EMERGENCY SERVICES SUPERANNUATION BOARD v ROBERT SUNDERCOMBE & ANOR

EMERGENCY SERVICES SUPERANNUATION BOARD v ROBERT SUNDERCOMBE & ANOR - [2004] NSWSC 405 - NSWSC 2004 case summary — Zoe

[16]

11 In this application the plaintiff originally propounded five grounds upon which the adjudication should be quashed but was granted leave to add a further ground by way of Further Amended Summons which is to be filed by 4.00pm tomorrow. Ground 1 - Defendant made an election 12 The first ground raised by the plaintiff is that Lipman was precluded from proceeding with the withdrawal of the adjudication application and making the new application because it had accepted payment of the $85,000-odd in circumstances where such payment would not have been made but for the finding that the first determination was unaffected by jurisdictional error to the extent of the amount of the payment. It was submitted that Lipman effectively affirmed the first determination and the first adjudication that gave rise to the first determination. Reliance was placed on what Mason J, as he then was, observed in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 655: A person is said to have a right of election when events occur which enable him to exercise alternative and inconsistent rights, i.e. when he has the right to determine an estate or terminate a contract for breach of covenant or contract and the alternative right to insist on the continuation of the estate or the performance of the contract. It matters not whether the right to terminate the contract is conferred by the contract or arises at common law for fundamental breach - in each instance the alternative right to insist on performance creates a right of election. 13 It was submitted that the tender by the plaintiff to Lipman of the $85,000 put Lipman to an election whether to (a) accept the payment and with it the consequence that its right to withdraw the first adjudication application was extinguished or (b) reject the payment and thereby preserve its rights. 14 I disagree with that submission. What McDougall J said was that he would not quash the determination unless the plaintiff paid to Lipman the $85,000. It seems to me that McDougall J made clear that he was only going to grant relief on the condition that the plaintiff pay Lipman the unaffected amount. It was really up to the plaintiff whether to agree to that condition and it could not, it seems, have obtained its relief in the form that it did without agreeing to pay that amount. The defendant had no say at that stage. It was a matter for the plaintiff. I suppose, on one view of it, the defendant could have objected to the process that his Honour propounded in his judgment before orders were entered to indicate that it did not wish to be paid, but in the circumstances it does not seem to me that the payment of $85,000 imposed on the defendant a requirement to elect to receive it and give up all its rights. Indeed, the correspondence to which I have referred indicates that the plaintiff itself wished to maintain its rights under the contract.

[23]

(4) This Division applies to a new application referred to in this section in the same way as it applies to an application under section 17." [102] An adjudicator may fail to determine an adjudication application for the purposes of s 26(1)(b) for a number of reasons. The adjudicator may become incapable of making the determination within the time required or may for some reason refuse to do so or become disqualified from doing so. But, in my opinion, an adjudicator may also fail to determine an adjudication within time for the purposes of the subsection if the determination is purportedly delivered within time but is not given according to law. For example, where the adjudicator has given a determination within time but it has been procured by fraud, it could hardly be said that the adjudicator has performed the task which the Act requires of him or her within the time stipulated in s 21(3). The same may be said of a case in which the adjudicator delivers a determination within the time stipulated but the determination has been given without jurisdiction. In such cases, it may be said that the determination is of no effect: it is as if the adjudicator had made no decision at all. [103] When an adjudication under the Act is quashed pursuant to judicial review, in my opinion the claimant becomes entitled to withdraw its adjudication application under s 26(2) upon and from the date upon which the quashing order is made because on that date it has been ascertained that the adjudicator did not determine the adjudication according to law within the time allowed by the Act, for the purposes of s 26(1)(b). The claimant may then, within five business days of the quashing order, make a new adjudication application under s 26(3). That subsection, in conjunction with s 17(3)(c), (d) and (e), makes it clear that the adjudication process does not start all over again from the beginning. Rather, there is an adjudication pursuant to a fresh adjudication application, of the dispute as defined by the original payment claim and the original payment schedule. The respondent may not, therefore, make any submissions to the new adjudicator in reliance upon reasons for withholding payment of the original payment claim which were not indicated in its original payment schedule, as provided in s 14(3) and s 20(2B). The new adjudicator appointed by the nominating authority under s 19 may, or may not, be the adjudicator who conducted the original adjudication, as considerations of convenience, saving of expense and perceptions of pre-judgment may require. In conducting the new adjudication, the adjudicator would, doubtless, have regard to the reasons of the Supreme Court for quashing the original determination. By this procedure, the saving in time and expense envisaged by the adjudication machinery of the Act may not be totally lost.

[30]

28 It was submitted that the plaintiff was not in a position to know or understand the nature of the claim that was made against it or understand the provisions of the contract upon which the claim was made. This was raised before the adjudicator in a general way, it seems, and the adjudicator dealt with it under a heading "there is insufficient information in the payment claim to enable the respondent to respond". Reliance was placed upon what Einstein J said in John Holland Pty Limited v Cardno MBK (NSW) Pty Limited & Ors [2004] NSWSC 258. 29 The adjudicator made findings in respect of that submission and found that the payment claim was not defective and that the respondent had been provided with enough information to meaningfully respond in the payment schedule. The payment schedule is in evidence before me and it is detailed indeed. It includes a schedule setting out the various items and the plaintiff's response to Lipman's claims. In addition, the plaintiff referred to its understanding that Lipman's claims for time-related costs were made pursuant to cl 36.2(b) of the contract, with reference to a letter of 19 May 2004 that refers to Lipman's claim "pursuant to cl 36.2(b) of the contract". It is apparent that the plaintiff assumed that that was the clause under which the defendant was proceeding. 30 It is submitted that the Act requires appropriate exposure of the nature of the claim so that the recipient of it is able to understand what is claimed against it. Section 13 of the Act, in particular s13(2)(c), requires that "A payment claim must state that it is made under this Act". It also requires that it must identify the construction work or related goods and services to which the progress payment relates and must indicate the amount of the progress payment that the claimant claims to be due. In John Holland Einstein J said: [23] whilst it is not permissible to construe section 13 as providing that in order to be a valid payment claim, such a claim must do more than satisfy the requirements stipulated for by subsection 2(a), (b) and (c), the consequence to a claimant which does not include sufficient detail of that claim to be in a position to permit the respondent to meaningfully verify or reject the claim, may indeed be to abort any determination. 31 It seems to me that there is no jurisdictional error in respect of this matter identified in the determination of the first defendant. Rather, it seems to me that the adjudicator dealt properly within the confines of his statutory obligations and proceeded to deal with the claim that there was insufficient information in the payment claim to enable the respondent to respond.

[32]

33 The adjudicator, in dealing with the time costs in relation to variations, said in par 52 that the respondents had raised a series of reasons in their adjudication response on this topic that were not included in their payment schedule. Specifically, he referred to pars 60 to 62 and said that they had not been considered pursuant to s20(2B) of the Act. Section 20(2B) of the Act prohibits a respondent to a payment claim including in the adjudication response any reason for withholding payment, unless those reasons have already been included in the payment schedule provided to the claimant. Pars 60 to 62, which the adjudicator said that he had not paid regard to were as follows: 60. ESSB submits that Lipman has not identified (in either its Payment Claim or its Application) a contractual basis for entitlement to this sum. The payment claim does not refer to any provision of the Contract. In its Application for Adjudication Lipman states (at paragraphs 1 and 2 under the heading "Tab No 3"): "The term "time related costs" is used when referring to the variation cost component described in clause 36.2(b) of the Contract. The claimant has an entitlement under the contract to claim and be paid for actual costs caused by time related issues in performing a variation." Such a statement does not identify the basis of claim and it is submitted that the Claimant has provided insufficient information to ESSB to respond. ESSB repeats its submissions in paragraphs 31 to 35 above in this regard. Further, the strong inference from Lipman simply asserting that it has an entitlement under the Contract for these costs, without identifying, adequately or at all, the relevant contractual provisions, is that Lipman does not itself know what these provisions are. 61. Any such submission by Lipman is embarrassing, unhelpful and an abuse of the adjudication process and should be construed against Lipman to the fullest extent. 62. In the circumstances: (a) the inclusion of this claim in the Application invalidates the Application; and (b) the claim should be dismissed.

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