[2013] TASSC 3
COURT: SUPREME COURT OF TASMANIA
CITATION: Skilltech Consulting Services Pty Ltd v Bold Vision Pty Ltd [2013] TASSC 3
PARTIES: SKILLTECH CONSULTING SERVICES PTY LTD
v
BOLD VISION PTY LTD
ADJUDICATE TODAY PTY LTD
O'BRIEN, John
FILE NO/S: 910/2012
DELIVERED ON: 22 February 2013
DELIVERED AT: Hobart
HEARING DATES: 10, 11 December 2012
JUDGMENT OF: Blow J
CATCHWORDS:
Contracts – Building, engineering and related contracts – Remuneration – Statutory regulation of entitlement to and recovery of progress payments – Payment claims – Validity – Requirement to specify construction work in sufficient detail to enable assessment of claim.
Building and Construction Industry Security of Payment Act 2009 (Tas), s17(2)(d).
Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248, referred to.
Aust Dig Contracts [279.5]
Contracts – Building, engineering and related contracts – Remuneration – Statutory regulation of entitlement to and recovery of progress payments – Adjudication of payment claims – Natural justice – Whether duty to invite further submissions – Extent of duty to have regard to material submitted by parties.
Building and Construction Industry Security of Payment Act 2009 (Tas), s25.
F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295; Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208; Musico v Davenport [2003] NSWSC 977; Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd [2006] NSWSC 205; John Goss Projects Pty Ltd v Leighton Contractors (2006) 66 NSWLR 707; Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) (2009) 26 VR 172; Watpac Constructions (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168; Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd (2010) 30 VR 141, referred to.
Aust Dig Contracts [279.6]
REPRESENTATION:
Counsel:
Plaintiff: J A H Foxcroft SC, C Doherty
First Defendant: T J Margetts SC
Second and Third Defendants: No appearance
Solicitors:
Plaintiff: Gadens Lawyers
First Defendants: Oldham Naidoo Lawyers
Second and Third Defendants: Philip Davenport
Judgment Number: [2013] TASSC 3
Number of paragraphs: 88
Serial No 3/2013
File No 910/2012
SKILLTECH CONSULTING SERVICES PTY LTD v
BOLD VISION PTY LTD, ADJUDICATE TODAY PTY LTD
and JOHN O'BRIEN
REASONS FOR JUDGMENT BLOW J
22 February 2013
1 The plaintiff, Skilltech Consulting Services Pty Ltd, is aggrieved by an adjudication determination under the Building and Construction Industry Security of Payment Act 2009 ("the Act"). It is seeking orders that the determination be quashed or, alternatively, declared void.
2 Skilltech was engaged by an authority known as Southern Water to install a very large quantity of water meters in Southern Tasmania. It in turn engaged the first defendant, Bold Vision Pty Ltd, which trades as "Laser Plumbing Moonah", to install water meters. Disputes developed between Skilltech and Bold Vision. On 11 September 2012, Bold Vision applied to the second defendant, Adjudicate Today Pty Ltd, as a nominating authority under the Act, for an adjudication in respect of a claim for $2,480,887.03. The third defendant, John O'Brien, was nominated by Adjudicate Today as the adjudicator to determine that adjudication application. On 15 October 2012, he made a determination requiring Skilltech to pay Bold Vision $1,247,371.81. That is the determination to which these proceedings relate.
3 A notice of appearance has been filed on behalf of the second and third defendants, but they were not represented at the trial of the action.
4 Skilltech's primary claim is for relief in the nature of certiorari . Writs of certiorari may no longer be issued by this Court: Judicial Review Act 2000, s43. However relief in the nature of certiorari is still available: Supreme Court Rules 2000, r627(2)(a); Tasman Quest Pty Ltd v Evans (2003) 13 Tas R 16, at pars[8], [9]. Counsel for Bold Vision accepted at the trial that relief in the nature of certiorari would be available, in an appropriate case, to quash an adjudication determination, or a purported adjudication determination, under the Act. As an alternative remedy, Skilltech is seeking a declaration, in the exercise of the Court's equitable jurisdiction, declaring the adjudication determination void.
5 The Act is modelled on similar legislation that has been enacted in other States, including the Building and Construction Industry Security of Payment Act 1999 (NSW), and the Building and Construction Industry Security of Payment Act 2002 (Vic). The object of the Act is to ensure that those who carry out construction work have enforceable rights to receive progress payments. The Act provides a mechanism for prompt adjudications in relation to disputes concerning entitlements to progress payments. Its significant provisions in relation to claiming and disputing progress payments, and the adjudication of such disputes, can be summarised as follows:
• A person who has undertaken to carry out building work or construction work under a building or construction contract is entitled, on and from each "reference date", to a progress payment: s12(1)(a).
• The expression, "reference date", is defined in s4. A "reference date" is a date determined by, or in accordance with, the terms of the contract as the date on which a progress payment may be made. If the contract does not expressly provide for such a date, the last day of each month in which building work or construction work is carried out under the contract constitutes a "reference date".
• A claimant who is, or claims to be, entitled to a progress payment under s12 may serve a "payment claim" on the person who is, or may be, liable under the contract to make the payment: s17(1). Section 17 also contains provisions as to the contents, frequency and timing of payment claims.
• If a respondent on whom a payment claim is served wishes to pay less than the claimed amount, that respondent may provide to the claimant a "payment schedule" which identifies the payment claim, indicates the amount (if any) that the respondent proposes to pay, specifies why the amount is less than the claimed amount, and specifies the reasons for withholding any payment: s18.
• In that situation, subject to certain formal requirements, the claimant may make an "adjudication application" under s21: s20(2)(a)(ii).
• A claimant may, in writing, apply to a nominating authority, chosen by the claimant, to have a payment claim adjudicated: s21(1). Section 21 goes on to place restrictions on the circumstances in which applications for adjudication may be made, and on the timing of such applications.
• An adjudication application must identify the payment claim and the payment schedule to which it relates, and may contain any submissions relating to the application that the applicant thinks fit: s21(5)(a) and (c).
• When an adjudication application is made to a nominating authority, the nominating authority is required to refer the matter as soon as practicable to a person who is a qualified adjudicator: s22(1).
• Subject to certain procedural requirements, a respondent may lodge with the adjudicator a response to the adjudication application: s23(1). An adjudication response may contain any submissions relevant to the response that the respondent thinks fit: s23(3)(c).
• If the respondent is entitled to lodge an adjudication response, and lodges one within the permitted time, the adjudicator is required to determine the adjudication application within 10 business days after receiving that adjudication response: s24(1)(a)(i).
• An adjudicator is required to determine whether all or part of a progress payment is to be paid by the respondent: s25(1)(a). He or she is required to determine the amount to be paid, the date when the payment becomes payable, and the applicable rate of interest: s25(1)(b).
• If an adjudicator determines that a respondent is required to pay an adjudicated amount, that respondent must pay the amount within five business days after service of the adjudicator's determination, or by any later date determined by the adjudicator: s26(1).
• If the respondent does not pay on time, the claimant may request the nominating authority to issue an "adjudication certificate": s26(2)(a). An adjudication certificate specifies the names of the parties, the adjudicated amount, and the date when payment was due to be made: s26(5).
• An adjudication certificate may be filed as a judgment for a debt in a court of competent jurisdiction, and is enforceable as a judgment for a debt: s27(1) and (2).
• An adjudication determination in respect of a s17 payment claim does not affect any right that a party to the contract may have under the contract or the general law: s10(1). As a general rule, nothing done under ss17 – 39 affects any civil proceedings arising under the contract: s10(2).
6 The background events leading up to the trial of this action have been as follows:
• On 14 August 2012 Bold Vision made a claim against Skilltech, which it contends to have been a s17 payment claim, for $2,480,887.03.
• On 28 August 2012 Skilltech provided a s18 payment schedule indicating that it proposed to pay Bold Vision nothing.
• Bold Vision made an adjudication application on 11 September 2012.
• Skilltech lodged an adjudication response on 25 September 2012.
• The adjudicator made his determination on 15 October 2012. (The parties had granted him an extension of time of four business days.)
• On 22 October 2012 Skilltech commenced this action.
• On 23 October 2012, Skilltech applied for and was granted an injunction which, in effect, restrains Bold Vision from applying to Adjudicate Today for the issue of an adjudication certificate, from applying for judgment for the adjudicated amount, and from enforcing the adjudication determination. That injunction remains in force until further order.
7 The process of adjudication under the Act involves the exercise of a public power. Accordingly, a determination by an adjudicator is amenable to orders in the nature of certiorari : Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393 (Court of Appeal).
8 The grounds upon which certiorari can be granted were summarised by the High Court in Craig v South Australia (1995) 184 CLR 163, at 175 – 176, as follows (omitting footnotes):
"Where available, certiorari is a process by which a superior court, in the exercise of original jurisdiction, supervises the acts of an inferior court or other tribunal. It is not an appellate procedure enabling either a general review of the order or decision of the inferior court or tribunal or a substitution of the order or decision which the superior court thinks should have been made. Where the writ runs, it merely enables the quashing of the impugned order or decision upon one or more of a number of distinct established grounds, most importantly, jurisdictional error, failure to observe some applicable requirement of procedural fairness, fraud and 'error of law on the face of the record'. Where the writ is sought on the ground of jurisdictional error, breach of procedural fairness or fraud, the superior court entertaining an application for certiorari can, subject to available procedural and evidentiary rules, take account of any relevant material placed before it. In contrast, where relief is sought on the ground of error of law on the face of the record, the superior court is restricted to the 'record' of the inferior court or tribunal and the writ will enable the quashing of the impugned order or decision only on the ground that it is affected by some error of law which is disclosed by that record."
9 It follows that those principles must be applied in relation to a proceeding for relief in the nature of certiorari under r627(2)(a).
10 Counsel for Skilltech sought such relief on the basis of jurisdictional errors, failures to observe requirements of procedural fairness, and errors of law on the face of the record. Submissions as to the quashing of the adjudication determination were made on eight loosely formulated grounds. I will deal with those eight grounds in the same order as counsel did in their submissions.
Denial of natural justice in determination of "building or construction contract" (Ground 1)
11 Bold Vision contends that it undertook to carry out building work or construction work under a building or construction contract, and was entitled to a progress payment under s12(1)(a) of the Act in respect of a particular reference date, namely 25 July 2012. In making his determination, the adjudicator considered the adjudication application made by Bold Vision and the adjudication response made by Skilltech. In those documents the parties advanced inconsistent contentions as to what constituted the "building or construction contract". For the purpose of the adjudication determination, the adjudicator made findings as to what constituted the contract between the two parties. He did not fully accept the submission of either party as to that point, but reached a conclusion of his own that was partly inconsistent with the submission of each party. He did so without first offering either party an opportunity to make submissions as to the conclusion that he reached on the point. Skilltech contends that he thereby failed to observe an applicable requirement of procedural fairness, and that relief in the nature of certiorari should therefore be granted.
12 The term "building or construction contract" is defined in s4 of the Act as follows:
" building or construction contract means a contract, or other arrangement, under which one party undertakes to carry out building work or construction work for, or to supply building or construction-related goods and services to, another party".
13 Section 25(2) provides that, in determining an adjudication application, an adjudicator is to consider only certain matters that are listed in that subsection. One of those matters is "the provisions of the building or construction contract to which the application relates": s25(2)(b). It follows that in some cases an adjudicator will need to make findings as to whether a "building or construction contract" exists, as to how such a contract was constituted, or as to what provisions such a contract contains.
14 Representatives of Skilltech and Bold Vision executed a document called a "Subcontract Agreement" dated 4 April 2011. That document contained nothing about the scope of the work that Bold Vision would be required to do for Skilltech. It set out a series of contractual terms which, on the face of the document, appeared to be intended to govern the relationship between the parties. However, in a number of respects, practices subsequently adopted by the parties differed from those provided for in the document.
15 One such difference concerned provisions in the subcontract agreement as to purchase orders. Those provisions were contained in cls 4.1 – 4.4 inclusive. Clause 4.1 read as follows:
"Skilltech incurs no liability to Contractor unless and until it issues to the Contractor a Purchase Order for a Project. Subject to the agreement of the Contractor, each time Skilltech issues a Purchase Order to the Contractor in accordance with this clause, a Contractor incorporating this Agreement is formed between Skilltech and the Contractor for the supply of the Works specified in the Purchase Order. This Agreement may be incorporated into several Contracts independently and concurrently."
16 However no purchase orders were issued by Bold Vision to Skilltech. Instead, the arrangements for particular work to be done at particular locations were communicated electronically by means of devices known as "hand held units" or "HHUs".
17 Bold Vision contended in its adjudication application that none of the work it did for Skilltech was carried out pursuant to the subcontract agreement. Its submissions about that document read:
"In the Claimant's [Bold Vision's] view the manner of work it was required to do was not captured and managed by this document at all. It was not referred to through the course of the work, and none of its provisions were adhered to by either party, nor processes followed by the Respondent [Skilltech]. In the Claimant's view it has no application to the work done.
… Ultimately little will turn on this and the adjudicator will have to determine what relevance if any this document has, and if indeed it was the arrangement under which the Claimant carried out its work. The Claimant does not think it was.
…
The Respondent argues that the claim is invalid for the following reasons:
1 Here the Respondent notes that it did not issue any Purchase Orders as required by the contract. Under the terms of the contract that means there IS no contract. The Respondent speaks of ' directions provided from time to time to Laser [Bold Vision's business name] to undertake the works envisaged by the Agreement .' There is nothing about this in the contract. But the Claimant agrees that this was the way the work was done. The contract was irrelevant during the works. It played no part except for the schedule of rates. In any case there is nothing here about the validity of the claim.
…
The Claimant argues that the actual construction contract is based upon simply the schedule of rates, and the other arrangements made between the parties as outlined previously. This is consistent with s7 of the Act which provides that such arrangements can be;
(a) is written or oral; or (b) is partly written and partly oral; [sic]
As noted the contract at Attachment A1 [ie the subcontract agreement] does not even come into being until Purchase Orders are issued. The Respondent has conceded that no such orders were ever issued."
18 Skilltech disagreed. In par88 of its adjudication response, its solicitors wrote:
"The Respondent says that the Subcontract was partly in writing and partly to be implied. Insofar as it was in writing the Subcontract comprised the Subcontract appearing as Annexure A to the Adjudication Application [ie the subcontract agreement dated 4 April 2011]. Insofar as it is implied, it is implied from the need to give the Subcontract business efficacy and by Law."
19 In par89, the solicitors for Skilltech set out the relevant terms of the subcontract between the parties, as they contended them to be, and continued:
"The Respondent says that the Subcontract was varied at the time or shortly after the Works commenced by mutual agreement and as evidenced by conduct thereafter whereby:
(a) the process of issuing Purchase Orders was not used, but the relevant information and description of works to be performed was transmitted to the Claimant through the medium of hand held units ( HHU s) in the possession of the Claimant's work crews; and
(b) the terms of the Subcontract applied to all works performed by the Claimant pursuant to the directions it received by HHU, and each direction to perform works did not create a separate contract."
20 In his adjudication determination, the adjudicator considered the submissions of the parties and some relevant evidence, and made the following finding at par19:
"19 The Subcontract Agreement together with the directions, whether oral or written, 'provided from time to time to [the Claimant by the Respondent] [sic] to undertake the works envisaged by the Agreement' therefore constitutes in my opinion the Contract or 'other arrangement', as defined in the Act, between the parties pursuant to which the work was undertaken."
21 I accept that this conclusion was inconsistent with the submissions of each party as to what constituted their contract or other arrangement. Bold Vision had essentially contended that the written subcontract agreement had been abandoned, and did not form part of the applicable contract or other arrangement. Skilltech contended that there was a contract comprising the written subcontract agreement and a number of implied terms, as varied. The adjudicator concluded that the work was undertaken in accordance with the subcontract agreement and subsequent directions given by Skilltech, when that was not a finding that either party had asked him to make.
22 Under s24(2)(a) of the Act, an adjudicator has the power, before making his or her determination, to request further written submissions from either party. Under s24(2)(b), there is a duty to give the opposing party an opportunity to comment on any such submissions. Counsel for Skilltech submitted to me that the adjudicator, once he contemplated making a finding for which neither party had contended, had a duty to afford the parties natural justice by requesting further written submissions from them in relation to his proposed conclusion.
23 There have been a number of decided cases in other States concerning the duties of adjudicators to afford parties natural justice in cases like this. Before turning to them, it is appropriate to refer to some of the general principles concerning a decision-maker's duty of procedural fairness. Ordinarily, procedural fairness does not require a decision-maker to disclose his or her provisional conclusions: Sinnathambi v Minister for Immigration and Ethnic Affairs (1986) 66 ALR 502 at 506. As Lord Diplock said in F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295 at 369:
"… the rules of natural justice do not require the decision maker to disclose what he is minded to decide so that the parties may have a further opportunity of criticising his mental processes before he reaches a final decision. If this were a rule of natural justice only the most talkative of judges would satisfy it and trial by jury would have to be abolished."
24 However, if a decision-maker contemplates making a determination on a different basis from that on which the parties have conducted the case, he or she must inform the parties of that prospect so that they have an opportunity to address any new or challenged issues that may arise, and a failure so to inform the parties will ordinarily result in a denial of procedural fairness: Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208 per Ipp JA, with whom Mason P agreed, at pars[78] – [79].
25 The question here is whether the administrator's thinking as to what constituted the parties' building or construction contract differed so significantly from the submissions put to him that his duty of procedural fairness required him to invite further submissions. In my view, his thinking hardly differed at all from what Skilltech had submitted to him.
26 The authorities as to adjudicators' duties of procedural fairness from other Australian jurisdictions do not help Skilltech at all in my view. In Musico v Davenport [2003] NSWSC 977 at pars[107] – [108], McDougall J said the following:
"107 … It may readily be accepted that the Act provides for a somewhat rough and ready way of assessing a builder’s entitlement to progress claims. It may also be accepted that the procedure is intended not only to be swift, but also to be carried out with the minimum amount of formality and expense. Nonetheless, what an adjudicator is required to do is to decide the dispute between the parties. Under the scheme of the Act, that dispute is advanced by the parties through their adjudication application and adjudication response (which, no doubt, will usually incorporate the antecedent payment claim and payment schedule). If an adjudicator is minded to come to a particular determination on a particular ground for which neither party has contended then, in my opinion, the requirements of natural justice require the adjudicator to give the parties notice of that intention so that they may put submissions on it. In my opinion, this is a purpose intended to be served by s 21(4) of the Act (although the functions of s 21(4) may not be limited to this).
108 It follows, in my opinion, that where an adjudicator determines an adjudication application upon a basis that neither party has notified to the other or contended for, and that the adjudicator has not notified to the parties, there is a breach of the fundamental requirement of natural justice that a party to a dispute have 'a reasonable opportunity of learning what is alleged against him and of putting forward his own case in answer to it'. (See Lord Diplock in O’Reilly [ O'Reilly v Mackman [1983] 2 AC 237] at 279.)"
27 Section 21(4) of the NSW Act, to which McDougall J referred at the end of par[107] quoted above, empowers an adjudicator to request further submissions from either party, and to call a conference of the parties.
28 In Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd [2006] NSWSC 205 at par[10], Einstein J summarised the relevant principles as follows:
" The Requirements of Natural Justice
v The content of the rules of natural justice are variable.
vi Musico v Davenport [2003] NSWSC 977 is authority for the proposition that an adjudicator breaches the requirements of natural justice where an application is determined upon a basis not advanced by either party.
vii McDougall J's reasoning in Musico v Davenport was predicated on the proposition that an adjudicator under the Act stands in the same position as a tribunal: see his Honour's reference to O'Reilly v Mackman [1983] UKHL 1; [1983] 2 AC 237 in paragraphs [31] and [45] of the judgment.
viii The decision in Emergency Services Superannuation Board v Davenport [2004] NSWSC 697 is to the same effect.
ix Mason J observed in Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at 585 that the real question in most cases has now become what the hearing rule requires , rather than when it applies . The hearing rule is a requirement of procedural fairness, but the Act prescribes the procedure that is to apply in connection with an adjudication determination. The legislature, having addressed itself to the question as to how a claimant and the respondent to adjudication application are heard by an adjudicator, the Act makes it clear that that is the limited opportunity of the hearing which is to be given and there is no warrant to vary that legislative scheme: see eg Twist v Randwick Municipal Council [1976] HCA 58; (1976) 136 CLR 106 per Barwick CJ at 110.
x The adjudicator has a broad discretion as to how to establish the facts that are relevant in the valuation of a disputed payment claim. He is entitled to make use of the material submitted by the parties, and provided the parties are given the relevant notice to enable material to be placed before the adjudicator, the requirements of natural justice in the Act are satisfied. There is no other requirement as is established by applying the simple rules of construction.
xi This is consistent with the Court's statements on the natural justice issue in Brodyn v Davenport [(2004) 61 NSWLR 421] by specific reference only to sections 17(1), (2), 20, 21(1) and 22(2) (d) of the Act.
'... such is the importance generally of natural justice that one can infer a legislative intention that this is essential to validity, so that if there is a failure by the adjudicator to receive and consider submissions, occasioned by breach of these provisions [namely occasioned by the failure to give notices], the determination is a nullity.'
At [57] (adding emphasis to make the point clearly).
xii The requirements of fairness require an adjudicator to determine the value of a contested payment claim only by reference to the specific submissions made by the parties, and if the adjudicator is minded to move outside those submissions, the adjudicator must give the parties the opportunity to make further submissions.
xiii The Act contains the particular measure of natural justice which is a precondition to validity: Brodyn v Davenport at [57], which requires no resolution as to whether the failure to accord procedural fairness is void or voidable.
xiv A failure by an adjudicator to have regard to relevant facts may amount to a denial of natural justice under the Act. The rationale is clear: ' Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice '. According to Gleeson CJ, this alone was sufficient to dismiss the complaint of lack of procedural fairness in Minister for Immigration and Multicultural affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 at 13- 14." [Original emphasis.]
29 There are a number of cases relating to similar legislation that establish that no relief should be granted on the basis of a failure to afford natural justice unless (a) there has been a substantial denial of procedural fairness, and (b) that denial has related to a material question in the adjudication. In John Goss Projects Pty Ltd v Leighton Contractors (2006) 66 NSWLR 707, McDougall J, after reviewing the authorities, including Musico and Procorp , said, at par[42]:
"In my view, the concept of materiality is inextricably linked to the measure of natural justice that the Act requires the parties to be given in a particular case. Whatever the principles of natural justice may require in a particular case, they could not, in my opinion, require an adjudicator to give the parties an opportunity to put submissions on matters that were not germane to his or her decision."
30 In Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) (2009) 26 VR 172, the plaintiff contended that there had been a failure to afford procedural fairness in relation to a controversy as to which version of a contract constituted the relevant construction contract. At par[143], Vickery J said:
"… in approaching the question of procedural fairness in the decision-making of an adjudicator under the Act, not too fine a point should be taken in relation to what is done. The shortcomings of the statutory procedure provided for in the Act point to the need for a large measure of practicality, flexibility and common sense being observed to make it work. The procedures will call for adaptation in each case in the light of the clear legislative intention of the Act, namely that an adjudicator's determinations are to be carried out informally … and speedily … and 'on the papers' … and bearing in mind that there is always the facility for erroneous determinations to be corrected upon a final hearing of the issues in dispute between the parties …". [References to sections in the Victorian Act omitted.]
31 In Watpac Constructions (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168 at par[147], McDougall J said:
"I accept, however, that the court should not be too ready to find that a denial of natural justice was immaterial; that it had no real or practical effect; or that (in the present context) there was nothing that could have been put on the point in question. But it remains the case, I think, that the denial of natural justice must be material, and that submissions that could have been put might have had some prospect of changing the adjudicator's mind on the point."
32 That passage was cited with approval by Vickery J in Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd (2010) 30 VR 141 at par[242]. At par[243], his Honour said:
"… it is a matter of realistically balancing the objects and purposes of the Act, the nature of the procedure it prescribes and its consequences, with the need to ensure an adequate measure of fairness in undertaking the processes contemplated, and the consequences for a party if they are not."
33 In this case there was no dispute as to the existence of some sort of "building or construction contract" between the parties, but there was a dispute as to what constituted that contract, and as to what its terms were. Bold Vision's adjudication application depended for its validity on the existence of a "building or construction contract". Skilltech's adjudication response did not deny the existence of such a contract, but raised issues as to its constitution and terms. Contrary to the contentions of Bold Vision, but in accordance with the contentions of Skilltech, the adjudicator accepted that the document dated 4 April 2011 constituted part of the parties' contract. Skilltech's complaint about procedural fairness can therefore only have merit, if at all, as to findings concerning arrangements not contained in that document.
34 In making his determination, the adjudicator considered each component of Bold Vision's claim of 14 August 2012. He allowed 13 components in full, wholly rejected 7 components, and allowed one component in part. He reject a submission by Skilltech that it was entitled to substantial set-offs. His reasons for rejecting Skilltech's submissions as to components of the claim and some setoffs related to inadequate evidence, inadequate submissions, the inherent credibility of some assertions, and claims that were essentially for damages for breach of contract not giving rise to entitlements to interim payments under the Act. Counsel for Skilltech did not submit to me that any decision by the adjudicator to allow a component of Bold Vision's claim wholly or in part, or any conclusion that he reached as to Skilltech's set-off claims, was materially affected by the impugned finding as to the constitution and terms of the parties' contract or other arrangement, and I have not been able to detect anything in the evidence before me to suggest that.
35 Counsel for Skilltech submitted that the adjudicator's failure to invite additional submissions as to the constitution and terms of the contract had an impact on his findings as to the validity and scope of the payment claim by Bold Vision dated 14 August 2012. Because of the wording of s12 of the Act and the definition of "reference date" in s4, a claimant is entitled to make only one progress claim per month. Bold Vision sent Skilltech a number of documents, each of which, on its face, purported to be a s17 payment claim. Some such documents were sent to Skilltech with the payment claim dated 14 August 2012. Bold Vision contended that that collection of documents constituted a valid single payment claim, and the adjudicator accepted that contention. Counsel for Skilltech made a submission to me to the effect that that was an erroneous conclusion that resulted from the adjudicator denying procedural fairness in relation to the issue as to the constitution and terms of the parties' contract. However, I cannot see how further submissions as to what constituted the parties' contract or other arrangement could possibly have made a difference to that conclusion.
36 Clause 9.3 of the subcontract agreement provided:
"On or before the 25th calendar day of each month, the contractor must submit to Skilltech' [sic] Representative a claim for progress payment of the value of the Works executed in conformity with the Contract."
37 Subsequent clauses set out provisions as to the supply of supporting information, the determination of the value of work carried out, and the making of monthly payments. As I have said, Skilltech submitted to the adjudicator that the relationship between the parties was governed by the subcontract agreement, some implied terms, and an agreement to vary their subcontract to allow for the use of handheld units. The submissions made by Skilltech as to the nature of the parties' contract or other arrangement, to the extent that they were not accepted by the adjudicator, were of no relevance to the question of what constituted a monthly progress payment claim for the purposes of cl 9.3. The finding of the adjudicator as to what constituted the contract or other arrangement, to the extent that that finding was inconsistent with Skilltech's submissions to him on that point, had nothing to do with that question either.
38 I am not therefore satisfied that the conclusion of the adjudicator as to the nature of the parties' contract or other arrangement had any impact on the status that he accorded to the payment claim dated 14 August 2012 or the documents that accompanied it. Skilltech has not demonstrated that, in relation to the issue as to the constitution and terms of the contract, there was a material failure to afford the parties procedural fairness. Ground 1 must fail.
Incorrect reference date (Ground 2)
39 As I have said, in its payment claim and its adjudication application Bold Vision relied upon 25 July 2012 as a "reference date". The adjudicator clearly accepted, for the purpose of his determination, that Bold Vision was entitled to a progress payment based on that reference date. Skilltech contends that Bold Vision was not entitled to rely upon 25 July 2012 as a reference date for its claim of 14 August 2012; that that claim therefore could not constitute a valid s17 payment claim; and that therefore neither the adjudication application nor the adjudication determination were valid.
40 Section 17(4) of the Act provides as follows:
" (4) A claimant must not serve more than one payment claim in respect of each reference date under the building or construction contract."
41 Clause 9.3 of the subcontract agreement, which is set out above, permitted Bold Vision to submit a progress claim on or before the 25th calendar day of each month. However, during the period from 26 June 2012 to 25 July 2012 inclusive, Bold Vision sent Skilltech a large number of invoices, most of which purported to be payment claims under applicable legislation. Most were endorsed, "This payment claim is made under the Building and Construction Industry Security of Payment Act 2009". Five of them were identically endorsed, save that the year of the statute was specified as 2002 – the year of the Victorian Act. However the document relied on by Bold Vision as a s17 payment claim displayed a reference date, namely "25/7/2012", whereas the earlier invoices did not, and it included in the sum claimed the amounts claimed in those earlier invoices.
42 Counsel for Skilltech submitted to me that Bold Vision was entitled to submit only one payment claim per month; that the first document purporting to be a payment claim that was submitted on or before the 25th day of each calendar month must form the basis for establishing the reference date; that subsequent documents purporting to be payment claims submitted up to and including the 25th day of the month were not valid payment claims; and that the 14 August document relied on by Bold Vision as a valid payment claim therefore did not have that status. Similar submissions were made in its payment schedule and in its adjudication response. Its arguments were not accepted by the adjudicator.
43 In Brodyn Pty Ltd v Davenport (above) at par[66], Hodgson JA, with whom Mason P and Giles JA agreed, said:
"If there is a document served by a claimant on a respondent that purports to be a payment claim under the Act, questions as to whether the document complies in all respects with the requirements of the Act are generally, in my opinion, for the adjudicator to decide. Many of these questions can involve doubtful questions of fact and law; and as I have indicated earlier, in my opinion the legislature has manifested an intention that the existence of a determination should not turn on answers to questions of this kind."
44 Those comments were obiter. It was held in that case that relief in the nature of certiorari is not available to quash the determination of an adjudicator. That conclusion is no longer regarded as good law, in the light of Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 and Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (above). However those decisions do not cast any doubt on the correctness of the remarks I have just quoted, which concern the validity of adjudication determinations. Those remarks were cited with approval by Vickery J in Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 at par[130]. At pars[129] – [130] in that case, his Honour said the following:
"129 A failure to comply with a requirement of the Act will not necessarily result in a non-complying payment claim being invalid. It is a question of the character of the legislative requirement and the degree of non-compliance. A failure to satisfy a basic and essential requirement of the legislation in a substantial and material way will usually result in the invalidity of the errant payment claim. However, payment claims which, in spite of a technical defect being exposed, fall short of meeting this test, will not usually be considered as invalid.
130 Further, whether a court is in a position to determine the question of invalidity will depend upon whether the payment claim, on its face, satisfies the test to which I have referred. Where the validity of a payment claim is brought under challenge and the question turns upon questions of fact, or mixed fact and law, generally that will be for an adjudicator to decide, in keeping with the intent of the legislation."
45 Those comments were also obiter. His Honour found that the payment claims in that case failed to satisfy a basic and essential requirement of the legislation in a substantial and material way, and that the failures were manifest on the face of the documents: par[131].
46 Counsel for Skilltech referred me to authorities for the proposition that a premature payment claim is invalid: Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266 at pars[55] – [60] (obiter dicta of Nicholas J); FK Gardner & Sons Pty Ltd v Dimin [2007] 1 Qd R 10. He submitted that I should not follow two decisions of Vickery J in which his Honour held that the premature service of a payment claim will not render the payment claim invalid unless the early service justifies a finding that the payment claim was not made in good faith under the Act: Metacorp Pty Ltd v Andeco Construction Group Pty Ltd (above); Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183; (2011) 27 BCL 244, at pars[130] – [138].
47 In my view I have no need to determine which line of authority should be preferred, or even whether there is an inconsistency between the two lines of authority. Whether the status of the 14 August document was a matter for the adjudicator, or whether it is a matter for me, the only appropriate conclusion is that ground 2 must fail. The document dated 14 August 2012, on its face, did not lack any of the characteristics of a valid s17 payment claim. On the other hand none of the earlier invoices specified a reference date, as distinct from an invoice date and a due date, and it must have been evident to all concerned that none of them related to the full range of work that Bold Vision had been undertaking for Skilltech. That being the state of the evidence, if it was a matter for the adjudicator, it was clearly open to him to conclude that the payment claim dated 14 August 2012 was a valid s17 payment claim, and that the earlier documents were not, despite the endorsements on them. In my view I should follow the dicta in Brodyn and Gantley, and reject ground 2 on that basis. But if the dicta in those cases are wrong, and it is up to me to make a finding as to the status of the 14 August document I am satisfied, having regard to the matters I have referred to, that the earlier documents were not s17 payment claims, and that 14 August document was a valid s17 payment claim. Ground 2 must fail.
Failure to deal with consequence of termination (Ground 3)
48 Skilltech's initial submissions in relation to this ground have been almost totally abandoned. Initially, counsel for Skilltech sought to argue that the parties' contract had come to an end, either as a result of its repudiation and an acceptance of that repudiation, or as the result of the term of the contract expiring; that it came to an end before the date relied on by Bold Vision as a reference date, namely 25 July 2012; that Bold Vision had no right to make a s17 payment claim after the discharge of the contract; and that the payment claim of 14 August 2012 was therefore invalid. By the end of the trial of the action, counsel for Skilltech had accepted that Bold Vision was entitled to submit a single s17 payment claim after the termination or expiry of the contract. The only argument on the part of Skilltech that survived to the end of the trial in relation to this ground was an argument that the adjudicator should have concluded that Bold Vision was only entitled to make one progress payment claim per reference date, and that that entitlement had already been used by an invoice that purported to be a payment claim under the Act prior to 14 August 2012. I have already rejected that argument when dealing with ground 2. Ground 3 must fail on the same basis.
Inclusion of amounts already paid by Skilltech (Ground 4)
49 When the adjudicator calculated that the amount Skilltech was required to pay to Bold Vision was $1,247,371.81, he made a mistake. He included in that figure a total of $229,530.12 that had already been paid. Skilltech now accepts, "for present purposes", that the adjudicator did not fall into jurisdictional error by failing to take into account sums previously paid. Ground 4 therefore cannot succeed.
50 It is worth noting that s27 of the Act, which permits an adjudication certificate to be filed and enforced as if it were a judgment, deals with the situation where an adjudicated amount has been partly paid. Section 27(3) requires that, when an adjudication certificate is filed, it must be accompanied by an affidavit by the claimant "stating that a part of the adjudicated amount has not been paid at the time the certificate is filed". By virtue of s27(4), if the affidavit specifies that part of the adjudicated amount has not been paid, the judgment is for only part of that amount. It follows that, if Bold Vision wished to enforce the adjudication determination, it would be necessary for the payment of the $229,530.12 to be disclosed in an affidavit, and the judgment sum would be reduced accordingly.
Failure to consider matters of defence (Ground 5)
51 Section 25(2)(d) of the Act requires an adjudicator, in determining an adjudication application, to consider "the payment schedule, if any, to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule". Skilltech contends that the adjudicator failed to comply with that obligation to the extent that he failed to consider submissions and supporting documentation provided by Skilltech in its payment schedule and its adjudication response in relation to three matters: (a) an audit of Bold Vision's work; (b) defective work; and (c) variation claims. It contends that the adjudicator thereby denied it natural justice.
The audit material
52 In its adjudication response, in its submissions relating to set-offs, Skilltech asserted that discrepancies had been found between the works claimed by Bold Vision to have been undertaken and those that were in fact undertaken. It asserted that such discrepancies had been found in an audit conducted by "the Superintendent". It appears from par125 of the adjudication response that the superintendent was a Mr Cassimaty, an engineer who was appointed to the position of superintendent under the head contract between Skilltech and Southern Water.
53 In rejecting Skilltech's submissions that it was entitled to a set-off, the adjudicator said the following:
"183 The Respondent refers in the Payment Schedule to an audit of 'a large number of the installations which have been claimed and this audit has revealed what appears to be a wide-scale rorting'. The Respondent has not provided a copy of the audit or indeed any extracts from it to support its contention.
…
186 In the AA [adjudication application] the Claimant says: 'the Respondent does not provide anything concrete in this regard'. As I have noted above, the Respondent has not provided a copy of the Superintendent's alleged audit to support its claims.
187 In the AA submissions, the Claimant says:
'At no time has the Respondent ever provided any details of the alleged overcharging.
At no time ever provided [sic] a single document from Sothern [sic] Water setting out any allegations or calculations of shortfalls.
At no time ever provided a copy of any purported audit, any findings of any audit, or any allegations made in any audit'.
188 The Claimant concludes in relation to the alleged audit: 'Here the Respondent argues that it has been overcharged by $431,766.46 as a result of "wide scale rorting". The absurdity of such allegations has already been addressed. The Respondent relies on a spreadsheet calculation … The Claimant has reviewed this page closely and cannot find any logical or mathematical relationship between the numbers on the two tables at the top'.
189 The Claimant makes further submissions discrediting the calculation and concludes: 'There is nothing here that shows that the Superintendent has anything to do with the document or the contents therein. The document is rejected and does not establish any overcharging'. I agree.
190 I am not satisfied that the Respondent has established an entitlement to any deduction based on the 'attached calculation' to the Payment Schedule.
191 In the AR the Respondent refers on page 42 to 'a table on the following page' to support its claim for a 'Set off claim for works not performed'. There is confused page numbering in the AR submissions at this point but a table is provided calculating an alleged credit of $451,898.56. This table is not supported by any evidence to which I am referred to establish either overpayments or rectification costs either estimated or incurred.
192 Accordingly I reject the Respondent's claim to an entitlement to set off the amount claimed or any amount for alleged overpayments or rectification costs."
54 After spending some considerable time studying the adjudication response documents and the written and oral submissions made to me by counsel for Skilltech, I have been able to identify and evaluate the material that Skilltech contends that the adjudicator failed to consider in relation to the audit issue. As I have said, Skilltech contended that it was entitled to a number of set-offs. It contended that it was entitled to set off a total of $451,898.56. Included in that figure was a sum of $124,061.36 which was described, on the 50th page of the adjudication response, as "Amount due to Skilltech for overpayment of items for not having been done". (The page numbering of the document submitted to the adjudicator went haywire after page 42, but I have been provided with a copy of the first 72 pages, properly numbered.) The audit issue relates to that set-off claim for $124,061.36, not the full $451,898.56 as asserted by Mr Foxcroft SC in his submissions.
55 The set-off claim for $124,061.36 was based in part on some communications from the superintendent, Mr Cassimaty, copies of which were included in the adjudication response documentation, as follows:
• On 22 May 2012 Mr Cassimaty sent an email to two men at Skilltech about data indicating that on 1,803 occasions it had been necessary to remove vegetation to install a water meter. He wrote, "We have audited 144 of these claims using the installation photos and 24 of these appear valid. This equates to 16.7% of the total amount claimed." Spreadsheets, apparently relating to the 144 installations, were attached, and included in the adjudication response papers.
• On 25 July 2012 Mr Cassimaty sent Skilltech a "Notice to Contractor", no 283, saying that he had "undertaken an audit of those properties in Hobart SP3.2 where demolition of stop taps has been claimed by the Contractor [ie Skilltech]." He said that of 456 properties inspected, the original stop tap was present at 119, and that he would "certify 74% of all stop tap demolitions made in Hobart SP3.2". Supporting documentation, apparently relating to 456 properties, was forwarded and included in the adjudication response papers.
• On the same day, Mr Cassimaty sent Skilltech another "Notice to Contractor", no 284, about the demolition of stop taps in the Clarence, Kingborough and Glenorchy areas. He wrote, "The results of the audit indicate that the Contractor is entitled to payment for 1,554 properties where a stop tap demolition has taken place. This equates to a payment of $113.08 per property minus $24.39 per property for ball valve installation (which has already been paid)." Supporting documentation was said to have been forwarded with that notice, but I have not been able to find it in the adjudication response material.
• On the same day, Mr Cassimaty sent Skilltech a third "Notice to Contractor", no 285, headed "Hand Held Unit Claims – Old Rates". That notice related to 27 different categories of claims for payment by Skilltech. In respect of each category, there was a fixed amount payable per unit of work. As to most categories, the superintendent determined that Skilltech was to be paid for fewer units of work than it had claimed for. For example, in relation to something with the code number 3.0, described as "exposing existing service", Skilltech had claimed for 1,954 payments, including 913 before 31 July 2011, but the superintendent decided to allow only 216.5 claims. As to some categories, all claims were allowed. As to others, none were allowed. Some explanatory notes were attached. It is clear from those notes that, in relation to some categories of work, payment was withheld on the basis that the superintendent regarded it as "inconclusive", and not as a result of a positive assertion that Skilltech had claimed a payment for work that had not been done at all.
56 The calculation that resulted in the figure of $124,061.36 appears on the 47th, 48th and 49th pages of the adjudication response, and was explained by Skilltech's solicitors in par192 of that document. There they explained, "The work audited had been claimed by the Claimant as 'extras' above the scheduled installation rate using items for those additional works set out in the Schedule of Rates." It appears that Bold Vision had claimed $690,620.29 for the work in question; that Skilltech had paid only $203,459.10; and that, using the superintendent's figures, Skilltech calculated that it should only have paid $79,397.74. That was $124,061.36 less than it had paid, hence the claim to set off that sum.
57 A number of points can be made in passing about the validity of Skilltech's calculation. First of all, where the superintendent's information was based on a sample, Skilltech assumed that the sample was representative. Secondly, no attempt was made to distinguish between claims for work that was established not to have been done and claims that the superintendent regarded as "inconclusive" because they were not substantiated by evidence that he considered satisfactory. As to items in the latter category, Skilltech was taking a "pay when paid" approach.
58 The adjudication response was provided in two folders – one A4 size and one A3 size – and a single compact disc. At the beginning of the A4 folder were the 72 pages of submissions, properly numbered up to and including page 42. The submissions about set-offs began on that page. The submissions in support of the claimed set-off of $124,061.36 appeared on pages which would, if numbered, have been pages 44 to 48 and 50. Nothing on those pages told the adjudicator where to look for supporting documentation.
59 After the 72 pages of submissions there followed copies of the subcontract agreement, the payment response, a schedule of rates, and a set of specifications. Thereafter, at least in the copy of the adjudication response provided to me, there is a divider with a tab labelled "Offsetting Claim". Behind that tab is a memorandum labelled "Annexure 24975b" and entitled "Rejection Of Claims #24975 #24980, #24981, #24982 and #24983 for overclaiming". Ideally, that is where the adjudicator should have looked. That memorandum contains three pages of text, most of which relates to the superintendent's audits – not a single audit but several. Those three pages of text are followed by supporting papers about 1.5cm thick, included in which are the three notices of 25 July 2012 and, a lot further on, the email of 22 May 2012. None of the material is indexed. There are no page numbers, except within individual documents. I have not been able to find a table of contents.
60 When the adjudicator said, in par183 of his determination, quoted above, that Skilltech had not provided "a copy of the audit or indeed any extracts from it", he was apparently unaware that he had the three notices, the 22 May email, and a collection of supporting documentation, all of which related to "the audit". In par189 he agreed with a dismissive comment by Bold Vision in relation to one of Skilltech's calculations. That comment appears at page 7 of the adjudication application. Bold Vision was referring to a calculation that appears on the second last page (unnumbered) of Skilltech's payment schedule. That calculation includes, in full, the calculation that produced the figure of $124,061.36. The adjudicator erred in agreeing that there was nothing that showed that the superintendent had had anything to do with the calculation or its contents. The calculation was based on figures produced by the superintendent, even though it was a calculation undertaken by Skilltech.
61 In par191 the adjudicator referred to a table in the adjudication response. On page 42 of the adjudication response it was said that further details in relation to the set-off claims of $124,061.36 and $327,837.20 "are set out in the table on the following page". In fact the details in question were not in that table, but in a later one on pages which would, if numbered, have been pages 47 to 50. The adjudicator identified that table as the correct one. He commented, "This table is not supported by any evidence to which I am referred to establish either overpayments or rectification costs either estimated or incurred." Literally speaking, he was correct about that. The table was supported by evidence that was provided to him, but there was no reference to the supporting evidence in that table or elsewhere in the 72 pages of primary submissions.
The defective work material
62 One component of Skilltech's claim of $451,898.56 in respect of set-offs was a sum of $22,809.10 which was described on the 50th page of the adjudication response as relating to "Defective work not rectified". The material relating to defective work was not mentioned by counsel for Skilltech in their written outline of argument, but Mr Foxcroft SC referred to it in the course of his oral submissions.
63 Skilltech made submissions in relation to defective work at pars201 – 203 of its adjudication response. It asserted that Bold Vision sent an email on 11 September 2012 saying that it would not be "attending to any more QA fails whatsoever until the current breach situation has been fully resolved". Skilltech relied on cl 16.4 of the subcontract agreement, which provided that, despite the existence of a dispute and for the duration of the dispute, Bold Vision was required to continue to perform its obligations under that agreement. Paragraph 203 of the adjudication response asserted that details of how the sum of $22,809.10 had been calculated were "shown in the attached spreadsheet". The spreadsheet in question does not appear in, or at the end of, the 72 pages of primary submissions. It is located amongst the papers behind the tab labelled "Offsetting Claim", behind a title page that is labelled "Defective and Non-compliant Work". It was not cross-referenced to par203. There are about 20 pages of supporting material clipped onto it.
64 The adjudicator clearly did not have regard to that material. He did not refer to the claim for $22,809.10 in his determination at all, though he did refer to the claim for $327,837.20 for "nonconforming work", of which it formed part.
Material relating to variations
65 Five components of Bold Vision's claim related to variations, ie additional works. The adjudicator made findings in favour of Bold Vision in relation to four of those components, but made a finding in favour of Skilltech as to the other. In respect of each of the four successful claims, the adjudicator rejected Skilltech's contentions on the basis that, as to various matters, it had provided no supporting evidence, no specifics, no valid reasons, and/or no explanation.
66 In its adjudication response, Skilltech's submissions as to the five variation claims appear in tabular form on pages which, if numbered, would have been pages 54 to 65. Each variation claim is broken down into a number of components. For example the first, referred to as VAR0047, was a claim for $92,735.12 which consisted of ten components, seven of which were undisputed. As to those that were disputed, the table shows the amount claimed by Bold Vision, the amount conceded by Skilltech to be payable, some short comments as to Skilltech's contentions, and, under a heading "Evidence and response to Laser's claims", a further comment. Usually that comment is, "Please see attached spreadsheet under relevant tab". The spreadsheets in question constitute the contents of the A3 folder that forms part of the adjudication response.
67 The first item in VAR0047 relates to a claim for $15,584.16 in respect of "Locations". It appears from the table on the 54th page of the adjudication response that Skilltech paid Bold Vision $1,895.10 less than the amount it claimed "due to location being incorrectly keyed and no evidence of work provided". If one goes to the A3 folder, one finds a divider with a red tab marked "VAR0047". Immediately behind that tab is a page headed "Variation 0047 Legend" which sets out the meaning of 12 code numbers. Immediately behind that page is a six-page spreadsheet headed "Laser Variation 0047 – Locations". On the last page of that document, two items are highlighted in brown ink. The first appears to relate to a property at 677 Sandy Bay Road and a claim for $843. Against that item there is a comment, "No photos supplied please see legend item 2". The second appears to relate to a claim for $1,052.10 in respect of a property at 38 Liverpool Street. Against that item there is a comment, "This cost should be charged under locator. Please see legend item 1". The figures appearing in the two highlighted items add up to $1,895.10, which is the amount that Skilltech decided to withhold. It appears that Skilltech decided to withhold that amount not because of any contention that the work had not been done, but because $843 worth of work was not substantiated to its satisfaction by means of photos, and because it contended that $1,052.10 worth of work was claimed under the wrong heading.
68 The rest of the A3 folder appears to follow a similar pattern. It appears that the components of each of the five variation claims are set out, category by category and property by property, with each disputed sum highlighted in brown and explained by a comment, and by a number that refers to a "legend". What appears in these pages is a very detailed series of assertions, or sometimes non-admissions.
69 The adjudicator was required to make a determination as to these matters "on the papers". Bold Vision's papers contained assertions that its work was recorded and billed appropriately. Skilltech's papers asserted that, in many respects, Bold Vision had overcharged. The adjudicator was plainly aware of the material in the A3 folder. He specifically referred to that folder in pars126, 134, 145 and 155 of his determination. He correctly drew a distinction between evidence and assertions. I am not satisfied that he overlooked any of the material provided by Skilltech in relation to variations. He might perhaps have given some of that material less weight than it deserved. He seems to have been wrong when he said, on several occasions, that Skilltech had provided no specifics, or had not explained how it assessed certain withheld amounts. But any such errors were errors as to his comprehension of the material provided to him. Failing to comprehend material is very different from failing to have regard to it.
Bold Vision's submission as to s23(4)
70 The principal submission made by counsel for Bold Vision in relation to ground 5 concerns s23(4) of the Act, which reads as follows:
" (4) A respondent must not include in an adjudication response reasons for withholding payment, unless those reasons have already been included in the payment schedule provided to the claimant."
71 Essentially Mr Margetts SC submitted on behalf of Bold Vision that Skilltech's reasons for claiming set-offs, and for partly withholding payment of the relevant variation claims, were not included in the payment schedule that it provided under s18.
72 As I have said, the calculation of alleged overpayments of $124,061.36 was set out on the second last page of the payment schedule. Assertions as to the superintendent's audits were set out on pages 2 and 3 of the payment schedule. The contention that Skilltech was entitled to a set-off of $22,809.10 appeared in the calculations on the second last page of the payment schedule, but no details were provided as to how that figure was calculated. The payment schedule as to variation claims included a table that set out the components of the relevant variation claims, showing what amounts were withheld, and for what reasons. The information provided by Skilltech in the payment schedule appears to be identical to that provided in the A4 folder of the adjudication response, but it did not provide the documents that appear in the A3 folder.
73 In my view the reasons relied on by Skilltech for claiming the set-offs in question, and for withholding variation payments, as stated in the adjudication response, were included in the payment schedule with an adequate degree of detail. I therefore reject the submission based on s23(4).
Denial of natural justice?
74 In relation to ground 5, counsel for Skilltech did not contend that there had been a lack of good faith on the part of the adjudicator. The submission was based entirely on there having been a denial of natural justice. The critical question is whether the adjudicator failed to afford Skilltech the measure of natural justice that was required, having regard to the provisions of the Act.
75 In Brodyn Pty Ltd v Davenport (above) at par[55], Hodgson JA, with whom Mason P and Giles JA agreed, said, in relation to the intention of the legislature:
"What was intended to be essential was compliance with the basic requirements …, a bona fide attempt by the adjudicator to exercise the relevant power relating to the subject matter of the legislation and reasonably capable of reference to this power …, and no substantial denial of the measure of natural justice that the Act requires to be given. If the basic requirements are not complied with, or if a purported determination is not such a bona fide attempt, or if there is a substantial denial of this measure of natural justice, then in my opinion a purported determination will be void and not merely voidable, because there will then not, in my opinion, be satisfaction of requirements that the legislature has indicated as essential to the existence of a determination."
76 There will be a denial of the required measure of natural justice if an adjudicator does not read the parties' submissions at all: Timwin Construction Pty Ltd v Façade Innovations Pty Ltd (2005) 21 BCL 383; [2005] NSWSC 548; or if the adjudicator does not consider the adjudication response:
Reiby Street Apartments v Winterton Constructions [2006] NSWSC 375; or perhaps when an adjudicator fails to mention a critical issue: Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1 at pars[57], [58].
77 In this case the adjudicator read and considered the parties' submissions. He mentioned all the critical issues. For the reasons stated above, I think he did not appreciate the significance, or full significance, of various documents submitted by Skilltech in support of its adjudication response. That is perhaps not surprising given the complexity of the dispute, the limited time available to him, the volume of material submitted to him, the fact that Skilltech's supporting material was not paginated, and the fact that the adjudicator was largely left to figure out for himself, as best he could, how the supporting material related to the 72 pages of primary submissions in the adjudication response. At worst, he may have made errors of fact as a result of not understanding the significance, or full significance, of some of the supporting material. However that is very different from denying a party natural justice by failing to consider material submitted by that party. One should not take too fine a point about the shortcomings that have been identified in the adjudicator's decision-making: Grocon Constructors (above) at par[143]. In all the circumstances, I am satisfied that the adjudicator did not deny the measure of natural justice that was required to be afforded. Ground 5 must fail.
Premature submission of payment claim (Ground 6)
78 This ground raises much the same argument as ground 2, which I have rejected. As I have said, Bold Vision sent Skilltech a number of invoices that were endorsed, "This payment claim is made under the Building and Construction Industry Security of Payment Act 2009". Skilltech contends that the payment claim dated 14 August 2012 was not a valid s17 payment claim because one of the earlier invoices was a valid s17 payment claim with a July 2012 reference date.
79 I reject that submission. None of the invoices in question was endorsed with a reference date, as distinct from an invoice date or a date for payment. None of them purported to be a monthly payment claim covering the full range of work undertaken by Bold Vision for Skilltech. The practice of submitting multiple invoices at intervals of much less than one month was inconsistent with those invoices constituting s17 payment claims. In those circumstances, there were strong grounds for concluding that none of those invoices constituted, or was intended to be, a valid s17 payment claim. It was entirely appropriate for the adjudicator to accept that the payment claim dated 14 August 2012 was a valid s17 payment claim. I would make a finding to that effect too. Ground 6 must fail.
Progress claims under the law of another jurisdiction (Ground 7)
80 Section 7(4) of the Act provides that nothing in the Act "is to be taken to entitle a person to a payment if a claim for the payment has been made under the law of another jurisdiction". As I have said, Bold Vision submitted five invoices that were endorsed, "This payment claim is made under the Building and Construction Industry Security of Payment Act 2002." The Tasmanian Act was passed in 2009. The Victorian Act was passed in 2002. The amounts billed in the five invoices that were so endorsed were included in the payment claim of 14 August 2012. Skilltech contends that those five invoices were payment claims under the law of Victoria, and that the amounts billed by those five invoices were therefore not recoverable under the Act.
81 That is rubbish. Obviously the wrong year was printed as the result of someone's mistake. The invoices related to work done in Tasmania. The Victorian Act does not apply here. There is nothing in it to indicate that the Victorian Parliament intended to have extraterritorial operation. For the reasons stated in relation to grounds 2 and 6, there were strong grounds for treating the invoices in question as not constituting valid payment claims for the purposes of Tasmania's s17 or the equivalent provision in Victoria. It was open to the adjudicator to treat the work that was the subject of the five invoices as properly being the subject of the 14 August payment claim, and that is what he did. I would make a finding to that effect too. Ground 7 must fail.
Failure of the payment claim to identify the work performed in the claim period (Ground 8)
82 Skilltech contends that the 14 August payment claim was invalid because it did not comply with s17(2)(d) of the Act. That provision reads as follows:
" (2) A payment claim must —
…
(d) identify the building work or construction work, or building or construction-related goods and services, to which the progress payment relates, in sufficient detail to enable the person on whom it is served to assess the claim; …".
83 The payment claim contains hundreds of pages of supporting documentation. It fills an A4 ring binder. The adjudicator rejected a submission that the payment claim failed to meet the requirements of s17(2)(d), saying that Skilltech had proven more than capable of responding to the payment claim.
84 Counsel for Skilltech submitted that Bold Vision's invoices, or some of them, had inadequately identified the locations where work was undertaken, had claimed the payment on the basis of estimates rather than detailed records, and had claimed for the cost of labour without providing adequate detail.
85 The requirements of the Victorian equivalent of our s17 were considered by Finkelstein J in Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248. The Victorian section, s14, required a payment claim to "identify the construction work or related goods and services to which the progress payment relates", but did not expressly mention the need for the person on whom it was served to be able to assess it and respond. At pars[11] and [12], his Honour said the following, which I adopt:
"11 The manner in which compliance with s 14 is tested is not overly demanding: Leighton Contractors Pty Ltd v Campbelltown Catholic Club Ltd [2003] NSWSC 1103 at [54] citing Hawkins Construction (Aust) Pty Ltd v Mac’s Industrial Pipework Pty Ltd [2002] NSWCA 136 at [20] ('[The requirements for a payment claim] should not be approached in an unduly technical manner ... As the words are used in relation to events occurring in the construction industry, they should be applied in a common sense practical manner'); Multiplex Constructions [2003] NSWSC 1140 at [76] ('[A] payment claim and a payment schedule must be produced quickly; much that is contained therein in an abbreviated form which would be meaningless to the uninformed reader will be understood readily by the parties themselves'); Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA Pty Ltd) [2007] QSC 333 at [20] ('The Act emphasises speed and informality. Accordingly one should not approach the question whether a document satisfies the description of a payment schedule (or payment claim for that matter) from an unduly critical viewpoint').
12 Nonetheless a payment claim must be sufficiently detailed to enable the principal to understand the basis of the claim. If a reasonable principal is unable to ascertain with sufficient certainty the work to which the claim relates, he will not be able to provide a meaningful payment schedule. That is to say, a payment claim must put the principal in a position where he is able to decide whether to accept or reject the claim and, if the principal opts for the latter, to respond appropriately in a payment schedule: Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462, 477; John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258 at [18]- [21]. That is not an unreasonable price to pay to obtain the benefits of the statute."
86 His Honour went on to hold that the payment claim in that case did not comply with the Victorian Act because a claimed amount of $215,850 was not broken down or adequately explained.
87 The question whether the payment claim in this case satisfied the requirements of s17 was one for the adjudicator to decide: Brodyn Pty Ltd v Davenport (above) at par[66]. Having regard to the material before the adjudicator, particularly the payment schedule in which Skilltech addressed the merits of the payment claim, I consider that it was open to the adjudicator to hold that the payment claim satisfied s17(2)(d). I would make the same finding. It is true that, in its payment claim documentation, Bold Vision sometimes identified locations by means of meter ID numbers and/or meter serial numbers, rather than street addresses, and that estimates and averages were sometimes used. However it does not follow that the information provided was inadequate to enable Skilltech to assess the claim. Having regard to the contents of the payment schedule, I think the adjudicator was right to conclude that the information provided was sufficiently detailed for Skilltech to be able to assess Bold Vision's claim. Ground 8 must fail.
Conclusion
88 I have rejected all of the plaintiff's arguments. The action will be dismissed.