[2013] WASAT 29

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM : COMMERCIAL & CIVIL

ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA)

CITATION : CITY RESIDENCE PTY LTD and CATOI [2013] WASAT 29

MEMBER : MR C RAYMOND (SENIOR MEMBER)

HEARD : DETERMINED ON THE DOCUMENTS

DELIVERED : 28 FEBRUARY 2013

FILE NO/S : CC 1690 of 2012

BETWEEN : CITY RESIDENCE PTY LTD

Applicant

AND

PETER CATOI

Respondent

Catchwords:

Construction Contracts Act 2004 (WA) application for review of decision by adjudicator to dismiss - Whether application for adjudication made within time - Meaning of 'days'

Legislation:

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

Home Building Contract Regulations 1992 (WA)

State Administrative Tribunal Act 2004 (WA), s 87(1)

Result:

Application refused

Decision under review affirmed

Summary of Tribunal's decision:

The applicant applied under the Construction Contracts Act 2004 (WA) for a review of a decision by an adjudicator to dismiss its adjudication application on the grounds that the application had been made out of time, contrary to the time period imposed by s 26 of that legislation.

The outcome of the review depended on a proper construction of the construction contract entered into between the parties. The applicant contended that the adjudicator had erred in finding that progress claims had to be paid within seven calendar days of the date of the submission of the claim, as opposed to seven working days thereafter. After consideration of the contract and the parties' submissions, the Tribunal concluded that the adjudicator was correct in his construction of the contract and, consequently, that the decision under review should be affirmed.

The Tribunal dismissed the respondent's application for costs on the basis that there was no sufficient basis established for departing from the usual rule that each party bear their own costs.

Category: B

Representation:

Counsel:

Applicant : Mr M Jones (Acting as Agent)

Respondent : Mr P Hassett

Solicitors:

Applicant : N/A

Respondent : Lavan Legal

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

Australian Broadcasting Commission v Australasian Performing Right

Association Ltd (1973) 129 CLR 99

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] 219 CLR 165

REASONS FOR DECISION OF THE TRIBUNAL :

Introduction

1 On 2 September 2012, an adjudicator, Mr David Trinder, registered as such under the Construction and Contracts Act 2004 (WA) (CC Act), dismissed an adjudication application commenced by the applicant, City Residence Pty Ltd (applicant), in these proceedings.

2 The application was dismissed under s 31(2)(a)(ii) of the CC Act by reason that the adjudicator found that the application had not been prepared and served in accordance with s 26 of that Act. The findings reflect that the application was made one day outside the 28 day period prescribed by s 26 of the CC Act based on a conclusion that a progress claim had to be paid within seven calendar days as opposed to seven working days.

3 The applicant asserts that the adjudicator erred in failing to construe the construction contract entered into between the parties so as to find that the progress claim was due to be paid within seven working days of the date of submission of the claim. If the applicant is correct, the adjudication application will have been served within the time period required.

Issue for determination

4 The sole issue for determination is therefore whether, on a proper construction of the construction contract entered into between the parties, payment of progress claims were to be made within seven working days, or seven calendar days.

The relevant contractual provisions

5 The contract entered into between the parties is in the standard Master Builders Association of WA standard form RBW 2006 Residential Building Works Contract (for use in works over $200,000 without an architect). The instrument of agreement between the parties was signed on 29 October 2009.

6 The contract commences in the same manner as many similar standard form contracts, with a schedule setting out the particulars of contract. This contains details of the parties, a description of the works to be carried out, the land upon which the works is to be conducted, and the time for commencement and completion thereof. There is then an Appendix I which sets out particular details to which reference is made in the conditions of contract. For example, clause 16 sets out the circumstances in which the contract may be varied and the basis upon which any extra work is to be priced, which is to be constituted by the labour rates set out in Appendix I item 3 and the price for materials at actual cost, inclusive of GST, plus the percentage stated in Appendix I item 1. The relevant items of Appendix I set out a tradesperson's rate applicable of $55 per hour, a labourer's rate of $40 per hour and a percentage to be allowed for supervision, overheads and profit, respectively, of 25%. There are a range of details set out in nine items of Appendix I dealt with in a similar manner, and specific reference will be made below to item 4 dealing with the period for payment of progress claims or final account.

7 Appendix II sets out special conditions of contract, none of which is relevant to the matters in dispute, and thereafter follows the conditions of contract. There is nothing particularly unusual in the conditions of contract which deal with the usual subject matter in most similar types of standard form building contracts, save in one respect. This is that the conditions of contract refer, on occasion, to 'days' and on other occasions, although far more predominantly, to 'working days', rather than adopting one measure of time, usually working days: see the various standard and term contracts prescribed under the Home Building Contract Regulations 1992 (WA).

8 Clause 34 of the conditions deals with interpretation and provides:

INTERPRETATION

(a) where the following words or phrases occur in the Conditions, or in the Drawings, Specification or any other document having reference to the Works, unless the context otherwise indicates, they mean as follows:

…

' days ' means calendar days …

…

' working days ' means Monday to Friday excluding public holidays in the area of the Works or throughout Western Australia.

…

9 Clause 25 of the conditions deals with payment and provides:

PAYMENT

…

(c) Payment of the progress claims must be made by the owner to the builder within the period stated in Appendix I item 4 or, if not stated, within seven working days of the date of submission to the Owner of the claim or account.

…

10 Appendix I item 4 is as follows:

Period for payment of progress claims or final account. ---7--days

If none provided, five working days. Clauses 25, 27.

The numeral '7' has been added in handwriting.

11 As already indicated, most of the clauses of the conditions of contract make reference to time periods or limits measured in working days. Examples are:

• clause 11 - makes the contract conditional upon it becoming lawful under the Water Act (it is not clear to what enactment this refers) for the works to commence within 60 working days of the date of the contract, which also provides that if any of the stated conditions are not fulfilled within 60 working days from the date of contract the contract remains on foot unless terminated by the owner or the builder;

• clause 15 - availability of materials - permits substitute materials to be selected and notified to the builder in writing within five working days of the builder's notification of any specified material not being available;

• clause 19 - delays and extensions of time - requires that the builder notify the owner in writing of the cause and the extent of delay, and enables the owner to object within five working days after receipt of the notice;

• clause 21 - termination by owner - enables the owner to terminate the contract in the event that the builder continues a default for seven working days after written notice from the builder;

• clause 25 - payment - as set out above, provides for progress claims to be paid, in the absence of any other period being stipulated in Appendix I item 4, within seven working days of the date of submission of the claim;

• clause 28 - defects liability period - enables the owner to engage others to make good defects if the builder fails to do so after being given seven working days' written notice;

• clause 30 - notices - provides for deemed receipt of notices sent by prepaid post at the expiry of two clear working days after posting; and

• clause 31 - settlement of disputes - enables a party to refer a dispute to arbitration at the end of five working days following the giving of notice of a dispute or difference.

12 On the other hand, there are some provisions which refer to both working days and days. Clause 10 - date for commencement and time for completion - states that the builder must commence the Works within the number of days stated in the Particulars of Contract Item E of various stipulated events, and further provides that the builder must bring the Works to Practical Completion under Clause 26 within the number of days stated in the Particulars of Contract Item E. Item E states a time for commencement, being 'the period of sixteen (the numerals are inserted in handwriting) working days' and a time for completion being 'the period of 290 (the numerals are inserted in handwriting) days from the date for commencement'.

13 Clause 20 - suspension of works - permits the builder to give seven working days' written notice of an intention to suspend the works, requires the builder to lift the suspension within 15 working days of the progress payment being made or breach being remedied and provides that the time in which to bring the Works to Practical Completion shall be extended by the period equivalent to the number of days for which the Works were suspended and any consequential delays.

The proper construction of the contract

14 The applicant contends that there is a serious contradiction between clause 25(c) and Appendix I item 4 that can only be resolved by the parties altering the number of working days available for payment. It is submitted that the numeral '7' was inserted to be consistent with the seven working days stated in clause 25(c), that it would make no sense for the inserted numeral '7' to mean seven calendar days because that would usually mean the same as the default period of five working days already stated in Appendix I item 4, which would still conflict with the seven working days in clause 25(c), and that therefore, the only interpretation that makes any sense and eliminates contradictions in the contract is for the inserted numeral '7' to mean seven working days.

15 There is, with respect, less conflict than the applicant contends. Under clause 25(c), the period is seven working days if Appendix I item 4 does not state a different period. Appendix I item 4, without the insertion of numeral '7' states five working days, and that applies unless a different number of days is inserted in item 4. If the numeral '7' had not been inserted, there would have been no conflict. The time period applicable would have been five working days.

16 The applicant then appears to place some weight on the extent to which the contract refers more frequently to working days rather than days. The submission erroneously refers to the time to commence being expressed in calendar days, and contends that reference is made to calendar days when there are longer or more difficult periods of time that require calculation. The applicant relies on the amount of space left for the insertion of the time period in item 4 and relies on the fact that little space is provided for the insertion of either 'calendar' or 'working' immediately prior to 'days'.

17 The applicant also places reliance on a statutory declaration provided by Mr Joseph Allia dated 29 November 2012. Mr Allia is the Managing Director of the applicant. He explains in his statutory declaration that the numeral '7' was inserted to make item 4 consistent with clause 25(c). He makes reference to 'we' having completed the space and to the word 'days' having no meaning to 'us' at the time without specifying to whom this was intended as a reference. It is understood to have been intended to be a reference to the respondent, Mr Peter Catoi, and himself.

18 Although the Tribunal is not bound by the rules of evidence, it is obvious that those rules which govern the interpretation of written instruments must be followed, because a written instrument could not possibly have one meaning in a court and a different meaning in the Tribunal. On that basis, no regard can be had to Mr Allia's statutory declaration, as it is no more than a subjective statement of the belief or understanding of the parties about their rights and liabilities, and regard cannot be had to such: see the references in McCourt & Anor and Cranston [2012] WASCA 60 ( McCourt ) at [69]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] 219 CLR 165; and Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451.

19 The duty of a court or tribunal in construing a written contract is also discussed in McCourt at [70], where reference is made to Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109, where Gibbs J said:

It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate' …

20 The applicant submits that the interpretation clause requires the defined meanings to be applied, unless the context otherwise indicates, and that in context, the reference to the numeral '7' in item 4 must be read as a reference to seven working days. An example where that is clearly so is clause 10 - date for commencement and time for completion – where 'days' referenced to the Particulars of Contract Item E must be understood to be working days. It is the days stated in Item E. The days stated in Item E apply, and they are described as working days. On the other hand, later in the same clause, the reference to the date by which practical completion must be achieved as being within the number of days stated in Particulars of Contract Item E must be taken to be a reference to calendar days consistent with the definition of 'days'. In both instances, it is the words of the whole instrument which disclose that 'days' means working days for the date of commencement and calendar days for the date of completion in order that clause 10 is consistent with Item E.

21 In clause 20 - suspension of works - there is no other part of the contract which dictates a contrary meaning be given to 'days' when speaking of the time by which the date for practical completion is to be extended. Although there are references to various time periods defined by working days, the time of any suspension of the work is not required to be measured by that formula and there is no reason why the defined meaning of 'days' cannot be applied to calculate the period of suspension and the period of the extension of time for practical completion to be achieved.

22 When one has regard to the Particulars of Contract Schedule and Appendix I, the unit of measure is clearly stated in the written document, be it in terms of working days, days, a percentage or labour rate. Specific time periods were inserted for the time for commencement and the time for completion in circumstances where the draftsman clearly distinguished between working days and calendar days. It is on the following page that item 4 of Appendix I appears and which clearly expresses that the period of payment of progress claims or the final account, if no other period is provided, is five working days. A different period may be provided by inserting a numeral immediately prior to 'days'. The distinction between working days and days is clearly drawn in the document, and the meaning is in no way ambiguous.

23 If Mr Allia was of a different mind when inserting the numeral '7' in Appendix I and can show that whoever else signed the document was under the same common mistake, the applicant may have a claim for rectification of the contract, but that is another matter. Until the contract might be rectified by a court of competent jurisdiction, the adjudicator could only make a decision based on the contract before him, and so must the Tribunal on review.

Conclusion

24 It follows that the adjudicator was correct in his conclusion that the payment dispute arose when the progress claim was not paid within seven calendar days of the date on which it was submitted, rather than within seven working days and, consequently, that the adjudication application fell to be dismissed for noncompliance with s 26 of the CC Act.

25 The applicant has applied for costs on the basis that at the first directions hearing in the proceedings, the representative of the applicant, Mr Jones, said that the applicant required time to prepare submissions as it would need to engage legal counsel and that, in the circumstances, the respondent reasonably retained legal representation in this review and, further, because it is contended that the review is obviously unmeritorious.

26 The starting point in the Tribunal is, of course, that each party bear their own costs provided by s 87(1) of the State Administrative Tribunal Act 2004 (WA). In this matter, the respondent was represented by counsel at the first directions hearing and there is nothing to indicate to the Tribunal that the respondent would have elected not to have legal representation, but for the applicant's advice that it intended to seek legal assistance for the preparation of its submissions.

27 I also do not accept that the review was so obviously unmeritorious. The form of the contract and use of alternative measures of time, and the selection of a time period inserted in item 4 of Appendix I which coincided with the default time period printed within item 4, resulted in what is obviously a genuine dispute about the meaning of the contract.

28 There is no sufficient basis established for departing from the usual rule that each party bear their own costs and, accordingly, the application for costs will be refused.

Orders

29 The Tribunal will accordingly cause orders to issue as follows:

1. The decision under review is affirmed.

2. The application for review is dismissed.

3. The respondent's application for costs is dismissed.

I certify that this and the preceding [29] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MR C RAYMOND, SENIOR MEMBER