SUPREME COURT OF QUEENSLAND
CITATION: John Holland Pty Ltd v Coastal Dredging & Construction
Pty Limited & Ors [2012] QCA 150
PARTIES: JOHN HOLLAND PTY LTD
ACN 004 282 268
(appellant)
v
COASTAL DREDGING & CONSTRUCTION PTY LIMITED
ACN 131 812 587 (first respondent)
ABLE ADJUDICATION PTY LTD
ACN 134 663 933
(second respondent)
PAUL HICK
(third respondent)
FILE NO/S: Appeal No 1970 of 2012
SC No 1058 of 2012
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal
ORIGINATING
COURT: Supreme Court at Brisbane
DELIVERED ON: 8 June 2012
DELIVERED AT: Brisbane
HEARING DATE: 19 March 2012
JUDGES: Fraser and White JJA and Peter Lyons J
Separate reasons for judgment of each member of the Court, each concurring as to the order made
ORDER: Appeal dismissed with costs.
CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where appellant subcontracted work to first respondent – where first respondent served payment claim under s 17(1) of the Building and Construction Industry Payments Act 2004 on appellant and appellant served payment schedule in reply to payment claim under s 18(1) of the Act – where first respondent served adjudication application under s 21 of the Act and appellant served adjudication response under s 24 of the Act – where third respondent delivered adjudication
decision – where appellant applied in Trial Division for declaration that adjudication void and should be set aside – where appellant argued adjudication decision void because first respondent’s payment claim not made from a valid “reference date” as required by s 12 of the Act – where the appellant argued adjudication decision should be declared void because adjudicator found contractual bar of subcontract inapplicable on a basis which neither party contended – whether the adjudication decision was void and should be set aside
Building and Construction Industry Payments Act 2004 (Qld), s 12, s 17(1), s 18(1), s 21, s 24, s 26, s 99
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36, cited
Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394, cited Chapmans Ltd v Australian Stock Exchange Ltd (1996)
67 FCR 402; [1996] FCA 1568, cited
John Goss Projects Pty Ltd v Leighton Contractors Pty Ltd (2006) 66 NSWLR 707; [2006] NSWSC 798, cited Minister for Commerce v Contrax Plumbing & Ors [2004] NSWSC 823, considered
Simcorp Developments & Constructions Pty Ltd v Gold Coast
Titans Property Pty Ltd [2010] QSC 162, considered
Spankie & Ors v James Trowse Constructions Pty Limited
[2010] QCA 355 , considered
COUNSEL: P Dunning SC, with S McNeil, for the appellant
R A Holt SC, with B E Codd, for the first respondent
No appearance for the second respondent
No appearance for the third respondent
SOLICITORS: Holding Redlich Lawyers for the appellant Hemming & Hart Lawyers for the first respondent No appearance for the second respondent
No appearance for the third respondent
[1] FRASER JA: The appellant contracted to carry out construction work for Bechtel Australia Pty Ltd. In early March 2010, the appellant subcontracted some of that work, relating to the dredging of materials in the Gladstone Harbour region, to the first respondent. On 28 November 2011, the first respondent served a payment claim under s 17(1) of the Building and Construction Industry Payments Act 2004 on the appellant claiming $5,042,837.79 (including GST). On 9 December 2011, the appellant served a payment schedule in reply to the payment claim, under s 18(1) of the Act. The first respondent served an adjudication application under s 21 of the Act on 22 December 2011. The appellant’s adjudication response under s 24 was served on 6 January 2012. On 31 January 2012 the adjudicator, the third
respondent, delivered its decision under s 26, finding that the first respondent was entitled to payment of $3,571,790.20 (including GST).
[2] The appellant applied in the Trial Division for a declaration that the adjudication decision was void and should be set aside. It contended before the primary judge, and it repeated on appeal, that the decision was void on two grounds.
Reference date
[3] The appellant contended that the adjudication decision was void because the first respondent’s payment claim was not made from a valid “reference date” as required by s 12 of the Act. It submitted that authority supported its propositions that such a payment claim was not within the Act, 1 and that any adjudication decision based upon such a claim was void. 2
The Act
[4] The directly relevant provisions of the Act are s 12 and the definition of “reference date” in Schedule 2:
“12. From each reference date under a construction contract, a person is entitled to a progress payment if the person has undertaken to carry out construction work, or supply related goods and services, under the contract.
…
reference date , under a construction contract, means—
(a) a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out or undertaken to be carried out, or related goods and services supplied or undertaken to be supplied, under the contract; or
(b) if the contract does not provide for the matter—
(i) the last day of the named month in which the construction work was first carried out, or the related goods and services were first supplied, under the contract; and
(ii) the last day of each later named month.”
It was common ground that the relevant provision of the definition is paragraph (a).
[5] Section 99 provides:
“No contracting out
1 F K Gardner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10 at [24], Baxbex Pty Ltd v Bickle
[2009] QSC 194 per Daubney J at [17]; Tailored Projects Pty Ltd v Jedfire Pty Ltd [2009] 2 Qd R
171 per Douglas J at [44]; De Neefe Signs Pty Ltd v Build1 (Qld) Pty Ltd [2010] QSC 279 per Fryberg J at [14] and Simcorp Developments & Constructions Pty Ltd v Gold Coast Titans Property Pty Ltd [2010] QSC 162 per Douglas J at [26].
2. Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421 at [53].
(1) The provisions of this Act have effect despite any provision to the contrary in any contract, agreement or arrangement.
(2) A provision of any contract, agreement or arrangement
(whether in writing or not) is void to the extent to which it— (a) is contrary to this Act; or
(b) purports to annul, exclude, modify, restrict or
otherwise change the effect of a provision of this
Act, or would otherwise have the effect of excluding, modifying, restricting or otherwise changing the effect of a provision of this Act; or
(c) may reasonably be construed as an attempt to deter a person from taking action under this Act.”
The subcontract
[6] Clause 12.6 of the subcontract provided:
“The Subcontractor may submit a Payment Claim to John Holland only on each Reference Date. The Subcontractor warrants to John Holland that Payment Claims will:
(a) be calculated for the periods and/or by the method and within the times required by Schedule A and clause 12.13;
(b) be in the format John Holland requires including the provision of a statutory declaration as required under clause
12.17; [Clause 12.17 was a warranty by the first respondent that it would not include amounts in respect of
subcontractors, workers or employees in a “Payment Claim”
unless it had provided specified matters to the appellant,
including a statutory declaration and supporting evidence “reasonably required” by the appellant that the subcontractors and employed workers had been paid and “any additional information, statements, certifications, or
…a statutory declaration”, as the appellant “may reasonably require or consider is desirable, to satisfy any Legislative Requirement applicable” to the appellant or the Works.]
(c) be delivered to the John Holland Project Manager or such other nominated person;
(d) include the evidence reasonably required by John Holland of the value of work completed in accordance with the Subcontract and the amount claimed;
(e) set out the total value of work completed in accordance with the Subcontract to the date of the Payment Claim, the amount previously paid to the Subcontractor and the amount then claimed;
(f) be delivered only if the conditions precedent to the Subcontractor's entitlement to make a Payment Claim are satisfied; and
(g) not include any claims which are barred by clause 16.3 or otherwise.
The Subcontractor warrants and represents that if a Payment Claim does not comply with the conditions set out in this clause 12.6:
(h) that Payment Claim is void; and
(i) the Reference Date for the purposes of the Security of
Payment Act shall be the same day on the following month.”
[7] “Payment Claim” and “Reference date” were defined. Clause 1.1 of the subcontract provided:
“Unless the context otherwise indicates, each word or phrase defined in this clause 1.1 and elsewhere has that meaning given to it whenever used in this Subcontract.
…
Payment Claim means a claim for payment of the Subcontract Sum submitted by the Subcontractor to John Holland strictly in accordance with the Subcontract.
…
Reference Date means the date when the Subcontractor may submit a Payment Claim to John Holland in accordance with clause 12.6 and Schedule A, and has the same meaning as defined in the Security of Payment Act.”
(“Security of Payment Act” was defined in a way which comprehended the Act.)
[8] Also relevant is the following item in Schedule A of the subcontract; “Reference date (i) Up to Completion, on 28 of
each month;
(Clause 1.1, 12.6, 12.13 and 13.2(a))
(ii) On the receipt of a
Completion notice (clause
13.2(a)); and
(iii) On the submission of a Final
Payment Claim (clause
12.13)”
The parties agreed that the relevant provision was the reference to the 28th day of each month in paragraph (i).
The adjudicator’s decision
[9] The appellant argued before the adjudicator that the first respondent had failed to comply with some of subclauses (a)-(g) of cl 12.6 of the subcontract, with the result that no reference date had arisen such as to entitle the first respondent to make the payment claim. The adjudicator did not determine whether or not there had been any such non-compliance, but held that 28 November 2011, being the 28th day of the relevant month, was the reference date for the payment claim.
The primary judge’s decision
[10] The appellant repeated the same argument before the primary judge. It relied upon a concession by the first respondent that it had not complied with cl 12.6(b) in relation to the payment claim. The primary judge rejected the argument, holding that the introductory words in cl 12.6, together with the provision in Schedule A, fixed the 28th of November 2011 as the reference date in relation to the payment claim. Her Honour considered that subclauses (a)-(g) of cl 12.6 amounted to promises by the first respondent as to the contents of any payment claim it made. A breach of those promises might or might not give the appellant valuable rights, but it did not change the fact that a reference date had occurred. Her Honour considered that cl 12.6(i) could not alter that fact.
The appellant’s submissions
[11] The appellant submitted that the proper construction of the contractual definition of reference date was that its accrual was conditional upon satisfaction of the matters in cl 12.6. It was necessary to refer to the subparagraphs of cl 12.6 in order to identify the date “worked out under” the subcontract, within the meaning of paragraph (a) of the definition of “reference date” in the Act. In the appellant’s submission, the first respondent’s admitted non-compliance with paragraph (b) justified the conclusion that there was no reference date for the payment claim. So much resulted from cl 12.6(h), and it was put beyond doubt by paragraph (i), which deferred any reference date until “the same day on the following month”. The appellant argued that the primary judge’s construction did not give effect to the principles that the whole of the instrument should be considered, since the meaning of any one part might be revealed by other parts, that the words of every clause must, if possible, be construed so as to render them all harmonious one with
another 3 , and that courts “…strain against interpreting a contract so that a particular
clause in it is nugatory or ineffective, particularly if a meaning can be given to it consonant with the other provisions in a contract.” 4 The primary judge’s construction was submitted to contravene those principles because it failed to give the objectively intended effect to the paragraphs of cl 12.6 and the incorporation of
those paragraphs both in the definition of “Reference Date” (by the words “in accordance with cl 12.6”) and in the definition of “Reference date” in Schedule A of the subcontract (by the reference to cl 12.6 within the parentheses under that term).
[12] The appellant argued that the proper construction was that the existence of a reference date depended upon the existence of a document which complied with the
3 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973)
129 CLR 99 at 109 as per Gibbs J.
4 Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402 at 411 per Lockhart and Hill JJ.
requirements set out paragraphs (a)-(g) of cl 12.6 and the arrival of the 28th day of the month. Clauses 12.6(h) and (i) therefore operated to defer the creation of a reference date until the next month because of the non-compliance with cl 12.6(b).
[13] In the appellant’s submission, that approach reflected the Act’s emphasis, including in s 12 and the definition of “reference date”, upon the freedom of the parties to agree upon dates on which progress claims might be made, which the Act then adopted as the relevant reference dates. The appellant relied upon the statements by Douglas J in Simcorp Developments & Constructions P/L v Gold Coast Titans Property P/L ; Gold Coast Titans Property P/L v Simcorp Developments and Constructions P/L 5 that the Act “contemplates that the contract may contain provisions for working out a period for service of a payment claim intended to be used in fixing when such a claim may be made” 6 and that it had been held that “the Act does not override the contractual provisions and stresses adherence to their terms ( Reed Constructions (Qld) Pty Ltd v Martinek Holdings Pty Ltd [2009] QSC
345 at [13]-[14]).” 7
[14] The appellant submitted that the construction of cl 12.6 of the subcontract which it advocated was not inimical to the anti-avoidance provision in s 99 of the Act. The appellant referred to John Goss Projects Pty Ltd v Leighton Contractors Pty Ltd , 8 in which McDougall J referred to his earlier decision in Minister for Commerce v Contrax Plumbing & Ors , 9 and to observations made by Bryson JA on appeal from that decision, 10 and said:
“Bryson JA observed (at [58]) that ‘[t]he avoidance provisions should be applied according to their terms and no more widely’. The Act seeks to strike some balance between competing considerations. On the one hand, there is the protection of the entitlement of those who perform construction work, or supply related goods or services, to receive progress payments. On the other, there is the freedom of parties to contract as they wish. I respectfully agree with what Bryson JA said, although I would add that, in interpreting the
‘avoidance provisions’, it is necessary to pay due regard to the objects of and policy underlying the Act. But, that having been said, I do not think that anything in the Act generally, or in s 34 in particular, requires the Court to strain to find that a provision of a contract offends the Act.”
Consideration
[15] I summarised relevant features of the statutory scheme in Spankie & Ors v James
Trowse Constructions Pty Limited : 11
5 [2010] QSC 162.
6 [2010] QSC 162 at [25].
7 [2010] QSC 162 at [26].
8 (2006) 66 NSWLR 707 at [78].
9 [2004] NSWSC 823.
10 Minster for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142 at [58].
11 [2010] QCA 355 at [9]-[10].
“The object of BCIPA is expressed in s 7. It is to ensure that a person who undertakes to carry out construction work or to supply related goods and services under a construction contract is ‘entitled to receive’ and ‘able to recover’ progress payments. Section 8 provides that the object is to be achieved by granting an entitlement to progress payments, whether or not that is provided in the contract, and by establishing a procedure that involves the making of a payment claim, response by way of a payment schedule, referral of a disputed or unpaid claim to an adjudicator, and payment of the progress payment decided by the adjudicator.
The first aspect of the statutory object, the entitlement to progress payments, is created by s 12, which is in Part 2 (‘Rights to progress payments’). Section 12 provides that ‘From each reference date under a construction contract, a person is entitled to a progress payment if the person has undertaken to carry out construction work, or supply related goods and services, under the contract’. The expression ‘reference date, under a construction contract’ is defined to mean, so far as is presently relevant, ‘a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out or undertaken to be carried out, or related goods and services supplied or undertaken to be supplied, under the contract’. Section 13 relevantly provides that the amount of a progress payment to which a person is entitled in relation to a construction contract is the amount calculated under the contract.”
[16] The effect of contractual provisions upon the procedure for vindicating the statutory entitlement to progress payments by making Payment Claims and the amount of any such payment are not in issue in this appeal. 12 Nor is it necessary to attempt a comprehensive reconciliation of general statements in the cases concerning the relationship between the Act and the contracts with which it is concerned. 13 It is necessary only to deal with the narrow issue agitated by the appellant concerning the effect of cll 12.6(b), (h) and (i) of the contract upon the “reference date” for the
purposes of s 12 of the Act.
[17] In considering that issue, the object of the Act expressed in s 7, and how that object is to be achieved, expressed in s 8, must be borne in mind. An interpretation of the Act which best achieves its purpose is to be preferred to any other interpretation. 14
Relevantly, s 8 makes it clear that the purpose of the Act is not merely to give statutory force to a contractual entitlement to progress payments. Rather, the fundamental object of ensuring an entitlement to progress payments is to be achieved by granting a statutory entitlement to progress payments even where the contract itself makes provision for progress payments. The extent to which those
12 Cf Reed Constructions (Qld) Pty Ltd v Martinek Holdings Pty Ltd [2011] 1 Qd R 28 at [24].
13 See Vis Constructions Ltd & Anor v Cockburn & Anor [2006] QSC 416 at [27] and Mansouri & Anor v Aquamist P/L [2010] QCA 209 at [15], referring with approval to Beckhaus Civil Pty Ltd
v Brewarrina Council [2002] NSWSC 960 at [60], but compare Reed Constructions (Qld) Pty Ltd v Martinek Holdings Pty Ltd [2011] 1 Qd R 28 at [16] – [19], De Martin and Gasparini Pty Limited v Energy Australia & Anor (2002) 55 NSWLR 577 at [590].
14 Acts Interpretation Act , s 14A(1).
separate contractual and statutory entitlements coincide must be derived from the operative provisions of the Act.
[18] Section 12 confers upon a person who has undertaken to carry out construction work a statutory entitlement to recover a progress payment from each “reference date under a construction contract”, which is defined to mean, so far as is presently relevant, “a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out or undertaken to be carried out, …under the contract…”. Accordingly, the contractual provisions to which reference may be made for the purpose of ascertaining the “reference date” are those which state, or provide for the working out of, the date on which a progress payment claim “may be made”. The latter expression refers to an entitlement to make a progress claim. It does not comprehend reference to warranties which concern the form and content of progress claims or the consequences of breaching warranties about the form and content of progress claims.
[19] The Act adopts contractual provisions concerning the amount of a progress payment (s 13(a)), the valuation of construction work and related goods and services (s 14), the date upon which a progress payment under a construction contract becomes payable (s 15(1)(a)), the rate of interest payable on the unpaid amount of a progress payment that has become payable (s 15(2)(a)), the amount held by the respondent which may be included in a payment claim (s 17(3)(b)), the period within which a payment claim may be served (s 17(4)(a)), and the time within which a payment schedule must be served if the respondent is to avoid becoming liable to pay the claimed amount (s 18(4)(b)(i)). None of those provisions bear upon the date upon which the statutory entitlement to progress payments accrues. Bearing in mind the statutory object and the role of s 12 and the definition of “reference date” in giving effect to that object, those provisions are incapable of justifying an implication that the date upon which the statutory entitlement to a progress payment accrues may be qualified by contractual provisions other than those captured by the unambiguous terms of the definition of “reference date”.
[20] The first sentence of cl 12.6 of the subcontract, read with the definition of “Reference date” in Schedule A of the subcontract therefore requires the conclusion that, in terms of the statutory definition of “reference date”, a claim for a progress payment under the subcontract “may” be made on the 28th day of each month. The incorporation in cl 12.6 of the contractual definition of “Reference Date” does not falsify that conclusion, because that definition also refers to the date when the first respondent “may submit” a “Payment Claim” (a term which is defined in cl 1.1 to mean “a claim for payment…strictly in accordance with the Subcontract”). The appellant did not identify any circumstance which might justify a court in re-writing these contractual provisions to produce a different construction or how, consistently with the Act, that might be done in a way which deferred the accrual of the first respondent’s statutory entitlement to a progress payment from the “date stated in, or worked out under, the contract on which a claim for a progress payment may be made”. In particular, cl 12.6 is not open to the construction that compliance with the warranty in cl 12.6(b) is, for the purposes of the statutory definition of “reference date”, a condition of the entitlement to submit a payment claim conferred by the first sentence of cl 12.6.
[21] The effect of the appellant’s argument is, therefore, that cl 12.6(h) and (i) operated to defer what otherwise would have been the respondent’s statutory entitlement to a progress payment from a reference date ascertained in accordance with the Act. The intended effect of cl 12.6(h) might be debatable, but cl 12.6(i) certainly purports to have that effect. It follows that it (and cl 12.6(h) if it would have a similar effect) is void as a provision that, in terms of s 99(2)(b) of the Act “purports to … modify … or otherwise change the effect of a provision of this Act, or would otherwise have the effect of … modifying, or otherwise changing the effect of a provision of this Act”.
[22] Douglas J’s observation in Simcorp Developments & Constructions P/L v Gold Coast Titans Property P/L that the Act does not override contractual provisions must be understood as being subject to any application of s 99. That decision is otherwise not on point. His Honour’s conclusions that the contractor’s claim in that case should have been treated simply as a progress claim under the contract and not as a payment claim under the Act, 15 and that the “issuing or deemed issuing of a progress certificate by the superintendent is a necessary pre-condition to the
delivery of a payment claim under s 17 of the Act”, turned upon the construction of quite different contractual provisions and the application of s 17.
[23] The approach I have adopted is, I think, consistent with McDougall J’s general observations in John Goss Projects Pty Ltd v Leighton Contractors Pty Ltd which are quoted in [14] of these reasons. That case also concerned a different point, namely, whether a contractual provision requiring notification of a claim within a specified time of the occurrence of the events giving rise to the claim was inconsistent with the right given by s 13(4) of the New South Wales Act to bring a payment claim within twelve months after cessation of the contractual work. McDougall J found that the contractual provision was not rendered void by s 34 of the New South Wales Act because the contractual provision did not say anything about the time when a payment claim might be made but instead limited the entitlement to work that might be comprised in a payment claim whenever it was
made. 16 The point in issue in this appeal was not considered in that decision.
[24] Finally in this respect, I should mention that Hodgson JA’s observation in Minister for Commerce v Contrax Plumbing & Ors 17 that a contractual provision about the determination of reference dates “…could be such as to restrict the operation of the Act within the meaning of s 34…” (a section of the New South Wales Act which is
similar to s 99 of the Act) is not inconsistent with my conclusion, although the issue there was very different and Bryson JA and Brownie AJA expressly refrained from dealing with it.
Denial of natural justice
[25] The appellant argued that the adjudication decision should be declared void because, in relation to the first respondent’s substantial claim for delay damages, the adjudicator found that a contractual bar in cl 16.3 of the subcontract was inapplicable on a basis for which neither party contended. The primary judge
15 [2010] QSC 162 at [26].
16 (2006) 66 NSWLR 707 at 722 [82].
17 [2005] NSWCA 142 at [54].
accepted that if the adjudicator did decide the issue on a basis which was not argued, that would amount to a denial of natural justice sufficient to render the adjudication decision void. Her Honour found, however, that the adjudicator decided the issue on a basis which was argued before him. It is only that finding which is in issue in this appeal.
The issues in the adjudication
[26] The relevant claim by the first respondent was for $85,000 per day assessed with reference to “Stand By Rates” set out in Schedule G of the subcontract, as the costs of certain items of the subcontractor’s equipment for each day of a delayed period of 68 days. The appellant accepted that the commencement of the first respondent’s dredging work was delayed from the program start date and granted an extension of time of 68 days. The appellant also proposed to make a significant payment on
account until final costs were “…received, evaluated and agreed”. 18
[27] In the payment schedule, the appellant argued that the first respondent’s claim for delay costs was barred by its failure to comply with cl 16.1 of the subcontract. That clause required the first respondent to give the appellant certain notices if it wished to make a claim against the appellant in respect of anything arising out of or in connection with the works or the subcontract. There were three exceptions to the requirement, including for claims for an extension of time under cl 10.6. The appellant argued that the first respondent’s claim for delay costs was not within that exception, the first respondent had not given the prescribed notices, and the claim was therefore barred by cl 16.3. Clause 16.3 relevantly provides that if the first respondent fails to comply with cl 16.1, the subcontract sum will not be adjusted as a result of, and the appellant will not be liable upon any claim by the first respondent arising out of or in connection with, “the relevant Direction or fact, matter or thing (as the case may be) to which clause 16.1…applies.”
[28] In submissions in the adjudication application, the first respondent replied to the appellant’s argument. Relevantly, the first respondent submitted:
“89. With regard to Standby as a Daywork variation:
a. Clause 11.5 of the contract deals with John Holland directing work beyond that contracted,
b. The additional time required by John Holland is that number of days between the instruction to mobilise and the adjusted date for commencement of work,
c. The work period was specifically approved by the issue of an extension of time,
d. The value of the work was expressly agreed by John Holland pursuant to Schedule G and clause 11.6(d)(i) and a commitment to payment was made see Annex K email.
e. Clause 16.3 has no application to directed day work and no further notices are required as it was directed and preapproved at the rate claimed.
18 Appellant’s letter to the first respondent 30 June 2011 in Schedule 4 of the Payment Schedule.
90. With regard to Standby as an extension of time:
a. The Respondent directed the mobilisation (this is not in issue)
b. The Claimant having mobilised was unable to commence work
c. The Respondent expressly agreed to an extension of time of
68 days (see Respondent letter at Annex K and to the
payment of the sum claimed)
d. The sum able to be claimed is in accordance with clause
10.13 and is an Extension Event within the meaning given to
that term by the definitions section of the contract at clause
1.1
e. The requirements of clause 10.8 are satisfied by the approval of the extension, thus satisfying the second limb of clause 10.13
…
g. The sum claimed is in accordance with the contract provisions at clause 10.13(c) and (d)
h. Clause 16.3 cannot be said to strike down an entitlement expressly granted and valued for which the relevant documents have been provided to secure the extension pursuant to clause 10.6 as that is an exception to the operation of 16.3 by operation of clause 16.1”
[29] In the adjudication response, the appellant, having acknowledged granting the first respondent an extension of time to the date of completion of 68 days, argued that the extension was granted pursuant to cl 10.10 of the subcontract (which relates to orders issued by the appellant for the suspension of work), argued that the extension of time was not made pursuant to cl 10.8 (which empowered the appellant to extend the date for completion where the first respondent duly claimed an extension under cl 10.6 for delays within cl 10.5, including delays caused by an “Extension Event”, (which was defined to comprehend unauthorised acts or omissions by the appellant) admitted that the first respondent was entitled to “direct costs” under cl 10.10(b)(i), and argued that the first respondent was not entitled to payment under cl 10.13 because of the first respondent’s failure to follow the strict requirements of that clause. (Cl 10.13 is an agreed damages clause which conditioned the first respondent’s entitlement to the agreed damages. In the appellant’s submission, one condition was that the first respondent strictly made extension of time claims in accordance with cl 10.7 and cl 10.8). The appellant developed submissions in support of its proposition that it had not granted an extension of time under cl 10.8.
The adjudication decision
[30] The adjudicator preferred the first respondent’s evidence that no suspension order was issued, and accordingly rejected the appellant’s submission that the extension was granted pursuant to cl 10.10 and limited any claim to direct costs. The
adjudicator did not accept the first respondent’s argument that the costs could be valued under cl 11.5, but accepted that cl 10.13 was the appropriate clause.
[31] The adjudicator also rejected the appellant’s argument that the first respondent was not entitled to delay costs because of non-compliance with cl 10.13 and that it had not been granted an extension of time under cl 10.8. The first respondent’s claim was accepted as an “Agreed Damages” claim under cl 10.13. In rejecting the appellant’s arguments that the first respondent was not entitled to an extension of time and, “presumably”, not entitled to be paid under cl 10.13 because the first respondent did not take steps to avoid or minimise the consequences of delay, the adjudicator observed that “…just cannot be the circumstances that apply here” because the extension of time had already been granted and the respondent had conceded that it would pay stand by costs.
[32] After setting out cl 16, the adjudicator reasoned as follows:
“91. In the circumstances which are by now well traversed in the matters discussed above, the Respondent's submissions are premised on the Claimant having failed to claim an extension of time under clause 10.6. Otherwise, clause 16.3 could not apply.
92. The Claimant's submissions proceed on two fronts. One on the basis that the entitlement to the Stand-by Amount arises under clause 11.5 and the other on the basis it arises under clause 10.13 [a footnote reference was given to paragraph
90 of the first respondent’s submissions]. As I have already stated above, I do not accept the entitlement to the Stand-by Claim arises under clause 11.5 but rather, it arises under clause 10.13.
93. In my view, as with the Respondent's submissions in respect to clause 10.7 the circumstances have moved on. The extension of time has been granted. I am satisfied that clause
16.3 does not apply in the circumstances here.”
The primary judge’s decision
[33] In rejecting the appellant’s argument that it had been denied natural justice, the primary judge held that the adjudicator’s finding that the contractual basis for the extension of time was cl 10.8 and that there was consequently an entitlement to the Schedule G amount pursuant to cl 10.13 “was clearly the basis put forward by the subcontractor in its written submissions to the adjudicator”. In that respect, the primary judge referred to the footnote reference in paragraph 92 of the adjudicator’s decision to paragraph [90] of the first respondent’s submissions.
The appellant’s arguments
[34] The appellant did not advance any direct challenge to the primary judge’s reasoning, but argued that the adjudicator’s reference in paragraph 93 to the circumstances having “moved on” was a “rather shorthand allegation that the construction or application of cl 16 was affected by the conduct of the parties subsequent to the
execution of the contract, that is, the existence of a waiver or estoppel of some kind.” 19 The appellant argued that, had it been given the opportunity to make submission about that course of reasoning, it could have pointed out that claims could only be made in accordance with the contractual terms and it could have
demonstrated the absence of any viable claim of waiver or estoppel with respect to the contractual bar in cl 16.
Consideration
[35] The primary judge’s reasons explain why there is no substance in the appellant’s claim that it was denied natural justice. Whatever may be the proper construction of the relevant provisions of the subcontract, a matter which is not in issue in this appeal, it is clear that the adjudicator did not decide the issue on the basis of any waiver or estoppel. The reference to circumstances having “moved on” was, as the following sentence demonstrated, merely a reference to the extension of time having been granted, which itself adopted that aspect of the first respondent’s argument in paragraph 90(e) and (h) of the submissions in its adjudication application. The appellant had and availed itself of the opportunity to respond to those submissions. It was not denied natural justice.
Proposed order
[36] The appeal should be dismissed with costs.
[37] WHITE JA: I have read Fraser JA’s reasons and agree for those reasons that the appeal be dismissed with costs.
[38] PETER LYONS J: I agree with the reasons of Fraser JA and the order proposed by his Honour.
19 Appellant’s outline of submissions, paragraph 36.