[2014] WASAT 147
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA)
CITATION : DIGDEEP INVESTMENTS PTY LTD and NW CONSTRUCTIONS PTY LTD [2014] WASAT 147
MEMBER : MS L WARD (MEMBER)
HEARD : DETERMINED ON THE DOCUMENTS
DELIVERED : 29 OCTOBER 2014
FILE NO/S : CC 470 of 2014
BETWEEN : DIGDEEP INVESTMENTS PTY LTD
Applicant
AND
NW CONSTRUCTIONS PTY LTD
Respondent
Catchwords:
Construction Contracts Act 2004 (WA) - Application for review of decision by adjudicator to dismiss application - Whether application for adjudication was in time - Date when payment dispute arose - Contract included a time for payment clause - Section 18 of Construction Contracts Act 2004 (WA) 'Time for payment' does not apply to contract - Section 17 of Construction Contracts Act 2004 (WA) 'Responding to claims for payment' does apply to contract - Provisions in Sch 1, Div 5 apply with the exception of the 'time phrase' – No 'waiver' of contract term for payment within 14 days - Unilateral offer to extend payment term to 28 days
Legislation:
Construction contracts Act 2004 (WA), s 3, s 6, s 6(a), s 13, s 17, s 18, s 25, s 26, s 26(1), s 26(2)(a), s 31(2)(a), s 31(2)(a)(ii), s 37(2), s 46(1), cl 7, Sch 1, Div 1, Div 2, Pt 2, Div 5
State Administrative Tribunal Act 2004 (WA), s 17, s 60(2)
Result:
Application for review dismissed
Summary of Tribunal's decision:
Digdeep Investments Pty Ltd contracted with NW Constructions Pty Ltd for certain earthworks to be undertaken in central Perth.
Digdeep Investments Pty Ltd applied to the Tribunal for a review of an adjudicator's decision to dismiss its application for adjudication. The adjudication was in respect of an invoice sent by email to NW Constructions Pty Ltd on 19 December 2013, in the amount of $110,574.36 (excluding GST). NW Constructions Pty Ltd did not pay the invoice. Digdeep Investments Pty Ltd made an application for adjudication on 13 February 2014. The adjudicator found that the payment dispute arose on 2 January 2014 and that the application for adjudication was out of time.
Digdeep Investments Pty Ltd submitted that the adjudicator was wrong to dismiss the application under s 31(2)(a)(ii) of the Construction Contracts Act 2004 (WA). Digdeep Investments Pty Ltd submitted that the time for payment is within 28 days of receiving the payment claim as set out in cl 7(3) of Sch 1 to the Construction Contracts Act 2004 and as stated on the payment claim.
Digdeep Investments Pty Ltd submitted that the payment dispute arose on 16 January 2014, and that therefore the adjudication application was within the time set out in s 26(1) of the Construction Contracts Act 2004 .
Having considered the matter, the Tribunal found that the adjudicator was correct. In particular, the Tribunal found that the contract included a time for payment clause, namely, a period of 14 days. Therefore, s 18 of the Construction Contracts Act 2004 did not apply and there was no requirement to imply the 28 day time period for payment under cl 7(3) of Sch 1 of the Construction Contracts Act 2004 . The wording inserted by the applicant on the payment claim to the effect that payment fell due not later than 28 days from receipt of the claim was not a waiver of any rights under the contract. Under the contract, the time for payment was by 2 January 2014. The payment claim was not paid or disputed by 2 January 2014. Therefore, the payment dispute arose on 3 January 2014. The application to have the payment dispute adjudicated was made on 13 February 2014. Accordingly, the adjudication application was not served within the 28 days after the payment dispute arose.
The adjudicator was correct to dismiss the application for adjudication under s 31(2)(a) of the Construction Contracts Act 2004 . The application for review was dismissed.
Category : B
Representation:
Counsel:
Applicant : Mr I McKellar (Acting as Agent)
Respondent : Ms A Dowley
Solicitors:
Applicant : N/A
Respondent : Contract Intelligence Pty Ltd
Case(s) referred to in decision(s):
Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57
All Roofs Pty Ltd and Southgate Corporation Pty Ltd [2012] WASAT 178
Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133
Digdeep Investments Pty Ltd and NW Constructions Pty Ltd [2013] WASAT 60
MCIC Nominees Trust T/As Capital Projects & Developments and Red Ink Homes Pty Ltd [2013] WASAT 177
Michael Ebbott t/as South Coast Scaffolding and Rigging Services v Hire Access Pty Ltd [2012] WADC 66
Re Scott Johnson; Ex Parte Decmil Australia Pty Ltd [2014] WASC 348
South Coast Scaffolding and Rigging and Hire Access Pty Ltd [2012] WASAT 5
The Commonwealth v Verwayen (1990) 170 CLR 394
REASONS FOR DECISION OF THE TRIBUNAL
:
Introduction
1 Digdeep Investments Pty Ltd (applicant) T/As Metro Bobcats applied to the Tribunal under s 46(1) Construction Contracts Act 2004 (WA) ) (CC Act) for a review of an adjudicator's decision to dismiss its application for adjudication under s 31(2)(a) of the CC Act.
2 The application to the Tribunal for a review of the adjudicator's decision to dismiss its application for adjudication is within the Tribunal's review jurisdiction: see s 17 of the State Administrative Tribunal Act 2004 (WA) (SAT Act)
The issue for determination
3 The issue for determination by the Tribunal is whether or not the adjudicator was correct to dismiss the application for adjudication for being out of time. In turn, the Tribunal must decide when the payment dispute arose for the purpose of the CC Act. In order to decide when the payment dispute arose, the Tribunal must decide when the payment claim was due for payment. Accordingly, did NW Construction Pty Ltd (respondent) have:
a) 14 days to pay the payment claim as per the contract?; or
b) 28 days to pay as per the 'time phrase' in cl 7(3) of Sch 1 to the CC Act?; or
c) 28 days to pay as per the payment terms written by the applicant on Payment Claim No 5?
4 Following the exchange of written submissions and documentation between the parties, the matter was determined entirely on the documents pursuant to s 60(2) of SAT Act.
The contract
5 By way of background, the applicant contracted with the respondent to carry out certain earthworks on Lot 901, at the corner of William and Newcastle Streets, Perth, Western Australia in or about February 2012.
6 The construction contract comprises of several documents, including relevantly, the Earthworks Contract Agreement Part 1 (Earthworks Contract), signed by the parties on 22 February 2012.
7 The Earthworks Contract includes clause 3(ix) which is headed 'Payment Claims'. Clause 3(x) of the Earthworks Contract is headed 'Payment Terms' and it includes clause 3(x)(c) which states that 'The processing of any invoice will take up to 14 days …'. Clause 3(xi) of the Earthworks Contract is headed 'Payment Periods' and relevantly states that they will 'be dealt with each 14 days'.
8 The relevant terms of contract are set out in greater detail in the previous Tribunal decision Digdeep Investments Pty Ltd and NW Constructions Pty Ltd [2013] WASAT 60 ( Digdeep 2013 ) at [4] and [5] as follows:
Clause 3 of the Earthworks Contract stated:
ix PAYMENT CLAIMS
Payment claims will be assessed to the Contract Price and in accordance to the Program Schedule of Payments established under the agreement or contract. Payment claims received before the scheduled time and date defined by [the respondent] under payment terms shall be treated as being received late and will be dealt with in the following payment cycle.
The contract will not claim any fees or damages for late payments as they delivered the claim past the payment terms defined.
[The respondent] will not accept a facsimile invoice for any claim or payment[.]
[The respondent] will accept electronic progress claims, being an invoice issued by email. [The respondent] will only accept an invoice when it is identified as an electronic invoice; this is done by adding invoice above the ATO required Tax Invoice title required of [sic] under the Goods and Services Act 1999. Should an incorrectly structured or formatted invoice be issued [the respondent] will not advise of its non[-]conformance and will not process the claim, this clause is only available to those that have a signed agreement or contract to this policy.
[The respondent] will receive either an original invoice (via mail) or an Invoice (via email) that will commence the claim process.
Either claim MUST be accompanied by a completed Sub Contractor Statement and a signed, numbered and completed [the respondent's] Works Completion Certificate related to the progress claim. If all items are not attached to a mailed original claim or an invoice claim, the claim will not be processed.
An Invoice must be followed up by a mailed original invoice or emailed invoice.
All [P]ayment Claims will be dealt under the WA Trade Practices.
The following two paragraphs of the Earthworks Contract dealt with 'Payment Terms' and 'Payment Periods', and stated:
X PAYMENT TERMS
[The respondent] will treat any claim for payment to the following test:
a. Trade Labour only contracts will be dealt with each 14 days;
…
c. The processing of any invoice will take up to 14 days, which within [sic] that period a cheque will be issued to the Sub Contractor, to the Australian Post Office mail business address registered with [the respondent].
d. A cheque can be made available for picking up at [the respondent's] business office, to be eligible for a pickup, the contractor must [sic]:
(1) Must issue a notice (release) in either the progress or final claim, on the contractor company letterhead, requestion [sic] a pickup payment, and
(2) They must nominate the person to pick this payment up,
(3) The nominated person will have to produce a copy of the letter and a picture identification, and
(4) The nominated person must be prepared to have a copy of the ID taken on the back or front of the release.
e. No invoice will be processed unless the invoice is:
(1) A Tax Invoice as prescribed under the Goods and Services Act,
(2) Attached to:
(a) [The respondent's] Construction Sub Contract or Statement, and
(b) [The respondent's] Construction issued Works Completion Certificate, the Works Completion Certificate must nominate all materials ([if] any), and labour undertaken to the agreement or contract, nomination the Purchase Order identified on the agreement or contract.
f. If the Invoice is not received on the second (2nd) or Fourth (4th) Thursdays of the Month will be rolled over to the following 14 day period.
xi PAYMENT PERIODS
Trade Labour only agreements or contracts will be dealt with each 14 days.
Materials and Labour agreements or contracts will be dealt with on the fourth Thursday of each month[.]
9 Various payment claims were made by the applicant under the contract. The works under the contract were completed by the applicant in or about July 2012 and the six months defect liability period expired in about January 2013.
Payment Claim No 3 - subject of a previous application for review
10 Payment Claim No 3 was issued on 31 July 2012 and was the subject of an earlier application for review by the Tribunal in Digdeep 2013 . In Digdeep 2013 , the application for review was successful as the Tribunal found that an email dated 1 August 2012 was not a notice of dispute under the CC Act. Therefore, the application for adjudication served on 5 September 2012 was found to be within time.
11 Relevant to this application, at [28] of Digdeep 2013 , the Tribunal stated that:
As mentioned earlier, although the Earthworks Contract at clause 3(ix) set out how a claim for payment of money under the contract could be made, and in clause 3(x) and clause 3(xi) dealt with the time by when payment must be made, it did not set out how to respond to a payment claim. Therefore, as per s 17 of the CC Act set out above, the provisions in Sch 1 Div 5 were implied into the contract.
12 The Tribunal notes that following the decision in Digdeep 2013 , the payment dispute relating to Payment Claim No 3 was remitted to the adjudicator, Mr Kim Doherty. Mr Doherty determined that, in the absence of a notice of dispute, Payment Claim No 3, which was issued on 31 July 2012, was due to be paid on or before 28 August 2012.
Payment Claim No 5 - subject of the current application for review
13 This application for review is in respect of Payment Claim No 5 made by the applicant under the contract.
14 The respondent received Payment Claim No 5 by email on 19 December 2013. Payment Claim No 5 is in the amount of $110,574.36 (excluding GST). Payment Claim No 5 includes claims for the work done under the contract and an amount of $53,391.80 (excluding GST) for 'retentions'.
15 Payment Claim No 5 relevantly states:
Pursuant to the Contract, the amount claimed above falls due for payment not later than 28 days from receipt by you of this payment claim.
16 On 23 January 2014, the respondent provided the applicant with a notice of dispute which stated that it disputed the amount claimed on Payment Claim No 5. Payment Claim No 5 remains outstanding.
17 On 13 February 2014, the applicant served an adjudication application on the respondent and the adjudicator.
Decision under review - the adjudication
18 On 12 March 2014, the appointed adjudicator, Mr Alan V Riley, dismissed the applicant's application for adjudication. The adjudicator stated that the primary reason for dismissal was that the application for adjudication was made out of time.
19 The adjudicator found that payment of Payment Claim No 5 was to be made within 14 days as per the contract and that any notice of dispute was also to be given within 14 days as per cl 7(1) of Sch 1 to the CC Act. The adjudicator did not accept that there was any 'tension at all' with the contract having 'up to 14 days' as the time for payment and the notice of dispute to be given 'within 14 days.
20 In summary, the adjudicator found that:
• Payment Claim No 5 was made on 19 December 2013;
• Payment of the claim was due by 2 January 2014, being 14 days;
• A payment dispute arose on 2 January 2014 when the amount claimed was not paid in full and nor was the amount claimed disputed; and
• The adjudication application was made on 13 February 2014, being more than 28 days after the payment dispute arose.
21 Accordingly, the adjudicator found that the application for adjudication was served out of time and that he 'must' dismiss it under s 31(2)(a) of the CC Act.
22 The adjudicator considered a number of secondary bases for dismissal, and with the exception of an issue in relation to retention monies not forming part of the payment claim, he did not consider the other grounds to be additional reasons for dismissal.
23 The parties' written submissions to the Tribunal, in relation to the date on which the payment dispute arose, are summarised below.
Applicant's submissions
24 The applicant's primary submission is that all of the terms in cl 7 'Responding to a payment claim' of Div 5 of Sch 1 to the CC Act are implied into the contract.
25 According to the applicant, it followed that the respondent was to either:
• dispute the payment within 14 days of receiving the claim - that is, by 2 January 2014 (as per cl 7(1) of Sch 1 to the CC Act); or
• pay the claim within 28 days of receiving it - that is by 16 January 2014 (as per cl 7(3) of Sch 1 to the CC Act or the applicant's payment terms on Payment Claim No 5).
26 The applicant submits that the payment dispute arose on 16 January 2014 and that therefore the application for adjudication made on 13 February 2014 was within 28 days after the dispute arises.
27 In the alternative, the applicant submits that even if cl 7(3) of Sch 1 to the CC Act is not implied, then the respondent has 28 days to pay as per the wording on Payment Claim No 5 and that the applicant has thereby waived its right to payment within 14 days.
Respondent's submissions
28 The respondent claimed that the adjudication application was defective on a number of grounds including the primary reason that it was made out of time.
29 In relation to the 'out of time' ground, the respondent submitted that s 17 of the CC Act 'Responding to claims for payment' implies everything within cl 7 of Sch 1, with the exception of the time phrase found in cl 7(3) of Sch 1 to the CC Act: see Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd [2009] WASAT 133 ( Blackadder ) at [50], South Coast Scaffolding and Rigging and Hire Access Pty Ltd [2012] WASAT 5 ( South Coast Scaffolding ) at [50] and Michael Ebbott t/as South Coast Scaffolding and Rigging Services v Hire Access Pty Ltd [2012] WADC 66 ( Ebbott ) at [54].
30 The respondent relies on clause 3(x) of the contract, which states that the payment was to take 'up to 14 days'. Based on the authorities cited at [29] above, the respondent submitted that as the contract specifies a time for payment there is no requirement to imply any terms under s 18 of the CC Act. Therefore, the 'time phrase' in cl 7(3) of Sch 1 to the CC Act does not apply and the 28 day time for payment is not implied in the contract.
31 The respondent submits that the time for payment is by 2 January 2014. As the respondent failed to pay the amount by 2 January 2104, a payment dispute arose.
32 Section 26 (1) of the CC Act gives any party to the contract 28 days to apply for adjudication. According to the respondent, the application for adjudication had to be made by 30 January 2014. Accordingly, the respondent submits that the adjudication application made on 13 February 2014 is out of time.
33 In response to the applicant's claim that, in accordance with the wording on Payment Claim No 5, it has 'waived' the right to payment within 14 days by extending it to 28 days, the respondent submissions include that:
A contractor cannot waive and then unilaterally dictate the payment terms that apply to give rise to a payment dispute under the CC Act.
34 The secondary grounds relied on by the respondent to support its claim that the adjudication application is defective include, in summary, that:
• it has not been prepared in accordance with s 26(2)(a) of the CC Act as the complete contact details of the appointed adjudicator were not included in the application; and
• Payment Claim No 5 is not a 'payment claim' as defined in s 6 of the CC Act due to the lateness of the claim and the claim may include three separate payment disputes.
Relevant statutory provisions
35 The Tribunal's earlier decision, South Coast Scaffolding , sets out at [35] to [45] the statutory provisions relevant to implied terms and the time for payment. The relevant sections of the CC Act are summarised below.
36 The CC Act requires that an adjudicator must dismiss an application without making a determination of the merits on a number of stated grounds, which include the application not having been served in accordance with s 26 of the CC Act: see s 31(2)(a) of the CC Act.
37 Section 26(1) of the CC Act provides that the party must apply for adjudication within 28 days after a payment dispute arises unless s 37(2) of the CC Act applies. The Tribunal notes that s 37(2) of the CC Act does not apply to this application.
38 Section 6 of the CC Act provides that a payment dispute arises as follows:
For the purposes of this Act, a payment dispute arises if -
(a) by the time when the amount claimed in a payment claim is due to be paid under the contract, the amount has not been paid in full, or the claim has been rejected or wholly or partly disputed;
…
39 Section 3 of the CC Act defines a 'payment claim' as meaning a claim made under a construction contract including claims made:
(a) by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under the contract; or
(b) by the principal to the contractor for payment of an amount in relation to the performance or non-performance by the contractor of its obligations under the contract[.]
40 Part 2 'Content of construction contracts' of the CC Act includes Div 2 which is headed 'Implied provisions'.
41 Sections 17 and 18 of the CC Act are within Div 2 of Pt 2 of the CC Act and they set out when certain terms will be implied into a construction contract as follows:
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.
42 Schedule 1 'Implied provisions' Div 5 'Responding to claims for payment' of the CC Act includes cl 7(1), cl 7(2) and cl 7(3) as follows:
7. Responding to a payment claim
(1) If a party that receives a payment claim -
(a) believes the claim should be rejected because the claim has not been made in accordance with this contract; or
(b) disputes the whole or part of the claim, the party must, within 14 days after receiving the claim, give the claimant a notice of dispute.
(2) A notice of dispute must -
(a) be in writing;
(b) be addressed to the claimant;
(c) state the name of the party giving the notice;
(d) state the date of the notice;
(e) identify the claim to which the notice relates;
(f) if the claim is being rejected under subclause (1)(a) – state the reasons for the belief that the claim has not been made in accordance with this contract;
(g) if the claim is being disputed under subclause (1)(b) - identify each item of the claim that is disputed and state, in relation to each of those items, the reasons for disputing it; and
(h) be signed by the party giving the notice.
(3) Within 28 days after a party receives a payment claim, the party must do one of the following, unless the claim has been rejected or wholly disputed in accordance with subclause (1) -
(a) pay the part of the amount of the claim that is not disputed;
(b) pay the whole of the amount of the claim.
…
Tribunal's consideration - when did the payment dispute arise?
43 Firstly, the Tribunal will consider whether the adjudication application was made within 28 days after the payment dispute arose as required by s 26(1) of the CC Act. Whether the adjudication application was made within 28 days, will depend on the date when the payment dispute arose.
44 In relation to when a payment dispute arises under s 6 of the CC Act, the Tribunal notes that Justice Beech, in Re Scott Johnson; Ex Parte Decmil Australia Pty Ltd [2014] WASC 348, adopted the Tribunal's approach where he stated at [37] that:
It has been held in decisions of the State Administrative Tribunal that a payment dispute arises if, after a payment claim has been made:
(a) by the time the amount claimed in the payment claim is due to be paid, that amount has not been paid in full; or
(b) at any time prior to that, the claim has been rejected or wholly or partly disputed;
whichever is the sooner. The adjudicator proceeded on the basis of that approach. Neither party sought to challenge it. I am content to adopt that approach. (See Blackadder at [34] - [37] and South Coast Scaffolding at [42]).
45 The issue for determination is the date on which the payment dispute arose, that is, 2 January 2014 as submitted by the respondent, or 16January2014 as submitted by the applicant, or some other date determined by the Tribunal.
46 For the reasons set out below, the Tribunal finds that the applicant's application for review must fail. In the Tribunal's view, the adjudicator was correct to dismiss the adjudication application for being out of time. The Tribunal finds that the payment dispute arose on 3 January 2014, that is the day after the payment claim was due for payment on 2 January 2014.
47 The determination of the issue turns on, firstly, the effect of the reference on Payment Claim No 5 to 'payment not later than 28 days' and, secondly, the applicability, or otherwise, of s 18 of the CC Act.
Question 1: Does the wording on Payment Claim No 5 that, 'Pursuant to the Contract, the amount claimed above falls due for payment not later than 28 days from receipt by you of this payment claim' alter the time for payment of 14 days under the contract?
Answer: No
48 The applicant claims that it has waived its right to payment within 14 days, by unilaterally extending the payment time to 28 days, by including the wording on Payment Claim No 5 that, 'Pursuant to the Contract, the amount claimed above falls due for payment not later than 28 days from receipt by you of this payment claim'.
49 The High Court dealt with the concept of waiver in The Commonwealth v Verwayen (1990) 170 CLR 394 ( Verwayen ) and more recently in Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57 ( Agricultural ). In Verwayen the Commonwealth was held to have been estopped or to have waived its right to rely on a statute of limitations as an answer to Mr Verwayen's claim for damages for personal injury: see Agricultural at [60]. Verwayen dealt with the concept of waiver in the context of litigation; whereas Agricultural dealt with waiver in a commercial setting where a borrower had not made punctual repayments. At [49] of Agricultural the borrower submitted that there was a waiver in three different senses:
… an election between inconsistent rights; an application of the common law doctrine of forbearance; or the abandonment or renunciation of a right[.]
50 The High Court in Agricultural decided that the lender and the indemnifier had not waived compliance in any of the three different senses with the relevant due dates by accepting late repayments from the borrower.
51 In this case, the parties entered the contract under which Payment Claim No 5 was issued, in or about 22 February 2012. In effect, the contract provides at clause 3(x)(c) that a cheque for payment will be issued within 14 days of receiving an invoice.
52 In this Tribunal's view, the time for payment under the contract is clear. However, the applicant now claims, that on or about 19 December 2013, it unilaterally offered to extend the contract terms of payment from 14 days to 28 days. There is no indication from the respondent that it has done any of the following, namely, requested an extension of time to pay Payment Claim No 5, or agreed to an extension of time to pay Payment Claim No 5, or relied on the applicant purportedly granting an extension of time to pay Payment Claim No 5. In this application there was no evidence of consideration for a variation of the agreement. Nor is there any evidence of any detrimental reliance for a promissary estoppel.
53 Accordingly in the Tribunal's view, any unilateral offer to change the payment date made before the due date is not an abandonment of a right. The applicant's right to a payment still exists, rather an extension of time in which to pay has been offered to the respondent. Nor has there been any election between any inconsistent rights under the contract. The effect of any such offer of an extension is that, at best, it may dictate the applicant's range of options if payment is not received: see Kirby J at [126] of Agricultural .
54 A payment claim made under the CC Act is made in relation to work performed under the contract. In this case, that is the contract entered into by both parties on or about 22 February 2012. A purported unilateral waiver or offer of extension of the time for payment, does not form part of the contract for the purpose of the CC Act. The contract terms may be varied by agreement between the parties in accordance with the provisions under the contract, or where no such provision is in the contract, the provisions in Sch 1 Div 1 of the CC Act: see s 13 of the CC Act.
55 Section 25 of the CC Act provides that it is only a payment dispute arising under a construction contract which might be the subject of an adjudication application under the CC Act. It is well recognised that claims, other than for a 'payment claim' as defined in s 3 of the CC Act, may arise outside the construction contract or by operation of law. However, a claim for payment which arises beyond the terms of the construction contract, or which becomes due for payment beyond the terms of the construction contract, is not a 'payment claim' as defined under the CC Act and cannot give rise to a 'payment dispute' or therefore an application for adjudication: see All Roofs Pty Ltd and Southgate Corporation Pty Ltd [2012] WASAT 178 at [53].
56 Accordingly, in this case, the Tribunal finds that the time for payment is in accordance with the contract and it remains 14 days from receipt of the payment claim.
Question 2: Does the time phrase in cl 7(3) of Sch 1 to the CC Act apply to this construction contract?
Answer: No.
57 The law in relation to the parts of cl 7 of Sch 1 to the CC Act, which are to be implied into a construction contract, is well established in this Tribunal and has been confirmed by Commissioner Gething, as he then was, in the District Court of Western Australia: see Ebbott at [54], Blackadder at [50] and South Coast Scaffolding at [50].
58 In particular, the terms which are to be implied under the CC Act were stated by the Tribunal in Blackadder at [50] as follows:
Schedule 1 cl 7(3) of the CC Act provides that within 28 days of a party receiving a payment claim, it must, if appropriate, pay either the whole of the claim or that part that is not disputed. The only time element of that clause is the introductory words, '(w)ithin 28 days after a party receives a payment claim' (time phrase). This then begs the question as to the subject matter of the remainder of the clause. It must be said that we have had considerable difficulty in attempting to properly construe the scheme provided through s 17 and s 18 read with Sch 1 Div 5 of the CC Act. We have come to the conclusion that the only sensible answer is that the remainder of cl 7(3) and cl 7(4) of the CC Act constitute parts of the response to a payment claim, and therefore are 'about when and how to respond'. This is because s 17 and s 18 of the CC Act describe the provisions in Sch 1 Div 5 of the CC Act variously as provisions about when and how a party is to respond, or about the time when a payment is to be made. The entirety of the provisions in the schedule is therefore to be regarded is dealing with one or other of those subject matters. We think our conclusion in this regard is further strengthened when it is considered that cl 7(3) of the CC Act forms part of a self-contained code of conduct on the part of the party receiving the payment claim - see the reference in Sch 1 cl 7(3) to cl 7(1), and the reference in Sch 1 cl 7(4) to cl 7(3) – which is not conducive to easy severance, with the obvious exception of the time phrase. The result is that, in our view, if, as we have found , s 17 of the CC Act applies, everything within cl 7 with the exception of the time phrase must be implied into the contract. If s 18 applies, there must be payment within 28 days of claim in accordance with cl 7(3) of the CC Act.
(Tribunal emphasis added)
59 As set out in Digdeep 2013 , at [28], s 17 of the CC Act applies to this construction contract such that the provisions in Sch 1, Div 5 are implied. In Digdeep 2013 , the Tribunal set out the payment terms and payment period at [4] - [6]. However, the Tribunal, in Digdeep 2013 , was not required to determine the due date for payment and therefore, it did not expressly state that s 18 of the CC Act did not apply to the contract. However, in the Tribunal's view, such a finding is implicit when [5],[6] and [28] of Digdeep 2013 are considered.
60 In this application, a written provision exists in the construction contract between the parties setting out the payment terms and the payment period. In particular, clause 3(x)(c) of the contract states that:
The processing of any invoice will take up to 14 days, which within [sic] that period a cheque will be issued to the Sub Contractor[.]
61 Accordingly the Tribunal is satisfied that the construction contract has a written provision, 'about the time by when a payment must be made':
see s 18 of the CC Act.
62 Therefore, s 18 'Time for payment' of the CC Act does not apply in accordance with the cases cited above, and the provisions in 'Sch 1 Div 5 of the CC Act about the 'time by when a payment must be made' are not implied in this construction contract.
63 In this application, the payment claim was received by the respondent by email on 19 December 2013. The contract between the parties specifies that payment will be made within 14 days, which is, by 2 January 2014. The payment claim was not paid by 2 January 2014. In accordance with s 6(a) of the CC Act the payment dispute in this application arose on 3 January 2014.
64 The passage of 28 consecutive days after the payment dispute arose, in this case on 3 January 2014, should include 3 January 2014, and expired on 30 January 2014: see MCIC Nominees Trust T/As Capital Projects & Developments and Red Ink Homes Pty Ltd [2013] WASAT 177 at [64] and [65] regarding the computation of time.
65 The application for adjudication was served on the respondent and the adjudicator on 13 February 2014 and it was therefore made outside the time required by s 26(1) of the CC Act.
Conclusion
66 The Tribunal finds that for the reasons set out above, the adjudicator's decision to dismiss the application for adjudication under s 31(2)(a)(ii) of the CC Act was correct and the decision is affirmed.
67 Given the above finding, it is not necessary for the Tribunal to consider the secondary grounds for dismissing the adjudication application. This is especially as s 31(2)(a)(ii) of the CC Act states that the appointed adjudicator 'must' dismiss the application without making a determination of its merits where the application is not prepared and served in accordance with s 26 of the CC Act; that is, the adjudicator has no discretion in this regard and the dismissal in these circumstances is mandatory.
Orders
1. The application for review is dismissed.
2. The decision made by the appointed adjudicator Mr A V Riley in adjudication No 05-14-03 on 12 March 2014 dismissing the application for adjudication under s 31(2)(a)(ii) of the Construction Contracts Act 2004 (WA) is affirmed.
3. The respondent has liberty to apply for its costs of the proceeding.
3.1 If the parties are unable to agree the costs to be fixed by 21 November 2014, then the respondent is to file with the Tribunal and give to the applicant, by 19 December 2014, the following documents:
3.1.1 a schedule of the costs claimed in sufficient detail to enable the Tribunal to assess and fix any costs which might be awarded, together with any supporting documents upon which the applicant/respondent wishes to rely; and
3.1.2 short written submissions addressing the basis upon which it is contended costs should be awarded and the quantum of costs claimed.
3.2. If the respondent makes an application for costs, the applicant may, on or before 10 January 2015, file with the Tribunal and give to the respondent, short written submissions opposing the application.
3.3. Subject to further order, if the respondent makes an application for costs, the Tribunal shall, after the parties file written submissions, determine the application on the documents, and if costs are awarded, shall fix the amount of such costs.
I certify that this and the preceding [67] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS L WARD, MEMBER