Futurepower Developments Pty Ltd v TJ & RF Fordham Pty Ltd

Relevant legal principles

1. A number of principles are relevant in considering the question whether an adjudicator adequately considered a party's submissions and gave sufficient reasons for his or her decision. They were not seriously in dispute between the parties.
2. First, reasoning for an administrative decision should not be read "minutely and finely with an eye keenly attuned to the perception of error": Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 456 at 287, cited in PPK Willoughby v Eighty Eight Construction Pty Ltd [2014] NSWSC 760 at [59]-[62]. Rather, a broad reading of the reasoning should be adopted in recognition of the fact that administrative decisions are not made by experts accustomed to legal expression: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6 at 291 (Kirby J).
3. Second, the reasons should be read in their entirety: PPK Willoughby v Eighty Eight Construction Pty Ltd [2014] NSWSC 760 at [62]; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 291 (Kirby J).
4. Third, consideration of whether the applicant has been afforded procedural fairness must take into account the scheme prescribed by the Act and the fact that it is "inappropriate" for the court to "sift finely through the reasons of the decision maker in an attempt to find slips warranting the court's intervention": Clyde Bergemann at [58]; Watpac Constructions (NSW) Pty Ltd v Austin Corp [2010] NSWSC 168 at [142], [146].
5. Fourth, and related to the third point, a failure to give "lengthy, elaborate or detailed" reasons is not indicative of a denial of natural justice: Clyde Bergemann at [66]. In fact, the Act itself deters adjudicators against giving lengthy reasons by prescribing a compressed (10 business day) timeline for the provision of reasons: s 21(3)(a) of the Act. So long as reasoning demonstrates that the adjudicator has turned his or her mind to the issues raised, natural justice, and the parties interest in expediency, will have been served: Clyde Bergemann at [66]-[67].
6. Fifth, an honest error in identifying or addressing issues for determination is not the same as making a determination without good faith. The former will not make an adjudicator determination invalid while the latter will: Brookhollow Pty Limited v R & R Consultants Pty Limited and Anor [2006] NSWSC 1 at [58].

The failure to take account of the amount paid by Futurepower

1. The first issue raised by Futurepower arises not from the adjudication application and Futurepower's response to it but from the determination itself. Futurepower contends that the Adjudicator failed to take account of the fact that it had paid $216,144.27 in respect of TRN's payment claim. That is said to be an obvious error that vitiated the determination.
2. I do not accept that submission. Under s 22(5) of the Act, the Adjudicator may, on his own initiative or on the application of either party, correct the determination if, among other things, it contains an error arising from an accidental slip or omission. The failure to deduct the $216,144.27 from the Adjudicator's determination clearly falls into that category. In the determination, the Adjudicator records that the scheduled amount in the payment schedule was $216,144.27 and, later, that the amount in dispute was $475,840.44. It was obvious, and it was obvious to the Adjudicator, that it was not in dispute that Futurepower owed TRN $216,144.27 and that consequently that amount did not need to be the subject of the adjudication determination. It was clearly a slip for the Adjudicator to include that amount as part of his determination. That slip is capable of being corrected by the Adjudicator. In fact, of course, the amount has been paid and TRN has not sought to register a judgment which includes that amount. It cannot be a jurisdictional error if the Act gives the Adjudicator jurisdiction to fix the very error in question. In any event, the court should exercise its discretion to refuse relief where relief can be obtained from the Adjudicator and where the amount was never the subject of a dispute between the parties and has, in fact, been paid.

The position of Mr Harding

1. The second issue raised by Futurepower concerns the ability of Mr Harding to give directions on behalf of the Superintendent.
2. The Adjudicator dealt with this issue principally in the context of his discussion of variation no 1. The Adjudicator observed (para 70) that cl 21 of the Contract states that: The Superintendent may from time to time appoint individuals to exercise delegated Superintendent's functions … The Adjudicator also observed (para 71-2) that "Superintendent" was defined to include a "Superintendent's Representative" and that "Superintendent's Representative" was defined to mean "an individual appointed in writing by the Superintendent under clause 21".
3. The Adjudicator then deals with Futurepower's arguments in relation to Mr Harding in these terms: 73. Item 5 of the Contract names NWS and Mr Attard as Superintendent. It does not expressly limit the role of Superintendent to Mr Attard personally, his name is listed below that of NWS in Item 5 of the Contract. Mr Harding is a Project Manager employed by NWS. I have made note of the fact that Mr Harding has signed the Clearance Certificates 1 to 6 on behalf of NWS as Superintendent over a period of approximately six months from August 2015. Which indicates to me that Mr Harding was performing a role vis a vis as a representative of the Superintendent, that included such functions as signing the Clearance Certificates on behalf of the Superintendent NWS. 74. At paragraph 12 on page 61 of the Adjudication Response the Respondent takes issue with Mr Harding signing the Clearance Certificates and submits that the Project Manager is not authorised to endorse the progress claims and that in effect the Superintendent has not issued a Clearance Certificate at any stage. The Respondent has not provided any evidence that it ever challenged Mr Harding signing the Clearance Certificates as Superintendent during the works period. 75. On the evidence before me I am satisfied that Mr Harding was an employee of NWS, that NWS is named as Superintendent on the Contract and that Mr Harding was acting as de facto Superintendent's Representative and that neither the Respondent nor Mr Attard raised any objection to Mr Harding acting in this role during the duration of the works.
4. Futurepower submits that these paragraphs provide inadequate reasons for the conclusion that the Adjudicator reached because he gives no reasons for the conclusion that Mr Harding was appointed as a Superintendent's Representative and no reasons for why the fact that he operated as a "de facto" Superintendent's Representative was sufficient.
5. I do not accept that submission. The Adjudicator correctly identified the issue that he was required to address and the terms of the Contract that were relevant to that issue. He explained why he thought Mr Harding had operated as a de facto Superintendent's Representative. There was ample evidence to support that conclusion. He concluded that that was sufficient for Mr Harding to be a Superintendent's Representative for the purposes of the Contract. In my opinion, it was not necessary for him to do more. In particular, it was not necessary for him to set out the various legal bases on which the parties might be bound by the way in which they had conducted themselves notwithstanding their failure to comply strictly with the terms of the contract governing their relationship. It is plain that the Adjudicator turned his mind to the issue and considered it. That is sufficient.

Clauses 36 and 58 of the Contract

1. Futurepower's principal complaint in relation to cls 36 and 58 of the Contract is the way in which the Adjudicator dealt with its arguments in relation to cl 36.2. That clause provides: 36.2 Proposed variations The Superintendent may give the Contractor written notice of a proposed variation. The Contractor shall as soon as practicable after receiving such notice, notify the Superintendent whether the proposed variation can be effected, together with, if it can be effected, the Contractor's estimate of the: a) effect on the construction program (including the date for practical completion); and b) cost (including all time-related costs, if any) of the proposed variation. The Superintendent may direct the Contractor to give a detailed quotation for the proposed variation supported by measurements or other evidence of cost. The Contractor's costs for each compliance with this subclause shall be certified by the Superintendent as moneys due to the Contractor. Clause 58 relevantly provided that TRN "when requested, shall forward to the Superintendent any invoices, statements or receipts that may be required for checking any variation".
2. Also relevant is cl 41.2 which relevantly provides that "The failure of a party to … communicate a claim in accordance with the relevant provision of the Contract shall, inter alia, entitle the other party to damages for breach of Contract but shall neither bar nor invalidate the claim".
3. Futurepower submitted before the Adjudicator that cls 36 and 58 had not been complied with. In considering that question, the Adjudicator referred (at para 99) to TRN's email dated 4 August 2015 informing Mr Harding that there was approximately 718m3 of contaminated material and to Mr Harding's email dated 10 August 2015 asking TRN to proceed. The Adjudicator continued: 99. … It is apparent from this email correspondence that Mr Harding was satisfied with the prices and measurements provided by the Claimant for the proposed works. Mr Harding subsequently certified payment for these works in Clearance Certificate 2 and following. 100. The Claimant subsequently provided further supporting material, copies of which are at Tab 11 of the Adjudication Application: (a) a copy of the volume calculation, dated 4 August 2015, which shows a volume of 717.867m3. The volume calculation is titled Crojar-Vol Asbestos Craboni. At paragraph 18 of the Payment Schedule the Respondent has submitted that the calculation actually relates to a different site at which the Claimant was also working. At 4.43 to 4.45 of the Adjudication Application the Claimant has explained that while it was working on a number of sites in the area and grouped them all together under the name "Crojar" as in internal reference code, the volume calculation does indeed relate to the Site. (b) copies of the Dial-a-Dump dockets and a summary of the tonnage of material removed which indicates that a total of 1,191.20 tonnes were removed on 12 August 2015 and 236.24 tonnes were removed on 2 September 2015. 101. The Claimant also relies on the reports and documentation prepared by PEA, including PEA's Waste Soil Classification Report dated 10 August 2015 at Tab 13 of the Adjudication Application which estimates 900 tonnes of soil and the second PEA Waste Soil Classification Report dated 28 August 2015, which estimates a further 300 tonne of soil stockpiled on site on 13 August 2015 following the first removal on 12 August 2015. 102. On the basis of the above reasons I am satisfied that the Claimant complied with clause 36.2(b) for Variation 01.
4. The Adjudicator then dealt with Futurepower's argument based on cl 36.4 (which set out how the Superintendent was to price a variation), pointing out that the amount claimed by TRN in respect of variation no 1 was calculated in accordance with the rates set out in TRN's email dated 4 August. He then said (para 104): I accept the Respondent's submission that the Claimant has not provided any evidence that it notified the Superintendent of the effect on the Construction Program as required by clause 36.2(a) of the Contract. However, the Claimant has submitted that clause 41.2 of the Contract expressly states that a failure of a party to communicate a claim in accordance with the relevant provisions of the Contract shall neither bar nor invalidate the claim. I therefore accept that the Claimant's failure to comply with clause 36.2(a) of the Contract does not invalidate Variation 01.
5. Futurepower contends that the Adjudicator did not adequately explain why cls 36.2 and 58 had been complied with. I do not accept that contention. It was plain that the Adjudicator thought that Mr Harding's email acceptance of TRN's rates, and the fact that Mr Harding subsequently issued clearance certificates in respect of the work, was adequate evidence that the Superintendent had approved the variation in accordance with cl 36.2. Whether he was right or wrong about that, he was entitled to reach that conclusion and the reasons he gave provided a sufficient basis for him doing so.
6. It is also plain that the Adjudicator thought that the provision of information to which he referred was sufficient to comply with the requirements of cl 36.2, and cl 36.2(b) in particular, and that it was unnecessary for TRN to comply with cl 36.2(a) because of cl 41. It was not necessary, as Futurepower appears to contend, for the Adjudicator to seek to explain why he thought the information was sufficient or why he thought that cl 41 was applicable. That was detail which was not necessary to understand how the Adjudicator reached the conclusions that he did. The reasons that he gave demonstrated that he had considered the correct provisions of the Contract and the arguments advanced by the parties in relation to them and recorded the conclusion he had reached concerning those arguments. He was not required to do more.

Were the remediation works carried out as claimed?

1. The Adjudicator addressed this issue in paras 106 to 114 of his determination. In para 106, the Adjudicator summarises the reasons advanced by Futurepower for contending that the asbestos remediation works were not carried out on the site as claimed. As the Adjudicator pointed out, those reasons made up the bulk of the Adjudication Response. The Adjudicator summarised those reasons in the following terms: (a) [Futurepower's] geotechnical consultant, Geotest, did not find evidence of significant asbestos contamination on the Site [the report was prepared in connection with the DA application] … [Futurepower] therefore questions the discovery by the Claimant of asbestos contaminated material on the site; (b) the Claimant was conducting works on a number of sites in the area and the Claimant's own evidence indicates that it was dealing with a number of sites at the same time. … (c) the proper procedures for removing asbestos were not complied with. … The Respondent appears to submit that Jason Kennett was not on site during the removal, however the Respondent provides a list of the people inducted onto the site on 10 August 2015 and includes Jason Kennett in that list; (d) the timeline of events is not plausible. [some examples are then given including the fact that the bulk of the ACM was removed on 10 August 2015, which was two days before the SGS test results were obtained]; (e) the SGS testing results are problematic. The Respondent submits on pages 28 to 31 of the Adjudication Response that the SGS Report inter alia does not confirm where the samples tested came from, and makes no reference to the chain of custody of the samples and that there is no reference to asbestos in the testing results; (f) the Claimant has refused to provide primary documentation from PEA and SGS …
2. The Adjudicator concluded that "the Claimant has established that it did carry out the asbestos remediation works on the Site as claimed". He gave the following reasons: 108. The Claimant has submitted that the Respondent attended a site meeting on 21 July 2015 at which the ACM was discussed and examined. The Respondent has not refuted this submission. I therefore accept that the Respondent was made aware of the presence of ACM on the Site in July 2015 and that insofar as the Respondent submits that it does not believe that there was an ACM contamination on the Site, this does not accord with the Claimant's evidence that the Respondent inspected the ACM on the Site on 21 July 2015. 109. The Claimant submits that it engaged independent consultants, PEA, to inspect and sample the ACM and prepare a RAP and Waste Classification Report. The Claimant has provided copies of these Reports and the laboratory test results from SGS. The RAP clearly identifies the Site in the title, Remediation Action Plan for 30 Jardine Drive, Edmondson Park, NSW. At paragraph 1.0 of the RAP the site is again identified as 30 Jardine Drive Edmondson Park and Lot 33 in DP 29317. I therefore accept that the Claimant has established that the independent documentation is in respect of the Site. 110. The Respondent has raised a number of concerns about the details of PEA and SGS's actions in carrying out their functions and has hinted at collusion with the Claimant to fabricate the reports relied upon by the Claimant to establish the existence and extent of the ACM. For the purposes of this Adjudication, I will take the reports produced by PEA and SGS at face value and determine that they do support the Claimant's claim as to the existence and extent of the ACM on site. 111. I determine that the Claimant has provided an explanation as to why the Geotest inspection may have missed the asbestos contamination, being that that Geotest's sampling was taken around the edge of the contaminated area and the Geotest Report acknowledged that it was unable to example areas of the site due to heavy vegetation. 112. The Claimant has also pointed to a photograph dated 10 August 2015 provided with the Payment Schedule which shows the stockpile of the ACM on site. I therefore accept the Claimant has pointed to photographic evidence showing the existence of the ACM. 113. For the above reasons I determine that the Claimant has established that the ACM did occur on Site as claimed by the Claimant. 114. I also determine that the Claimant has provided evidence, in the form of delivery dockets, transport running sheets and day field reports as well as the reports prepared by PEA substantiating the extent of the ACM and the activities related to its removal.
3. In my opinion, these reasons adequately address the issues raised by Futurepower. It is plain from the summary that the Adjudicator had carefully considered Futurepower's submissions. Moreover, it is relevant in considering the question whether the Adjudicator gave adequate reasons for his decision that he was required to deal with lengthy, rambling and difficult-to-follow submissions in a short period of time.
4. The point summarised in para (a) is addressed in para 111 of the determination. The point summarised in para (b) is addressed in paras 108 and 109 of the determination. Those matters provided ample justification for the conclusion that the asbestos that was found on testing came from the site. The point summarised in para (c) was addressed partly in the summary itself (Mr Kennett was inducted onto the site) and the material referred to in para 114. The Adjudicator was entitled to accept the records that were provided to him as providing adequate evidence that the work was properly carried out. The remaining points were addressed in para 110. That paragraph is brief. However, it is evident from it that the Adjudicator chose to accept the reports of PEA and SGS (a testing laboratory). In my opinion, he was not obliged to give reasons for doing so. The reports were prepared by independent experts. The reasons advanced for why the Adjudicator should reject them were complicated and confusing. It is evident that the Adjudicator considered but did not accept them. It was not necessary for him to do more.

The other variations

1. Futurepower takes objection to the following paragraphs of the Determination: 128. The Respondent's position in relation to the Claimant's non-compliance with the strict procedures under clause 36 are inter-related to the issue as to the validity of Mr Harding's decisions and directions in approving variations. The issues are inter-related in the sense that Mr Harding did approve the variations on behalf of the Superintendent. 129. The procedure under clause 36 is a process between the Claimant and the Superintendent whereby ultimately the Superintendent may approve variations even if those parties have deviated in some part from strict adherence to that procedure through an exchange or oral discussions or informal emails. It nonetheless remains a fact that all of the variations 02 to 08 were approved by Mr Harding on behalf of the Superintendent and valued accordingly. In those circumstances, for the purpose of this adjudication, I am satisfied that Mr Harding acted appropriately in so doing. I will deal with variations 01 to 08 on that basis.
2. Those paragraphs are said to provide no reason for the conclusion stated in them. However, those paragraphs must be read in light of the Adjudicator's discussion of the same issues in the context of variation no 1. The Adjudicator explained why he thought that Mr Harding should be treated as a Superintendent's Representative - namely, that he had acted in that position. He also explained that he thought it was adequate compliance with cl 36 if the variations were approved by Mr Harding and valued by him in accordance with the agreed rates. Whether he was right or wrong about that does not matter. He addressed the issue of whether cl 36 had been complied with and set out why he thought that it had.
3. Futurepower also complains that the Adjudicator did not deal adequately with variations 3 to 8. The complaint in each case is the same - namely, that the Adjudicator simply recites the competing contentions and then adopts the formula "For the reasons given above I determine that Variation XX has been approved by the Superintendent". However, it is clear that in each case the issue is whether the relevant variation has been approved in accordance with the Contract. In each case, that issue turned on whether the approval given by Mr Harding was sufficient. That, in turn, depended on whether Mr Harding was to be regarded as a Superintendent's Representative and whether Mr Harding had agreed to the variations. The Adjudicator had already explained why he had reached the conclusions he had on those questions when dealing with variation no 1. He was not obliged to repeat those conclusions in relation to the other variations.

Orders

1. The orders of the court are that the claim for relief in paragraphs 1, 2, 3, 7 and 8 of the summons be dismissed with costs.
2. I will hear the parties on what ancillary orders should be made in the light of this judgment. If the parties can agree on the terms of the orders, I will make them in chambers.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 March 2017