Brierty Limited v Gwelo Developments Pty Ltd [2014] NTCA 7

[1] The focus of this appeal is the construction of s 27(a) of the Construction Contracts (Security of Payments) Act (NT) (the Act). It raises the question whether a party to a construction contract is entitled to re-apply to have a payment dispute adjudicated under the Act where a party has previously applied and then withdrawn an application for adjudication of the same payment dispute.

[2] Section 27(a) of the Act states:

If a payment dispute arises under a construction contract, any party to the contract may apply to have the dispute adjudicated under this Part unless -

(a) an application for adjudication has already been made by a party (whether or not a determination has been made) but subject to sections 31(6A) and 39(2); ..

[3] On 12 September 2014 the appellant applied to simultaneously adjudicate two payment disputes under a construction contract with the respondent. It could not do so without the consent of the respondent. After the application was served the respondent advised that it did not consent to the adjudicator adjudicating the two payment disputes simultaneously. On 22 September 2014 the appellant withdrew the first application and on 25 September 2014 made two fresh applications, one for each payment dispute. On 2 October 2014 the respondent filed an application in the Supreme Court seeking declarations that the appellant was not entitled to reapply to have the two payments disputes adjudicated.

[4] On 7 October 2014 the learned trial Judge held:

... s 27 does apply to preclude the (appellant) from making the second and third applications. They have not, therefore, been validly made and are of no effect under the Act.

The learned Judge erred in construing section 27(a) of the Construction Contracts (Security of Payments) Act as applying to applications which have been withdrawn under s 28A prior to the making of the subject application.

[6] The appellant submits that, according to its grammatical construction, s 27(a) of the Act refers only to applications which remain in existence or have been determined already by an adjudicator at the time the subsequent application is made.

[7] The phrase "an application for adjudication has already been made by a party", which appears in the text of s 27(a) of the Act, uses - in the words highlighted - the present perfect tense. The appellant submitted that this requires there to be an action stemming from the past that continues to be relevant to the present discourse, that is, an application for adjudication which is still on foot or already determined when the further application is made. A withdrawn application for adjudication is not relevant to the present because the application cannot and does not last through to the present.

[8] The appellant further submitted that such a construction of s 27 of the Act enables applicants to meaningfully avail themselves of the right of withdrawal granted by s 28A of the Act. It is also consistent with the object of the Act which is to promote the security of payments under construction contracts by facilitating timely payment and the rapid resolution of payment disputes.

[9] It was also suggested that the effect of the trial Judge's interpretation of s 27 of the Act was that a party may be able to stop another party proceeding with an application for adjudication of a payment dispute by filing an application and then withdrawing it. This argument fails in limen. Such conduct would be an abuse of the process of the adjudication procedures provided by the Act and would not preclude a valid further claim being made by the opposing party. Further, once an adjudicator is appointed an application cannot be withdrawn if the other party objects and has a legitimate interest in obtaining a determination of the application.[1]

[10] In our opinion, the submissions made by the appellant cannot be sustained. Such a construction is neither consistent with the text of s 27 of the Act nor the objectives of the legislative scheme. Section 27 of the Act permits a party to a construction contract to apply to have the payment dispute adjudicated unless, relevantly, an application for adjudication has already been made by a party, whether or not a determination has been made. The words "whether or not a determination has been made" are relevant to indicate that a party is disentitled from applying for adjudication of a dispute not only where an application for adjudication of that dispute has been made and determined, but also where an application has been made but, for any reason, not determined.

[11] Contrary to the appellant's arguments, the use of the present perfect tense of the verb 'to make' (as in "has already been made") does not resolve the statutory interpretation issue of in favour of the appellant. Rather, it makes it clear that the relevant question to be asked immediately prior to any application to have a payment dispute adjudicated is: "Has any party to the contract already made an application for adjudication of the payment dispute?"

[12] The question is not, as the appellant contends: "Is there an application in existence at the present time?" That question simply does not arise on any interpretation on s 27(a) the Act. To derive that question from s 27(a) is creative invention, not statutory interpretation.

[13] Relevant to the present appeal, therefore, the question to be asked, when now considering whether the appellant was entitled to apply to have the payment dispute adjudicated, is: "At the time the appellant applied to have the payment dispute adjudicated under the Act, had any party to the contract already made an application for adjudication of the payment dispute?"

[14] If the answer to that question is in the affirmative, then the appellant was not entitled to apply to have the payment dispute adjudicated under the Act. The ultimate fate or the current status of any earlier application - whether withdrawn, dismissed, determined, or adjudication decision pending - is irrelevant.

[15] This interpretation of s 27(a) of the Act is reinforced by the fact that the section expressly provides for only two exceptions where a party may further apply to have a payment dispute adjudicated. Those two exceptions are in the circumstances specified by s 31(6A) and s 39(2) of the Act. Neither of those circumstances involves a withdrawal of an application.

[16] It is also reinforced by the provisions of s 28A of the Act which provide that once an adjudicator has been appointed an adjudicator must refuse a withdrawal of an application if the other party objects and has a legitimate interest in obtaining a determination of the application.

[17] The learned trial Judge's construction of s 27(a) of the Act is consistent with the legislative scheme of the Act.

[18] The object of the Act is described as being to secure payments under construction contracts and provide for an adjudication of disputes about payments under construction contracts. The object is to be achieved by:[2]

• (a) facilitating timely payments between the parties to construction contracts; and

• (b) providing for the rapid resolution of payment disputes arising under construction contracts; and

• (c) providing mechanisms for the rapid recovery of payments under construction contracts.

[19] Part 3 of the Act provides for the adjudication of disputes and has the expressed object of determining "the dispute fairly and as rapidly, informally and inexpensively as possible".[3] The Act then goes on to set out who can apply for adjudication, when adjudication can be applied for and the process which must be undertaken. The parties may agree upon an adjudicator or, in the absence of agreement, provision is made for the appointment of an adjudicator. Thereafter the Act deals in detail with the adjudication process and the effect of an adjudicator's determination. There is a provision dealing with the enforcement of determinations.

[20] The effect of the legislative scheme is to insert a statutory right into a construction contract, irrespective of the parties' wishes,[4] designed to provide a timely interim resolution of a payment dispute. The Act provides that the appointed adjudicator's determination is binding on the parties even if other proceedings relating to the payment dispute have been commenced.[5] A party that is liable to pay an amount under a determination must do so on or before the date stated in the determination.[6] The adjudication does not prevent a party to a construction contract from commencing proceedings before an arbitrator, court or other body in relation to the dispute. However the adjudication must proceed despite the proceedings unless all of the parties require the appointed adjudicator to discontinue. The arbitrator, court or other person dealing with a matter arising under the construction contract must, in making any award, allow for amounts that have been or must be paid under a determination of a payment dispute and can also make an order for restitution or any other appropriate order relating to the determination.[7]

[21] As her Honour, the trial Judge, pointed out, the object of Part 3 of the Act is to determine the dispute fairly and as rapidly, informally and inexpensively as possible.[8] Her Honour placed weight upon the fact that, inconsistent with this objective, the construction of s 27 proposed by the appellant would allow a party to withdraw an application for adjudication and then, subject to time constraints, make as many further applications as it desired. It is not surprising that the legislative scheme would not permit a situation where an applicant could withdraw an application and substitute a further application. The literal interpretation of s 27 of the Act is consistent with the aims of the Act.

[22] The appeal is dismissed.

[4] Section 10 of the Act which precludes provisions in an agreement that purport to exclude, modify or restrict the operation of the Act.