Coordinated Construction Co Pty Ltd v Climatech [2007] NSWCA 19 | Case summary

Coordinated Construction Co Pty Ltd v Climatech [2007] NSWCA 19 | Case summary | Zoe

17 Adjudication applications (1) A claimant may apply for adjudication of a payment claim (an adjudication application ) if: (a) the respondent provides a payment schedule under Division 1 but: (i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or (ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or (b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount. (2) An adjudication application to which subsection (1) (b) applies cannot be made unless: (a) the claimant has notified the respondent, within the period of 20 business days immediately following the due date for payment, of the claimant's intention to apply for adjudication of the payment claim, and (b) the respondent has been given an opportunity to provide a payment schedule to the claimant within 5 business days after receiving the claimant's notice. (3) An adjudication application: (a) must be in writing, and (b) must be made to an authorised nominating authority chosen by the claimant, and (c) in the case of an application under subsection (1) (a) (i) - must be made within 10 business days after the claimant receives the payment schedule, and (d) in the case of an application under subsection (1) (a) (ii) - must be made within 20 business days after the due date for payment, and (e) in the case of an application under subsection (1) (b) - must be made within 10 business days after the end of the 5-day period referred to in subsection (2) (b), and (f) must identify the payment claim and the payment schedule (if any) to which it relates, and (g) must be accompanied by such application fee (if any) as may be determined by the authorised nominating authority, and (h) may contain such submissions relevant to the application as the claimant chooses to include. (4) The amount of any such application fee must not exceed the amount (if any) determined by the Minister. (5) A copy of an adjudication application must be served on the respondent concerned. (6) It is the duty of the authorised nominating authority to which an adjudication application is made to refer the application to an adjudicator (being a person who is eligible to be an adjudicator as referred to in section 18) as soon as practicable. …

22 Adjudicator's determination (1) An adjudicator is to determine: (a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount ), and (b) the date on which any such amount became or becomes payable, and (c) the rate of interest payable on any such amount. (2) In determining an adjudication application, the adjudicator is to consider the following matters only: (a) the provisions of this Act, (b) the provisions of the construction contract from which the application arose, (c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim, (d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule, (e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates. (3) The adjudicator's determination must: (a) be in writing, and (b) include the reasons for the determination (unless the claimant and the respondent have both requested the adjudicator not to include those reasons in the determination). (4) If, in determining an adjudication application, an adjudicator has, in accordance with section 10, determined: (a) the value of any construction work carried out under a construction contract, or (b) the value of any related goods and services supplied under a construction contract, the adjudicator (or any other adjudicator) is, in any subsequent adjudication application that involves the determination of the value of that work or of those goods and services, to give the work (or the goods and services) the same value as that previously determined unless the claimant or respondent satisfies the adjudicator concerned that the value of the work (or the goods and services) has changed since the previous determination. (5) If the adjudicator's determination contains: (a) a clerical mistake, or (b) an error arising from an accidental slip or omission, or (c) a material miscalculation of figures or a material mistake in the description of any person, thing or matter referred to in the determination, or (d) a defect of form, the adjudicator may, on the adjudicator's own initiative or on the application of the claimant or the respondent, correct the determination.

The reasons for the difference between the amount claimed and the assessed amount are as follows: · John Holland is not entitled to be paid for all of the work as a variation; · there is no entitlement to a variation for excavating and/or exposing detonators. Specification G1 is limited to the cost of removing exposed detonators; · John Holland did not comply with clauses 48, 40.1 and 35.4.5 of the Conditions of Contract in giving notice to the Superintendent of a claim for a variation and extension of time; · John Holland has not provided all necessary information to support its claim in accordance with clause 48 of the Conditions of Contract; · John Holland did not examine all information available or obtainable by the making of reasonable enquiries at the time of tender in breach of clause 12 of the Conditions of Contract; · some or all of the delays claimed have not been caused by the alleged variation; the detonator dump did not affect John Holland's intended or actual method of work; · John Holland failed to take care when blasting as required under clause 16.2 of Specification G1 and is responsible for the spread of the detonators in Cut 4; · the haulage cycle time analysis provided by John Holland is flawed; · the cost claimed of additional loading and hauling was not incurred by John Holland; · the claimed additional work carried out due to the detonators is not "additional work"; · extra plant, equipment and resources were not required for the work at Cut 4 as a result of the detonators; · the margin claimed by John Holland for head office costs and profit on plant and equipment is excessive; and · there is overlap in the amounts claimed by John Holland for the detonator dump and the other claims, namely spoil, swell and additional costs for blasting as a result of a latent condition, and some of these amounts have already been paid to John Holland. 12 Holland then made an adjudication application dated 28 February 2006, in which it requested the adjudicator to determine the amount which represented a proper valuation of RTA's instructions affecting the excavation of Cut 4. The adjudicator notified his acceptance of his appointment to act as an adjudicator on 6 March 2006. 13 RTA's adjudication response was submitted under cover of a letter dated 8 March 2006. In addition to referring to and elaborating on reasons given in the payment schedule, the submissions included the following: 2. Putting that to one side, the fundamental point in this Adjudication Application is that the claim made by the Claimant is not one that you, as Adjudicator, have jurisdiction to determine under the Building and Construction Industry Security of Payment Act 1999 ("the Act"). …

DECISION OF ASSOCIATE JUDGE 19 The Associate Judge held that the adjudicator failed to consider RTA's jurisdiction submission. He then went on to consider four questions: 1. Was the adjudicator obliged to consider the submission which was not included in the payment schedule? 2. Was the determination void because the adjudicator did not consider the submission? 3. Should relief be denied on discretionary grounds, because the submission was bad in any event? 4. Whether failure to give reasons rendered the determination void? 20 As regards the first question, the Associate Judge noted RTA's contention that the submission was not a reason for withholding payment within s.20(2B) of the Act, but rejected that contention, relying on Multiplex Constructions Pty. Limited v. Luikens [2003] NSWSC 1140 and Brookhollow Pty. Limited v. R & R Consultants Pty. Limited [2006] NSWSC 1. 21 However, RTA also submitted that the adjudicator was obliged to consider the substance of the submission, because it concerned the Act, the contract and the payment claim, all of which the adjudicator was required to consider under s.22(2) of the Act; and primarily on the basis of what I said in The Minister for Commerce v. Contrax Plumbing (NSW) Pty. Limited [2005] NSWCA 142 at [33]-[36], the Associate Judge upheld this submission. 22 The Associate Judge divided the second question into three sub-questions: (a) Was there failure to comply with a basic and essential requirement for the existence of the adjudication determination set out in the Act? (b) Was there a bona fide attempt by the adjudicator to exercise the relevant power relating to the subject of the legislation and reasonably capable of reference to that power? (c) Was there a substantial denial of the measure of natural justice that the Act required to be given? 23 The Associate Judge answered sub-question (a) yes, sub-question (b) no, and sub-question (c) yes. In relation to (a), he relied particularly on Holmwood Holdings Pty. Limited v. Halkat Electrical Contractor Pty. Limited [2005] NSWSC 1129 at [46]-[49]. 24 As regards the third question, the Associate Judge held that he could not decide there was no possibility that the adjudicator would have changed his determination had he considered the submission; and accordingly, said he would not refuse relief on this basis. 25 As regards the fourth question, the Associate Judge said he did not need to consider it. However, he noted that RTA's contention on this matter seemed to be based on an inference that the adjudicator did consider the submission, contrary to the Associate Judge's findings.

WERE RTA'S SUBMISSIONS ON JURISDICTION DULY MADE? 29 In his submissions for the RTA in support of the Notice of Contention, Mr. Walker SC submitted that s.14(3) of the Act made it clear that there may be reasons "why the scheduled amount is less" that are not "reasons for withholding payment"; and that this supported a narrow construction for "reasons for withholding payment", as limited to circumstances where payment would be due but for a particular reason or reasons. Mr. Walker submitted that it was not a reason for withholding payment that a future adjudicator would lack jurisdiction to determine an adjudication application; so that submissions that an adjudicator lacked jurisdiction to determine an adjudication application would not be "reasons for withholding payment" within s.14(3), and thus would not be submissions precluded by s.20(2B) from being included in an adjudication response. 30 Mr. Walker further submitted that in so far as the jurisdiction submissions were based on the proposition that the amount to be paid in respect of the detonator dump claim had been determined by the Superintendent at a particular sum, that was asserted in the payment schedule. The claimant had not in its payment claim asserted that its statutory right went beyond the contractual right, so there was no occasion for the respondent to deny this in the payment schedule. 31 In my opinion, it is clear that the limit in s.22(2)(d) to submissions "duly made" is intended to engage s.20(2B); so that a submission included in an adjudication response contrary to the requirements of s.20(2B) is not "duly made" within s.22(2)(d). Of course, the same submission could be duly made if made in response to a request under s.21(4)(a) or in a conference called by an adjudicator under s.21(4)(c); but there was no such request or conference in this case, so the question is whether RTA's submissions on jurisdiction were included in from its adjudication response in breach of s.20(2B). 32 As pointed out by Mr. Walker, s.14(3) does draw a distinction between indicating "why the scheduled amount is less" and "the respondent's reasons for withholding payment", the latter being required only where the scheduled amount is less "because the respondent is withholding payment for any reason". 33 In my opinion, this distinction does not justify a narrow view as to what amounts to reasons for withholding payment. If a respondent does not propose to pay any amount included in the payment claim for any reasons said to justify non-payment of that amount, then in my opinion that is withholding payment and the reasons are reasons for withholding payment. It does not matter whether the reasons relate to non-performance of work, bad work, set-offs or cross-claims of any kind, contractual provisions limiting the claimant's right to payment or statutory provisions limiting the claimant's right to payment, or indeed any other suggested justification. Any other view would do violence to the language "withholding payment for any reason", and be contrary to the plain purpose of s.20(2B) to avoid new submissions being introduced late in a process going ahead on a brief and strict timetable. I agree with what Palmer J said on this matter in Mulitiplex Constructions Pty. Limited v. Luikens [2003] NSWSC 1140 at [65]-[68]. 34 Indications why the scheduled amount is less, which do not amount to reasons for withholding payment, could be such things as an allegation that payment had already been made, or possibly excuses for non-payment falling short of alleged justification, such as inability to pay. 35 RTA's contention is that its jurisdiction submissions were not "reasons for withholding payment" within s.20(2B), but merely reasons why the adjudicator did not have jurisdiction to make a determination on the matter; and that it would not have been appropriate, in the payment schedule, to give reasons why a future adjudicator would lack jurisdiction. 36 The jurisdiction of the adjudicator extended to determining the amount to which Holland was entitled pursuant to its payment claim, this amount being that specified in ss.9 and 10 of the Act, in particular in ss.9(a) and 10(1)(a). 37 In substance, RTA's submission as to jurisdiction was to the effect that "calculated in accordance with the terms of the contract" in those statutory provisions meant determined according to mechanisms provided by the contract, that is, the amount determined by the Superintendent or any amount substituted for that amount in accordance with the dispute resolution mechanism provided by the contract. 38 I note that in Transgrid v. Siemens Limited [2004] NSWCA 395, (2004) 61 NSWLR 521 at [35], I expressed the view (obiter) to the effect that "calculated in accordance with the terms of the contract" meant calculated on the criteria established by the contract, and did not mean reached according to mechanisms provided by the contract; and I adhere to that view as being more in accord with the use of the word "calculated" and with the prohibition in s.34 of the Act on contracting out of the effect of the Act. On the other view, contractual provisions denying progress payments for construction work otherwise than as certified by a superintendent or in accordance with review procedure provided by the contract could in my opinion have the effect of restricting the operation of the Act, and thus be made void by s.34. I do not think the legislature intended to make such usual provisions void. That obiter view is not directly relevant to the issue now under consideration; but the circumstance that the weight of authority was against RTA's submission has some indirect relevance, as indicated below. 39 Quite apart from the matter in the previous paragraph, I do not see that RTA's submissions in any event truly went to jurisdiction. The adjudicator's jurisdiction is to determine the amount of the progress payment in accordance with ss.9 and 10 of the Act; and RTA's submissions go to what is the correct result of doing this. That is, the submissions were to the effect that the correct exercise of jurisdiction would be to adopt the amount reached by the contractual mechanisms, rather than to apply the contractual criteria to reach a different result. It may be said that this view of mine, that RTA's submissions were not truly as to jurisdiction but merely as to how it could be exercised, is also irrelevant to the issue under consideration; but in my opinion it does have relevance in assessing whether RTA's jurisdiction submissions were "reasons for withholding payment" within s.20(2B). 40 In my opinion, RTA's jurisdiction submissions were plainly such reasons. Against a background where the Superintendent had made a determination of $1,815,458.61 in respect of the detonator dump claim, Holland's payment claim included $7,965,509.13 in respect of that claim. There were broadly two ways of challenging Holland's entitlement to that sum in accordance with ss.9 and 10: one was to say that, on the criteria provided by the contract, Holland was not entitled to it; and another was to say that ss.9 and 10 limited Holland's entitlement to amounts determined in accordance with contractual mechanisms. RTA's payment schedule adopted the first way; but while it referred to the Superintendent's determination, it did not say anything to the effect that ss.9 and 10 limited Holland's entitlement to amounts determined in accordance with the contractual mechanism, or to suggest that any such point was being taken. Mere reference to the Superintendent's determination did not of itself suggest this, since it would also support a contention that the case made by Holland was insufficient to show an entitlement under s.9 or s.10 that was different from that determined by the Superintendent. 41 There is some force in a submission made by Mr. Walker to the effect that the Act applies to a whole range of persons participating in the building industry, so it would be unreasonable to expect too much sophistication and precision in payment schedules; and thus that specific reference to the amount of the Superintendent's determination should be regarded as sufficient to raise the point that, under ss.9 and 10, the amount to which the claimant was entitled was limited to the amount determined in accordance with the contractual mechanisms. I do not think it necessary to decide whether that approach should be given weight in the case of an apparently unsophisticated respondent. It does not seem to me appropriate to give weight to it in the case of RTA. In circumstances where, as mentioned above, the weight of authority was against limiting a claimant's rights in that way, RTA should have signalled in the payment schedule that it was contending contrary to that authority, so that Holland would be given an opportunity to deal with that contention in its adjudication application. 42 In my opinion, the circumstance that the submissions were expressed in the adjudication response as being submissions concerning the jurisdiction of the adjudicator did not make them other than reasons for withholding payment. It was precisely because, on RTA's submissions, the right to payment calculated in accordance with ss.9 and 10 of the Act was limited to a right to payment determined in accordance with contractual mechanisms, that RTA contended that the adjudicator lacked jurisdiction. Accordingly, in my opinion the submission was in breach of s.20(2B) and was not duly made.

36 Similarly, in my opinion, an adjudicator could take into account a contention of an applicant that a term of the contract is void by reason of s.34, when considering matters under paragraphs (a) and (b), even if that contention could not be taken into account under paragraph (c). 48 However, it is to be noted that I said that the adjudicator was required by pars.(a) and (b) of s.22(2) to consider matters "if he or she thinks [they are] relevant to the construction of the Act, the construction of the contract, and the validity of the terms of the contract having regard to the provisions of the Act". To put this another way, I was saying that the adjudicator should not ignore something which he or she is aware of and also believes is of real relevance to issues arising under pars.(a) and (b), simply because the matter was not raised in submissions duly made by a respondent. Of course, if the matter has not been so raised, there may be questions of natural justice to the claimant that need to be addressed, perhaps by calling for further submissions or by arranging a conference; but that is another issue. However, the requirement for natural justice to the claimant is a further reason why the adjudicator would not be required to consider such matters under pars.(a) or (b) unless he or she thought they were really material to issues arising under those paragraphs. 49 Thus, in my opinion, any requirement to consider such matters which were not raised in submissions duly made arises only after a threshold is crossed, involving both awareness of the matters in question and a belief that they are of real relevance. In this case, I would infer that the adjudicator became aware of the submissions to the extent necessary for forming a view that they were affected by s.20(2B), but there is no basis for any conclusion that the adjudicator believed they were of substantial relevance to issues arising under pars.(a) and (b) of s.22(2). 50 In those circumstances, in my opinion the adjudicator was not required to consider RTA's jurisdiction submissions by reason of par.(a) and/or par.(b) of s.22(2). I have already decided that those submissions were not "duly made", so that the adjudicator was not required to consider them under s.22(2)(d).

WAS THE DETERMINATION INVALIDATED BY FAILURE TO COMPLY WITH S.22(2)? WAS THE DETERMINATION INVALID THROUGH LACK OF GOOD FAITH? WAS THERE A DENIAL OF NATURAL JUSTICE? 51 These questions only arise if, contrary to my view, RTA's jurisdiction submissions were "duly made" or else were required to be considered by reason of s.22(2)(a) and/or (b). 52 Mr. Christie submitted to the effect that a failure by the adjudicator to consider the submissions, either because he wrongly concluded they were not "duly made" or because his failure to do so was in breach of s.22(2)(a) and/or (b), was not a failure to comply with an essential requirement of the Act, such as would invalidate the decision, and could not conceivably amount to a lack of a bona fide attempt by the adjudicator to exercise the relevant power, or to a denial of natural justice. 53 Mr. Walker SC submitted that the Associate Judge's decision on these issues was correct. He submitted that s.22(2) made it clear that the adjudicator was required to consider the matters in pars.(a)-(d); and in circumstances where this was part of Parliament's codification of procedural fairness, the legislature's intention was that a failure to comply should result in invalidity. The prohibition in s.25(4)(a)(iii) against challenging an adjudicator's determination only arose after a judgment had been obtained; as regards the situation before judgment was obtained, there was no tension between an apparent jurisdictional limit and an exclusion of the Court's jurisdiction, requiring narrow limits to be placed on intervention by the Court. 54 In my opinion, there may be a sense in which s.22(2) is breached if there is any relevant provision of the Act or provision of the contract which is not considered by the adjudicator, or indeed if there is any one of what may be numerous submissions duly made to the adjudicator which is not considered. However, in my opinion a mere failure through error to consider such a provision of the Act or of the contract, or such a submission, is not a matter which the legislature intended would invalidate the decision. 55 The relevant requirement of s.22(2) is that the adjudicator consider the provisions of the Act, the provisions of the contract and submissions duly made. If an adjudicator does consider the provisions of the Act and the contract which he or she believes to be relevant, and considers those of the submissions that he or she believes to have been duly made, I do not think an accidental or erroneous omission to consider a particular provision of the Act or a particular provision of the contract, or a particular submission, could either wholly invalidate a determination, or invalidate it as regards any part affected by the omission. One could express this by saying that such an accidental or erroneous omission does not amount to a failure to comply with s.22(2), so long as the specified classes of considerations are addressed; or alternatively, if one takes the view that s.22(2) does require consideration of each and every relevant provision of the Act and the contract and each and every submission duly made, the intention of the legislature cannot have been that this kind of mistake should invalidate the determination. In a case where there were 1,000 submissions duly made, an accidental failure to consider one of them could not reasonably be considered as invalidating a whole determination; and there is no basis for partial invalidation of a determination, that is, invalidation only of that part affected by the omitted submission. 56 I see these views as essentially the same as I expressed in Brodyn Pty. Limited v. Davenport [2004] NSWCA 394, (2004) 61 NSWLR 421 at [56]: 56 It was said in the passage in Anisminic quoted by McDougall J that a decision may be a nullity if a tribunal has refused to take into account something it was required to take into account, or based its decision on something it had no right to take into account. However, in Craig v. South Australia (1995) 184 CLR 163 at 177 the High Court said that this would involve jurisdictional error if compliance with the requirement in question was made a pre-condition of the existence of any authority to make the decision. I do not think that compliance with the requirements of s.22(2) are made such pre-conditions, for the same reasons as I considered the determination not to be subject to challenge for mere error of law on the face of the record. The matters in s.22(2), especially in pars.(b), (c) and (d), could involve extremely doubtful questions of fact or law: for example, whether a particular provision, say an alleged variation, is or is not a provision of the construction contract; or whether a submission is "duly made" by a claimant, if not contained in the adjudication application (s.17(3)(b)), or by a respondent, if there is a dispute as to the time when a relevant document was received (ss.20(1), 22(2)). In my opinion, it is sufficient to avoid invalidity if an adjudicator either does consider only the matters referred to in s.22(2), or bona fide addresses the requirements of s.22(2) as to what is to be considered. To that extent, I disagree with the views expressed by Palmer J in Multiplex Constructions Pty. Limited v. Luikens [2003] NSWSC 1140. 57 Accordingly, even if RTA's jurisdiction submissions were matters that should have been considered under s.22(2), the adjudicator's failure to do so did not invalidate his decision. At worst for Holland, they were submissions as to which there were strong reasons to hold they were not "duly made", the adjudicator made a reasonable if erroneous decision that they were not duly made, and the adjudicator took a reasonable if erroneous view that the matters raised were not of sufficient relevance to warrant express consideration under pars.(a) and (b) of s.22(2). Accordingly, if there was any breach of s.22(2), it was not of a kind that could invalidate the decision. 58 Even more clearly in my view, an omission to consider the submissions could not conceivably justify a finding that the adjudicator did not make a bona fide attempt to exercise the relevant power. 59 Whether or not in this context lack of bona fides can be demonstrated without demonstrating personal dishonesty, I do not see the slightest basis for concluding that the adjudicator did anything other than make a bona fide attempt to exercise his power. 60 I note in passing the terms of s.30 of the Act, which are as follows: 30 Protection from liability for adjudicators and authorised nominating authorities (1) An adjudicator is not personally liable for anything done or omitted to be done in good faith: (a) in exercising the adjudicator's functions under this Act, or (b) in the reasonable belief that the thing was done or omitted to be done in the exercise of the adjudicator's functions under this Act. (2) No action lies against an authorised nominating authority or any other person with respect to anything done or omitted to be done by the authorised nominating authority in good faith: (a) in exercising the nominating authority's functions under this Act, or (b) in the reasonable belief that the thing was done or omitted to be done in the exercise of the nominating authority's functions under this Act. 61 It would be surprising in the extreme if what the adjudicator did in this case was such as could disentitle him to the immunity provided by s.30; and I think it would be rare that a decision could be invalidated for lack of bona fides by conduct that would not also lose the immunity given by s.30. 62 Mr. Walker SC in his submissions made a suggestion that it was inappropriate to adopt the criteria in R v. Hickman: Ex Parte Fox & Clinton (1945) 70 CLR 598 in circumstances where there was no provision in the Act excluding the jurisdiction of the Court to review the adjudicator's determination. In Brodyn, the view was taken that, although there was not an explicit exclusion of the jurisdiction of the Court prior to the obtaining of judgment and thus the application of s.25(4)(a)(iii), an intention was disclosed to exclude intervention for errors of law or other errors short of errors causing invalidity, and that in those circumstances the Hickman criteria were applicable. There has been no application in this case to re-consider Brodyn. 63 Finally, on the question of natural justice, plainly there was no denial of natural justice if the submission in question was not "duly made". Even if the correct view was that the submission was duly made, I would still not find a denial of natural justice. The legislature plainly entrusts to the adjudicator the role of determining whether submissions are or are not duly made, and thus of determining whether a submission contained in an adjudication response is one that should not be there because of the effect of s.20(2B). If an adjudicator addresses that question and comes to a conclusion that the submission was not duly made, I cannot see that the adjudicator has then failed to afford the measure of natural justice contemplated by the Act.

CONCLUSION 64 For those reasons, in my opinion the following orders should be made: 1. Appeal allowed. 2. Orders below set aside, and in lieu thereof order that RTA's summons be dismissed with costs. 3. Order that RTA pay Holland's costs of the appeal. 65 BASTEN JA: The Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Building Payment Act") has led to a spate of litigation in its relatively short life so far. There has been a tendency for counsel, for their own forensic purposes, to formulate questions which are said to require resolution in the particular proceedings. Often that proves to be unnecessary, but in seeking to respond to the issues raised by counsel in argument, the Courts have tended to address such questions, even when their resolution is recognised to be unnecessary. 66 In my view the present case involves a short point, beyond which the Court should not stray. Under the standard form of construction contract entered into by the parties, a claim for an additional amount due to a variation of the contract could be made by the contractor, but was to be assessed by the superintendent appointed under the contract, who was required to make a determination. As noted by Hodgson JA at [9] above, a claim was made for approximately $8 million, of which the superintendent allowed an amount of approximately $1.8 million: above at [9]-[10]. The superintendent provided a document which particularised the amounts allowed and those disallowed. 67 The contractor (hereinafter "John Holland") then made a payment claim under the Building Payment Act for an amount which included $8 million for the variation. The principal ("the RTA"), responded with a payment schedule which attached the determination by the superintendent, identifying the payment which the RTA proposed to make as the amount allowed by the superintendent. The manner in which the RTA sought to rely upon the superintendent's determination is set out at [11] above. The language used could be understood as making one or both of the following responses: (a) the value of the construction carried out or undertaken by John Holland in accordance with the terms of the contract, was correctly assessed by the superintendent ("the first response"); (b) the only amount to which John Holland was entitled as a progress payment was the amount determined by the superintendent, whatever that amount might be ("the second response"). 68 It was contended by the RTA that when the matter went for adjudication under the Building Payment Act, the adjudicator failed to consider the contention in par (b) and that, accordingly, no valid adjudication has yet been undertaken. 69 The submissions of the RTA, described the second response as its "jurisdiction submission". This was purely a forensic device to base an argument that the submission could be contained in the "adjudication response" permitted under s 20 of the Building Payment Act, even though it may not have been raised by the payment schedule, and thus did not fall within the requirement in sub-s 20(2B). The argument was that a submission relating to the jurisdiction of the adjudicator could not constitute a "reason for withholding payment" and hence was not required to have been included within the payment schedule: see sub-s 14(3). 70 As the argument continued, the submission being a valid part of the adjudication response was therefore a submission "duly made" in support of the payment schedule, in accordance with s 22(2)(d). That provision made it mandatory for the adjudicator to consider such a submission and it followed that, if he failed to consider it, he would have failed to exercise his statutory function according to law. 71 This argument is based on a false premise, and has given rise to this Court being invited to consider a number of false issues. The false premise is that the scope of the payment schedule and the identification of submissions "duly made" by the Respondent in support of the schedule are matters to be objectively determined by this Court. In my view they are not: they are matters to be determined by the adjudicator. If, as appears to be accepted by both parties, the adjudicator did not address the second response, it may have been for one of a number of reasons, namely: (a) he did not think it fell within the scope of the payment schedule and that to be taken into account it should have done; (b) it did not need to fall within the scope of the payment schedule, but for some other reason it was not "duly made"; (c) The submission was inconsistent with the scheme of the Building Payment Act, which required the adjudicator to determine what work had been undertaken under the contract and what was the value of the work.

So long as it is part of the function of the adjudicator to determine such matters and so long as it is within the power of the adjudicator to act in accordance with his own determination, even if a court might have reached a different conclusion, there is no basis for saying that the adjudication was invalid. 72 As I sought to explain in Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229 at [43]-[48], in my view the power to resolve these questions has been conferred on the adjudicator. 73 In considering the correctness of this approach, the focus must again be on the particular circumstances of the present case. Thus, the complaint is that the adjudicator failed to consider an assertion that the rights of John Holland were limited in law, and hence the adjudicator's powers were limited, to a payment in accordance with the determination of the superintendent under the contract. It is not, for example, asserted that the adjudicator was the recipient of a corrupt payment from another party. Thus, bearing in mind the limitation of the argument, the following statutory provisions are relevant. The first provides that the result of an adjudication is an "adjudication certificate" and, if the adjudicator determines that the respondent is required to pay an amount, must identify the "adjudicated amount", which the respondent is then required to pay: s 23(2). If the amount is not paid, it can be enforced as a debt by filing the adjudication certificate in any court of competent jurisdiction: s 25(1). Section 25(4) recognises that a respondent may be entitled to commence proceedings to have the judgment set aside, but states that the respondent: "(a) is not, in those proceedings, entitled: (i) to bring any cross-claim against the claimant, or (ii) to raise any defence in relation to matters arising under the construction contract, or (iii) to challenge the adjudicator's determination … ." 74 The limitations imposed by s 25(4), with regard to "those proceedings", reflect the further provision in s 32(1) which prevents anything in Part 3 of the Act (which includes s 25) affecting - "… any right that a party to a construction contract: (a) may have under the contract, or (b) may have under Part 2 in respect of the contract, or (c) may have apart from this Act in respect of anything done or omitted to be done under the contract."

Subsection (3) provides that any amount paid by a party to the contract must be taken into account in any order or award made in such proceedings. 75 The second response raised by the RTA, asserts a right of the RTA under the contract, namely to pay no more than the superintendent certified. This right might constitute an unassailable defence, in particular circumstances, to a claim brought under the construction contract, unaffected by Part 3 of the Building Payment Act. However, it cannot be pleaded as a defence to a debt under an adjudication certificate, a fact which is not inconsistent with the possibility that a payment claim may be made and upheld under the Building Payment Act, giving rise to a statutory debt, regardless of the position under the construction contract. This being so, it is understandable that an error of law made by an adjudicator in considering either the scope of the right conferred by the Building Payment Act or, if relevant, the scope of the right under the construction contract, forms no basis for treating an adjudication certificate as invalid. 76 The next question is whether an injunction may lie to prevent the person who made the payment claim requesting an adjudication certificate, after the adjudication determination has been made, on the basis that the determination is invalid. This, it may be noted, is not a case in which the adjudicator failed to make a determination in writing nor is it suggested that he failed to include the reasons for his determination, in contravention of s 22(3). Nor, for example, is it a case where any error of the kind referred to in s 22(5), such as an accidental slip or a clerical mistake has been made. Further, where a respondent fails to make a payment in accordance with an adjudicator's determination, s 24 confers on the claimant a right to request an adjudication certificate. If the respondent cannot challenge, on the ground now under consideration, the adjudicator's determination in proceedings to have the judgment based on the certificate set aside, the statutory purpose would be thwarted if a determination could be set aside on that ground if the respondent acted before the certificate was provided. 77 A further factor which gives support to the conclusion set out above is that, as explained by Hodgson JA at [40], Part 2 of the Building Payment Act, and in particular the right to a progress payment conferred by s 8 and the calculation of the amount in accordance with ss 9 and 10, suggest that the statutory right to payment is unaffected by calculations undertaken by a superintendent or other authority appointed to value work under the contract. In other words, the statutory regime is, partly, though not of course wholly, independent of the terms of the construction contract and is intended to operate according to its own statutory terms: see the prohibition on contracting out in s 34. 78 It follows, in my view, that it is not appropriate for this Court to construe the payment schedule, or indeed to construe the contract or the Building Payment Act as applied by the adjudicator, for the purpose of determining the validity of an adjudicator's determination. For the purpose of a payment under the Act, authority to determine those matters conclusively is vested in the adjudicator. That is not to say that an adjudicator's determination cannot be set aside on any ground at all: it is merely to say that it cannot be set aside on the ground relied upon in these proceedings. No more need or should be said. 79 For these reasons, I agree with the orders proposed by Hodgson JA. **********

Coordinated Construction Co Pty Ltd v Climatech

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