CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS –
REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO
AND RECOVERY OF
PROGRESS PAYMENTS –ADJUDICATION OF PAYMENT CLAIMS – where the
Source
Original judgment source is linked above.
Catchwords
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS –REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TOAND RECOVERY OFPROGRESS PAYMENTS –ADJUDICATION OF PAYMENT CLAIMS – where theapplicant (as head contractor) and thefirst respondent (as builder) are partiesto a design and construct contract – where the first respondent served apaymentclaim on the applicant and the applicant subsequently served a paymentschedule of an amount approximately $8.7 million less –where the firstrespondent applied for adjudication in respect of its payment claim –where the amount in issue was a variationclaim of $681,445.37 – whereboth parties accept that no submissions, evidence, witness statements or otherdocuments weredirected to any other part of the payment claim, only the$681,445.37 amount – where the applicant seeks a declaration thathavingpaid the sum of $681,445.37 for which the adjudication decision was sought, by
operation of s 97(1)(b) of the Building Industry Fairness (Security of
Payment) Act 2017 (Qld), the adjudication application is taken to have been
withdrawn – where the first respondent contends it is the statutory
obligation of the adjudicator pursuant to s 88, to determine every element of
the payment claim not just those aspects of the payment claim a claimant directs
the adjudicator to
determine in its submissions – where the first
respondent contends that the scope of submissions made to the adjudicator does
not impact the adjudicator’s duty to decide the entirety of the payment
claim – where the first respondent contends that
the words in s 97(1)(b)
“the subject of the adjudication” refer to the amount of the payment
claim itself not particular amounts expressly addressed
in the adjudication
application or submissions in support of it – where the applicant contends
for a contextual construction
of s 97(1)(b) reflecting the purpose of the Act to
provide a quick and inexpensive process for securing payment – whether the
“subject
of the adjudication” per s 97(1)(b) must be the whole of
the amount stated in the payment claim or may be some particular part of the
payment claim – whether the
adjudication application can be taken to have
been withdrawn pursuant to s 97(1)(b) in circumstances where the applicant has
paid the sum for which the adjudicator’s decision was sought but not the
total payment
claim
Acts Interpretation Act 1954 (Qld), s
14A
Building Industry Fairness (Security of Payment) Act 2017 (Qld),
ss 75, 79, 84, 85, 88, 97
Coordinated Construction Co Pty Ltd v JM
Hargreaves (NSW) Pty Ltd [2005] NSWCA 228
(2005) 63 NSWLR 385
R v A2 [2019] HCA 35
(2019) 269 CLR
507
Judgment (24 paragraphs)
[1]
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS -ADJUDICATION OF PAYMENT CLAIMS - where the applicant (as head contractor) and the first respondent (as builder) are parties to a design and construct contract - where the first respondent served a payment claim on the applicant and the applicant subsequently served a payment schedule of an amount approximately $8.7 million less - where the first respondent applied for adjudication in respect of its payment claim - where the amount in issue was a variation claim of $681,445.37 - where both parties accept that no submissions, evidence, witness statements or other documents were directed to any other part of the payment claim, only the $681,445.37 amount - where the applicant seeks a declaration that having paid the sum of $681,445.37 for which the adjudication decision was sought, by operation of s 97(1)(b) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld), the adjudication application is taken to have been withdrawn - where the first respondent contends it is the statutory obligation of the adjudicator pursuant to s 88, to determine every element of the payment claim not just those aspects of the payment claim a claimant directs the adjudicator to determine in its submissions - where the first respondent contends that the scope of submissions made to the adjudicator does not impact the adjudicator's duty to decide the entirety of the payment claim - where the first respondent contends that the words in s 97(1)(b) "the subject of the adjudication" refer to the amount of the payment claim itself not particular amounts expressly addressed in the adjudication application or submissions in support of it - where the applicant contends for a contextual construction of s 97(1)(b) reflecting the purpose of the Act to provide a quick and inexpensive process for securing payment - whether the "subject of the adjudication" per s 97(1)(b) must be the whole of the amount stated in the payment claim or may be some particular part of the payment claim - whether the adjudication application can be taken to have been withdrawn pursuant to s 97(1)(b) in circumstances where the applicant has paid the sum for which the adjudicator's decision was sought but not the total payment claim
[1] This is an application for declarations regarding the proper construction of s 97(1)(b) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the Act). There are no issues of fact in dispute, and the second respondent (who is the adjudicator to an adjudication application) does not appear and agrees to abide the order of the court.
[2] The applicant, Downer EDI Rail Pty Ltd (Downer), as a contractor, entered into a design and construct contract with the first respondent, DT Infrastructure Pty Ltd (DTI), as a builder. The contract relates to the design and construction of a train maintenance and stabling facility at Ormeau. The contract was entered into on 29 June 2023.
[3] On 24 February 2025, DTI served a payment claim on Downer under the Act for just over $22 million excluding GST. This will be referred to throughout as either "the payment claim" or "payment claim 21". On 17 March 2025, Downer served a payment schedule, referred to throughout as either "the payment schedule" or "payment schedule number 21". Downer certified the sum in respect of payment schedule 21 to be a sum of approximately $13.5 million excluding GST. The difference therefore between the claimed amount in the payment claim and the payment schedule is some $8.7 million. Part of that sum of $8.7 million included a sum for variation claims of $681,445.37.
[4] On 30 April 2025, DTI applied for adjudication said to be in respect of payment claim 21.
[5] On 1 May 2025, DTI served on Downer a copy of its adjudication application, submissions and other material in support of the application. I will return to those submissions shortly.
[6] The second respondent was appointed and accepted appointment as adjudicator on 12 May 2025.
[7] To give the argument which follows some context, I refer to some parts of the submissions made by DTI in support of its adjudication application. I set it out at some length because the factual matrix is important to the outcome of the case. First, in its submissions in support of its adjudication application at paragraph 13 (which appears at page 111 of the affidavit of Mr Pfeiffer), DTI identified that the "decision sought" in the adjudication application was that the adjudicator should determine those matters which were set out at paragraph 13. That paragraph reads:
[7]
"13. For the reasons elaborated upon later in these submissions, the Adjudicator should determine that:
[8]
(a) Downer pay DTI the amount of $681,445.37 (ex GST);
(b) Downer pay DTI interest on that amount at the rate of 14.09% from 31 March 2025 (being the due date for payment); and
(i) Downer is liable for 100% of the Adjudicator's fees; and
[10]
(ii) Downer is to reimburse DTI for 100% of the fee payable under section 79(2)(d) of the Act."
[11]
[8] Second, at paragraph 49 of the application, DTI recorded "DTI pursues two variation claims in the Adjudication Application". It identified the first variation being number 41 in respect of which DTI claimed a sum of $678,570.37 in the payment claim, and secondly, variation number 53 for which DTI claimed a sum of $2,875 in the payment claim. The claim went on to identify at paragraph 50 that, "[t]hough the amounts claimed by DTI in the Payment Claim for these two variations are relatively small, these are major variations to the Contract and will ultimately have significant time and cost consequences for DTI."
[9] At paragraphs 51 through to 61, DTI went on to provide a high-level summary of the dispute in relation to variations numbered 41 and 53. Next, at paragraph 62 of its application, DTI recorded "[i]n this Adjudication Application, DTI pursues a total of $681,445.37", relating to variations 41 and 53. There is no reference in the summary of the dispute section of the adjudication application to any other part of the outstanding $8.7 million under payment claim 21.
[10] Next, turning to paragraph 156 of the adjudication application, DTI provided an overview of the claim in respect of variation number 41 and again identified the particulars which it claimed in respect of that variation. From paragraph 177, DTI outlined its position as to why it was contractually entitled to the variation, being variation 41. From paragraph 259 onwards, DTI set out why the adjudicator should determine the quantum of variation 41 in the amount sought by DTI. DTI then reached its conclusions in relation to that particular variation and identified at paragraph 269 that:
[12]
(a) DTI is entitled to a Variation under the Contract in order to comply with the amended requirements of BPIC 2024; and
(b) Downer is liable to pay DTI the amount of $678,570.37 for the extra-over costs incurred by DTI relating to the increase in the hourly rate for workers who performed works in the months of April 2024 to July 2024."
[13]
[11] Commencing then at paragraph 270, DTI identified its claim in respect of variation number 53. It specifically identified that it claimed the sum of $2,875 in respect of that variation. It identified that variation 53 was associated with the solar works for the project. From paragraph 275, DTI set out its position as to why it was contractually entitled to the variation for the solar works set out in variation number 53. Commencing from paragraph 359, DTI provided submissions as to the quantum relevant to variation number 53. At paragraph 362, DTI set out "[f]or the purposes of this Adjudication Application, DTI only asks the Adjudicator to determine the elements in subparagraph (a) of the definition of Variation Effects", and then went on to describe the certain matters that it required, that it described as variations in respect of the solar works. At paragraph 369, DTI submitted:
[14]
(a) DTI is entitled to a Variation under the Contract in respect of the Solar Works; and
(b) Downer is liable to pay DTI the amount of $2,875 for the variation work performed by DTI and claimed in the Payment Claim."
[15]
[12] Finally, at paragraph 384, in its conclusion to its adjudication application, DTI submitted that DTI sought a determination from the adjudicator in terms that merit those under paragraph 13 which I earlier described under the heading "decision sought".
[13] Although DTI's adjudication application was supported by extensive evidence running to several hundreds of payments, pages of schedules, witness statements and similar material, both parties accepted that no submissions, evidence, witness statements or other documents were directed at any other part of the approximately $8.7 million claimed by DTI in payment claim 21 that Downer declined to certify as being payable. The claim, submissions, witness statements and other documents were limited to the two identified variation claims, 41 and 53. As such, the only decision which was sought by the adjudication application pertained to those two variations in the sum of $681,445.37.
[14] DTI also accepts that the evidence that it provided to the adjudicator did not attempt to identify the work for which the $8.7 million was claimed but not paid, nor what was said to be the basis for an entitlement to the payment other than that which was contained in the payment claim. It can be accepted therefore, that the adjudicator was not asked to make any determination that Downer pay any part of the approximately $8.7 million claimed but not certified, that fell outside the scope of the variations that comprise the amount for which the decision was sought.
[15] Having been served with DTI's adjudication application, submissions and other evidence, Downer paid the amount identified in paragraph 13 of the adjudication application, being the amount of $681,445.37. DTI does not dispute that Downer has paid the amount in full, including the interest in accordance with its request at paragraph 13 under the heading "decision sought." The adjudicator has not yet made a decision, and no decision is in fact due until the 11th of June 2025. By this proceeding, Downer seeks a declaration that, by having paid the sum for which the decision was sought plus the interest, the provisions of s 97 of the Act are operative. Section 97 of the Act provides:
[16]
(a) is withdrawn if the claimant has given a written notice of discontinuation to the adjudicator and respondent; or
[17]
(b) is taken to have been withdrawn if the respondent has, before an adjudicator has decided the application, paid the claimant the amount stated in the payment claim the subject of the adjudication application.
[18]
Despite the withdrawal of an adjudication application an adjudicator is still entitled to be paid fees for considering the application, see section 95.
[19]
(2) If subsection (1)(b) applies, the claimant must as soon as practicable inform the adjudicator and the respondent that the adjudication application has been withdrawn because of payment.
[20]
(3) As soon as practicable after an adjudication application is withdrawn, the claimant must inform the registrar that the application has been withdrawn and whether it was withdrawn as mentioned in subsection (1)(a) or (b).
[21]
[16] The court is therefore required to construe the words of s 97, but in particular, subparagraph (1)(b), in order to decide whether the adjudication application "is taken to have been withdrawn" within the meaning of the subsection. That is in fact the relief which the applicant seeks by paragraph 1 of the originating application, being a declaration that, by operation of s 97(1)(b) of the Act, adjudication application number 2833440 was taken to have been withdrawn by the first respondent on 15 May 2025.
[17] The parties also agree as to the principles of construction that guide me. Primarily, that the words of the section must be given their ordinary meaning, and that meaning is to be taken from the text, purpose and context of the legislation, including the surrounding provisions, what can be drawn from other aspects of the statute and the statute as a whole.[1]
[18] Pursuant to s 79 of the Act, a claimant may apply for an adjudication of a payment claim if the amount stated in the payment schedule which is given in response to a payment claim, is less than the amount stated in the payment claim. By s 88(1)(a), the adjudicator is then required to decide the amount of the progress payment, if any, to be paid by the respondent to the claimant. That is referred to as "the adjudicated amount". Section 88(2) then identifies the matters which the adjudicator is obliged to have consideration to in deciding the adjudication application to which the application relates, together with all the submissions and other documents properly made by the claimant in support of the claim, the payment schedule, submissions and relevant documents as well as the provisions of the Act. By , the adjudicator must not consider an adjudication response that was not given within the time required under , or a reason included in the adjudication response to the adjudication application if the reason is prohibited from being included in the response under
[19] At the core of the argument before me today is the question as to whether the adjudication application is taken to have been withdrawn within the meaning of s 97(1)(b), in circumstances where the amount paid by Downer was only in respect of the variations in issue. Or, whether the section is only triggered if Downer pays the total amount of the payment claim, being the disputed sum of $8.7 million.
[20] Downer submits that what s 97(1)(b) is referring to when it speaks of paying "the amount stated in the payment claim the subject of the adjudication application" is as the words say, the amount stated in the payment claim that is the subject of the adjudication. The emphasis here is on the words, the payment claim that is "the subject of the adjudication". If the subject of the adjudication application is the whole of the amount stated in the payment claim, then the whole of that amount must be paid for the application to be taken to be withdrawn. In this case, that would be the sum of some $8.7 million.
[21] However, if the subject of the adjudication application is some particular part of the payment claim, and that part is the part which is paid, then upon the payment of that part is the application taken to be withdrawn? DTI submits that it is the statutory obligation of the adjudicator to decide every element of the payment claim, not just those aspects of the payment claim which it directed that the adjudicator "should determine" in its submissions. DTI's counsel accepted that this was a complex task, there being hundreds of line items to consider but, notwithstanding the onerous nature of the task, pointed to what was described as the adjudicator's statutory obligation to do precisely that. In particular, DTI pointed to the adjudicator's statutory obligations set out in s 88 to consider all the matters set out therein, specifically those the adjudicator is obliged to consider under s 88(2). But submitted that the scope of the submissions made by DTI to the adjudicator did not impact upon the scope of the adjudicator's duty to decide the entirety of the disputed payment claim.
[22] DTI further submits that, where a claimant decides to only raise certain claims in an adjudication application, no concession is thereby made by the claimant as to the balance of the claims where there is a difference between the claim and the scheduled amount. Put another way, DTI submits that the manner in which the claimant puts its adjudication application does not derogate from the obligations of the adjudicator to determine the amount of the statutory progress payment.
[23] DTI refers in particular to Coordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd,[2] where Hodgson JA describes that the task of an adjudicator is to determine the amount of the progress payment to be paid by the respondent to the claimant, and that requires a determination on the material available to the adjudicator of the amount that is properly payable. His Honour there referred to the fact that the adjudicator is to consider only the provisions of the Act, the contract, the payment claim and the claimant's submissions duly made, as well as the payment schedule and submissions made, but that did not mean that consideration of the provisions of the Act and the contract and the merits of the claim are "limited to issues actually raised by submissions duly made".[3] Assuming that that statement should be accepted as correct, it does not support the proposition that, where the only issues to be decided are ones which have been so clearly identified as they have been here and, by inference, all other aspects of the claim are not being pursued, the adjudicator is bound to consider and decide facts which are not in dispute on the face of the application.
[24] DTI submits that the words in s 97(1)(b) "the subject of the adjudication" refer to the amount of the payment claim itself and not just particular amounts expressly addressed in the adjudication application or the submissions in support of it. That construction, DTI submits, is consistent with the relevant purpose of the Act, which is for the adjudicator to decide the amount of the progress payment to be made. It follows, DTI submits, that for the adjudication to be "taken to be withdrawn" and the adjudicator discharged from the function to determine the progress payment, the whole of the payment claim must be paid, or at least the whole of the amount not otherwise expressly abandoned by the claimant. Further, DTI submits that, if the operation of s 97 were tied merely to the issues addressed by the claimant in the adjudication application, then the words "stated in the payment claim" as they appear in s 97(1)(b) would not need to appear in the section.
[25] I do not accept DTI's construction of s 97(1)(b). Firstly, one starts with the words of the section. The section is designed so as to facilitate two ways in which an application might be withdrawn. The first, is where the claimant gives written notice that it intends to discontinue the application. That is found in subparagraph (a). The second way in subparagraph (b), is where the application "is taken to have been withdrawn". That means that the application is not in fact withdrawn in accordance with subparagraph (a), but a payment has been made of the disputed sum such that there is, on the face of the application, no longer a dispute. The inference then, that it is taken to be withdrawn arises when the application or, relevantly, as here, part of it, is taken to have been withdrawn because there has otherwise been satisfaction of the amount in dispute.
[26] DTI accepts that an application could be taken to have been withdrawn if it was expressly withdrawn in the submissions for example. If, for example, under the existing paragraph 13 for the "decision sought", there had been a further subparagraph identifying that DTI did not require any other parts of the payment claim to be adjudicated, it would expressly be taken to be withdrawn. But DTI does not accept that an implication or inference can arise, or be taken to arise, from submissions which would cause the adjudication to be withdrawn other than expressly. Further, DTI submits that there can be no inference drawn from the submissions by the use of DTI's language that the adjudicator "should determine" variations 41 and 53, that there had in fact been an abandonment of the other parts of the payment claim.
[27] DTI's construction must be rejected because express withdrawal is what is contemplated by subparagraph (a). Subparagraph (b) must by necessity be directed towards a different circumstance. But the real argument in terms of construction here is the emphasis to be placed on the words, "the amount stated in the payment claim the subject of the adjudication application." DTI's construction, in my view, effectively gives no work to do to the words, "the subject of the adjudication application." On DTI's construction, the clause could have finished after the words, "stated in the payment claim".
[28] DTI then points to the explanatory memorandum which, in respect of cl 97, explains that the clause allows a claimant to withdraw an application, including where the respondent pays the claimed amount.[4] DTI says the phrase "the claimed amount" is a defined term under the Act. That is correct because the phrase "the claimed amount" is defined in s 68(1)(b). The definition of "the claimed amount" would, in the circumstances of this claim, be the total of some $21 million identified in the payment claim. But had the drafters of s 97(1)(b) wished to use the phrase "the claimed amount", thereby invoking that defined term, they could have done so. The legislation does not use that terminology. It uses a different terminology contained in the subsection. That the legislature used a different set of words to achieve a different meaning seems clear to me.
[29] Contrary to DTI's submission, the explanatory memorandum does not support DTI's construction. Rather, in my view, it supports the construction offered by the applicant. The addition of the words, "the subject of the adjudication application" at the end of cl 97 directs attention towards that which is genuinely in issue in the payment claim. In this case, limited to those matters to which DTI sought the adjudicator should direct his determination.
[30] In my view, the section should be read in the contextual way for which Downer contends where the words "the subject of the adjudication" are linked to the words of the amount. The contextual reading must be the correct one, in my view, because, firstly, the process is intended to be one which is fast and efficient. The DTI construction does not support this intention because it means things need to be decided by the adjudicator that are not genuinely, or in fact at all, in issue. Secondly, the process is intended to identify those matters genuinely in dispute, not those which are not.
[31] There are other aspects of the legislation which support the applicant's contextual approach to interpretation, and they include but are not limited to the following. First, s 75(5), by which the legislation permits a later payment claim to bring forward those parts of payment claim 21 that remain unpaid. This means that the currently unpaid part of payment claim 21 is not abandoned. It can properly be dealt with by a subsequent payment claim.
[32] Second, s 79(3) and (4), provide that the adjudication application may be accompanied by submissions relevant to the application and those submissions will be given to the respondent within four business days after making the application. The purpose of giving the submissions which themselves narrow the matters in dispute, is to allow the respondent to substantively respond to the actual matters in issue. That substantive response process is consistent with the otherwise brutal timeframes referred to in the cases under the Act, which require that the payment claim process is dealt with quickly and efficiently. That is consistent with the purpose and object of the Act which is to provide a quick and inexpensive interim procedure for builders to be paid for their work.
[33] Third, ss 84 and 85, again are directed towards allowing the adjudicator to decide the disputed amounts as quickly as possible which necessarily carries with it a construction of the legislation that the adjudicator is not required to decide those matters which are not genuinely in dispute.
[34] Fourth, the provisions of s 88(2) which set out the matters which the adjudicator must consider includes at subparagraphs (c) and (d), the submissions which the parties make. It would be an onerous construction of the legislation if the adjudicator was required to consider matters pertaining, in this case, to some $8.7 million worth of claims where the submissions on both sides had been confined to $681,445.37 worth.
[35] I therefore reject the respondent's construction and am prepared to make the declaration sought at paragraph 1 of the originating application.
[36] As a matter of completeness, however, I ought to deal with DTI's alternative argument being that, if I am against DTI's construction, then I ought to consider the matters which are contained in the respondent's submissions at paragraphs 34 to 39. The heart of that argument seems to be that, when Downer paid the amount which it did in respect of variations 41 and 53, its correspondence of 15 May 2025 recorded that the payment was made pursuant to cl 32.6(a) of the building contract, being on account without admission of liability and without prejudice to the contractor's position in relation to those two stated variations.
[37] In my view, this argument can be dealt with quite quickly. I do not take the letter of 15 May 2025 to be other than recording that the payment which is being made, is being made pursuant to the identified clause of the contract. I accept the applicant's characterisation, that this is an entirely unremarkable procedure to pay an amount in accordance with a contractual obligation to do so. I understand DTI's submission to be that, if the payment is not a payment made under the adjudication application, then s 97(1)(b) of the Act is not engaged. It can be accepted that the payment which has been made by the applicant in this case is not a payment under the adjudication application and therefore does not attract the character of the binding amount which might otherwise be revisited at a later time, as other payments under the contract might be. That is because, there is in fact no adjudication of the sum involved. The whole point of the payment, it seems to me, is that the adjudication application is therefore taken to be withdrawn, and the payment could not be other than a payment made pursuant to the contractual terms.