[2013] WASAT 114

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM : COMMERCIAL & CIVIL

ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA)

CITATION : EC & M PTY LTD and CTEC PTY LTD [2013] WASAT 114

MEMBER : MR C RAYMOND (SENIOR MEMBER)

HEARD : 4 FEBRUARY 2012 AND 30 MAY 2013

DELIVERED : 19 JULY 2013

FILE NO/S : CC 1891 of 2012

BETWEEN : EC & M PTY LTD

Applicant

AND

CTEC PTY LTD

GLYNN LOGUE

Respondents

Catchwords:

Construction Contracts Act 2004 (WA) - Application for review of decision by an adjudicator to dismiss - Whether adjudication lodged out of time - Effect of notice from Principal disputing claim when contract provides for assessment by Superintendent - Whether contract has provisions on how to respond to claim - Whether statutory terms implied

Legislation:

Construction Contracts (Security of Payments) Act (NT), s 8, s 8(a)

Construction Contracts Act 2004 (WA), s 3, s 6, s 17, s 22, s 26, s 27, s 46,

Sch 1 Div 4, Div 5, Div 9

Result:

Application to set aside decision under review dismissed

Decision under review affirmed

Summary of Tribunal's decision:

The applicant applied under s 46 of the Construction Contracts Act 2004 (WA) for the review of a decision by an adjudicator to dismiss certain claims.

The adjudicator relied on Blackadder Scaffolding (Aust) Pty Ltd v Mirvac Homes (WA) Pty Ltd [2009] WASAT 133 to find that a letter written by the respondent, as Principal under the relevant construction contract, rejecting some of the claims incorporated in a progress claim made by the applicant established the date on which the payment dispute arose, with the result that the adjudication application was dismissed as not having been prepared and served within the required time.

The applicant contended that the decision relied upon was distinguishable on the facts because, in this case, the process of assessing and determining the claim had to be carried out by the Superintendent appointed under the contract. It was submitted that, in these circumstances, any expression of opinion, or rejection of the claim by the Principal, was irrelevant. Alternatively, the applicant contended that the earlier decision of the Tribunal was wrongly decided and should not be followed.

The Tribunal firstly considered the bases upon which it was submitted that the earlier decision was incorrectly decided. The Tribunal noted the bases upon which the Northern Territory Supreme Court had concluded that under its similar, but not identical, legislation, there was only one date upon which the payment dispute could arise and that was the date when payment was due under the contract. The Tribunal was unable to come to a conclusion that its earlier decision was wrong and as it had been followed on many occasions, including by the Tribunal constituted by a judicial member, that decision was followed.

The Tribunal then considered the terms of the contract between the parties and concluded that under the contract the applicant was obliged to await the assessment by the Superintendent and that, once a payment certificate was issued, it bound the parties. The respondent was obliged to continue to perform the contract and therefore to pay in accordance with the certificate. Further, that under the contract the letter from the respondent rejecting the claims had no effect as between the parties and was not capable of constituting a rejection of the claim, in whole or in part, sufficient to create a payment dispute under the legislation.

However, the Tribunal concluded that the contract did not contain a provision of how to respond to a payment claim within the meaning of the legislation. The result of this was that certain statutory terms had to be implied. Those statutory terms obliged the respondent to respond to the payment claim and, consequently, the rejection letter was effective in creating a payment dispute. Consequently, the adjudication application had not been prepared and served within the time limits required under the legislation and the adjudicator was held to have correctly dismissed the application for adjudication.

The Tribunal therefore issued orders dismissing the application to set aside the decision under review and affirming the decision under review.

Category: B

Representation:

Counsel:

Applicant : Mr M Holler

Respondents : Mr J Quan-Sing

Solicitors:

Applicant : Talbot Olivier

Respondents : Allens

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

Blackadder Scaffolding (Aust) Pty Ltd v Mirvac Homes (WA) Pty Ltd [2009] WASAT 133

Commodore Homes (WA) Pty Ltd and Deegan & Anor [2007] WASAT 45

Department of Construction and Infrastructure v Urban & Rural Contrating Pty Ltd & Anor [2012] NTSC 22

Dig Deep Investments Pty Ltd and North-West Constructions Pty Ltd [2013] WASAT 60

Fuel Tank & Pipe v Decmil Australia Pty Ltd [2010] WASAT 165

Grahame Allen Earthmoving Pty Ltd v Woodwark Bay Development Corporation Ltd - Queensland Supreme Court BC 8802422 (Unreported decision dated 15 December 1988)

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

REASONS FOR DECISION OF THE TRIBUNAL :

Introduction

1 On or about 18 December 2011, CTEC Pty Ltd (Contractor) entered into a construction contract, within the meaning of that term as used in the Construction Contracts Act 2004 (WA) (CC Act) with EC & M Pty Ltd (Principal) in terms of which the Contractor undertook to carry out construction work for a contract sum of $8,923,862.97. The general conditions of the contract (GC) were in accordance with AS 4000-1997 with amendments as marked up by the parties.

2 On 7 August 2012, the Contractor made a claim for payment of an amount of $2,419,709.90.

3 By letter dated 8 August 2012, the Principal informed the Contractor of its assessment of the claim. The amounts claimed for a number of variations were either disputed in part or rejected entirely. On 24 August 2012, the Superintendent appointed under the contract to carry out various functions, including certification of amounts due in respect of progress claims, issued a progress certificate in respect of the claim, the effect of which was to reject a number of claims in part or in full.

4 On 19 September 2012, the Contractor lodged an adjudication application. The adjudicator first appointed could not act because of a conflict of interest and, after following the procedures necessary for the appointment of a further adjudicator, a second adjudicator was duly appointed. The adjudicator found that, in respect of 13 variation claims, the adjudication application had not been prepared and served within the time period required under the CC Act and that he was consequently required to dismiss those claims. The basis of this finding was that the variation claims had been disputed by the Principal in its letter of 8 August 2012, with the result that a payment dispute arose on the following day and the adjudication application had not been prepared and served within 28 days thereafter as required. The Contractor disputes this finding and applies for review under s 46 of the CC Act asserting that the adjudicator erred in relying on an earlier decision of the Tribunal in Blackadder Scaffolding (Aust) Pty Ltd v Mirvac Homes (WA) Pty Ltd [2009] WASAT 133 ( Blackadder ). In relation to Blackadder , the Contractor says that:

• the case determined that a payment dispute could arise in the context of the contract in question when the claim was rejected by the Principal, but that could not be so in this matter as the contract bestowed the right to assess the claim on the superintendent, not the Principal; and

• the case was wrongly decided insofar as it found that a payment dispute might arise, by reason of a rejection of a payment claim, prior to the due date for payment of the claim under the contract.

Issues

5 The adjudication was commenced late if, as held by the adjudicator, the letter from the Principal dated 8 August 2012 constitutes a rejection of the claim and such rejection triggers a payment dispute. In order to determine the matter, the following issues therefore arise:

1) Was Blackadder incorrectly decided insofar as it construed s 6 of the CC Act in a manner which enables a payment dispute to arise, either at the date the claim was rejected or wholly or partly disputed, or the date on which the payment was due under the contract but was then not paid in full, whichever is the earlier?

2) If Blackadder is followed, does the role of the Superintendent under the relevant contract provision (GC 37.2) prevent the letter of 8 August 2012 creating a payment dispute?

3) What is the effect of GC 37.2 in relation to the implication of the statutory terms set out in Sch 1 Div 4 and Div 5 of the CC Act?

Issue 1: Is Blackadder incorrect in determining when a payment dispute might arise?

6 The Contractor has effectively adopted the rationale of a Northern Territory decision, Department of Construction and Infrastructure v Urban & Rural Contracting Pty Ltd & Anor [2012] NTSC 22 ( Urban & Rural Contracting ), which came to a conclusion in relation to s 8 of the Construction Contracts (Security of Payments) Act (NT) (Northern Territory Act), which substantially corresponds with s 6 of the CC Act, to the effect that there is only one date on which a payment dispute may arise, being the due date for payment under the contract.

7 In Urban & Rural Contracting , Justice Barr acknowledged that s 6(a) of the CC Act had different wording to s 8(a) of the Northern Territory Act. His Honour favoured the single date construction because it more accurately reflected the actual text of s 8(a) of the Northern Territory Act, and it provided clarity and certainty in relation to the start date for the 90 day period within which an adjudication application must be commenced under that legislation. While that meant that, in some cases, this would mean that a party whose payment claim had been rejected or disputed at a relatively early time might have to 'mark time' and hold off applying for adjudication until the due date of payment under the contract, his Honour considered the waiting period did not seem disproportionately long in the statutory context that an applicant for adjudication had 90 days after the payment dispute arises within which to apply. It is evident that the CC Act places greater emphasis on timeliness, allowing only 28 days after the payment dispute arises to prepare and serve the adjudication application.

8 The Contractor stressed that the context and language of s 6 of the CC Act also favoured a construction in favour of a single date on which a payment dispute arises, being the date the amount claimed in the payment claim is due to be paid. Blackadder , at [37], recognised that the language, and punctuation, of s 6(a) did not favour a construction which provided for a payment dispute to arise at either the date the claim was rejected or wholly or partly disputed, or the date the payment was due to be paid but was not paid in full. The Tribunal regarded the provision as ambiguous because of the apparent redundancy of the words 'or the claim has been rejected or wholly or partly disputed' if the payment dispute in any event only arose when the payment was due to be paid under the contract and the amount had not been paid in full. Because of this ambiguity, regard was had to the second reading speech and an interpretation was favoured which promoted the stated purpose of keeping the money flowing in the contracting chain by enforcing timely payment.

9 Justice Barr acknowledged that the language of s 6(a) of the CC Act left the provision open to the construction that it applied to an event on or before the due date for payment. A construction permitting a payment dispute to arise upon rejection of a claim appears to be supported by cl 7 of Sch 1 Div 5, which, instead of simply fixing a date when payment is due, uses a formula which imposes an obligation to pay in full or in part within 28 days after receipt of the payment claim, unless the claim has been rejected or wholly disputed. Notice of that rejection or dispute must be given within 14 days of receipt of the payment claim. This suggests that a dispute arises when the notice of dispute is given and that, in that circumstance, there is no due date for payment.

10 However, Justice Barr observed that, theoretically, there is no redundancy of the kind which concerned the Tribunal in Blackadder . His Honour noted, at [20], that a Principal may make a payment claim against a Contractor for defective work performed under a construction contract or for non-performance of work required to be performed under a construction contract. Therefore, his Honour observed that it was possible for a Principal's payment claim to be rejected or disputed and yet still be paid in full, if the contract so provides, by a deduction for monies otherwise payable under the contract or by the application of retention monies, or possibly by way of set off under the general law.

11 It is not clear that the redundancy concern can be met in the above manner. On the face of it, a Principal would only have a payment claim, as defined in s 3 of the CC Act, if the Principal has a claim against the Contractor in circumstances in which the contract does not provide security for the claim, or the claim is outside the agreed terms upon which the Principal could retain monies or enforce any security provided. If security is provided and the contract permits set off, the Principal would simply enforce the security or deduct monies from the retention. There would be no need to make a claim against the Contractor for payment of any amount. This is consistent with s 22 of the CC Act, which requires that there be a provision about the status of money retained by the Principal for the performance by the Contractor of its obligations, failing which the terms set out in Sch 1 Div 9 are implied. Those terms include a provision that money ceases to be payable to the Contractor by virtue of the operation of the contract.

12 If the Principal has to make a 'payment claim', then the scheme of the legislation requires that there be provisions of how to claim, and how to respond to the claim, which, if disputed, would require referral to adjudication.

13 Section 6(b) and s 6(c) of the CC Act recognise that, in the ordinary course, a Principal would simply have recourse to any retention monies or security held, and a payment dispute would arise under the contract when the money retained is due to be paid under the contract or security has not been returned when due to be returned.

14 While there are undoubted difficulties in the construction of s 6 of the CC Act read as a whole, and of subsection (6)(a) within it, I am unable to conclude that Blackadder is wrong.

15 I indicated to counsel during the hearing that, as Blackadder had been approved and followed by the Tribunal in previous decisions, and in particular, in Fuel Tank & Pipe v Decmil Australia Pty Ltd [2010] WASAT 165 ( Decmil ), the constitution of which included a judicial member, I would be required in the interests of good administration of the law to follow Decmil . In this regard see: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639; Commodore Homes (WA) Pty Ltd and Deegan & Anor [2007] WASAT 45.

16 I suggested that it might be appropriate, if I formed a preliminary view that Blackadder might be wrong, that the Tribunal be reconstituted to include a judicial member. Counsel for the Principal was opposed to that course on the basis that the matter had been on foot for a long period of time and that he would wish to have an opportunity to make full and considered submissions if such a course were contemplated. It should be noted that the matter was delayed because it was understood that the Tribunal, constituted by a judicial and senior member of the Tribunal, would be re-examining Blackadder in Dig Deep Investments Pty Ltd and North-West Constructions Pty Ltd [2013] WASAT 60 ( Dig Deep ). As it transpired, the Tribunal did not find it necessary in Dig Deep to determine issues raised relating to Blackadder . In the circumstances the matter proceeded on the basis that if I became inclined to a view that Blackadder might be wrong, I would provide the parties with an opportunity to make submissions on whether or not the Tribunal should be reconstituted. In view of the conclusion I have reached, that course is not necessary.

Issue 2: Does the role of the Superintendent under GC 37.2 prevent rejection by the Principal from creating a payment dispute?

17 GC 37.1 provides that the Contractor shall claim payment progressively in accordance with item 28 of Annexure Part A to the General Conditions. Item 28 refers to stages of Work under Construction (WUC) when progress claims can be made - as per item ii of Annexure D - payment milestone schedules. Part D contains payment milestone schedules which include provision for monthly progress claims, practical completion and final documentation handover.

18 GC 37.2, as marked up by the parties to indicate additions or deletions from the standard form, provides as follows:

Provided that full details are provided to enable checking, the Superintendent or delegate will review the progress claim for consistency with the Contract, agree or determine percentages and quantities in respect of Work performed at the date of the progress claim and agree or determine the value claimed against the percentages, quantities and hours and return the agreed or amended progress claim to the Contractor. The Superintendent or delegate will not be obligated to certify payment for progress claim items not fully supported by approved progress measurements and any other such document as may be required. However, the Superintendent reserves the right to certify provisional payment on an invoice in dispute, pending audit and reconciliation of the total charge.

Within one (1) working day of receipt by the Subcontractor of the agreed or amended progress claim the Subcontractor shall finalise its progress claim on the basis of the value agreed or determined by the Superintendent and shall submit the finalised progress claim to the Superintendent or delegate for formal sign-off.

The Superintendent shall, within 15 buiness [sic] 4 days after receiving such a finalised progress payment claim, issue to the Principal and the Contractor :

a) a progress certificate evidencing the Superintendent's opinion of the moneys due from the Principal to the Contractor pursuant to the finalised progress claim and reasons for any difference (' progress certificate '); and

b) a certificate evidencing the Superintendent's assessment of retention moneys and moneys due from the Contractor to the Principal pursuant to the Contract .

If the Contractor does not make a progress claim in accordance with Item 28, the Superintendent may issue the progress certificate with details of the calculations and shall issue the certificate in paragraph (b).

If the Superintendent does not issue the progress certificate within 14 15 business days of receiving a progress claim in accordance with subclause 37.1, that progress claim shall be deemed to be the relevant progress certificate .

Upon receipt of the progress certificate the Contractor shall submit to [the] [sic] Superintendent its original Tax Invoice in the amount of the progress certificate as certified by the Superintendent together with a copy of the signed-off progress claim so that it is received by [the] Superintendent within 5 business days of receipt of the progress certificate.

All applicable purchase order numbers must be referenced on the invoice and associated with the relevant line item(s) and amount(s) stated on the invoice. Invoices without relevant purchase order numbers will be deemed incorrect and returned to the Contractor .

Invoices shall indicate the time period during which the Work was performed and for which the invoice is submitted.

Each invoice shall be signed by the Contractor certifying that all Work covered by the invoice is complete and that the invoice is correct, authentic and the only one issued for the Work described therein.

All invoices shall be sent to [the] Superintendent's mailing address.

Any invoice, which fails to comply with the terms of the Contract, including being supported by the procedure set out above in requirements of form and documentation, may be returned to the Contractor for correction.

The Principal shall by the later of: within

a) 15 business 7 days after receiving both such certificates (where the Superintendent fails to issue the certificates in the timelines specified this subclause a) shall not apply), or

b) within 30 business 21 days after the Superintendent receives the progress claim, or

c) within 10 business days after receiving the Contractor's compliant invoice,

pay to the Contractor the balance of the progress certificate after deducting retention moneys and setting off such of the certificate in paragraph (b) as the Principal elects to set off. If that setting off produces a negative balance, the Contractor shall pay that balance to the Principal within 7 days of receiving written notice thereof.

Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily. Payment other than final payment shall be payment on account only. At any time the Superintendent may, by issue of a further certificate, correct any error which has been discovered in any previous certificate, other than a Certificate of Practical Completion or Final Completion[.]

19 GC 1 is headed 'Interpretation and construction of Contract' and sets out all relevant definitions. 'Superintendent' is defined as meaning the person stated in item 5 as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent.

20 GC 20 provides that the Principal shall ensure that at all times there is a Superintendent and that the Superintendent fulfils all aspect of the role and functions reasonably and in good faith.

21 The contract terms reflect that the Superintendent is given general supervisory responsibilities in respect of the site. The Superintendent may direct the Contractor to have persons removed from the site in a range of circumstances (GC 23), may audit compliance with an approved workplace health and safety plan (GC 23.7), require information from the Contractor in relation to latent conditions (GC 25.2), must give the Contractor necessary information in relation to the set out of the site (GC 26), may give directions to the Contractor in relation to work that does not comply with the contract (GC 29.3) and is generally the person to whom the Contractor must give notice of various matters (GC 30.1 and GC 32.1). The Superintendent has the power to direct the Contractor to suspend the works (GC 33.1), to assess and apportion causes of delay to the works (GC 34.4) and to assess and issue a written direction relating to any extension of time claimed by the Contractor (GC 34.5). The Superintendent is required to assess whether practical completion has been achieved and to issue a practical completion certificate and to certify as due and payable to the Principal any liquidated damages. The Superintendent is required to give the Contractor written notice of proposed variations (GC 36.2). These responsibilities of the Superintendent are not intended to constitute an exhaustive list of the Superintendent's responsibilities, but are sufficient to reflect the nature of the Superintendent's role under the contract. It is in this context that regard must be had to the operation of GC 37.2 as set out fully above.

22 In considering GC 37.2, regard must also be had to GC 37.7, which provides that the Principal may deduct from payments to the Contractor (or security provided) any amounts for which the Contractor must reimburse the Principal, which the Principal pays on the Contractor's behalf, or which the Contractor owes to the Principal, pursuant to the contract.

23 The Contractor contends that the effect of GC 37.2 is that only the Superintendent has a role in assessing a progress claim. If the Superintendent fails to assess the claim in the manner prescribed, the progress claim will be treated or deemed to be a progress certificate evidencing the Superintendent's opinion of the monies due from the Principal to the Contractor. Further, that having regard to this structure, any communication from the Principal reflecting an intention to reject or wholly or partly dispute a claim is irrelevant.

24 Counsel for the Principal rejects this contention and refers to the general dispute resolution provisions set out in GC 42.1 which enable either party to give notice of a dispute relating to a Superintendent's direction, which, by definition (GC 1), includes, amongst other things, an approval, assessment or certificate. On this basis, it is submitted for the Principal that the Principal can dispute the whole of any payment claim made by the Contractor, and regardless of the Superintendent's certificate, can trigger the dispute resolution mechanism provided under GC 42, including if a conference fails to resolve the matter, referral to arbitration.

25 On this basis, the Principal contends that, on the authority of Blackadder , as found by the adjudicator, the issue of a non-complying notice of dispute will, nevertheless, establish the existence of a payment dispute ( Blackadder at [58]). As outlined in the introduction, the Contractor contends that, unlike Blackadder , the Principal has no role to play in an assessment of a progress claim under the contract and that any statement of opinion by the Principal constitutes no more than information which the Superintendent can take into account in making an independent assessment.

26 A similar contractual scheme was considered by Justice Dowsett in Grahame Allen Earthmoving Pty Ltd v Woodwark Bay Development Corporation Ltd - Queensland Supreme Court BC 8802422 (Unreported decision dated 15 December 1988). In that case, after examining the relevant provisions and, in particular, the dispute resolution clause allowing a dispute to be referred to arbitration, Justice Dowsett concluded that the clauses led to the inevitable conclusion that it was the intention of the parties at the time of contracting that the Superintendent's certificate be the sole warrant for payment and that such payment be made notwithstanding any argument as to the correctness of the certificate. His Honour observed that it would be specious for the Superintendent to be required to provide a certificate if it were then left to the Principal to himself decide what the amount due, in fact, was. His Honour concluded that the Superintendent's certificate determined the amount due and that the amount of such certificate was to be paid within the time limit prescribed by the clause. It was further noted that:

The functions conferred upon [the Superintendent] by the contract are, one might say, broadly to act as honest broker as between the [Principal and the Contractor]. There is nothing at all curious about the parties in advance agreeing to their rights being provisionally adjusted in this way by a person who presumably would have their trust.

27 All of the above statements are entirely apposite to GC 37 in this case. The position is made all the more clear by a provision within GC 42.1 that, notwithstanding the existence of a dispute, the parties shall, subject to clauses 39 and 40 (which deal with insolvency and termination of the contract) and subclause 42.4, continue to perform the contract.

28 GC 42.4 provides that nothing within GC 42 shall prejudice the right of a party to institute proceedings to enforce payment due under the contract or to seek injunctive or urgent declaratory relief.

29 As I understand the argument of counsel for the Principal, none of the above is disputed as a matter of contract. But, it is submitted that we are concerned with the construction and operation of the CC Act and there is no reason why, consistent with Blackadder , a manifest rejection by the Principal should not have the effect of triggering a payment dispute. I am unable to accept this argument.

30 In Blackadder , the contract did not provide for a Superintendent performing the type of role as in this case. In that context, a non-complying rejection of the claim was held to be sufficient to create a payment dispute. I accept the submissions on behalf of the Contractor that the opinion of the Principal expressed in the letter dated 8 August 2012 was incapable of having any contractual, and therefore any practical, effect as between the parties. The Principal was entitled, and indeed obliged, to await the assessment by the Superintendent and once a payment certificate was issued it bound both parties. The Principal was obliged to continue to perform the contract and therefore to pay in accordance with the certificate. No matter what clear statement of intent might have been made beforehand, the Principal's legal obligation would be clear once a payment certificate had issued. In those circumstances, the letter dated 8 August 2012 had no effect as between the parties and was not capable of constituting a rejection of the claim, in whole or in part, sufficient to create a payment dispute. That would not prevent the Principal giving notice of dispute and referring the matter, if not resolved in conference, to arbitration, or from using its statutory adjudication process.

31 This conclusion is not necessarily determinative of the matter because of the doubts raised by the Tribunal during the hearing as to the effect of GC 37.

Issue 3: What is the effect of GC 37.2 in relation to the implication of the statutory terms set out in Sch 1 Div 4 and Div 5 of the CC Act?

32 Throughout the hearing of this matter, the Tribunal expressed concern about how GC 37.2 was intended to operate. During the period in which the matter was held in abeyance pending the handing down of the Dig Deep decision, the parties were given leave to specifically address whether the clause contained a sufficient provision about how to respond to a payment claim within the meaning of s 17 of the CC Act and the effect should it not do so.

33 As discussed in Blackadder at [42], the response required is one which provides an answer or gives a reply to the claim. Further, it is necessary that the contract have a written provision about when and how a party is to respond to a claim for payment (s 17 of the CC Act). If there is not a provision about when and how to respond, the provisions in Sch 1 Div 5 of the CC Act are implied. There are practical difficulties in working out what must be implied, as also discussed in Blackadder . The matter which must be included to avoid the implication is the matter dealt with in Sch 1 Div 5 of the CC Act about when and how to respond.

34 In my view, the contract does not contain a provision of how to respond in the sense of s 27 of the CC Act read with Sch 1 Div 5 thereof.

35 Counsel for the Principal submits that there is a provision of how to respond to a claim and the time within which to respond was established by what he referred to as the 15 business day cap. This is a reference to the provision that if the Superintendent does not issue the progress certificate within 15 business days of receiving a progress claim in accordance with subclause 37.1, that progress claim shall be deemed to be the relevant progress certificate.

36 It is necessary to consider whether GC 37.2 contains a written provision about the matters which are dealt with in the provisions of Sch 1 Div 5 in relation to responding to claims for payment.

37 GC 37.2 requires the Superintendent to assess a progress claim made pursuant to GC 37.1. The Superintendent is required to either agree or determine percentages and quantities in respect of work performed at the date of the progress claim and agree or determine the value claimed against the percentages, quantities and hours and then return the agreed or amended progress claim to the Contractor.

38 There is no provision at this stage for the Superintendent to identify each item of the claim that is disputed (although this might be apparent from the manner in which the progress claim is amended), nor to state, in relation to each of those items, the reasons for disputing each item of claim. That is a matter which is provided for under cl 7.2(g) of the Sch 1 Div 5 implied terms.

39 The mechanism of GC 37.2 then provides as follows. Within one business day of receipt (from the Superintendent) of the agreed or amended progress claim the contractor must finalise its progress claim on the basis of the value agreed or determined by the Superintendent and must submit it to the Superintendent. The Superintendent shall, within 15 business days after receiving the finalised progress payment claim, issue a progress certificate evidencing the Superintendent's opinion of the monies due from the Principal to the Contractor pursuant to the finalised progress claim and reasons for any difference. This presumably refers to the difference between the original version of the progress claim and the finalised progress claim. In order to obtain payment pursuant to the progress certificate, the Contractor must issue an invoice certifying that all work covered by the invoice is complete and that the invoice is correct, authentic and the only one issued for the work described therein. If the invoice does not comply with these requirements, it may be returned to the Contractor for correction. The Principal's obligation to pay is the later of either 15 business days after the issue of the progress certificate, 30 business days after the Superintendent receives the progress claim, or within 10 business days after receiving the Contractor's compliant invoice.

40 There is therefore no room under this mechanism for any dispute to arise. The Contractor is obliged to accept the Superintendent's determination, because the progress claim is amended and then becomes the finalised progress payment claim prior to certification. The invoicing requirements reinforce this position.

41 The implied provisions require that if the whole or part of a claim is disputed, notice be given, within 14 days after receiving the claim, identifying not only the disputed items of claim but the reasons for disputing them. At the time the Superintendent, under GC 37.2, gives reasons for any differences, there is no dispute, because the Superintendent's obligation to give reasons only arises if the Contractor provides a finalised progress claim reflecting the Superintendent's earlier determination. I do accept the Principal's submission that GC 37.2 provides a certain time within which to respond to both the original progress claim and the revised progress claim. However, for the reasons given, the contract mechanism does not permit the actions of the Superintendent in determining the original progress claim to give rise to a dispute. Even if the determination could be regarded as giving rise to a dispute, the contract does not require the Superintendent to provide the reasons for disputing any items of the claim at the relevant time.

42 I accordingly conclude that GC 37.2 does not contain a provision of how to respond to a payment claim within the meaning of s 17 of the CC Act.

43 GC 37.2 does provide for a time of 15 business days within which the Superintendent must either issue a progress certificate based on the finalised progress claim, or if he fails to do so, the original progress claim is regarded as the progress certificate. There is therefore no need to apply any term relating to the time within which a notice of dispute must be given.

44 The effect of the above findings is that cl 7(1) and cl 7(2) of Sch 1 Div 5 of the CC Act are implied into the contract. Given that the outcome of the proceedings depend on the effect of the Principal's response by the letter dated 8 August 2012, the focus of the case was on whether the Principal had a right to respond to a payment claim. There was no consideration of the provisions relating to time within which payment is to be made. The provisions of GC 37.2 provide for payment to be made by the later of various stated time limits measured from different events. In the circumstances, it is not appropriate for the Tribunal to express any view concerning these provisions. The contract will, however, have to be construed so as to operate in a manner consistent with the above statutory implied terms.

45 As the Contractor acknowledged in its written submissions filed on 14 May 2013, if its submissions challenging Blackadder were not accepted as to when a payment dispute arises, the implied provisions enable the Principal's letter dated 8 August 2012 to dispute the variation claims comprised in the Contractor's payment claim the subject of this review. This concession was correctly made as it is clear that the above implied provisions require the Principal to respond to the Contractor's payment claim.

Conclusion

46 It follows for the reasons given under the first and third issue headings above that the adjudicator arrived at the correct conclusion that the letter dated 8 August 2012 created a payment dispute between the parties on that date and that, consequently, the adjudication had not been prepared and served in accordance with s 26 of the CC Act, although that conclusion was reached for the wrong reasons. The Tribunal will accordingly cause orders to issue as follows.

Orders

1. The application to set aside the decision of the adjudicator to dismiss that part of the adjudication application relating to 13 variation claims disputed in part or rejected in a letter dated 8 August 2012 addressed by the respondent to the applicant is dismissed.

2. The decision under review is affirmed.

I certify that this and the preceding [46] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MR C RAYMOND, SENIOR MEMBER