[2014] WASAT 19

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM : COMMERCIAL & CIVIL

ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA)

CITATION : CROKER CONSTRUCTION (WA) PTY LTD and STONEWEST PTY LTD [2014] WASAT 19

MEMBER : MR C RAYMOND (SENIOR MEMBER)

HEARD : 10 JANUARY 2014

DELIVERED : ORAL REASONS FOR DECISION DELIVERED ON 24 JANUARY 2014

PUBLISHED : 12 FEBRUARY 2014

FILE NO/S : CC 1476 of 2013

BETWEEN : CROKER CONSTRUCTION (WA) PTY LTD

Applicant

AND

STONEWEST PTY LTD

Respondent

Catchwords:

Construction Contracts Act 2004 (WA) - Contractual provisions required to avoid implication of statutory implied terms - Determination of what constitutes payment claim

Legislation:

Construction Contracts Act 2004 (WA), s 3, s 6, s 16, s 17, s 18, s 26, s 31(2)(a), s 31(2)(b), s 46(1), s 46(2), s 53, Div 2, Div 4, Div 5, Pt 2, Sch 1

Result:

Application granted

Decision under review set aside and reversed

Summary of Tribunal's decision:

The applicant applied under s 46(1) of the Construction Contracts Act 2004 (WA) to review the decision of an adjudicator dismissing an adjudication application.

The decision turned on what contractual provisions were necessary in order to avoid the implication of statutory terms relating to how to make a claim for payment, when and how a party is to respond to a claim for payment, and the time when payment must be made. The applicant contended that the contractual provisions were insufficient and that the adjudicator had erred in concluding that a provision enabling a payment certificate to issue could constitute a claim for payment. The contract required an amount so certified to be paid within 14 days.

The Tribunal analysed the relevant statutory and contractual provisions, and concluded that, in material respects, the contract did not contain the necessary provisions, with the result that certain statutory terms were to be implied.

On the facts, the Tribunal found that particular correspondence and an invoice did not constitute a payment certificate as held by the adjudicator, and that the requirement to pay the certified amount within 14 days did not apply. The Tribunal held that these documents constituted a payment claim. The effect of this was that the implied terms allowed for 28 days for payment of the claim and that the application for adjudication had been prepared and served within time.

The Tribunal issued orders setting aside and reversing the decision of the adjudicator to dismiss.

Category: B

Representation:

Counsel:

Applicant : Mr S Brown

Respondent : Mr D Vilensky

Solicitors:

Applicant : Encore Legal Pty Ltd

Respondent : Bowen Buchbinder Vilensky

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

Blackadder Scaffolding Services (Australia) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133

Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211

REASONS FOR DECISION OF THE TRIBUNAL :

Introduction

1 Oral reasons for decision were delivered on 24 January 2014. The parties were advised that the transcript would be provided to them as constituting the Tribunal's written reasons for decision but that the transcript would thereafter be edited into a form suitable for publication, and that has occurred. What follows is the edited reasons for decision.

2 In this matter, Croker Construction (WA) Pty Ltd (applicant) has applied to the Tribunal by an application lodged on 31 October 2013 for an order under s 46(1) of the Construction Contracts Act 2004 (WA) (CC Act). The applicant seeks orders that the adjudicator's dismissal of the adjudication application under s 31(2)(a) of the CC Act be reversed and that the application be referred back to the adjudicator to make a determination on the merits of the application in accordance with s 31(2)(b) of the CC Act. In these reasons for decision, all references to sections, parts, divisions, schedules, or clauses within schedules are references to sections, parts, divisions, schedules or clauses within schedules of the CC Act unless the context indicates otherwise.

3 The parties entered into subcontract agreement 748/238 dated 31 August 2012 in terms of which the applicant agreed to pay Stonewest Pty Ltd (respondent) the amount of $584,313 for the construction of retaining walls upon Lot 504 Mayor Road, Coogee. The applicant is referred to in the contract documents as either the company or the main contractor. The respondent is referred to as the subcontractor.

4 The subcontract included, relevant to these proceedings, the formal instrument of agreement 748/238 and standard form AS 2545 of 1993 (AS 2545). Reference to the conditions in that standard form as the general conditions and particular clause numbers will be referred to with the initials 'GC'. It is common cause that this contract is a construction contract to which the CC Act applies.

5 A dispute between the parties concerning a claim by the applicant for payment of liquidated damages was referred to adjudication under the CC Act. The adjudicator's decision dated 18 October 2013 was to dismiss the application as having not been served in accordance with s 26 because service was effected more than 28 days after the payment dispute arose. The adjudicator expressly found that there was no other ground upon which he was required to dismiss the adjudication application under s 31(2)(a). The adjudicator found that the 'payment claim raised by the applicant is essentially a " Payment Certificate " for the purposes of clause 42.1'. That is a reference to GC 42.1 of AS 2545.

6 GC 42.1 of AS 2545 requires payment within 14 days of issue of the payment certificate by the main contractor's representative. The adjudicator found that a payment dispute arose under s 6 when the certified liquidated damages were not paid within that period, which was on 22 August 2013, the certificate having been found to have been served on 8 August 2013. It is common cause that the adjudication application was served on 1 October 2013 which, on the adjudicator's findings, is outside the 28 day period required by s 26.

7 The applicant contends that the 6 August 2013 documents constitute a payment claim but, as the contract contains none of the provisions referred to in s 16, s 17 and s 18, the implied provisions under the statute apply concerning about how to make a claim for payment, how to respond to it and when payment is to be made. If correct, payment would have been due 28 days after service of the payment claim but the payment dispute would arise on the sooner of that date or the date on which the claim was disputed.

8 It is common cause that the claim was rejected by the respondent by email on 3 September 2013 and that, if that is the date on which the payment dispute is properly to be regarded as having arisen, then the service of the adjudication application on 1 October 2013 was within the required 28 day period and the adjudication application should not have been dismissed as having not been served in accordance with s 26.

The issues

9 Although the parties have filed extensive submissions, the primary issues determinative of the matter can be simply stated as follows:

1) Does the invoice of 6 August 2013 constitute both a payment claim and a payment certificate within the meaning of GC 42.1 of AS 2545, such that payment is required to be made within 14 days of issue of the certificate?

The parties concur - in my view, correctly - that if answered in the affirmative, the adjudicator was correct to have dismissed the application for adjudication.

2) If 1) is answered in the negative, do the letter of 6 August 2013 and the attached invoice constitute the making of a payment claim by the applicant?

If yes, the parties agree that the adjudication was served in time. The decision under review will fall to be set aside and the matter will have to be referred back to the adjudicator to be determined on the merits, in accordance with s 46(2).

10 The subsidiary issues leading to determination of the primary issue are:

a) what is sufficient to constitute the provisions required by s 16, s 17 and s 18;

b) does the contract contain provisions about how a party is to make a claim to another party for payment, when and how a party is to respond to a claim for payment, and the time when payment must be made as required by s 16, s 17 and s 18; and

c) what is the status of the letter and/or invoice, both dated 6 August 2013?

The requirements of s 16, s 17 and s 18

11 The relevant statutory provisions are as follows:

16. Making claims for payment

The provisions in Schedule 1 Division 4 are implied in a construction contract that does not have a written provision about how a party is to make a claim to another party for payment.

17. Responding to claims for payment

The provisions in Schedule 1 Division 5 about when and how a party is to respond to a claim for payment made by another party are implied in a construction contract that does not have a written provision about that matter.

18. Time for payment

The provisions in Schedule 1 Division 5 about the time by when a payment must be made are implied in a construction contract that does not have a written provision about that matter.

12 In Blackadder Scaffolding Services (Australia) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133 ( Blackadder ), the Tribunal had cause to examine the way in which Pt 2 Div 2 required the different provisions of Sch 1 to be implied, with a particular focus on s 17 and s 18 which were relevant to the facts of that case. Paragraphs [40] to [42] of Blackadder state:

Part 2 Div 2 of the CC Act describes many circumstances in which different provisions in Sch 1 are to be implied into construction contracts, in each case limited to those contracts which do not have a written provision about a particular matter. So, for example, s 13 of the CC Act provides for the implication of terms dealing with variations of the contractor's obligations; s 15 of the CC Act deals with implication of terms concerning the contractor's ability to make a claim for a progress payment; and s 16 of the CC Act provides for implied terms about how a payment claim is made. Each of the stated examples requires that the entirety of the provisions in the relevant division of Sch 1 are to be implied in contracts which contain no written provision about the particular subject matter referred to expressly in the section.

Both s 17 and s 18 of the CC Act employ a slightly different formula. They commence with '(t)he provisions in Sch 1 Div 5 about', followed by a particular subject matter encompassed in the provisions referred to, before finishing with a reference to the contract not having a written provision 'about that matter'. Some evaluation is therefore required of the contract under consideration so as to determine if it has written provisions about the 'matter' to which the section refers, and if not, it is necessary to determine those provisions in Sch 1 Div 5 relating to the same 'matter' which are to be implied.

It is clear that it was Parliament's intention that the contract should itself stipulate both when a response to a payment claim is to be made, and how to respond, failing which the provisions in the schedule about 'that matter' will be implied. An initial question arises as to the meaning of 'respond'. Dictionary definitions provide the two broad alternatives of 'answer, give reply' on the one hand and 'non-communicative return' on the other. In our view, the former alternative is applicable in the context of s 17 of the CC Act because of the nature of the implied provisions in cl 7 of Sch 1 of the CC Act, including the requirement for the giving of a detailed notice of dispute which includes the reasons for rejecting or disputing the claim.

13 The effect of the decision is that, in relation to s 17 and s 18, it is necessary to analyse the applicable contractual provisions and compare them with the provisions in Sch 1 Div 5, about when and how to respond and the time by when to pay a payment claim, to determine whether the contract has provisions about the matters covered in Div 5.

14 In my view, s 16 requires a similar analysis and comparison to determine whether the contract contains a provision about how to make a claim to another party for payment. As discussed in Blackadder , s 16 differs in its wording from s 17 and s 18, with no reference to the formula 'about that matter'. The logical reason is that if the conditions of s 16 are not met, the whole of the implied provisions set out in Div 4 are implied, whereas in the case of s 17 and s 18, if the respective conditions or any one of them are not met, it is only the corresponding part of the implied provisions as set out in Div 5 which will be implied.

15 It is therefore necessary to consider the essential requirements provided for in each of Div 4 and Div 5. The parties have freedom to express the detail of each requirement - that is, the mechanism to be followed - but there must be a provision of a similar nature in each respect. The mechanism must not exclude, modify or restrict the operation of the CC Act: see s 53.

16 In the case of Div 4, there are three requirements:

1) The contract must state how either party can make a claim against the other. It is to be noted that the definition of 'payment claim' incorporated in Div 4 (and Div 5) reflects it can be a claim by the principal against the contractor or vice versa; further, that the definition of 'principal' in relation to a construction contract is the party to whom the contractor is bound, and the contractor is the person having, relevantly, the obligation to carry out construction work: see s 3.

2) It is necessary for a specified formality to be stated of how a claim for payment is to be made, given that cl 5(2) of Div 4 sets out a particular formality to be implied. This informs what is intended by requiring a provision of how to make a payment claim and is consistent with the ordinary meaning of 'how', which is defined as 'in what way or manner': see Macquarie Dictionary (5th ed, 2009).

3) There must be a provision to the effect that in the case of a claim by a contractor, the amount to be claimed is to be calculated with reference to the contract, or otherwise based on a reasonable remuneration see cl 5(3).

17 In the case of Div 5, there are four requirements:

1) There must be a provision specifying that a notice of dispute be given within a stated time if the recipient of the claim believes the claim should be rejected as not having been made in accordance with the contract or if the claim is disputed on the merits, either in whole or in part: see cl 7(1).

2) It is necessary for a specified formality to be stated of the information to be given in the notice of dispute and of the requirements for it to be otherwise valid; that is, what will be required for the notice to be validly given by the party responding to the claim: see cl 7(2).

3) There must be a provision stating a time within which that part of the claim not disputed by a notice of dispute must be paid, or if no notice of dispute has been given, by when the full amount claimed must be paid: see cl 7(3).

4) There must be a provision that if the principal is entitled to retain a portion of any amount payable to the contractor, the obligation to pay in full or in part within a stated time from the date of receiving a payment claim does not affect the principal's right of retention, but the principal must advise the contractor of any amount retained: see cl 7(4).

18 To the extent that the respondent submits that the terms of Div 4 and Div 5 are to be implied only if there is no provision at all dealing with how to claim, when and how to respond to a claim, and when to make payment, are consistent with what I have outlined, the submissions are accepted, but if meant in any wider sense, they are rejected.

The relevant contract terms

Are there contractual provisions of how to make a payment claim?

19 GC 42.1 of AS 2545 relevantly provides as follows:

Payment Claims, Certificates, Calculations and Time for Payment

At the times for payment claims stated in the Annexure and upon issue of a Certificate of Substantial Completion and within the time prescribed by Clause 42.7, the Subcontractor shall deliver to the Main Contractor's Representative claims for payment supported by evidence of the amount due to the Subcontractor and such information as the Main Contractor's Representative may reasonably require. Claims for payment shall include the value of work carried out by the Subcontractor in the performance of the Subcontract to that time together with all amounts then due to the Subcontractor arising out of or in connection with the Subcontract or for any alleged breach thereof.

Within 21 days after receipt of a claim for payment, the Main Contractor's Representative shall issue to the Main Contractor and to the Subcontractor a payment certificate stating the payment which, in the opinion of the Main Contractor's Representative, is to be made by the Main Contractor to the Subcontractor or by the Subcontractor to the Main Contractor. The Main Contractor's Representative shall set out in the certificate the calculations employed to arrive at the amount and, if the amount is more or less than the amount claimed by the Subcontractor, the reasons for the difference. The Main Contractor shall allow in any payment certificate issued pursuant to this Clause 42.1 or any Final Certificate issued pursuant to Clause 42.8 or a Certificate issued pursuant to Clause 44.6, amounts paid under the Subcontract and amounts otherwise due from the Main Contractor to the Subcontractor and/or due from the Subcontractor to the Main Contractor arising out of or in connection with the Subcontract including but not limited to any amount due or to be credited under any other provisions of the Subcontract.

If the Subcontractor fails to make a claim for payment under Clause 42.1, the Main Contractor's Representative may nevertheless issue a payment certificate.

Subject to the provisions of the Subcontract, within 35 days after receipt by the Main Contractor's Representative of a claim for payment or within 14 days of issue by the Main Contractor's Representative of the Main Contractor's Representative's payment certificate, whichever is the earlier, the Main Contractor shall pay to the Subcontractor or the Subcontractor shall pay to the Main Contractor, as the case may be, an amount not less than the amount shown in the Certificate as due to the Subcontractor or to the Main Contractor as the case may be, or if no payment certificate has been issued, the Main Contractor shall pay the amount of the Subcontractor's claim. A payment made pursuant to this Clause shall not prejudice the right of either party to dispute under Clause 47 whether the amount so paid is the amount properly due and payable and on determination (whether under Clause 47 or as otherwise agreed) of the amount so properly due and payable, the Main Contractor or Subcontractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable.

…

20 Also relevant are unnumbered clauses of the subcontract agreement dealing with liquidated damages and invoicing, payment and security set out under those headings commencing on page 13 of the agreement, which relevantly provide as follows:

21 Liquidated Damages

1. If the head contract works do not reach Substantial Completion by their date for Substantial Completion, for which the cause is delay by the subcontractor in completing the works, then the subcontractor will indemnify Croker Construction (WA) Pty Ltd against:

i. Liquidated damages under the head contract at the head contract rate specified in the General Conditions of Contract; and

ii. Damages, other than liquidated damages, which have become due or payable by Croker Construction (WA) Pty Ltd, to the Principal.

2. If the subcontractor's delay is not the sole cause of Croker Construction (WA) Pty Ltd's liability for damages under the head contract, the subcontractor will indemnify Croker Construction (WA) Pty Ltd only in proportion to the subcontractor's delay, which will be certified by an authorised Croker Construction (WA) Pty Ltd employee, as monies due and payable to Croker Construction (WA) Pty Ltd by the subcontractor.

3. Liquidated damages or other damages payable under this clause may be offset and deducted by Croker Construction (WA) Pty Ltd from any monies that may be or hereafter become payable to the subcontractor by Croker Construction (WA) Pty Ltd.

22 The contract contains no precedence clause giving priority to any of the contract documents in the event of ambiguity or discrepancy between the documents. GC 8.1 of AS 2545 requires either party noticing any ambiguity or discrepancy to obtain a direction from the main contractor's representative. There is no evidence of any direction having been sought. GC 42.1 of AS 2545 contains a detailed procedure for the subcontractor - that is, the respondent - to make a claim. It is true, as the respondent points out, that the main contractor's representative may issue a payment certificate if the respondent fails to make a claim for payment to which it is entitled under GC 42.1 of AS 2545; that is, a claim as specified in the annexure at substantial completion, which equates to practical completion, and at final completion. The annexure is silent as to when claims for payment - that is, progress claims - could be made. That omission is covered by the invoicing payment and security clause of the subcontract agreement referred to, which enables progress claims to be made on the 25th day of each month. There is no mechanism stipulating how the main contractor is to put information before the main contractor's representative in a form, such that the main contractor's representative can assess the main contractor's entitlement or otherwise.

23 The liquidated damages subclause 3 allows a set-off. The question arises: how is this to operate in the context of GC 42.1 of AS 2545? The scheme of the general conditions suggests that the certifier would have to be informed of a claimed set-off, which he would have to assess and take into account in certifying the balance of any payment claim payable to the respondent. GC 42.1 of AS 2545 requires the amount certified to be paid, although it appears retention monies provided for under the contract might be deducted under GC 42.3. The subcontract liquidated damages provision clause 3 might also permit such a deduction.

24 Neither party's submissions addressed directly how these provisions are intended to interact with each other or with the CC Act. For the present, it is assumed that the principal can claim set-off against the amount as certified. That, however, was not the process followed, as no progress claim or payment claim had been made by the subcontractor which was the subject of any assessment by the adjudicator. The adjudicator held, and the respondent contended, that under GC 42.1 of AS 2545, as no claim had been made by the subcontractor, the main contractor's representative was nevertheless entitled to issue a payment certificate for the liquidated damages claimed by the main contractor, and that the invoice of 6 August 2013 constituted the payment certificate.

25 There are several difficulties with this proposition.

26 Firstly, ordinarily, when a progress claim is made, it is assessed by the certifier. The amount due to be paid under the contract is the certified amount. It is not an amount which is claimed to be due. It is an amount which the certifier has valued as being the amount due under the contract. The contractor whose progress payment may have been partially rejected by the certifier may issue a notice of dispute under the dispute resolution provisions of the contract (see GC 47.1 of AS 2545), as might the principal, who might wish to assert that the certifier erred in certifying an amount greater than that to which the subcontractor is properly entitled. That dispute may be resolved in due course but, in the meantime, payment must be made in terms of the certificate, subject to possible deduction of retention monies or any set-off permitted. The certificate cannot be regarded as a claim or assertion of a right. It is proof of the entitlement to payment in the amount certified, subject only to any permitted deduction or set-off.

27 Secondly, the proposition results in an inconsistent application of GC 47.1 of AS 2545 as to what constitutes the payment claim by the subcontractor as compared to a payment claim by the main contractor. In the first instance, the progress claim constitutes the payment claim, and in the second instance, the payment certificate would have to do so. A construction favouring consistency should be preferred, particularly where the second construction, for the reasons just given, strains the language to treat a process of certification as a claim for payment as opposed to a means of establishing a right to payment, albeit subject to the right to dispute liability after payment.

28 Thirdly, there is nothing within GC 42.1 of AS 2545 which prescribes what the principal must do to make a claim. It is entirely directed towards how the subcontractor is to claim, the assessment of the claim and certification of the amount determined to be due or the issue of a payment certificate when the subcontractor fails to claim, when payment is to be made, and the effect of making payment.

29 Fourthly, as submitted by the applicant, the role of the certifier under a contract such as this is an independent role. As was stated by Hodgson JA, with whose judgment all members of the court joined, in Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 at [50]:

When exercising certifying functions in respect of which the superintendent must act honestly and impartially, the superintendent is not acting as the owner's agent, in the strict legal sense. In my opinion, this is confirmed by the consideration that the issue of a certificate by the superintendent does not bind the owner to any extent beyond what is prescribed by the building contract itself, so that the owner can challenge such certificates. If the superintendent was acting as the owner's agent in the strict sense, the issue of the certificate would be an act done by the owner through its agent, which the owner could not then challenge.

30 The way in which the contract interacts with the CC Act supports the above conclusion. The definition of 'payment claim' (see s 3 and Div 4 and Div 5 of Sch 1), read with s 31(2)(b), is consistent with the contractor having to make a payment claim for return of monies retained by the principal as security for performance of the contractor's obligations. The adjudicator may make an order for return of security under s 31(2)(b). That suggests that a principal does not have to initiate the processes of the CC Act in relation to exercising a right to deduct retention monies if not dealt with in the certification of a payment claim. This is also consistent with the provisions of cl 7(4) in Div 5 of Sch 1, which simply requires the principal to give the contractor notice that an amount has been retained from the payment in full, or in part, to which the contractor is entitled under cl 7(3).

31 There is no similar provision in respect of the exercise of a right of set-off, and the definition of 'payment claim' is consistent with the principal being required to make a payment claim in respect of the non-performance of the contractor's obligation to achieve practical completion or, in this instance, substantial completion by the stipulated date under the contract.

32 The proposition, as determined by the adjudicator and as supported by the respondent, is rejected for the reasons given, and I find there is no written provision about how the main contractor is to make a claim for liquidated damages.

33 It follows that, in terms of s 16, the provisions of Div 4 of Sch 1 apply in relation to how the principal is to make a payment claim. As there are adequate provisions of how the respondent or subcontractor is to make a payment claim, the implication is limited to a payment claim by the applicant. The above reasoning calls into question - but it is not necessary to determine - whether the contractual provision arguably permitting set-off against the certified payment amount may be void as being contrary to s 53, insofar as it allows unilateral action by the claimant without making a payment claim, as it appears is envisaged by the CC Act.

Are there contractual provisions about when and how to respond to a claim for payment?

34 The respondent submits that GC 47 of AS 2545 provides how the subcontractor is to respond to a payment claim. GC 47 of AS 2545 is the dispute resolution clause. It provides for either party to give notice of dispute arising in connection with the contract, for conferral within 14 days of the notice of dispute, and, ultimately, if not settled, permits referral to arbitration or litigation. The relevant part of GC 47 of AS 2545 dealing with the giving of a notice of dispute is GC 47.1, which provides as follows:

If a dispute between the subcontractor and the main contractor arises out of or in connection with the subcontract, including a dispute concerning a direction given by the main contractor's representative, then either party shall deliver by hand or send by certified mail to the other party and to the main contractor's representative a notice of dispute in writing adequately identifying and providing details of the dispute.

35 It is accepted that the details required to be given in the notice of dispute and the manner in which it is to be given to the other party are sufficient to constitute a provision about the matters set out in cl 7(1) and cl 7(2), save that there is no time limit within which the notice must be given; nor is that provided for elsewhere in GC 47 of AS 2545 or under any other provision of the contract.

36 I find, therefore, that part of cl 7(1) of Sch 1 falls to be implied; namely, that the notice of dispute be given within 14 days after receiving the payment claim. While GC 42 of AS 2545 provides a time within which the main contractor must make payment of a payment claim by the subcontractor, the reverse is not true, for the reasons given that a payment certificate does not constitute a payment claim by the main contractor under the provisions of the contract.

37 Consequently, in relation to a payment claim by the main contractor, cl 7(3) and cl 7(4) of Sch 1 must be implied, with necessary changes to cl 7(3) to delete references to cl 7(1), and to substitute 'in accordance with the requirements for giving notice of dispute'. That effectively ties the matter back to the express provisions of GC 47.1 of AS 2545.

The status of the letter and/or invoices both dated 6 August 2013

38 It follows from the above findings that even if the invoice of 6 August 2013 constitutes a payment certificate, it does not constitute a payment claim by the applicant.

39 The letter of 6 August 2013 states as follows:

Dear Sir,

Croker Construction (WA) Pty Ltd ( Croker ) hereby claims liquidated damages from Stone West [sic] Pty Ltd ( Stonewest ) in accordance with the Sub Contract Agreement, No 238.

As of today, 6 August 2013, Stonewest has still failed to achieve Practical Completion of the works under the Contract. Stonewest has been advised of its delays and liability for liquidated damages on numerous occasions. Despite that, Stonewest has persisted to leave the works in a state that is unusable for its intended purpose, including but not limited to, failing or refusing to deliver the associated keys to allow the Owner to access and use the works.

The Original Date for Practical Completion of the subcontracted works was 21 December 2012. Croker are [sic] willing to accept an EOT of 64 days without costs due to your late commencement on site resulting in a revised Date for Practical Completion of 11 March 2013. Croker has assessed that Stonewest has applied for an Extension of Time to the Date for Practical Completion for approved variation works totalling 4 weeks thus resulting in the revised final Date of Practical Completion of 08 April 2013.

Based on the above, Liquidated Damages are to apply at the rate of $750/day for the total of 119 days as at the date of this correspondence. Croker reserves its rights to claim further damages for Stonewest's delays or in mitigating Croker's other costs caused by Stonewest's other non-performances under the Contract.

Please make payment of the amount of $89,250.00 as denoted on the attached Tax Invoice within 28 days.

I trust that the above is satisfactory, however should you have any queries regarding the above or wish to discuss the matter further please do not hesitate to contact [the] undersigned on [telephone number deleted].

Yours faithfully[.]

40 On any reading of the letter, it asserts a claim to payment of liquidated damages. The Tribunal was informed, without dispute or challenge on behalf of the applicant, that the author of the letter is the person who managed the contract and dealt with the respondent at all times, and who, although not formally appointed as the main contractor's representative, performed the main contractor's representative's functions under the contract.

41 As such, there would be many occasions (although not when acting as a certifier) when the main contractor's representative acted as an agent for the applicant: in that regard, see the discussion in the text 'Construction Law' by Julian Bailey in Construction Law, Vol 1, published by Informa Law, section 518 and following. There is nothing in the language of the letter which suggests the main contractor's representative was acting as a certifier, merely enclosing a certificate establishing liability for payment on the part of the respondent. I find that the letter and attached invoice constitute a payment claim by the applicant against the respondent.

Conclusion

42 On the above findings and on the undisputed facts, the applicant's letter of 6 August 2013 and attached invoice of the same date were served on the respondent on 8 August 2013. The respondent was required to respond by 22 August 2014, as required by the implied term to respond within 14 days. The respondent did not do so until 3 September 2013 when it rejected the claim in its entirety. But for that rejection of the claim, the due date for payment under the implied terms is 28 days after receipt of the payment claim; that is, 5 September 2013. As the payment dispute arises on the earlier of either rejection of the claim or failure to pay on the due date, the payment dispute arose on 3 September 2013 when the rejection occurred.

43 The application had to be validly served within 28 days after the dispute arose - that is, by 1 October 2013 - and it was served on that date. The adjudicator therefore erred in his decision to dismiss on the basis that the application had been served outside the 28 day period. There is no suggestion that any other basis exists for the dismissal of the adjudication application under s 31(2)(a).

Orders

44 The Tribunal stated that it would therefore cause orders to issue in the following terms, which it did on 24 January 2014:

1. The decision of the adjudicator, Mr Michael Charteris, dated 18 October 2013 to dismiss the adjudication application between Croker Construction (WA) Pty Ltd and Stonewest Pty Ltd under s 31(2)(a) of the Construction Contracts Act 2004 (WA) is set aside and reversed.

2. The applicant must immediately serve a copy of this order on the adjudicator to enable the adjudicator to make a determination on their merits under s 31(2)(b) and within the 14 day period prescribed by s 46(2) of the Construction Contracts Act 2004 (WA) or any extension of that time consented to by the parties.

I certify that this and the preceding [44] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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MR C RAYMOND, SENIOR MEMBER