(b) On appeal
73 One matter for the adjudicator was whether, on the proper construction of the contract, the "ground conditions" for the definition of latent conditions were the features of the bedrock, the bedding plane shears, or also included the water ingress occasioned by the presence of those features when linked with a rechargeable water source. The adjudicator considered that groundwater ingress fell within the definition of latent conditions in the contract; see in particular his paras 89 and 97. The trial judge's decision did not involve a challenge to that view, although the contention grounds did.
74 The matter raised before the trial judge was whether the payment claim asserted as the latent conditions the bedding plane shears as distinct from water ingress, or vice versa, or a combination of the former resulting in the latter. The trial judge applied his own view of the payment claim, that it asserted the bedding plane shears which resulted in the water ingress, and then arrived at the substantial difference to which he referred on his para 68. Downer's principal submission was that, so far as that matter arose, it was a matter for the adjudicator and that he had plainly enough decided that the payment claim asserted the water ingress, see in particular his paras 63 and 86-89, and that the court should not substitute its own view. It submitted however, that the trial judge was incorrect in his view and it was open to the adjudicator to conclude as he did.
75 As will appear, I do not think that this categorisation of the payment claim was necessary. So far as it was for the adjudicator to address it, undoubtedly there were significant grounds in many references to bedding plane shears for the view to which the trial judge came. But even if the trial judge arrived at the preferable view, there were respectable grounds for the payment claim relying on the water ingress, caused by the bedding plane shears, as the latent conditions. Schedule 1 was far from precise in this respect. Paragraph 92 of the Braybrooke Report treated the "inflow rates" themselves as ground conditions, since Dr Braybrooke compared them with those which should have been anticipated by a prudent et cetera contractor, and the Braybrooke Report was plainly put forward as a substantial basis for the payment claim. It is not irrelevant that the submissions with the payment schedule referred to water ingress as conditions and to groundwater conditions, and that the Pells Report treated "the groundwater inflow" as the ground conditions, also referring to the bedding plane shears and their link to a rechargeable water source; see also the submission in the adjudication response earlier noted speaking of foreseen and anticipated inflows of water. There were many arguable indicators, of varying significance, of what the trial judge called the basis of Downer's claim, to which we were taken in detail on appeal. If the enquiry had to be made, they were far from all one way.
76 In arriving at his basis of Downer's payment claim, in my opinion the trial judge read too much into the reasons of Hodgson JA in Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229. Hodgson JA said in his paras [25]-[27]:
"25 I note also that s.13(2)(a) requires that a payment claim "identify" the construction work or related goods or services to which the payment relates. This requirement must be interpreted, in my opinion, having regard to the requirement in s.14(3) that the payment schedule indicate the respondents' reasons for withholding payment, the limitation on the adjudication response in s.20(2B) to those reasons, and the corresponding limitation in s.22(2)(c), as well as the circumstance that, for the reasons given above, payment claims may include amounts that are not (in a narrow sense) for construction work that has actually been carried out for related goods and services that have actually been supplied. In my opinion, the relevant construction work or related goods and services must be identified sufficiently to enable the respondent to understand the basis of the claim; and in the case of "delay damages" of the kind involved in this case, it is generally sufficient (assuming that the contract itself is sufficiently identified) that the basis of contractual entitlement be shown. In my opinion, that would generally be enough to ground identification, at least by way of inference, of the construction work or related goods or services to which the payment relates.
26 In my opinion, failure adequately to set out in a payment claim the basis of the claim could be a ground on which an adjudicator could exclude a relevant amount from the determination. Further, even if in such a case a claimant adequately set out the basis of the claim in submissions put to the adjudicator, the adjudicator could take the view that, because the respondent was unable adequately to respond to this subsequent material (because of the provisions of s.20(2B) and s.22(2)(c) of the Act), he or she is not appropriately satisfied of the claimant's entitlement. Generally however, in my opinion, it is for the adjudicator to determine if the basis of the claim is adequately set out in the payment claim, and if not, whether on this ground a relevant amount claimed should be excluded from the amount of the progress payment determined under s.22(1).
27 So far as this case is concerned, there is no suggestion that the contractual basis for the amounts claimed was not adequately indicated in the payment claim. The complaint is that the payment claim did not indicate that the claim was for related goods or services supplied. However, in my opinion, if a claim is in substance a claim for related goods or services supplied, it is not essential that it be explicitly identified as such in the payment claim: generally it is enough that the claim and its basis (in the contract and/or as a matter of valuation) be set out with sufficient clarity."
77 Hodgson JA was referring to sufficiency of identification of the construction work or related goods and services, and of the contractual basis for the amount claimed; indeed, he accepted that a payment claim which indicated on its face a contractual basis of delay damages could carry a claim for the supply of goods and services.
78 To return to adjudication of a payment claim by determining the amount of the progress payment (if any) to be made, the progress payment being in relation to the construction work (or related goods and services) identified in the payment claim, the issue is payment in relation to the work or the goods and services. Entitlement to payment in relation to the work can be expounded at different levels of particularity, but the claim to payment in relation to the work remains. It is the payment claim and the identified construction work (or related goods and services) that has the adjudicator's attention, and the parameters of the payment claim are not found in the level of particularity at which it is supported.
79 In the present case the payment claim was relevantly to a progress payment in relation to the work occasioned by the water ingress, with the three claims WI 1.1, WI 1.2 and WI 2.1 describing the direct and indirect costs thereby occasioned. The payment claim was made in reliance on cl 30.1 of the contract. It was for the adjudicator to address whether, on the material properly before him, Downer was entitled to payment in relation to the work. In determining the application the adjudicator would be expected to give attention to the meaning and scope of "ground conditions" in the definition of latent conditions, and to what ground conditions were encountered and whether they should have been anticipated by a prudent et cetera contractor. But what he was to determine was the payment claim, and it does not seem to me that this task would fall away if he thought it asserted bedding plane shears as the ground conditions as distinct from water ingress resulting from the bedding plane shears; or because it referred to bedding plane shears at the precise chainages stated in the payment claim (which by the time of the adjudication were accepted on both sides to have been stated mistakenly). As the adjudicator said in his paras 87-8, the claims were for increased water ingress. He considered that excessive water ingress was within the contractual latent conditions. He may or may not have been correct in his construction of the contract, but once he so decided his determination was within the parameters of the payment claim.
80 More fundamentally, as Hodgson JA observed in Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd at [24], if the adjudicator makes an error which can be seen as taking a determination outside the parameters of the payment claim, that does not necessarily invalidate the determination.
81 In Brodyn Pty Ltd v Davenport at [55] Hodgson JA, with whom Mason P and I agreed, noted as essentials to the existence of a determination compliance with the basic requirements laid down by the Act and "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". An adjudicator's determination may be incorrect, but it can still be a valid determination. Many cases have recognized that a determination under the Act is of an interim nature, often made in "pressure cooker" circumstances; that the purpose of the Act is to enable speedy resolution of claims to progress payments without excessive formality or intervention by the courts; and that the scope for invalidity for non-jurisdictional error is limited: for example: Brodyn Pty Ltd v Davenport at [51]; Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd at [45]; Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462 at [44].
82 An adjudicator's exercise of the statutory power includes addressing the parameters of the payment claim. Basten JA in Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd observed at [44] that a determination will not necessarily be set aside if the determination "goes beyond the parameters of the claim, properly understood", and that -
"Intervention on that basis will only be justified if the legislature has imposed an objective requirement, rather than one which the adjudicator has power to determine. It is well established that the mere fact that a requirement is objectively expressed, rather than by reference to the satisfaction of the officer or tribunal concerned, is not decisive of the construction issue. Indeed, in relation to inferior courts, it has been said that there is a strong presumption against any jurisdictional qualification being interpreted as contingent upon the actual existence of a state of facts, as opposed to the decision-maker's opinion in that regard: see Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 391 (Dixon J). A factor favouring that approach is "the inconvenience that may arise from classifying a factual reference in a statutory formulation as a jurisdictional fact": Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55 at 72 (Spigelman CJ)."
83 His Honour said at [51] that, for the reasons earlier set out -
"... it was for the adjudicator to determine the scope and nature of the payment claim. Furthermore, if the adjudicator had been inclined to determine the claim on the basis of a contractual entitlement other than that asserted by the claimant, he would have been required to make the relevant findings of fact and law to support his conclusion. If, in accordance with Brodyn and as suggested above, those matters are entrusted to the adjudicator by the Act, it is not open to the Court to form a view on those matters and act upon the view so formed, even to demonstrate that the adjudicated amount may be upheld on a different basis. The circumstances in which a court exercising a power of judicial review can reach a conclusion different from that reached by the repository of the power will be extremely rare: see Minister for Immigration and Ethnic Affairs v Guo Wei Rong (1997) 191 CLR 559 at 579."
84 See also Hodgson JA at [26], stating that generally it is for the adjudicator to determine if the basis of the claim is adequately set out in the payment claim and if not whether an amount should be excluded from the determined amount.
85 Ipp JA in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) at [76] stated that whether a claim complies with s 13(2) of the Act is "a matter for determination under s 17". In Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238 Basten JA referred to the cases concerning compliance with s 13 and said, at [71], that the existence of essential preconditions to a valid claim "are matters for the adjudicator, not for objective determination by a Court". It is not easy to see why determination of the parameters of the payment claim should be in a different position.
86 It may be added that in John Holland Pty Ltd v Roads & Traffic Authority of New South Wales (2007) NSWCA 19, decided after the hearing of the present appeals and cross appeal, whether a submission had been "duly made" (s 22(2)) was said to be a matter for the adjudicator, whose error in that respect would not invalidate his determination. It was not a matter for objective determination by the Court, see per Hodgson JA, with whom Beazley JA agreed, at [57] and Basten JA at [71]-[72]: the latter referred to what he had said in Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd.
87 In my opinion, determination of the parameters of the payment claim is a matter for the adjudicator, and a reasonable but erroneous decision by the adjudicator does not invalidate the determination. In the present case, in determining the amount of the progress payment (if any) to be made it was for the adjudicator to decide whether the water ingress fell within latent conditions for the purpose of the contract, and the parameters of the payment claim in that respect. He did so. As to both, it could not be said that the adjudicator's decision was without foundation, and if the adjudicator addressed the matters and came to his decisions, even if other decisions could have been come to, he did what the Act required - he determined the adjudicated amount. As was stated in Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142 at [49] -
"… an error of fact or law, including an error in interpretation of the Act or of the contract, or as to what are the valid and operative terms of the contract, does not prevent a determination from being an adjudicator's determination within the meaning of the Act."
88 There is good reason for leaving determination of the scope and nature of the payment claim to the adjudicator, apart from the purpose of the Act earlier mentioned. The scope and nature of the payment claim will often be, and in the present case was, open to be elucidated and evaluated with the benefit of the adjudicator's specialised knowledge.
89 Accordingly, I am unable to agree with the trial judge's conclusion that the adjudicator failed to determine Downer's payment claim, but instead determined a different claim. The adjudicator determined the payment claim, and the court should not by judicial review engage with the questions decided by him in doing so.
90 Nor do I consider that the determination was void because the adjudicator failed to attempt to understand the basis of the claim or failed bona fide to exercise his power. With respect to the trial judge, to say that "the outcome of [the adjudicator's] determination" indicates failure to consider the matters to which s 22(2) refers does not pay heed to the exposure of the adjudicator's reasons, and incorrectly imposes the Court's opinion of the correct outcome as the determinant of bona fides. I have not shared the trial judge's understanding of enquiry into the basis of a payment claim, and in my view there is no occasion to doubt that the adjudicator bona fide attempted to exercise his statutory power in, amongst other things, deciding whether the water ingress fell within latent conditions for the purposes of the contract and deciding that the payment claim was a claim for the increased water ingress and the claim he determined was within it.
91 As to natural justice, EA contended in its adjudication response that the claim put through the submissions contained in the adjudication application was a new claim, specifically but non-exclusively because of the differences in the chainages of the Relevant Locations. But EA made extensive submissions on water ingress and whether it was and should have been anticipated by a prudent et cetera contractor, at times specifically treating water ingress as the ground conditions. In my opinion, ground conditions by way of excessive water ingress from the bedding plane shears, was raised by the payment claim for the adjudicator's consideration and EA responded to it in the payment schedule in terms of the groundwater conditions. EA had appropriate opportunity to address water ingress as the ground conditions in the payment schedule and in the submissions contained in the adjudication response. It may not have used the opportunity well, with the focus it now sees as desirable, but that does not make out a denial of natural justice. I do not think the determination was void on that ground.