BLACKADDER SCAFFOLDING SERVICES (AUST) PTY LTD and MIRVAC HOMES (WA) PTY LTD [2009] WASAT 133 (30 June 2009)
Last Updated: 7 July 2009
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM : COMMERCIAL & CIVIL
ACT : CONSTRUCTION CONTRACTS ACT 2004 (WA)
CITATION : BLACKADDER SCAFFOLDING SERVICES (AUST) PTY LTD and MIRVAC HOMES (WA) PTY LTD [2009] WASAT 133
MEMBER : MR C RAYMOND (SENIOR MEMBER)
MR T CAREY (MEMBER)
HEARD : 20 MAY 2009
DELIVERED : 30 JUNE 2009
FILE NO/S : CC 545 of 2009
BETWEEN : BLACKADDER SCAFFOLDING SERVICES (AUST) PTY LTD
Applicant
AND
MIRVAC HOMES (WA) PTY LTD
Respondent
Catchwords:
Construction Contracts Act 2004 (WA) - Application for review of decision by adjudicator to dismiss - Grounds of dismissal that application not served in time - Whether provisions of Sch 1, Div 5 to be implied - Whether review encompasses other grounds for dismissal not considered by adjudicator
Legislation:
Construction Contracts (Security of Payments) Act (NT), s 20
Construction Contracts Act 2004 (WA), s 3, s 6, s 6(a), s 13, s 15, s 16, s 17, s 18, s 26, s 31, s 31(2), s 32(2), s 46(1), Pt 2 Div 2, Sch 1 Div 5, cl 6, cl 7
Interpretation Act 1984 (WA), s 18, s 19(1)
Result:
Application refused
Decision under review affirmed
Category: B
Representation:
Counsel:
Applicant : Mr R Shaw
Respondent : Mr V Liu
Solicitors:
Applicant : Lavan Legal
Respondent : Minter Ellison
Case(s) referred to in decision(s):
Marine & Civil Bauer Joint Venture and Leighton Kumagai Joint Venture [2005] WASAT 269
Merym Pty Ltd and Methodist Ladies College [2008] WASAT 164
Moroney and Murray River North Pty Ltd [2008] WASAT 111
Silent Vector Pty Ltd and Squarcini [2008] WASAT 39
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
1 The applicant applied under s 46(1) of the Construction Contracts Act 2004 (WA) to review a decision of an adjudicator to dismiss an adjudication application without a determination of the merits.
2 On a proper construction of the legislation, the Tribunal concluded that a payment dispute was triggered either if payment of a claim was not made when it fell due under the contract or when the claim had been rejected wholly or in part. However, as the contract in question did not have a provision as to how and when to respond to a progress claim, the implied provisions set out in Sch 1 Div 5 to the Construction Contracts Act 2004 (WA) applied. Those provisions obliged the respondent to give notice within 14 days of receipt of the payment claim if it disputed the claim. The respondent had done so, but not within the stipulated timeframe.
3 The Tribunal held that a late notice of dispute given outside the 14 day period nevertheless operated to trigger the existence of a payment dispute. Consequently, although for different reasons, the adjudicator was correct in concluding that the adjudication application was not served within the required 28 days from the date of the non-complying notice of dispute.
4 The Tribunal held that it was entitled to determine submissions which had been raised before the adjudicator but not determined by him. On an analysis of the facts, it was determined that the communications between the parties prior to the making of a claim by way of a letter dated 18 December 2008 reflected no more than a process of negotiation between the parties and that it was not possible to identify within that period any formal payment claim which had been made. The respondent's submissions that, in effect, a condition precedent to the making of a valid payment claim had not been met and therefore no valid adjudication application had been made within 28 days of a payment dispute arising, were rejected. The Tribunal held that, on a proper construction, the claim made was one under a construction contract as required by the legislation. It was for the adjudicator to make a determination whether or not there was a liability to make payment because of any non-compliance with the contractual precondition.
5 The application for review was accordingly refused and the decision of the adjudicator was affirmed.
6 This is an application for review under s 46(1) of the Construction Contracts Act 2004 (WA) (CC Act) of the decision of an adjudicator to dismiss an adjudication application.
7 The issue raised by the application is whether the adjudicator was correct to dismiss the adjudication application on the basis that it was made out of time. Depending on the resolution of that issue, there may be further issues as to whether or not regard should be had to any other of the grounds for dismissal raised before but not determined by the adjudicator, and if so, whether, based on those grounds, the decision to dismiss should, in any event, be affirmed.
8 The adjudicator's reasons for decision reflect the following.
9 The contract between the parties is a construction contract as defined in the CC Act. The applicant (Blackadder) claims the dispute arose on 1 February 2009, based on the payment claim being made on 18 December 2008.
10 The contract says:
Payment
The subcontractor (Blackadder) shall submit to Mirvac a Provisional Progress Claim on the day of any month as stated in the contract schedule, which will be assessed on the value of the subcontract works completed on site and by reference to the subcontract sum. The Subcontractor shall then submit a Tax Invoice for the agreed value. Payment of moneys shall not be evidence of the value of work or an admission of Liability or that the work has been carried out satisfactorily but shall be a payment on account only. Mirvac may retain the percentage stated in the contract schedule of the amount payable and the money so retained will be released when the Subcontractor has complied with his obligation under the Subcontract. Before final payment is made the subcontractor shall, if required to do so by Mirvac, provide a Final Statement and Release document in a form to be acceptable to Mirvac.
11 A schedule to the contract gives the day of the month (on which progress claims are to be made) as the 25th and states that the payment terms are 'the end of the following month'.
12 As the payment claim is dated 18 December 2008 and the contract says that a claim made before 25 December 2008 would be due to be paid on 31 January 2009, Blackadder contends that the dispute arose by non-payment of the payment claim on 1 February 2009. Consequently, the application would be due (to be served) by 28 February 2009. As the application was made on 27 February 2009, if this construction is accepted, the application satisfies s 26 of the CC Act.
13 The respondent (Mirvac) contends that, as it partly disputed the claim on 21 January 2009, then, according to the second leg of s 6(a) of the CC Act, the payment dispute arose on that date, with the consequence that the application had to be received by 18 February 2009.
14 The adjudicator found that the proper construction of s 6(a) of the CC Act was that the phrase 'by the time when the amount claimed in a payment claim is due to be paid under the contract' qualifies only the following words 'the amount has not been paid in full'. Therefore, a payment dispute arises either in the event just outlined, or separately if, as thereafter provided, 'the claim has been rejected or wholly or partly disputed'.
15 However, the adjudicator noted that Blackadder contended that the notice of 21 January 2009 did not constitute a proper notice of dispute because the implied provisions of the CC Act (which must be taken in context to be a reference to the provisions set out in Sch 1 Div 5) applied. Further, that Blackadder contended that as the implied provisions for how and when to respond to a payment claim applied, it was necessary for a notice of dispute to be received within 14 days of the payment claim.
16 The adjudicator found that the contract sets out in writing when Blackadder should make a payment claim - 'by the 25th day of any month' and that the contract also sets out in writing when Mirvac should make the payment - 'by the end of the following month'. The reasons for decision continue:
The contract also says how the claim should be responded to - that the claim - 'which will be assessed on the value of the subcontract works completed on site by reference to the subcontract sum'.
17 The contract goes on to say that 'The subcontractor shall then submit a Tax Invoice for the agreed value'. Further, the contract gives when a payment claim is to be responded to - viz 'by the end of the following month'. This is the written bargain the parties made about how and when to respond to a payment claim and therefore the implied conditions do not apply.
18 The adjudicator proceeded to find that the letter of 21 January 2009 constituted a rejection of the payment claim of 18 December 2008, and therefore the 28-day time for the application to be lodged under s 26 of the CC Act started from the date of that rejection. This required the adjudication application to be served by 18 February 2009, and as the application was not served until 27 February 2009, it had not been served in accordance with s 26 of the CC Act and was therefore dismissed under s 32(2) of the CC Act.
19 The adjudicator further justified dismissal on the basis that if the implied provisions applied:
... a notice of dispute was due in 14 days (ie 1 January 2009) then the trigger for the 28 days of section 26 starts from that date, (ie by 29 January 2009) ...
20 The following is not disputed and is contained within the documentation that was before the adjudicator.
21 The relevant contract provisions are as recorded in the adjudicator's reasons for decision.
22 The works, the subject of the contract, were approaching practical completion by October 2008. Meetings occurred between the parties from August 2008 through to 17 December 2008 with a view to agreeing the final amount payable to Blackadder. These meetings are referred to in a number of email communications (annexure 'H' to Mirvac's response to the adjudication (the Response)) and in the letter from Mirvac dated 21 January 2009, which is referred to in the adjudicator's reasons for decision (annexure 'P' to the Response).
23 There is, however, a dispute between the parties as to the effect of these meetings and the email communications - Mirvac contends that an email from Mr Hamilton of Blackadder, dated 16 October 2008, with attached spreadsheets constitutes a payment claim due by the end of the following month and that as Mirvac issued its assessment of the spreadsheets by a letter dated 31 October 2008 which is submitted to constitute a proper notice of dispute, an adjudication application had to be lodged within 28 days thereafter.
24 The letter from Mirvac dated 31 October 2008 is referred to in a statutory declaration by Adrian Murphy, Mirvac's contract administration manager, which is attachment 7 to the response and the letter is annexure 'J'.
The relevant statutory provisions
25 There is no issue between the parties as to the effect of s 26 and s 31 of the CC Act and we therefore refer to them only briefly. Section 26 requires that to apply to have a payment dispute adjudicated, a party to the contract, within 28 days after the dispute arises must, inter alia, serve the application on each other party to the contract. Section 31(2)(a) of the CC Act provides that an adjudicator must dismiss an application without making a determination of its merits on a number of stated grounds, including that the application has not been served in accordance with s 26 of the CC Act.
26 The following provisions are set out in full because their proper construction is central to determination of the application.
27 Section 6 of the CC Act states:
Payment dispute
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;
(b) by the time when any money retained by a party under the contract is due to be paid under the contract, the money has not been paid; or
(c) by the time when any security held by a party under the contract is due to be returned under the contract, the security has not been returned.
28 Sections 17 and 18 of the CC Act provide for the implication of terms regarding, respectively, responding to claims for payment and time for payment, as follows:
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.
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.
29 Both of these sections refer to Sch 1 Div 5 of the CC Act. Division 5 of the CC Act comprises cl 6 and cl 7 of Sch 1.
30 Clause 6 of Sch 1 of the CC Act contains a definition of 'payment claim' which is similar to the definition for the same expression to be found in the interpretation section of the CC Act, s 3. Mirvac has claimed that the claim the subject of the adjudication decision was not a payment claim and this is one of the additional grounds, not considered by the adjudicator, upon which we have been urged to dismiss the application. We will return to this issue.
31 Clause 7 of Sch 1 of the CC Act is in the following terms:
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.
(4) If under this contract the principal is entitled to retain a portion of any amount payable by the principal to the contractor -
(a) subclause (3) does not affect the entitlement; and
(b) the principal must advise the contractor in writing (either in a notice of dispute or separately) of any amount retained under the entitlement.
32 In considering the primary issue for determination as we have described it, it is necessary for us to consider the following three questions:
the correct construction of s 6(a) of the CC Act;
whether, given the terms of the written contract, it is necessary to imply terms by reason of either or both of s 17 and s 18 of the CC Act; and
if the answer to 2) is 'yes', how that implication is to operate, and its effect.
Construction of s 6(a) of the CC Act
33 The parties contended for differing interpretations of s 6(a) of the CC Act.
34 According to Blackadder, the words 'by the time when the amount claimed in a payment claim is due to be paid under the contract' apply to both contingencies which follow - namely, the amount is not paid in full; or the claim has been rejected or disputed (wholly or in part). Blackadder submitted that this clause sets the date at which the dispute arises by reference not to the events themselves, but to the date by which the section requires an assessment as to whether either of the stated contingencies has arisen (being the due date for payment). Reliance was placed upon the actual words and punctuation of the provision. The first comma appearing after 'paid under the contract' was said to be the critical indicator of such an interpretation.
35 The effect of Blackadder's interpretation, if accepted, is that the payment dispute did not arise until the date on which payment was due under the contract, which, in respect of the particular progress payment claim, is 31 January 2009.
36 Mirvac, on the other hand, submitted that s 6(a) of the CC Act provides for two different scenarios in which a payment dispute might arise: the first, where the amount of a payment claim had not been fully paid by the time it was due; and the second, where the claim is rejected or disputed. In support of its interpretation, Mirvac pointed to the purpose of the CC Act to have payment disputes determined as quickly as possible. Mirvac gave the example of a contract with a 50 day payment term where a payment claim was made on day one and rejected on day two. On Blackadder's interpretation, the contractor would be required to wait 50 days from the date of claim before commencing the adjudication application. Mirvac also submitted that if Blackadder's interpretation was correct, the words 'or the claim has been rejected or wholly or partly disputed' would be unnecessary, because where the claim was rejected or disputed, it would invariably be the case that the claim would not be fully paid by the due date.
37 We prefer Mirvac's interpretation of s 6(a) of the CC Act. Although the words (and punctuation) used do not make it entirely clear, we believe that the submission as to the utility of a separate reference to rejection or disputation of a claim, in circumstances where it would otherwise always be necessary for the parties to await the expiry of the payment period has much force. At the very least, the provision does give rise to an ambiguity of meaning, permitting reference to extrinsic material such as the second reading speech in accordance with s 19(1) of the Interpretation Act 1984 (WA) (Interpretation Act).
38 The primary purpose of the CC Act, as referred to in the second reading speech (Hansard, 3 March 2004 at p 274 at 275) is to keep the money flowing in the contracting chain by enforcing timely payment. By s 18 of the Interpretation Act 2004 (WA), a construction should be preferred which promotes that purpose. Mirvac's interpretation avoids a disputed claim being delayed. This outcome most effectively enforces timely payment.
39 It follows, that on a proper construction of s 6(a) of the CC Act, the adjudication application had to be served within 28 days of 21 January 2009, when Mirvac disputed Blackadder's claim, in part, assuming that such rejection is effective and can be relied upon. The application may have been served in time if the provisions set out in Sch 1 Div 5 of the CC Act apply in the manner for which Blackadder contends. We accordingly turn to that issue.
Applicability of implied terms
40 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.
41 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.
42 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.
43 The question is, did the contract between the parties so provide? Blackadder submitted that when one reads the contract it is plain that it did not, in relation to both 'the when' and 'the how'.
44 Mirvac contends that both aspects were satisfied. Regarding 'when', it submitted that this was satisfied by the reference to the progress payment claim being made by the 25th of the month and for 'payment terms' being 'at the end of the following month'. According to the argument, this imposed a time limit by which the claim must be responded to, to be before the end of the month following a payment claim. At the hearing, Counsel for Mirvac conceded that it was necessary for there to be some time allowance for Blackadder to issue a tax invoice. Counsel further conceded that it would be necessary to imply that the response to the payment claim be provided a reasonable time before the end of the month to enable an invoice to be submitted and paid before the last day of the month following the lodgement of the progress claim. Regarding 'how', Mirvac relied upon the reference in cl 4 of the contract to the assessment by Mirvac based on the proportion of the works completed and the submission by Blackadder of a tax invoice.
45 In our view, the contract contains no written provision about when to respond. Using our preferred meaning of 'respond' as 'answer, give reply', Mirvac's argument depends upon an implication, by reason of other matters, as to when the response must be made, which therefore is not a written provision. Added to that, the final time for a response is uncertain.
46 We also find that the contract contains no written provision about how to respond in the relevant sense. Clause 4 of the contract simply contains no reference to such a response, whether analogous to those appearing in Sch 1 cl 7 of the CC Act or otherwise. Neither of the matters contained in cl 4 of the contract upon which Mirvac relies has as its subject the method of response (in the preferred sense) to a payment claim. While the contract requires Mirvac to assess the payment claim against the value of the works, the contract is silent on how the assessment is to be communicated and the effect of any failure to respond in time, all of which are part of 'the matter' which s 17 of the CC Act will imply if there is no provision dealing with that matter. This is discussed more fully in the following heading.
47 Turning to s 18 of the CC Act, the parties were agreed that the contract did contain a written provision about the time by when a payment must be made, being the item in the contract schedule 'Payment terms: At end of following month'. We concur. The consequences of this, in light of the need to imply at least some of the provisions of Sch 1 Div 5 of the CC Act by reason of our conclusions about s 17, are discussed under the next heading.
48 There is no issue that where s 17 of the CC Act applies, Sch 1 cl 7(1) and cl 7(2) are to be implied. Therefore, it was a term of the contract between the parties that Mirvac should, within 14 days after receiving the payment claim, have given a notice of dispute.
49 A question arises as to Sch 1 cl 7(3) and cl 7(4) of the CC Act. Mirvac submitted that these subclauses were to be implied only in the event of s 18 of the CC Act applying, and not in the event of (only) s 17 of the CC Act applying, as we have found to be the case here. It based this submission on the premise that Sch 1 cl 7(1) and cl 7(2) deal with when and how to respond, whilst Sch 1 cl 7(3) and cl 7(4) deal with when payment is to be made. On the Tribunal pointing out that cl 7(4) (which preserves a principal's retention rights on its payment of either part or whole of the payment claim) is not concerned with the time of payment, Mirvac limited its submission in this regard to cl 7(3).
50 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.
51 As we have indicated, it is only with considerable difficulty that we have arrived at the above construction. We note the reporting functions of the Construction Contracts Registrar appointed under s 47 of the CC Act and respectfully suggest that the difficulties relating to the application of s 17 and s 18 and Sch 1 Div 5 of the CC Act could be usefully clarified by an appropriate amendment to s 17 and s 18. In that regard, we note that s 17 and s 18 of the CC Act have an interesting equivalent in the Northern Territory legislation which was modelled upon the CC Act. The relevant provision is s 20 of the Construction Contracts (Security of Payments) Act (2004) (NT) (NT Act). Section 20 of the NT Act is as follows:
Responding to payment claims and time for payment
The provisions in the Schedule, Division 5 about the following matters are implied in a construction contract that does not have a written provision about the matter:
(a) when and how a party must respond to a payment claim made by another party;
(b) by when a payment must be made.
52 We note that the above provisions of the NT Act appear to avoid the difficulties we have encountered in implying the relevant terms arising from the apparent overlap from s 17 and s 18 of the CC Act. Consideration might be given in any event to clarifying the degree of specificity required to avoid implication of the statutory provisions.
Application of statutory provisions including implied provisions to the contract
53 There is a dispute concerning the facts to which the implied provisions must be applied. As we have mentioned above, Mirvac has raised on the review that there were submissions put by it to the adjudicator which the adjudicator did not address. One of those submissions is to the effect that the payment dispute arose in October 2008. In the circumstances, we shall address firstly the factual situation upon which the adjudicator based his decision.
54 On the basis indicated, the payment claim was made on 18 December 2008. By Sch 1 Div 5 cl 7(1) of the CC Act, Mirvac was obliged within 14 days after receiving the claim to give Blackadder a notice of dispute. Mirvac failed to do so. Therefore, by Sch 1 Div 5 cl 7(3) of the CC Act, Mirvac was obliged to pay the whole of the amount of the claim by 31 January 2009.
55 It remains, however, to determine whether the adjudication application was served in time.
56 It is therefore necessary to consider the interaction between s 6 of the CC Act and the Sch 1 Div 5 provisions. The latter require that a notice of dispute be given within 14 days of the payment of claim being received. A notice of dispute given outside that time period has the effect stated above that the respondent to the adjudication will be obliged to pay the full amount of the claim. But, what is the effect of a late or otherwise non-complying notice of dispute?
57 We have already concluded above that the proper construction of s 6(a) of the CC Act is driven by the need to construe it in a manner which best promotes the purpose of the legislation. That supported our interpretation that there are two triggers for the commencement of a payment dispute, one of which is the rejection of the claim or it being disputed in whole or in part. We considered that this interpretation furthered the purpose of the CC Act by allowing timely payment under the contract to be enforced.
58 We consider that the same reasoning compels a conclusion that a non-complying notice of dispute will nevertheless trigger the establishment of a payment dispute and thereby require an adjudication application to be served within 28 days of that event. The purposes of the CC Act are in no way advanced by requiring a claimant to sit back and ignore a manifest rejection of a claim until such time as the date for payment under the contract falls due. The entire scheme of the CC Act emphasises the urgency governing adjudication, all of which, consistent with the second reading speech, is designed to achieve timely payment of monies payable under construction contracts.
59 We are conscious that this conclusion is contrary to that which was reached in Moroney and Murray River North Pty Ltd [2008] WASAT 111 (Moroney), in which the Tribunal gave no effect to an oral notice of rejection of a claim for the purposes of calculating when the payment dispute arose. We should follow that decision unless we consider it to be clearly wrong. After careful consideration, we have come to that conclusion. The effect of the implied provisions is that the failure to give a written notice of dispute within the 14 day timeframe will result in an obligation to pay the claim in full. But that gives, in our view, no valid reason for ignoring an actual rejection or dispute of a claim in part. A claimant may well need to take some care to ensure that, for instance, an oral rejection or dispute is recorded in writing and communicated with an opportunity for clarification. But if there is a rejection or dispute, it is consistent with the scheme of the legislation that a claimant should be able to act upon it to ensure that timely payment is achieved.
60 In the circumstances, although we have arrived there by somewhat different reasoning, we consider that the adjudicator's conclusion that the payment dispute arose on 21 January 2009 was correct and that the application for adjudication was consequently served out of time.
61 We should record that we do not agree with the further basis advanced by the adjudicator for justifying dismissal of the application to the effect that if the implied provisions applied, then the dispute arose 14 days after the date of the payment claim. To the contrary, no notice of dispute having been received, Blackadder was entitled to assume that it would receive payment of its claim in full in accordance with the contract and the implied provisions applicable to it.
62 In view of the above conclusion, it is not strictly necessary for us to consider the further bases advanced on behalf of Mirvac to support a dismissal of the adjudication application, but we shall do so for the sake of completeness.
Is there a right to review the other grounds for dismissal?
63 Mirvac developed a fairly comprehensive argument based on Moroney to support a contention that we should regard the adjudication application as having been dismissed under all of the grounds referred to in s 31(2)(a) of the CC Act. With respect, we see no difficulty in our ability to take into account all matters which the adjudicator should have considered. Indeed, even if an adjudicator fails to consider any of the grounds referred to in s 31(2)(a) of the CC Act but proceeds to dismiss the application on one of the grounds, the Tribunal stands in the shoes of the adjudicator because it is a review de novo. The grounds there stated are grounds on which an adjudicator and, therefore, the Tribunal must dismiss the application if the material before the adjudicator establishes those grounds.
64 Here the adjudicator stated at [31] of the reasons for decision that none of the other grounds referred to in s 31(2)(a) of the CC Act were relevant. We accept that to be the case. In truth, properly analysed, the further issues which Mirvac wish to ventilate are issues which were before the adjudicator but which were all directed towards whether or not the adjudication application had been commenced in time. They should, therefore, have been addressed by the adjudicator.
65 Mirvac submits that under the terms of the contract, no payment claim can arise because cl 4 of the contract includes a provision to the effect that before final payment is made, the subcontractor shall, if required to do so by Mirvac, provide a final statement and release document in a form to be acceptable to Mirvac.
66 If this is correct, it is submitted that its effect is that no valid payment claim having been made, a payment dispute could not be triggered, and therefore, no adjudication application had been lodged within 28 days of the payment dispute arising as required by s 26 of the CC Act.
67 The difficulty with this submission is that we were not taken to any documentary evidence sufficient to support the submission. Nowhere is there any statement that Mirvac required a Final Statement and Release document to be provided. Even if there was some evidence to support the contention, we do not consider that the existence of a precondition to a valid claim being made under the contract, prevents a claim being made for the purposes of the CC Act.
68 This issue was considered in Marine & Civil Bauer Joint Venture and Leighton Kumagai Joint Venture [2005] WASAT 269 (Marine & Civil). The Tribunal was there referred to authority to support a submission that if supporting documentation to a progress claim was required as a condition precedent, and was not provided, there was effectively no claim. The Tribunal concluded that the reference within the definition of 'payment claim' to a claim made under a construction contract is intended to be descriptive only and that the object of the adjudication is to determine whether the rejection of the payment claim, in whole or in part, is justified. Further, all the legislation intended to convey was that the claim must be one which arises under a construction contract. It is a means to confine adjudication to construction contract claims.
69 Some assistance was also gleaned from the corresponding definition of 'payment claim' in Sch 1 Div 5 where 'payment claim' is defined to mean a claim by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under 'this' contract. The emphasis is there on a payment claim for performance of the obligations under the contract, rather than the claim itself: see Marine & Civil at [72] - [82].
70 Accordingly, we consider that it is a matter for the adjudicator to determine, finally, on a consideration of the terms of the contract, and all communications between the parties whether there is sufficient evidence to establish that Mirvac required that a final statement and release document be provided in a particular form - and if so, whether non-compliance with that requirement affects the validity of the claim which was made on 18 December 2008.
71 Mirvac submitted that the series of meetings from August 2008 through to December 2008 to which we have referred, and the written emails and letters during that period, establish that the payment claim is constituted by an email dated 16 October 2008 together with the attached spreadsheets. Further, that as the claim was disputed by Mirvac's letter of 31 October 2008, to which we have referred above, the payment dispute arose on that date. Mirvac has referred to Silent Vector Pty Ltd and Squarcini [2008] WASAT 39 and Merym Pty Ltd and Methodist Ladies College [2008] WASAT 164 to support its contention that, once included in an earlier payment claim, the claim cannot be revised by mere repetition.
72 Once again, the difficulty is that the submissions do not appear to be supported by the evidence. The email of 16 October 2008 addressed by Mr Hamilton of Blackadder to Mr Marrapodi of Mirvac ends, in the final two paragraphs, with a request for Mr Marrapodi to review the figures produced and forward to Blackadder details of various labour deductions, which Mirvac had indicated should be deducted from the contract amount, together with all relevant documents, for Blackadder's review. Finally, once both parties had reviewed the figures, a meeting was suggested to formalise a final account.
73 Mirvac's letter of 21 January 2009 refers to a meeting held between Mr Hamilton, Mr Marrapodi and Mr Murphy on 17 December 2008. The opening sentence of the letter is:
At the meeting with Peter Hamilton, Adrian Murphy & Joe Marrapodi held on Wednesday 17 December at Mirvac's Hay Street office the final scaffolding claim was not agreed.
74 We consider, on a proper analysis of the relevant emails and correspondence, that the parties were engaged in negotiations with a view to reaching an agreement of a claim which would be acceptable to both parties. If agreement was reached, a final agreed account would be formalised. That point was clearly never reached. It is artificial, and in our view simply not possible, to identify a point at which it might be said that a payment claim had been made, when the setting for the discussions was as we have described. We accordingly reject Mirvac's contentions that the subject of the adjudication claim can be identified as a formal payment claim made at an earlier date, with the result that the adjudication application was made out of time.
75 For the above reasons, we conclude that the adjudicator's decision dismissing the application on the basis that the adjudication application was served out of time must be affirmed.
76 The Tribunal will accordingly issue an order as follows:
The application for review is refused.
The decision of the adjudicator dated 26 March 2009 dismissing the adjudication application is affirmed.
I certify that this and the preceding [76] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
MR C RAYMOND, SENIOR MEMBER