B J and S Paterson Pty Ltd (t/a Cooloola Civil Constructions) v. Eleventh Trail Pty Ltd [2009] QDC 380 (4 December 2009)

Last Updated: 8 December 2009

DISTRICT COURT OF QUEENSLAND

[1] The defendant (Eleventh Trail) filed an application on 16 November 2009 which sought (inter alia) the following orders:

(1) That the judgment filed 5 November 2009 and execution thereof be permanently stayed;

(2) Such further or other orders as the court may deem meet; ...

[2] It is common ground that the plaintiff (Paterson) and the defendant (Eleventh Trail) entered into a construction contract on 10 December 2008 whereby Paterson agreed to carry out certain building and construction works at Eleventh Trail’s residential development at Lillis Road, Gympie. It is common ground that the contract is a “construction contract” for the purposes of the Building and Construction Industry Payments Act (2004) (The Act).

[3] In September 2009, Paterson issued to Eleventh Trail a payment claim no. 8 said to be made under the Act for the sum of $134,655.22. Eleventh Trail disputed the validity of the payment claim and served on Paterson a payment schedule pursuant to s 18 of the Act in which it proposed to pay none of the amount claimed. Paterson then elected, pursuant to s 20(2)(a)(ii) of the Act to make an adjudication application under s 21(1)(a)(ii).

[4] An adjudicator (Mr Welsh) was appointed and received and considered an adjudication application with submissions from Paterson, and an adjudication response and submissions from Eleventh Trail. On 23 October 2009 Mr Welsh decided in favour of Paterson in the sum of $132,103.40.

[5] Eleventh Trail refused to pay. On 3 November 2009, and pursuant to s 30 of the Act, an adjudication certificate was issued, and on 5 November 2009 the certificate was registered as a judgment of this Court pursuant to s 31(1) of the Act.

[6] On the same day, on application by Paterson an enforcement warrant was issued and has, I am told, been registered in relation to a large number of properties owned by Eleventh Trail.

[7] When Mr Evans (counsel for Eleventh Trail) handed up his outline of submissions at the start of the hearing on 24 November, it became obvious for the first time that his client was also seeking equitable relief by way of a declaration that the payment claim upon which the adjudicator’s decision is based was void. Mr Telford (counsel for Paterson) complained on the basis that he had not prepared to meet such a claim given the orders sought in the application. Mr Evans then applied to amend his client’s application and I did contemplate allowing the application and adjourning the amended application to another date with costs, however I was persuaded by Mr Telford that the proper course was to determine Eleventh Trail’s application on the merits and, if so advised, it can make a fresh application for declaratory relief. This appeared to be a sensible course because the fundamental point at the heart of Mr Evans’ submission will also impact on any application for equitable relief.

[8] Mr Evans really raises only one point. He submits that the payment claim no. 8 does not on its face comply with s 17(2) of the Act because it does not “identify the construction work or related goods and services to which the progress payment relates”. He submits that if his submission, as a matter of law is correct it would follow that the adjudication and judgment and enforcement warrant would have no effect. He has specifically avoided applying therefore to set the judgment aside obviously to avoid the consequences of such an application set out in s 31(4) of the Act.

The Scheme of the Act

[9] The Act largely replicates similar legislation in New South Wales and jurisprudence from that State has informed and guided the proper approach of Queensland Courts to disputes governed by the Act.

[10] The Act provides what has been described as a “fast track interim progress payment adjudication vehicle”; Brodyn Pty Ltd and Davenport (2003) NSWSC 1019 adopted by McKenzie J in Roadtek, Department of Main Road and Davenport (2006) QSC 47 at [17] .

[11] As Einstein J said in Brodyn at [14]:

“...What the legislature has provided for is no more or no less than an interim quick solution to progress payment disputes which solution critically does not determine the parties rights inter se. Those rights may be determined by curial proceedings, the Court then having available to it the usual range of relief, most importantly including the right to a proprietor to claw back progress payments which it had been forced to make through the adjudication determination procedures. That clawback route expressly includes the making of restitution orders.”

[12] Section 100 of the Act specifically preserves Eleventh Trail’s right to take civil proceedings arising out the construction contract and to allow “claw back” of any money paid by it pursuant to the judgment of this Court.

[13] This is not a case such as R. J. Neller Building Pty Ltd and Ainsworth [2008] QCA 397 in which the party in the position of Eleventh Trail had commenced civil proceedings, and the court was asked to stay execution of an enforcement warrant pending the outcome of those civil proceedings. In the decision of this Court (the subject of the appeal) R. J. Neller Building Pty Ltd and Ainsworth [2008] QDC 129 , Dodds DCJ quoted from a leading case in New South Wales, Brodyn Pty Ltd and Davenport & Anor (2004) NSWCA 394 at 4012-1, at [15]:

“In Brodyn Pty Ltd v Davenport & Anor (2004) NSWCA 394 at 440-1, paragraph 51 the New South Wales Court of Appeal in a unanimous judgment considered the Act disclosed a legislative intention to give an entitlement to progress payments. It provided “a mechanism to ensure that disputes concerning the amount of such payments are resolved with a minimum of delay. The payments themselves are only payments on account of a liability that will be finally determined otherwise: sections 3(4) and 32. The procedure contemplates a minimum of opportunity for court involvement: sections 3(3) and 25(4). The remedy provided by section 27 can only work if a claimant can be confident of the protection given by section 27(3) if the claimant faced the prospect that an adjudication determination could be set aside on any ground involving doubtful questions of law, as well as of fact, the risks involved in acting under section 27 would be prohibitive and section 27 could operate as a trap (Quotes omitted).”

The Central Issue

[14] Mr Evans submits that the whole process set in motion by the delivery of the September payment claim no. 8 is nullified by the fact that the claim does not comply with s 17(2) of the Act. Section 17(2) of the Act is in the following terms:

“(2) A payment claim –

(a) Must identify the construction work or related goods and services to which the progress payment relates; and

(b) must state the amount of the progress payment that the claimant claims to be payable (the claimed amount to be bold and in italics); and

(c) must state that it is made under the Act.”

[15] Mr Evans mounts a number of attacks on the document which are set out in paragraphs 14 to 23 of his written outline. For example it appears (from the adjudication process) that the payment claim also included payment claim 7 which had been certified by the Superintendent under the contract in the sum of $88,613.76 but not paid. This is not apparent on the face of the document itself a fact alone said by Mr Evans to void the payment claim. The adjudicator dealt with this issue at paragraphs 13 to 20 of his decision.

“Payment Claim

13. The claimant served the respondent with a payment claim on 4 September 2009 in the amount of $134,655.22 including GST.

14. The payment claim identifies the construction work to which it relates as “residential development – Lillis Road, Gympie” and is further particularised in the attachments to the payment claim.

15. The payment claim states the amount of the progress payment that the claimant claims to be payable.

16. The respondent in its payment schedule asserts that the payment claim is invalid because it lacks precision and particularly required so as to reasonably and sufficiently appraise the respondent of the real issues and disputes. I agree that the breakdown of the actual amount claimed could have been summarised more clearly by the claimant in its payment claim, however it is clear that anyone with a knowledge of the project would easily be able to ascertain for themselves the breakdown of the amount claimed from the details of the payment claim.

17. The payment claim is, in my view, fully detailed and identifies the work being claimed and does not prejudice the respondent. The payment claim is in an identical template format to previously submitted payment claims, which was dictated by the respondent’s Superintendent. There is, in my view, no credible basis for asserting that the claimant has not identified the work or that the respondent is prejudiced. Accordingly, I reject the respondent’s challenge to the validity of the payment claim on this point.

18. The respondent in its adjudication response sites the decision in Baxbex Pty Ltd and Bickle [2009] QSC 194 (Baxbex) in support of its assertion that the claimant has not adequately identified the work. In my view the facts in Baxbex can be distinguished from this matter. In Baxbex the schedule to the payment claim simply referred to invoices, which were not attached to the payment claim, and did not provide any information which would identify the construction work. In this matter, as I have addressed point 17 above, the construction work is in my opinion adequately identified and provides sufficient information to allow the respondent to respond with the payment schedule.

19. The payment claim states that it is made under the Act.

20. I am satisfied that this payment claim complies with the requirements of s 17 of the Act.”

[16] As was done before the adjudicator reliance is placed on the decision of Daubney J in Baxbex Pty Ltd and Bickle [2009] QSC 194.

[17] I think that Mr Evans submission reveals a misunderstanding of the scheme and purpose of the Act.

[18] Neumann Contractors Pty Ltd v Peet Beachton Syndicate Ltd [2009] QSC 376 , a decision of White J, both involved applications to the Supreme Court based on a payment claim under the Act pursuant to s 19(2)(a)(ii) of the Act. Section 19 provides a number of options for a claimant in circumstances in which a payment claim said to be made under the Act is not paid and where the respondent has not replied by serving a payment schedule pursuant to s 18(1). The claimant may apply to the court (as was done in Baxbex and Neumann Contractors) or it may make an adjudication application under s 21(1)(b). Section 20 of the Act provides a claimant with similar options where the respondent to the claim has served a payment schedule (as happened in this case).

[19] White J observed in Neumann Contractors (at [3]):

“... Whether the document purporting to be a payment claim under (the Act) is such a claim is a question of construction against the background of the relations between Neumann and Peet.”

[20] In my opinion the scheme and purpose of the Act is such that it contemplates less curial interference in an adjudication certificate that has been registered as a judgment of a court of competent jurisdiction, than in the case of an application under either s 19(2)(a)(i) or s 20(2)(a)(i) directly to a court based on the payment schedule. This is borne out by the observations of Hodgson JA in Brodyn Pty Ltd and Davenport & Anor [2004] NSWCO 394, a decision based on similar provisions in the New South Wales Act which (as I have noted) has been consistently followed and approved by courts in this State. Hodgson JA (with whom Mason P and Giles JA agreed) said (at 441 to 442):

“52 However, it is plain in my opinion that for a document purporting to an adjudicator's determination to have the strong legal effect provided by the Act, it must satisfy whatever are the conditions laid down by the Act as essential for there to be such a determination. If it does not, the purported determination will not in truth be an adjudicator's determination within the meaning of the Act: it will be void and not merely voidable. A court of competent jurisdiction could in those circumstances grant relief by way of declaration or injunction, without the need to quash the determination by means of an order the nature of certiorari.

53. What then are the conditions laid down for the existence of an adjudicator's determination? The basic and essential requirements appear to include the following:

1. The existence of a construction contract between the claimant and the respondent, to which the Act applies (ss.7 and 8).

2. The service by the claimant on the respondent of a payment claim (s.13).

3. The making of an adjudication application by the claimant to an authorised nominating authority (s.17).

4. The reference of the application to an eligible adjudicator, who accepts the application (ss.18 and 19).

5. The determination by the adjudicator of this application (ss.19(2) and 21(5)), by determining the amount of the progress payment, the date on which it becomes or became due and the rate of interest payable (ss.22(1)) and the issue of a determination in writing (ss.22(3)(a)).

54. The relevant sections contain more detailed requirements: for example, s.13(2) as to the content of payment claims... A question arises whether any non-compliance with any of these requirements has the effect that a purported determination is void, that is, is not in truth an adjudicator's determination. That question has been approached in the first instance decision by asking whether an error by the adjudicator in determining whether any of these requirements is satisfied is a jurisdictional or non-jurisdictional error. I think that approach has tended to cast the net too widely; and I think it is preferable to ask whether a requirement being considered was intended by the legislature to be an essential pre-condition for the existence of an adjudicator's determination.

55. In my opinion, the reasons given above for excluding judicial review on the basis of non-jurisdictional error of law justify the conclusion that the legislature did not intend that exact compliance with all the more detailed requirements was essential to the existence of a determination: cf. Project Blue Sky Inc. v. Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355 at 390-91. What was intended to be essential was compliance with the basic requirements (and those set out above may not be exhaustive), a bona fide attempt by the adjudicator to exercise the relevant power relating to the subject matter of the legislation and reasonably capable of reference to this power (cf. R v. Hickman; Ex Parte Fox and Clinton [1945] HCA 53 ; (1945) [1945] HCA 53 ; 70 CLR 598) , and no substantial denial of the measure of natural justice that the Act requires to be given. If the basic requirements are not complied with, or if a purported determination is not such a bona fide attempt, or if there is a substantial denial of this measure of natural justice, then in my opinion a purported determination will be void and not merely voidable, because there will then not, in my opinion, be satisfaction of requirements that the legislature has indicated as essential to the existence of a determination. If a question is raised before an adjudicator as to whether more detailed requirements have been exactly complied with, a failure to address that question could indicate that there was not a bona fide attempt to exercise the power; but if the question is addressed, then the determination will not be made void simply because of an erroneous decision that they were complied with or as to the consequences of non-compliance (my emphasis) .”

[21] It would follow that even if there was some non-compliance in payment claim 8 it would not in the circumstances of this case render the adjudicator’s decision void. As I have noted, Eleventh Trail has preserved rights under the Act pursuant to s 100 which it has not yet chosen to pursue. If I am wrong in my conclusion based on my understanding of the scheme and purpose of the Act, I would have held that the payment claim (bearing in mind the antecedent relationship between the parties) complied with s 17(2) of the Act. For example, Eleventh Trail must have known that despite being certified by the Superintendent, claim 7 had not been paid by it and was cumulatively included in claim no. 8.

[22] It seems to me to be quite contrary to the express purpose of the Act to permit Eleventh Trail (having fully participated with the adjudication progress) to deny Paterson by way of a permanent stay, the fruits of a judgment regularly entered in this Court based on the adjudication certificate.

[23] It is not necessary for me to resolve the arguments raised by Mr Telford based on s 31(4) of the Act and whether the application is “procedurally deficient”. Given my view that Eleventh Trail’s application misapprehends and misapplies the scheme of the Act in relation to curial interference with an adjudicator’s decision, it is also unnecessary for me to deal with Mr Telford’s arguments based on R J Neller Building Pty Ltd and Ainsworth (supra) and Vadasz v Bloomer Constructions (Qld) Pty Ltd [2009] QSC 261. As I have noted above Eleventh Trail has not commenced proceedings against Paterson and has raised no issues of prejudice based on (for example) the inability of Paterson to pay any future judgment obtained against it by Eleventh Trail or to make restitution. That issue is entirely hypothetical.

[24] Finally I should also mention Surfabear Pty Ltd and G J Drainage and Concrete Construction Pty Ltd [2009] QSC 308 , a decision of Martin J in which His Honour did declare void an adjudicator’s decision which (as I understand the reasons) had been registered as a judgment in the Magistrates Court. Some reliance was placed on the decision by Mr Evans in his oral submissions to this Court. His Honour found that there was not a construction contract between the parties at all, and as this was one of the “basic and essential requirements” laid down for the existence of an adjudicator’s decision (as discussed above by reference to Hodgson JA’s judgment in Brodyn’s case) the decision was void. The decision does not advance Eleventh Trail’s argument.

[25] The application is dismissed with costs.