on 4 October 2010 (Fisher adjudication).
4) PC6 included under the heading 'This Period' a subheading of 'Qty Complete Invoice' and 'Invoice Amount'. The column under the heading 'This Period' is shaded in yellow. In relation to Item 5.2A of PC6, these amounts are 'Qty Complete Invoice' of 1,272,889 cubic metres at the rate of $13.02 per cubic metre and an 'Invoice Amount' of $16,573,014.78.
5) Payment Certificate 6 was issued by the superintendent on 14 September 2010. Payment Certificate 6 relevantly states in relation to Item 5.2A that the amount certified is 'Nil' and that: $14,483,148.54 of this claim was previously claimed … in Payment Claim No 5. I rejected this unapproved variation claim … My reasons for rejecting this claim have been previously given …
Progress Claim 7
29 On 1 October 2010 the contractor submitted PC7 to the superintendent claiming $21,156,826.84. Under the heading 'Unapproved Variations' the contractor claimed in PC7 a number of items including:
Item 5.2A: Additional Rate for excavation of rock fill from principal[']s borrow to embankment [as follows]:
Contract Sum:
Qty 1,330,000 [cubic metres]
Sell Rate $/Unit $13.02
Contract Sum (Original) $17,316,600.00
This Period:
Qty Complete Invoice 1,277,250 [cubic metres]
Invoice Amount $16,629,795.00
Total to Date:
Qty Complete Invoice 1,277,250 [cubic metres]
Amount Certified $16,629,795.00
30 On 14 October 2010 the superintendent advised the contractor that it had assessed PC7 and decided that the contractor was entitled to be paid $2,656,334.10. In relation to Item 5.2A the amount certified by the superintendent was 'Nil'. This was because the superintendent determined that:
This claim has no contractual basis. There was no obligation on MCC [Mining] to supply a stockpile of hard rock separate from the borrow area.
Moreover, [the] claim fails to comply with the notification requirements of clauses 36.1A and 41 of the Contract.
31 On 11 November 2010 the contractor applied for adjudication on several grounds. The adjudication was conducted by Mr Philip Loots (Loots' adjudication) and is the subject of the application for review in CC 11 of 2011. One of the grounds of the adjudication was a claim for the amount of $11,022,667.50 or, alternatively, $8,557,575.00 for the excavation of 1,277,250 cubic metres of rock fill from the hard rock borrow area at the rate of $8.63 per cubic metre or, alternatively, $6.70 per cubic metre. On 8 December 2010, Mr Loots found, so far as relevant to this review application, in summary:
1) The contract is a 'construction contract' within s 3 (see [2.45] of the Loots' adjudication).
2) In respect of the quantity of 1,112,377 cubic metres which was claimed in PC5 and which was determined in the first adjudication, Mr Loots stated at [2.52] and [2.54]:
[2.52] I agree that if sections 38 and 41 [of the CC Act] were construed to allow adjudication of a payment dispute which includes amounts which had previously been determined, such an outcome would defeat the binding and final nature of a determination.
…
[2.54] I agree that res judicata and the principles of issue estoppels inform the drafting of section 41(1)(b) of the [CC] Act.
3) In respect of the quantity of 1,272,889 cubic metres claimed in PC5 and PC6, a new rate of $8.63 per cubic metre cannot be claimed in PC7 for work done under the contract which had previously been claimed and rejected by the superintendent. In this regard, Anshun estoppel forms the basis of s 26(2)(c) (see [2.60] of the Loots' adjudication). The new rate of $8.63 per cubic metre is sufficiently relevant that the contractor should have claimed it in its first adjudication (see [2.65] of the Loots' adjudication).
4) The Tribunal decision of Merym Pty Ltd and Methodist Ladies College [2008] WASAT 164 ( Merym ) does not assist the contractor to support its claim that a repeat claim can be the subject of adjudication. This is because there was no previous determination in Merym . Further, Merym involved the provision of additional evidence in support of a payment claim which had already been rejected by the superintendent (see [2.68] of the Loots' adjudication).
5) The claim in respect of the quantity of 1,272,889 cubic metres is dismissed as the contractor did not seek to adjudicate it within the 28 days prescribed by s 26(1) (see [2.73] of the Loots' adjudication. The basis upon which that conclusion was reached and the effect of the principal's argument that the contractor was stopped from advancing this claim will be addressed further below).
6) The only part of the contractor's claim that the adjudicator could consider on the merits is the incremental quantity of 4,361 cubic metres, being the work carried out in the time between PC6 and PC7, and in relation to the extra over rate of either $8.63 per cubic metre or $6.70 per cubic metre.
32 In the Tribunal application CC 11 of 2011 in relation to PC7 the contractor claims that:
• the adjudicator is not estopped from adjudicating its claim in relation to 1,272,889 cubic metres of hard rock fill; and
• the application for adjudication in relation to 1,272,889 cubic metres of hard rock fill was lodged within 28 days of the payment dispute arising.
Progress Claim 9
33 On 30 November 2010 the contractor submitted PC9 to the principal, in relation to the period ending November 2010 claiming $15,288,753.82. Under the heading 'Unapproved Variations' the contractor claimed a number of items including:
• Item 5.2A: Additional Rate for excavation of rock fill from principal[']s borrow to embankment [as follows]:
Contract Sum:
Quantity 1,304,105 [cubic metres]
Sell Rate $/Unit $8.63
Contract Sum (Original) $11,254,426.15
This Period:
Qty Complete Invoice 1,304,105 [cubic metres]
Invoice Amount $11,254,426.15
Total to Date:
Qty Complete 1,304,105 [cubic metres]
Amount Certified $11,254,426.15
34 On 15 December 2010 the superintendent advised the contractor that it had assessed PC9 and decided that the contractor was entitled to be paid $507,726.48. In relation to Item 5.2A the amount certified by the superintendent was 'Nil'. This was because the superintendent determined that:
[t]his entire claim was made by Georgiou in its Progress Claim No 8 [sic] and rejected …
Further, 1,277,250 [cubic metres] out of the 1,304,105 [cubic metres] claimed in [P]rogress Claim No 8 has already been the subject of adjudication on two previous occasions.
This item was previously rejected on the grounds that it has no contractual basis and Georgiou has failed to comply with the notification requirements of clauses 36.1A and 41 of the Contract.
I assess that Georgiou is not entitled to any payment at all.
35 On 23 December 2010 the contractor applied for the adjudication. The adjudication was conducted by Mr Laurie Edmund James (James' adjudication) and is the subject of the application for review in CC 163 of 2011. There were several grounds advanced in the adjudication application challenging the basis for the rejection of the amount of $11,254,426.15 claimed under Item 5.2A.
36 On 20 January 2010 Mr James found, so far as relevant to this review application, in summary that:
1) The contract is a 'construction contract' within s 3 (see [3.2] of the third adjudication).
2) The application had been prepared and served in accordance with the CC Act.
3) He had jurisdiction to make a determination of the merits.
4) The payment claim at the rate of $8.63 per cubic metre cannot be claimed in PC9 because the rate has been claimed previously and rejected more than 28 days prior to lodging the application for adjudication (s 26(1), see [3.3(b)] of the James' adjudication).
5) The payment claim to the extent it is made on an alternative basis at a reasonable rate of $3.48 per cubic metre and based on Merym , is regarded as a new claim which is within the jurisdiction of the adjudicator (see [3.3(c)] of the James' adjudication).
6) Ultimately the adjudicator determined on the merits that the contractor was entitled to payment in respect of the work carried out in the time between PC8 and PC9, being excavation of an additional 26,855 cubic metres, at a reasonable rate determined to be $2.48 per cubic metre, giving a total amount of $66,674.80.
37 In the Tribunal application CC 163 of 2011, in relation to PC9, the contractor sought:
1. The decision of the adjudicator made pursuant to 31(2)(a) of the Constructions Contracts Act 2004 (CCA), that the Applicant's application in respect of 1,277,220 [sic] cubic metres of hard rock fill had been the subject of previous adjudications, be set aside.
2. The adjudicator had jurisdiction to determine the whole of the Applicant's adjudication application on the merits, including insofar as it related to 1,277,220 [sic] cubic metres of rock fill material.
3. The Applicant's adjudication application dated 23 December 2010 be remitted back to the adjudicator to be determined on the merits pursuant to section 31(2)(b) of the CCA.
Contractor's submissions
38 In essence, the contractor submits:
1) PC7 and PC9 are new payment claims which result in a new payment dispute as the quantity and rate of payment claimed differed to the earlier payment claims.
2) The payment dispute arose when PC7 and PC9 were partially rejected by the superintendent.
3) Accordingly, the applications for adjudication were lodged in time in both PC7 and PC9.
39 The contractor submits that PC7 and PC9 are new payment claims because, in summary:
• the contract does not state that only WUC done since the last progress claim is to be included in the progress claim;
• the majority in K & J Burns Electrical Pty Ltd v GRD Group (NT) Pty Ltd & Anor [2011] NTCA ( K & J Burns ) supported this approach; and
• in relation to PC 9, additional evidence was provided in support of the claim in the form of the Rider Hunt International Expert Witness Report of 30 November 2010. In accordance with Merym , repeated claims are permitted where they are supported with sufficient additional evidence.
Principal's submissions
40 The principal submits that there are four reasons why the applications should be dismissed, in summary:
1) Firstly, it is asserted the Tribunal lacks jurisdiction to review the adjudications. This is because:
a) Mr Loots effectively determined the claim insofar as it related to the excavation of 1,272,889 cubic metres based on the provisions of s 38 and s 41 and because of the operation of an issue or Anshun estoppel and not by reason of any of the grounds set out in s 31(2)(a).
b) Similarly, Mr James, reached his conclusion that in relation to the same volume of fill, the claim could not be pursued based on s 41 and, consequently, dismissed on any of the grounds set out in s 31(2)(a).
2) The disputes in the Loots' and James' adjudications arose in part from disputes which arose more than 28 days before the applications were made and should to that extent be dismissed under s 31(2)(a)(ii) (s 6 and s 26).
3) The disputes in the Loots' and James' adjudications arose in part from disputes which had been the subject of previous adjudications and should to that extent be dismissed under s 31(2)(a)(iii).
4) In any event, the contract was not a construction contract within the meaning of s 3 and s 4. This is on the basis that the tailings dam forms part of the magnetite concentrator for the purpose of extracting or processing a mineral-bearing substance and should have been dismissed under s 31(2)(a)(i). So even if the contractor's submissions were to be accepted in other respects, in a review de novo the correct and preferable decision is to substitute the Tribunal's decision that the adjudications be dismissed in their entirety and to make consequential orders setting aside the determination on the merits.
Consideration by the Tribunal - were the Loots' and James' adjudications dismissed under s 31(2)(a)?
41 In relation to the Loots' adjudication, the Tribunal is satisfied that Mr Loots dismissed the application under s 31(2)(a) insofar as it related to the payment disputes which had arisen more than 28 days before the application for adjudication was lodged and insofar as it related to claiming a rate which was different to that claimed in PC5 and PC6; that is, in relation to the 1,272,889 cubic metres of rock fill which had already been the subject of PC5 and PC6, albeit at a different rate. In relation to Mr Loots' references to estoppel, we find that the discussion of this concept was used to support his construction of the relevant sections of the CC Act, on which he relied. Mr Loots dealt with this in [2.67] - [2.77] of his determination. He had already rejected the contractor's reliance on Merym . His ultimate finding was that the excavation of the above volume of rock fill had been claimed in PC6 and had been rejected by the superintendent, and that the contractor had failed to bring an application disputing the rejection of its claim within the 28 days prescribed by s 26(1). Consequently, Mr Loots found that the applicant's application had to be dismissed under s 31(2)(a)(ii) to that extent (see [2.70] - [2.74]). The discussion concerning estoppel was therefore not an essential part of his reasoning. We do not consider that it is necessary to apply estoppels principles to what is a question of statutory interpretation.
42 In relation to the James' adjudication, we are also satisfied that the application was dismissed under s 31(2)(a) insofar as it related to the payment disputes which arose out of the rejection of the rock fill excavation claims included within PC5 and PC7. This conclusion reflects what we understand to be the substantive effect of Mr James' reasons.
43 At [3.3] of the determination, Mr James dealt with the principal's submission that he lacked jurisdiction to deal with the rock fill claim because it was asserted that the dispute had arisen more than 28 days prior to the application being served. Mr James approached the issue simply by considering whether or not the payment claim made in PC9 had given rise to a new payment dispute because of a variation in the rates claimed. In that regard he erroneously stated that PC7 (which related to a volume of 1,277,250 cubic metres) had been based on a rate of $8.63 per cubic metre. PC7 had in fact been based on a rate of $13.02 per cubic metre.
44 The confusion appears to arise because in the adjudication in relation to PC7 the contractor did not attempt to support the rate of $13.02 per cubic metre and for the first time advanced a claim based on a rate of $8.63 per cubic metre. Based on that misunderstanding of the rate, Mr James went on to conclude (at [3.3(b)]) that in relation to the payment claim before him (PC9) to the extent that the contractor maintained a claim based on a rate of $8.63 per cubic metre it could not be considered to be a new claim. This was because it was put forward and rejected more than 28 days prior to the lodging of the adjudication application and that, accordingly, 'that element of the rock fill claim must be dismissed'. However, as a claim had been made in the alternative based on a rate of $3.48 per cubic metre, Mr James went on to hold, based on the Merym decision, that this constituted a new claim (therefore giving rise to a new payment dispute) and found that this claim was within his jurisdiction (at [3.3(c)] of the adjudication).
45 It is therefore clear that Mr James had dismissed the entire claim advanced in PC9 for an amount of $11,254,426.15 based on a rate of $8.63 per cubic metre. The dismissal was based on his understanding (albeit erroneous) that this rate had been previously claimed and that the payment dispute in respect thereof had therefore arisen more than 28 days prior to the application being lodged. This is, therefore, clearly a dismissal effected under s 31(2)(a)(ii). At that point Mr James appears to have lost sight of the fact that PC7 claimed for a lesser volume of rock fill excavation than was claimed before him. Later, in considering the interaction with the previous Fisher and Loots' adjudications, he essentially relied on s 41 (finality of determinations) to conclude he could not deal with the volume of rock fill claims which had been the subject of the Loots' adjudication (1,277,250 cubic metres) and he went on to make a determination only in respect of the volume excavated since PC7 (26,855 cubic metres).
46 It follows as a result of the above conclusions in relation to both adjudications that the Tribunal has jurisdiction to review the decisions to dismiss pursuant to s 46(1) as they constitute decisions made under s 31(2)(a).
Does the CC Act permit claims to be repeated?
47 A number of recent cases have considered the ability of contractors to repeat claims under the CC Act or its equivalent in the Northern Territory under the Construction Contracts (Security of Payments) Act 2004 (NT) (CCNT Act).
48 It is noted that the decisions of the Court of Appeal of the Northern Territory (NTCA) in relation to the recycling of claims under the CCNT Act, namely A J Lucas Operations Pty Ltd v Mac-Attack Equipment Hire Pty Ltd [2009] NTCA 4; (2009) 25 NTLR 14) ( Mac-Attack ) and K & J Burns , are not binding on the Tribunal as they are decisions made by a court in a different hierarchy. Any decision of the Court of Appeal of another State is to be regarded as highly persuasive.
49 Recently, Corboy J of the SCWA in Thiess Pty Ltd v MCC Mining (Western Australia) Pty Ltd [2011] WASC 80 ( Thiess ) stated at [109] that in relation to whether or not a 'payment claim' could give rise to more than one 'payment dispute' under the CC Act:
Neither party referred to decisions in SAT concerning 'recycled' claims.
However, I note that in Silent Vector Pty Ltd and Squarcini [2008] WASAT 39 and Merym Pty Ltd and Methodist Ladies College [2008] WASAT 164, the Tribunal held that the mere repetition of a payment claim previously made could not give rise to a new payment dispute for the purpose of s 26 [of the] CC Act. That is also the position that has been adopted by the Supreme Court of the Northern Territory in respect of the Territory's legislation that is modelled on the CC Act: see A J Lucas Operations.
50 The Tribunal notes that Thiess did not consider the application of the most recent decision of the NTCA in this area, namely K & J Burns . Kelly J at [119] - [124] and Olsson J at [259] - [261] in K & J Burns formed the view that a contract may allow for a contractor to repeat claims for the same work undertaken. Kelly J at [124] stated that one cannot be 'dogmatic' that a contract will never permit repeat claims and gave the example of making claims for final payments, which may under some contracts include amounts which have been the subject of one (or more) progress claims.
51 In contrast the earlier decision of the NTCA in Mac-Attack decided that the CCNT Act did not permit repeat claims: per Mildren J at [11] and [15]; Riley J at [16]; and, Southwood J at [39], [42] and [47] - [49].
52 In these circumstances the weight to be given to the conflicting decisions of the NTCA requires assessment. The previous decisions of the Tribunal in Silent Vector Pty Ltd T/As Sizer Builders and Squarcini [2008] WASAT 39 ( Silent Vector) and Merym hold that the mere repetition of a payment claim previously made cannot give rise to a new payment dispute for the purposes of s 26. In a statement which was not necessary for the purposes of the decision in Merym the possibility was raised of whether a claim, which had never been considered on its merits due to insufficient supporting material being provided, might be repeated and be considered a new claim when supported with sufficient material to enable it to be assessed. That consideration is raised squarely in these proceedings and the question must be regarded as being entirely open.
53 The contractor relies on Merym at [35] to submit that as the rates for the work are different (and new information has been provided in respect of PC9), the claims are new and can give rise to new payment disputes.
54 It is apparent from the parties' submissions and the references to Merym in the James' adjudication that some claimants and adjudicators have placed what may appear to be undue emphasis on the obiter statement made at [35] of Merym to conclude that almost any new information made to support a previously rejected claim will constitute a new claim giving rise to a new payment dispute.
55 The contract referred to in Merym was the standard form AS 2124-1992. General Condition (GC) 42 of that contract permits a superintendent to reject a claim if it is not supported by evidence of the amount due and such information as may be reasonably required. It also provides that if the superintendent defaults in issuing a payment certificate within the stipulated time the principal is required to pay the amount of the contractor's claim. The superintendent is not entitled to delay the issue of a payment certificate until sufficient evidence or information to support the claim is furnished, as is permitted under the relevant contract in this matter, the amended standard form AS 4000-1997. It was in the above context that the obiter statement at [35] of Merym was made. In that context a 'rejected' claim (because of insufficient supporting evidence or information) had never been considered on its merits, and if repeated and properly supported, the view was expressed that it might be considered to be a new claim giving rise to a new payment dispute if rejected or not paid in full when due.
56 To the extent that Merym has been relied upon to support a general proposition that a claim can be regarded as a new claim if supported by new information, we do not consider Merym does so.
57 We have carefully considered the opposing views expressed in Mac-Attack and those of the majority in K & J Burns . On balance, we consider Mac-Attack , as further developed by the minority in K & J Burns , to be more persuasive.
58 The majority in K & J Burns gave a primacy to freedom of contract: see Kelly J at [124] and Olsson J at [238] - [241]. By contrast, in his dissenting judgment, Southwood J stated at [56]:
… The right to apply for adjudication of a payment dispute is subject to a condition namely that the right be exercised within 90 days of the payment dispute arising. The condition is part of the statutory right to adjudication that is conferred by the Act. The right to apply for adjudication, being a conditional right, is lost when the condition is not satisfied. The right having been lost, cannot be revived or retriggered by the making of another payment claim for the same amount for the same construction work. The filing of a repeat payment claim comprised of claims for the identical amounts for the identical work cannot operate to revive a right which the Act Parliament [sic] has terminated or destroyed. The condition created by s 28(1)(a) and (b) of the Act was part of the right conferred by s 27 of the Act, and the right to apply to for adjudication, being a conditional right, was lost when the condition was not satisfied. (Tribunal emphasis; authorities cited are omitted)
59 As Southwood J stated in Mac-Attack at [34] the object of the legislation is to be achieved by facilitating timely payments between the parties to constructions contracts. Further, in our view, that purpose is not served by a construction of the legislation which permits repeat claims. This is well illustrated by the very example given by Kelly J at [124] in K & J Burns where her Honour refers to some contracts where a final claim is to be made setting out all amounts claimed, each of which may have been the subject of one (or more) progress claims, and there may have been no new work done. That, with respect, does little to aid the primary aim:
To keep the money flowing in the contractual chain by enforcing timely payment and sidelining protracted and complex disputes. (Hansard, second reading speech, Legislative Assembly, 3 March 2004 at page 274)
60 The adjudication could be delayed at the convenience of the contractor until 28 days after the making of a final claim (or 90 days under the NTCA). If the payment claim is in fact good and should not have been rejected, the payment was due when the 'first' payment dispute arose. It is not enforcing payment in a timely manner if claims can be accumulated and pursued by adjudication when the construction contract reaches the stage of practical or final completion. Further, such a construction of the legislation renders otiose the mandatory requirement to commence adjudication within 28 days of the payment dispute arising. Why have such a restrictive requirement if it remains open to repeat the claim? In many large projects, as indeed is provided in the contract under consideration in this matter, the final payment claim is only required to be made after a maintenance period one year after the date of practical completion.
61 While the legislation was expressed in the second reading speech as being to support the privity of the contract between the parties, the form and content of any construction contract under the CC Act is not left to the unfettered discretion of the parties. Various provisions are prohibited (s 9, s 10 and s 11); other provisions are implied if the contract does not have a written provision about the relevant matter (Pt 2 Div 2), and any provision that purports to exclude, modify or restrict the operation of the CC Act has no effect (s 53).
62 With respect to the views expressed by the majority in K & J Burns we consider the opposing views in Mac-Attack and the minority views in K & J Burns to better reflect the true construction of the legislation. We conclude that it is not open under the CC Act for claims to be repeated, whether or not they are supported by additional material or information.
63 The contractor contends that the rejection of the payment claim in respect of PC9 nevertheless constitutes a new payment dispute because the claim was based on a different rate per cubic metre of rock fill excavated. This contention is rejected. The definition of 'payment claim' means, relevantly, a claim made under a construction contract by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under the contract. Once a payment claim has been made for any part of the work which the contractor is obligated to carry out, the failure to pay the claim in full when it is due to be paid, or the rejection or disputation of the claim in whole or in part, gives rise to a payment dispute in accordance with s 6.
64 A payment claim is a claim that an amount, whatever it may be, is claimed for the performance of the contractor's obligations under the contract; in other words, a particular amount is claimed for particular work. The making of a later claim for the same work, even if claimed at a different rate, is in substance a claim in respect of the same contractual obligation. The terms of the contract, express or implied, will determine the correct rate to which the contractor is entitled. The predominant feature of a payment claim is therefore the claim by the contractor that it has performed particular work. The right to adjudicate that claim must be exercised within 28 days of the date of the payment dispute arising. The claim cannot be characterised as a new claim simply by varying the rate charged. A construction of the definition of 'payment claim' and s 6 which permits such a course would not advance the purpose of the legislation. It would enable claims to be dressed up in a different format and would defeat the intent of the legislation that monies due under the contract be enforced in a timely manner.
65 In view of the conclusions we have reached to the effect that a claim cannot be repeated under the CC Act, it is strictly not necessary to consider whether the contract permits that course. However, in case the matter should go further, we shall express our views on that question.
Does this contract permit monthly progress claims to be repeated in a subsequent month?
66 The relevant contractual terms are summarised in [15] - [18] above.
67 The scheme of the contract is such that under cl 37.1 the contractor shall claim payment progressively. Under Item 28 the time for the progress claim is the last day of each month for WUC done to the day of that month.
68 Within 14 days of receiving the progress claim the superintendent may:
1) issue a progress certificate and provide the reason for any difference;
2) not issue a progress certificate in which case the progress claim becomes the progress certificate for the full amount; or
3) delay issuing a progress certificate beyond 14 days, where additional information is required.
69 The principal shall within seven days after receiving the progress certificate pay the contractor (cl 37.2). Clause 37.2 also states:
…
Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily. Payment other than final payment shall be payment on account only.
70 The contractor submits that the contract permits repeat 'progress claims' by reason that:
a) Clause 37.1 requires the contractor to 'claim payment progressively in accordance with Item 28'.
b) Item 28 states in relation to the time for progress claims 'Last day of each month for WUC done to the day of that month'.
c) Clause 37.1 states that each progress claim shall include details of the value of WUC done.
71 The contractor submits that these provisions, particularly:
Item 28, expressly, alternatively impliedly, provides for the repetition of claims made for payment of WUC claimed for in previous progress claims and that it is not stated that only WUC done since the last progress claim is to be included in the progress claim.
72 In our view, the relevant provisions have the following effect.
73 The contractor must claim payments progressively in accordance with Item 28. Item 28 requires a claim to be made each month for the work which has been done to that date. There is an obvious omission in Item 28 in that the day of the month up to which work is to be claimed has not been inserted. The intention is nevertheless clear that on the last day of each month a claim is to be made for work done up to a date in that month.
74 The issue then is what is meant by the requirement in cl 37.1 for the progress claim to include 'details of the value of WUC done' considered obviously in context. Equally, the provision is also to the effect that the progress claim shall include evidence of the amount due.
75 The superintendent is obliged to issue a progress certificate certifying the amount which in his opinion is due. If the superintendent fails to issue the progress certificate, the progress claim should be deemed to be the relevant progress certificate. The principal is obliged to pay the amount of the certificate within seven days after receiving it.
76 Accordingly, under the contract a payment is only due and payable at the time at which the principal is obliged to make payment.
77 If the amount certified by the superintendent and paid by the owner is less than that which the contractor considers is due, the contractor is obliged under cl 42 to give a notice of dispute and to follow the dispute resolution mechanism set out. This requires conferral within 14 days. The contractor is, however, entitled under cl 42.4 to institute proceedings to enforce a payment due under the contract which would encompass the making of an application for adjudication.
78 When the contractor makes the next progress claim in the following month the progress claim must include evidence of the amount due, which, in context, means due for the WUC carried out during the period from the last day covered by the previous progress claim. Reading the provisions in this way means that the value of WUC done is read as referring to the value of work done since the last mentioned date.
79 It is to be noted that cl 37.4 relating to the making of a final payment claim does not assist the contractor's contentions. The final claim includes a progress claim together with all other claims whatsoever in connection with the subject matter of the contract. This latter category may include any claim in tort, statute, unjust enrichment, quantum merit and even rectification (cl 42.1). The progress claim would cover the completion of minor omissions still requiring to be done which were not of a nature sufficient to prevent practical completion being achieved. This is evident from the contract definition of practical completion and defects (which includes omissions). The issue of a final certificate operates to release the parties from all obligations by way of accord and satisfaction, except for certain express claims one of which is in respect of unresolved issues the subject of a notice of dispute pursuant to cl 42.
80 At best, cl 37.1 and Item 28 might be regarded as ambiguous, thereby permitting evidence of the surrounding circumstances at the time of entry into the contract. We have no evidence relevant to the surrounding circumstances. If the progress claim form as described in [19] - [25] above was known by the parties to be the form which would be used, it would point very strongly to a construction of the contract which does not permit the repetition of claims. The claim refers only to work previously certified so that the phrase 'the value of WUC done' would have to be taken to mean as previously certified. The column in the form requiring insertion of the invoice amount for 'This Period' indicates strongly an intention that the payment claim would only be made for work undertaken since the last day of the period covered by the previous progress payment.
81 In our view, the contract properly construed does not expressly permit claims to be repeated. There is also no room for any term to that effect to be implied as the contract is clearly efficacious without such implication. The progress claim forms and the claims made in PC7 and PC9 other than in respect of its rock fill excavation claims under Item 5.2A and disputed variations claims, demonstrate that claims were made progressively for the value of work since the last progress claim. Item 2.2 is an example of this as discussed above at [24]. The value of the work shown prior thereto was the certified value. Once a claim is rejected, the express terms permit notice of dispute to be given and the enforcement of the claim.
Conclusion
82 It follows from our above findings that in both adjudications the correct and preferable decision on review is that the claims, to the extent that they included volumes of rock fill the subject of previous progress claims, which were rejected, should be dismissed under s 31(2)(a)(ii). This is because each of the adjudications, based as they were on the rejection of progress claims, which repeated the earlier rejected claims, were made more than 28 days after the date on which the payment dispute arose in respect of the repeated claims. It follows that Mr Loots was entirely correct in dismissing the claims which he did, although he entered into a discussion concerning estoppel and Anshun estoppel which was not necessary. The decision under review in respect of the Loots' adjudication should be affirmed.
83 In the case of Mr James' adjudication, he erred in his reasoning insofar as he found that the claim could not be repeated on the limited ground that it was based on the same rate of charge as the repeated claim. To the extent that he went on to deal with the claim, including that for the volume of material which was the subject of the earlier claim, we consider that he erred, but that aspect of the matter is not reviewable:
Match Projects Pty Ltd and Arccon (WA) Pty Ltd [2009] WASAT 134 ( Match Projects ). Mr James was wrong to find that he could not consider a claim based on a rate of $8.63 in respect of the entire claim before him. He was obliged to address the claim in respect of the additional 26,855 cubic metres of rock fill excavated subsequent to PC7 based on the $8.63 rate. The correct and preferable decision on review is therefore to vary the decision to dismiss to make plain that it relates only to 1,277,250 cubic metres of rock fill which was the subject of PC7 and to require that a determination be made in respect of the balance. If a determination is made in favour of the contractor, that should obviously take into account the amount already determined to be payable.
84 As the James' adjudication will in effect be set aside in part, we address the two alternative arguments put forward by the principal.
85 Firstly, the principal submits that the applications for adjudication should have been dismissed under s 31(2)(a)(iii) which provides:
31. Adjudicator’s functions
…
(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 -
…
(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) …
86 Secondly, it is submitted that the adjudicators wrongly concluded that the contract was a construction contract because the mining exception applied to the definition of 'construction contract'. Section 4(3) excludes work from the definition of 'construction work' which falls within specified activities relating to mining.
87 We shall deal with the second issue first. This matter was fully considered in both adjudications. Both adjudicators found the contract was a construction contract and went on to make a determination under s 31(2)(b). We do not accept that because the review is by way of a hearing de novo, as submitted by the principal, it is open for us to conclude that, in any event, the adjudication application should have been dismissed on this basis. If an adjudicator makes a decision that none of the criteria set out in s 31(2)(a) applies so as to require the application to be dismissed, that conclusion is not reviewable. It is only a decision to dismiss on those criteria which can be reviewed (see Match Projects ).
88 The issue in relation to s 31(2)(a)(iii) is different. Neither adjudicator dealt with this issue. It is therefore open to consideration. However, we reject the contractor's submission that the description 'arbitrator or other person or a court or other body' includes an adjudicator. The same description is used in s 25(b), s 45(1) and s 45(3) and in context clearly distinguishes between an 'adjudicator' and an 'arbitrator or other person or court or other body'. The indication in s 25 is particularly clear because it breaks down into two subsections: (a) which deals with an application for adjudication; and, (b) which deals with an order judgment or other signing by an arbitrator or other person or a court or other body, when (a) is unnecessary if the latter description included an adjudicator.
Orders
89 For the above reasons orders shall issue in the following terms:
1. The decision of the adjudicator, Mr Philip Loots, to dismiss parts of the application for adjudication reflected in the determination dated 8 December 2010 is affirmed and the application for review is otherwise dismissed.
2. In respect of the decision of the adjudicator, Mr Laurie Edmund James, to dismiss parts of the application for adjudication reflected in the determination dated 20 January 2011:
(a) the decision is varied as follows:
(i) the application for adjudication is dismissed pursuant to s 31(2)(a)(ii) of the Construction Contracts Act 2004 (WA) to the extent that it relates to the excavation of 1,277,250 cubic metres of rock fill;
(ii) the adjudicator is directed to make a determination under s 31(2)(b) of the Construction Contracts Act 2004 (WA) in respect of the balance of the payment dispute relating to 26,855 cubic metres of rock fill excavated based on a claimed applicable rate of $8.63 per cubic metre;
and
(b) the application for review is otherwise dismissed. I certify that this and the preceding [89] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER