HAMERSLEY IRON PTY LTD -v- JAMES [2015] WASC 10 (16 January 2015)

(2) I would stay Forge's application for leave to enforce the determination.

5 Hamersley and Forge are parties to a contract (Contract) dated 10 September 2012 for the design and construction by Forge of fuel hubs at West Angelas (Separable Part One) and Brockman (Separable Part Two).[1]

6 By letter dated 28 March 2013, Hamersley instructed Forge to discontinue work on the Brockman fuel hub.[2]

7 Following the reduction in the scope of work resulting from the letter of 28 March 2013, the parties were not able to agree the final value of the contract of works relating to the Brockman fuel hub (Contract Value). Contract variation 6 was issued by which the total Contract Value was reduced by the sum of $10,222,918.87. Forge contended that the remaining Contract Value was as adjusted by contract variation 6. Hamersley contended that the remaining Contract Value was as adjusted by contract variation 6, plus a further reduction in scope of $13.5 million.

8 On or about 4 February 2014, Forge submitted preliminary progress payment claim number 13 (the Payment Claim) for $14,335,778.07, plus GST.[3]

9 On 11 February 2014, Forge appointed administrators, and receivers and managers were also appointed by Forge's principal secured creditor. On 12 February 2014, the receivers and managers terminated the employment of all of Forge's employees who were conducting work under the Contract.[4]

10 By letter dated 17 February 2014, Hamersley informed Forge, for reasons set out in that letter, that it only accepted $641,607.33 of the amount claimed by Forge in the Payment Claim.[5] That gave rise to the payment dispute the subject of the adjudication.

11 On or about 18 February 2014, Hamersley had recourse to the security furnished by Forge, and recovered the sum of $5,633,442.

12 On 24 February 2014, Hamersley terminated the Contract.

13 On 17 March 2014, Forge served the adjudication application under the Act.

14 Hamersley served a response (the Response) on 31 March 2014.[6]

15 In the Response, Hamersley contended that Forge had not demonstrated that it had completed the remaining scope of work with respect to its Payment Claim, other than in relation to work to the value of $641,607.33. Hamersley also contended that it was entitled to setoff the sum of $7,416,742 under cl 47(a) of the general conditions of the Contract, and under s 553C of the Corporations Act 2001 (Cth).

(d) less balance of value of work under the Contract ($4,234,755)

17 Hamersley's claims were set out in the Response,[7] and were supported by a statutory declaration of Ms Kate McLachlan dated 31 March 2014.

18 In her statutory declaration, Ms McLachlan stated that Forge was late in completing the West Angelas fuel hub and that liquidated damages had accrued, totalling about $2 million as shown in the table at attachment KM 11.

19 Ms McLachlan's statutory declaration further stated that Hamersley had calculated the costs involved in completing the works, namely the additional man hours required to complete the works given that the project team would need to stay on site for much longer, of the order of three or four months, than what would have been the case, and the additional costs incurred in engaging other contractors to finish the work left unperformed by Forge. She stated that the costs to Hamersley in completing the works were likely to be about $4 million more than was to be paid to Forge.[8] She set out a table of these costs:

Contract Value at termination 53,267,811

Less Amount Paid to date -49,033,056

Balance of Contract Value 4,234,755

____________________________________________________

Estimated costs to complete 13,900,391

Less Balance on Contract Value 4,234,755

Additional costs to complete 9,665,636

____________________________________________________

Additional approximate cost to complete Contract 9,665,636

Less bonds -5,633,443

4,032,193

20 Taking into account the recovery of approximately $5.6 million under performance bonds, she stated that the entitlement to liquidated damages plus the additional cost to complete as shown in the table that was attached as KM 12 meant that Hamersley had an outstanding claim against Forge for approximately $7 million.

21 In its adjudication application, Forge contended that the Contract Value of the remaining work was $2,627,454.59. That sum was based on the value of the work claimed in its Payment Claim. Forge also contended that the cost to complete the remaining work under the Contract was $2,279,711. That sum was based on a schedule attached to the application.[9]

22 By letter dated 2 April 2014, the adjudicator requested Forge to provide further submissions in relation to the issue of setoff raised in Hamersley's Response. The next day the adjudicator requested Hamersley to respond as necessary to any matters raised in the reply by Forge. It is not in doubt that these requests were made by the adjudicator under s 32(2)(a) of the Act.

23 Forge responded to the adjudicator's request by providing further submissions (Forge's Further Submissions) on 7 April 2014 attaching further information and documents.[10]

24 In its Further Submissions in response to Hamersley's setoff claim, Forge stated, among other things, that Hamersley's claims should be rejected, in summary, because:

(a) the Contract Value at termination was considerably higher than as alleged by Hamersley;

(b) the cost of completing the works is considerably lower than as alleged by Hamersley;

(c) Hamersley has not accounted for values of works performed following the Payment Claim for which Forge had not then been paid;

(d) Forge is entitled to extensions of time which negate Hamersley's purported entitlement to liquidated damages; and

(e) Hamersley has not accounted for delay costs payable to Forge.[11]

25 Forge's Further Submissions referred to the actual and agreed Contract Value as at 24 January 2014 as set out in the Payment Claim. Forge stated[12] that how Hamersley had calculated the Contract Value at termination, and why its figure was $13.5 million less than the value shown on agreed documentation, was not explained in the declaration of Ms McLachlan or at all.

26 Further, Forge stated[13] that Hamersley had offered no explanation as to how it calculated the cost to complete. Forge's response stated that it had undertaken a detailed assessment of the cost to complete, reflected in the spreadsheet included as document 33 of the application.

27 On 10 April 2014, Hamersley provided further submissions, information and documents, as requested by the adjudicator, in response to Forge's Further Submissions (Hamersley's Further Submissions).

28 Hamersley's Further Submissions dealt with various issues arising from Forge's Further Submissions. The question of whether moneys were owed was dealt with in three paragraphs of Hamersley's Response.[14] In broad summary, Hamersley submitted that Forge was raising new claims which had not previously been made and had not been adequately substantiated, and that those claims should not be given any weight in the present adjudication.

29 Hamersley's Further Submissions also attached a further statutory declaration of Ms McLachlan. This included considerable detail directed to substantiating questions of the Contract Value at termination and the cost to complete.[15]

30 On 14 April 2014, the adjudicator determined that the adjudicated amount in respect of the Payment Claim was $641,607.33, plus GST. The adjudicator directed Hamersley to pay Forge the sum of $705,768.06 on or before 30 April 2014, together with interest at 6% from 17 February 2014.

31 The adjudication determination included the adjudicator's reasons as required by s 36(d) of the Act. His reasons included the following:

(1) The adjudicator rejected Hamersley's submission that the application should be dismissed because it is not possible to fairly make a determination because of the complexity of the matter. In coming to that conclusion, the adjudicator observed that Hamersley's Response includes only 20 documents of an evidentiary nature, a relatively moderate number compared with what might be expected given the scale of amounts claimed. The adjudicator concluded that the setoff did not involve unusual complexity.[16]

(2) The adjudicator accepted Forge's submission that contract variation 6 conclusively established the Contract Value of the remaining scope of work in Separable Part Two. However, he accepted Hamersley's submission that it was for Forge to demonstrate that any work the subject of a payment claim had been done.[17] Forge did not satisfy the adjudicator that it had completed the whole of the outstanding scope of work, or any more than was inherent in the admitted balance of $641,607.34.[18]

(3) The adjudicator accepted Hamersley's contention that he had jurisdiction to consider a setoff in the context of the adjudication.[19] Forge does not challenge that approach.

(4) Paragraph 14 of the adjudication reasons dealt with the merits of Hamersley's claim for setoff. I will set out what the adjudicator said in full in that respect:

1. I am not satisfied on the balance of probabilities that the completion of the outstanding work under the Contract will exceed the unpaid balance of the Contract sum as at termination, for the reasons set out as follows:

(a) Kate McLachlan in her Statutory Declaration in the Response referred to Hamersley Iron as having calculated the Contract value at termination at $53,267,811. The sum paid by Hamersley Iron to Forge Group (representing payment in respect of works carried out to 13 December 2013) amounted to $49,033,056 (not in dispute) leaving an estimated cost to complete of $4,234,755.

(b) The sum of $4,234,755 represented the value of the work yet to be performed as at 13 December 2013 and not paid for by 14 February 2014, when the Contract was terminated. The calculation referred to by Kate McLachlan takes no account whatsoever of the value of work done after 13 December 2013. It is conceded by Hamersley Iron and KBR that work to the value of $641,607.34 was done between 13 December 2013 and 24 January 2014, reducing the amount of work to be done as at 24 January 2014.

(c) The calculation referred to by Kate McLachlan also ignores work done between 24 January 2014 and termination on 14 February 2014. Kate McLachlan concedes that there were employees of Forge Group working on site, repatriated at the expense of Hamersley Iron. While there was substantially less time between 24 January 2014 and 14 February 2014, when the Contract was terminated, as compared to the period between 13 December 2013 and 24 January 2014, the latter period would have incorporated the Christmas/New Year break. It seems reasonable to assume that work would therefore have taken place between 13 December 2013 and 14 February 2014, reducing the Contract value of the remaining work.

(d) Forge Group with their further Submissions have provided me with Preliminary Progress Payment Claim No. 14, which shows a claim for $902,213 in respect of work done on Separable Part 1, including $706,166 for demobilisation. It is not necessary for me to determine how much work was actually done after 24 January 2014, but Forge Group are correct in submitting that no account of that work has been taken in the calculations referred to by Kate McLachlan.

(e) Forge Group have prepared a detailed schedule of the cost of completion, estimated at $2,279,711. While that figure may well be too low, it is far more credible than the claim of $13,900,391, which on the face of the calculations submitted by Hamersley Iron is about $10,000,000 too high and for which no detailed schedule was provided in the Response.

(f) It is not necessary for me for the purpose of this Determination to reach any conclusion as to the actual cost of completing the work. It is sufficient for me to find that on the balance of probabilities Hamersley Iron have not proven that the unpaid balance of the Contract sum, conceded by Hamersley Iron of $4,234,755, is less than the cost of carrying out the work.

(g) If the cost of completing the work were actually $13,900,391, then Hamersley Iron would have paid far more to Forge Group than the percentage of work said by KBR to have been actually completed by Forge Group. This I find very unlikely indeed, since a review of the documents in the Response and a consideration of the correspondence leading up to the Progress Payment Certificate of 17 February 2014 shows that KBR were zealous in checking payment claims.

(h) In the Statutory Declaration by Kate McLachlan with the further Submissions provided by Hamersley Iron in reply to the Forge Group further Submissions, Kate McLachlan makes a number of new assertions which are not set out in the Response or previous documents as follows:

(i) The reduction of the Contract sum from the apparent figure of $66,767,811.73 to $53,267,811.00 is explained as a reduction in the scope of Separable Part 2 in the sum of $13,500,000, although no variation to that effect or assessment by KBR has been issued. I am not satisfied that this figure has been substantiated as a proper assessment by Hamersley Iron.

(ii) Kate McLachlan records that $10,662,251.24 has been paid to Forge Group by Hamersley Iron upon assessments by KBR of Separable Part 2, but is now revised by Kate McLachlan as a very substantial overpayment, the actual figure which should have been assessed in her view being about $8,000,000. This is a novel assertion on her part to which Forge Group have no opportunity to respond and I find it improbable that such a major over certification should have occurred.

(iii) The cost to complete has been estimated by Hamersley Iron at a somewhat reduced figure of $13,705,164. This includes the sum of $2,134,500 in respect of work on Separable Part 2 already paid for in full by Hamersley Iron but now said to be required to be completely redone. This is not an assertion to which Forge Group had any opportunity to respond.

(iv) The costs of completing the Project now set out include the actual cost of getting the Forge Group employees home of $56,870 and the estimated cost of delivery of personal effects to Forge Group employees of $50,000, which in my view are not costs of completing the Work but are better dealt with as other back charges, as presently claimed in the Response.

(v) On reviewing the forecast costs for the completion of the West Angelas Fuel Hub, it can be seen from the attachment KM1 to the Statutory Declaration of Kate McLachlan that the cost of completing the work remaining in the West Angelas Fuel Hub is approximately $11,000,000. This compares with a balance of work remaining in the Contract of $2,697,708, reduced to $2,056,101 after taking into account the work done to 24 January 2014 and probably below $2,000,000 after taking into account work done to the termination of the Contract.

(i) Forge Group insist that the balance of the Contract sum is substantially larger. However, this makes no difference to the calculation of the setoff, in which Hamersley Iron are putting forward a cost of more than $13,000,000 to perform work which, on their figures, cannot have a contract value much more than $3,000,000.

(j) In the further Submissions raised by Forge Group, they assert that the total value of the Contract at 24 January 2014, taking into account all agreed valuations, is $66,767,811.73. For the purposes of this Determination, it is not material what value of the Contract I assess, since it is clear that Hamersley Iron are not intending to proceed with work to the value of $13,500,000 and are content to claim against Forge Group the cost of completing the rest of the outstanding work.

(k) As Kate McLachlan observes in her Statutory Declaration set out in the further Submissions from Hamersley Iron, the cost of getting other contractors in to do the work is often higher and this could be so even in the competitive market resulting from the downturn in mining services work. However, the extent of the costs claimed by Hamersley Iron appears greatly exaggerated and implausible.

(l) The claim for over certification and overpayment to Forge Group on Separable Part 2, not raised before 10 April, will not be entertained in this Adjudication as not being raised in the Response or previous correspondence and having appeared at such a late stage in the Adjudication that Forge Group have no opportunity to respond. Consequently, I am not persuaded that more work remains to complete Separable Part 2 than represented by the unpaid balance of the Contract sum for that Separable Part as calculated by Hamersley Iron namely $835,776.94.

(m) Forge Group in their further Submissions referred to the estimate by Hamersley Iron in its letter of 24 February 2014 asserting a setoff to the effect that the loss and damage resulting was in the order of $3,000,000. As was remarked in those further Submissions, that sum is fairly consistent with the calculations by Forge Group, if it refers to the balance of work remaining to complete. However, for the purposes of my assessment, it is only necessary for me to consider whether Hamersley Iron had demonstrated that the cost of completion of the outstanding works is greater than the unpaid balance of the Contract sum.

(n) Since the burden of proof is upon Hamersley Iron to satisfy me on the balance of probabilities that the cost to complete the work to them will be in excess of the remaining Contract value, something they have failed to do, I do not allow any setoff in respect of the cost of the completion of the work over and above the unpaid balance of the Contract sum and to that extent disallow their setoff.

(5) The adjudicator accepted Hamersley's claim for liquidated damages of $2,055,359.56.[20]

(6) The adjudicator found that Hamersley was entitled to the sum of $1,328,919.87 in respect of other costs and charges.[21]

(7) In paragraph 18, the adjudicator referred to Hamersley's concession that there was an unpaid balance on the Contract sum of at least $4,234,755 and that Hamersley had received $5,633,443 by way of recovered securities. Allowing for the permitted sums for other charges and for the liquidated damages, the onus was on Hamersley to demonstrate that the cost of the additional work would exceed $6,450,000, when the Contract Value was about half of that on Hamersley's own calculations. The adjudicator observed that 'even allowing for the costs of mobilisation and demobilisation and an increase in rates as compared to the Contract, no plausible explanation has been given as to how the cost of the work could be doubled'.[22]

(8) The adjudicator made reference to a document provided by Forge, which referred to mining services companies having been hit hard by the major fall back in capital expenditure by mining companies. The adjudicator observed that in those circumstances, it seemed very unlikely that Hamersley would suffer a cost explosion in the rates offered to it by a competitor of Forge. On the contrary, he said, the mining sector will be looking for work and so Hamersley will be in a strong bargaining position for the work to be offered.[23]

(9) The adjudicator concluded that on the material before him, he was not satisfied that Hamersley had established a prima facie case for a setoff in excess of the sum of $9,868,198 which it has in hand from the balance of the Contract sum and the securities called upon.

(10) Consequently, he determined that Hamersley must pay Forge the adjudicated amount of $705,786.06, on or before 30 April 2014, together with interest at 6% from 17 February 2014.

32 Hamersley applies for a writ of certiorari quashing the adjudication determination. The grounds for the application are as follows:

1. On 14 April 2014, the respondent (Adjudicator) made a determination (Determination) under the Construction Contracts Act 2004 (WA) with respect to a payment dispute arising between the other party, namely, Forge Group Construction Pty Ltd (formerly Cimeco Pty Ltd) (In Liquidation) (Receivers and Managers Appointed) (Forge Group) and the applicant (Hamersley Iron) as to a preliminary progress payment claim No 13 submitted by Forge Group to Hamersley Iron pursuant to a contract (Contract) dated 10 September 2012 between Forge Group and Hamersley Iron. In the Determination, having correctly concluded that:

(a) it was necessary for Forge Group to demonstrate that it had in fact completed the remaining scope of work with respect to its payment claim;

(b) Forge Group had not demonstrated that it had in fact completed work with respect to its payment claim save for $641,607.34 which had been acknowledged by Hamersley Iron in its progress payment certificate; and

(c) Hamersley Iron was entitled to set off against the sum of $641,607.34 amounts for which Forge Group was liable to Hamersley Iron under cl 47(a) of the General Conditions of the Contract (and under s 553C of the Corporations Act 2001) and that such a right to set off arises even when money had not already been spent by Hamersley Iron,

the Adjudicator made jurisdictional errors, or there are errors of law on the face of the record, by concluding that he was not satisfied on the balance of probabilities that the cost to complete the outstanding work under the Contract will exceed the unpaid balance of the Contract sum in that:

(1) the Adjudicator failed, as he was required by ss 32(1)(a) and 32(2) of the Construction Contracts Act, to make his determination on the basis of Forge Group's application and its attachments and Hamersley Iron's response and its attachments and further submissions and information provided by Hamersley Iron and Forge Group at the Adjudicator's request;

(2) further or in the alternative, the Adjudicator disregarded, or failed to give any weight to, or failed to give adequate weight to, Hamersley Iron's evidence and in particular the evidence of Kate McLachlan;

(3) further or in the alternative, the Adjudicator (instead) had regard to his own view as to the costs payable in the mining services sector;

(4) further or in the alternative, the Adjudicator erroneously formed a view as to the cost to complete the work by reference to contract value, and treated contract value as if it was a true indicator of the cost to complete the work (when there was no evidence which treated contract value as a benchmark);

(5) further or in the alternative, the Adjudicator dealt with disputed or contested facts arising from Hamersley Iron's evidence and Forge Group's evidence by drawing unsubstantiated conclusions about that evidence (rather than concluding pursuant to s 31(2)(a)(iv) of the Construction Contracts Act that the Adjudicator should dismiss the application without making a determination of its merits on the basis that he was satisfied that it is not possible to fairly make a determination, in the face of those disputed or contested facts, because of the complexity of the matter);

(6) further or in the alternative, the Adjudicator failed to give any reasons based on the evidence for his conclusion as he was required to do by s 36(d) of the Construction Contracts Act;

(7) further or in the alternative, the Adjudicator ignored Hamersley Iron's evidence provided in its supplementary submissions and statutory declaration as to the value of the costs to complete, and the value of the works completed despite having requested such submissions and information under s 32(2) of the Construction Contracts Act.

1. Further, by disregarding, or failing to give weight to, or failing to give adequate weight to, Hamersley Iron's evidence and in particular the evidence of Kate McLachlan, or by ignoring Hamersley Iron's evidence provided in its supplementary submissions and statutory declaration, the Adjudicator failed to accord procedural fairness to Hamersley Iron in that:

(a) the Adjudicator made findings without giving Hamersley Iron the opportunity to be heard on whether any of Hamersley Iron's evidence could or should be disregarded or ignored;

(b) further or in the alternative, the Adjudicator made findings as to credibility without giving Hamersley Iron the opportunity to be heard on the issue;

(c) further or in the alternative, the Adjudicator made findings disfavouring Hamersley Iron's evidence without giving an opportunity to Hamersley Iron to test (by crossexamination or otherwise) all disputed or contested evidence; and

(d) further or in the alternative, the Adjudicator had regard to his own view as to costs payable in the mining services sector without giving Hamersley Iron the opportunity to be heard as to that view.

1. Further, the Adjudicator's Determination was unreasonable or irrational and beyond the Adjudicator's jurisdiction:

(a) by reason of the matters set out in each one, or further and in the alternative, each one or more of grounds 1(1)-(7) above; further or in the alternative

(b) because, on the disputed or contested facts arising from Hamersley Iron's evidence and Forge Group's evidence, the Adjudicator could not have reasonably or rationally formed a view disfavouring Hamersley Iron's evidence.

33 Relevantly, the primary object of the Act is to provide a means for adjudicating payment disputes arising under construction contracts. A payment dispute arises if, by the time when the amount claimed in a payment claim is due to be paid under the contract, the amount has not been paid in full, or the claim has been rejected or wholly or partly disputed.[24] Section 3 defines a payment claim to mean a claim made under a construction contract, relevantly, by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under the contract.

34 It is not in doubt in this application that the adjudication dealt with the payment dispute arising from Hamersley's rejection of the Payment Claim.

35 Section 26 sets out the process for commencing an application for adjudication of a payment dispute. It provides that an application must be made within 28 days after the payment dispute arises. It sets out what the applicant must file and serve, and the required content of the application. Section 26(2)(c) provides that the application must set out or have attached to it all the information, documentation and submissions on which the party making it relies in the adjudication.

36 By s 27, the respondent to the application must serve its response within 14 days of being served with the application. Section 27(2) states that the response must set out the details of or have attached to it any rejection or dispute of the payment claim that has given rise to the dispute and must set out or have attached to it all the information, documentation and submissions on which the party making it relies in the adjudication.

37 Section 28 provides a process for the appointment of an adjudicator in the absence of agreement between the parties.

38 Division 3, comprising s 30 to s 37, is headed 'The adjudication process'.

39 Section 30 provides that the object of the adjudication process is to determine the dispute fairly and as quickly, informally and inexpensively as possible.

40 Section 31 sets out what the adjudicator must do. It prescribes a short timeframe, namely within 14 days of receipt of the respondent's response, within which an adjudicator is required to make a determination. That timeframe can only be varied with the consent of the parties.[25]

41 Section 31 governs the functions of the adjudicator. The section is in the following terms:

prescribed time means -

(a) if the appointed adjudicator is served with a response under section 27(1) - 14 days after the date of the service of the response;

(b) if the appointed adjudicator is not served with a response under section 27(1) - 14 days after the last date on which a response is required to be served under section 27(1).

(2) An appointed adjudicator must, within the prescribed time or any extension of it made under section 32(3)(a) -

(a) dismiss the application without making a determination of its merits if -

(i) the contract concerned is not a construction contract;

(ii) the application has not been prepared and served in accordance with section 26;

(iii) an arbitrator or other person or a court or other body dealing with a matter arising under a construction contract makes an order, judgment or other finding about the dispute that is the subject of the application; or

(iv) satisfied that it is not possible to fairly make a determination because of the complexity of the matter or the prescribed time or any extension of it is not sufficient for any other reason;

(b) otherwise, determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment, or to return any security and, if so, determine -

(i) the amount to be paid or returned and any interest payable on it under section 33; and

(ii) the date on or before which the amount is to be paid, or the security is to be returned, as the case requires.

(3) If an application is not dismissed or determined under subsection (2) within the prescribed time, or any extension of it made under section 32(3)(a), the application is to be taken to have been dismissed when the time has elapsed.

42 Section 32 deals with matters of procedure in an adjudication. It is in the following terms:

(1) For the purposes of making a determination, an appointed adjudicator -

(a) must act informally and if possible make the determination on the basis of -

(i) the application and its attachments; and

(ii) if a response has been prepared and served in accordance with section 27, the response and its attachments;

(b) is not bound by the rules of evidence and may inform himself or herself in any way he or she thinks fit.

(2) In order to obtain sufficient information to make a determination, an appointed adjudicator may -

(a) request a party to make a, or a further, written submission or to provide information or documentation, and may set a deadline for doing so;

(b) request the parties to attend a conference with the adjudicator;

(c) unless all the parties object -

(i) inspect any work or thing to which the payment dispute relates, provided the occupier of any place concerned consents to the entry and inspection;

(ii) arrange for any thing to which the payment dispute relates to be tested, provided the owner of the thing consents to the testing;

(iii) engage an expert to investigate and report on any matter relevant to the payment dispute.

(a) with the consent of the parties, extend the time prescribed by section 31(2) for making a determination;

(b) with the consent of the parties, adjudicate simultaneously 2 or more payment disputes between the parties;

(c) with the consent of all the parties concerned, adjudicate the payment dispute simultaneously with another payment dispute.

(4) If an appointed adjudicator adjudicates simultaneously 2 or more payment disputes, the adjudicator may, in adjudicating one, take into account information the adjudicator receives in relation to the other, and vice versa.

(5) An adjudicator's power to make a determination is not affected by the failure of either or both of the parties to make a submission or provide information within time or to comply with the adjudicator's request to attend a conference with the adjudicator.

(6) To the extent that the practice and procedure in relation to adjudications is not regulated by this Part or the regulations, an appointed adjudicator may determine his or her own procedure.

43 Section 36 sets out the content of an adjudicator's determinations. Among other things, an adjudicator's decision must be in writing, prepared in accordance with and containing information prescribed by the regulations, and give reasons for the determination.

44 By s 38, an appointed adjudicator's determination is binding on the parties to the construction contract under which the payment dispute concerned arose, even though other proceedings relating to the payment dispute may have been commenced before an arbitrator or other person or before a court.

45 Section 45 provides, in summary, that parallel proceedings before an arbitrator or court can be commenced and will be determined without regard to evidence of things said or done in the adjudication process.

46 Section 46 provides as follows:

Review, limited right of

(1) A person who is aggrieved by a decision made under section 31(2)(a) may apply to the State Administrative Tribunal for a review of the decision.

(2) If, on a review, a decision made under section 31(2)(a) is set aside and, under the State Administrative Tribunal Act 2004 section 29(3)(c)(i) or (ii), is reversed the adjudicator is to make a determination under section 31(2)(b) within 14 days after the date on which the decision under section 31(2)(a) was reversed or any extension of that time consented to by the parties.

(3) Except as provided by subsection (1) a decision or determination of an adjudicator on an adjudication cannot be appealed or reviewed.

Judicial review of an adjudication: legal principles

47 A determination made pursuant to s 31(2)(a) or s 31(2)(b) of the Act can be challenged by proceedings for judicial review.[26]

48 Section 46 does not preclude judicial review for jurisdictional error.[27]

49 Insofar as the distinction between an inferior court and other administrative body has utility,[28] an adjudicator under the Act is more akin to an inferior court.[29] Thus, an adjudication is not susceptible to judicial review for nonjurisdictional error, such as error of law on the face of the record. [30]

50 The nonexistence of the criteria in s 31(2)(a)(i) (iv) are jurisdictional facts which must be established in order to enliven the adjudicator's power to make a determination on the merits under s 31(2)(b).[31]

51 In Perrinepod v Georgiou,[32] Murphy JA considered the distinction between what is often termed jurisdictional facts in the broad and narrow senses. The narrow sense is where the exercise of power is contingent on the actual existence of a state of facts. In the case of a jurisdictional fact in the broad sense, the court's inquiry is directed to the process of reasoning adopted by the adjudicator, not to whether the jurisdictional fact actually existed.

52 In Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd,[33] Pritchard J considered the proper characterisation of the jurisdictional fact in s 31(2)(a)(ii). Her Honour concluded that the criteria in s 31(2)(a)(ii) should not be characterised as a jurisdictional fact in the narrow sense. Thus, the question is not whether that criterion in fact existed. Rather the focus is on the conclusion drawn by the adjudicator, and on the process by which the adjudicator came to that conclusion.

53 Her Honour's analysis has been followed in subsequent cases.[34] I too propose to follow that approach, which was the position adopted by both parties in this application.

54 So, a decision of an adjudicator in respect of one of the jurisdictional facts identified in s 31(2)(a) will be set aside if the decision:

(a) was so unreasonable that no reasonable decisionmaker could have reached that conclusion;

(c) took into account irrelevant considerations or failed to take into account mandatory relevant considerations;

(d) manifested serious irrationality or illogicality; or

(e) involved a misconception of the nature of the function which the adjudicator was performing.[35]

55 An adjudicator's determination under s 31(2)(b) can be the subject of judicial review for jurisdictional error. While the categories are not closed, the following five categories of jurisdictional error in respect of inferior courts and analogous bodies are well established:[36]

First, if an inferior court or an anomalous tribunal mistakenly asserts or denies the existence of jurisdiction. Second, if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist. Third, if it is an essential condition of the exercise of jurisdiction with respect to a particular matter that a certain event or requirement has in fact occurred or been satisfied (which I understand to be a reference to a jurisdictional 'fact') there will be jurisdictional error if the court or a tribunal purports to act in circumstances where that event has not in fact occurred or that requirement has not in fact been satisfied even though the matter is the kind of matter which the Court has jurisdiction to entertain. Fourth, jurisdictional error will occur where an inferior court disregards or takes account of some matter in circumstances where the statute establishing it and conferring its jurisdiction requires that that particular matter be taken into account or ignored as a precondition of the existence of any authority to make an order or decision in the circumstances of the case. Fifth, it will exceed its authority and fall into jurisdictional error if it misconstrues the statute establishing it and conferring jurisdiction and thereby misconceives the nature or the function which it is performing or the extent of its powers in the circumstances of the case.

56 To these may be added where the decision is made in bad faith and where it is made in breach of natural justice.[37]

57 The fourth category includes the failure to take account of a mandatory relevant consideration. The principles relevant to that ground of review were outlined by Martin CJ and Murphy JA in A v Corruption and Crime Commissioner as follows:[38]

Where it is alleged that there has been a failure to take into account a relevant consideration, the decision will only be vitiated by jurisdictional error if, on the proper construction of the Act in question, the decisionmaker was bound to take the consideration into account, as a condition of the valid exercise of the power conferred Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24, 39 (Mason J) (PekoWallsend); Project Blue Sky v Australian Broadcasting Authority [91]-[93].

The factors which a decisionmaker is bound to consider are determined by construction of the statute in which the discretionary power is conferred. If the discretion is unconfined by the statute, they must be determined by implication from the subject matter, scope and purpose of the act PekoWallsend, 39 - 40 (Mason J); R v Australian Broadcasting Tribunal; ex parte 2HD Pty Ltd, 49 50.

It must be recognised that, between matters a decision maker is bound to take into account, and those irrelevant considerations which the decisionmaker is prohibited from considering, there may be a wide range of permissible considerations which the decisionmaker may weigh or disregard without committing an error of law. It has been emphasised that a decision maker is not to be criticised for failing to consider everything which the affected party has chosen to include in an exhaustive list of all matters which the decision maker might conceivably regard as relevant Sean Investments Pty Ltd v MacKellar [1981] FCA 191; (1981) 38 ALR 363, 375; Peko-Wallsend, 39 (Mason J); Lo v Chief Cmr of State Revenue [2013] NSWCA 180 [9].

The court should be cautious when reviewing decisions on the basis of relevancy and irrelevancy so as to not stray into merits review Peko-Wallsend Ltd, 40-41 (Mason J); Bruce v Cole (1998) 45 NSWLR 163; Zhang v Canterbury City Council [2001] NSWCA 167; (2001) 51 NSWLR 589. The weight which is to be given to a relevant factor is generally a matter for the decisionmaker, and the preferred ground for setting aside an administrative decision taken without giving adequate weight to a relevant factor is that the decision is unreasonable Peko-Wallsend, 41; Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223, 230, 233234; see also Li [72] (Hayne, Kiefel and Bell JJ).

There are divergent authorities on the question of what is required to satisfy the duty to take into account relevant considerations Re Mactiernan; Ex parte Coogee Coastal Action Coalition Incorporated [2004] WASC 264 [62]. One view is that proper, genuine and realistic consideration is required Khan v Minister for Immigration and Ethnic Affairs [1987] FCA 457; (1987) 14 ALD 291, 292 (Gummow J); see also Re Minister for Resources; Ex parte Cazaly Iron Pty Ltd [226]. The alternative view is that provided the matter is given some consideration, the duty is discharged see PekoWallsend, 40-41. In Re Shire of Carnarvon; Ex parte Humphrey [2005] WASCA 182, McLure JA (Le Miere AJA agreeing) noted that 'the preponderance of authority is to the effect that the duty requires proper, genuine and realistic consideration of the relevant matter', referring to Khan and Williams v Minister for the Environment & Heritage (2003) 74 ALD 124 [60]. For the reasons which follow, it is unnecessary to resolve the differing authorities on this issue in order to resolve this case.

58 I proceed on the basis of what McLure JA said in Re Shire of Carnarvon.[39]

59 In the course of judicial review of an adjudication, it is necessary to keep in mind the informal and speedy nature of the adjudication process. It is inappropriate to engage in a line by line analysis of the adjudicator's determination.[40] An adjudicator is not expected or required to express himself or herself with the same degree of legal precision as would a court.[41]

60 I adopt the observations of Pritchard J in Cape Range[42] about the contextual considerations in the Act that indicate the role of an adjudicator, and that should be borne in mind when assessing a contention that an adjudicator's reasons reveal jurisdictional error, including the following:[43]

These provisions, particularly when considered in light of the purpose of the CC Act as a whole, indicate that adjudications under the CC Act are intended to be a rapid process for the resolution of disputes within the context of construction contracts, the aim of which is to 'keep the money flowing in the contracting chain'. The 'rapid adjudication process is a trade-off between speed and efficiency on the one hand, and contractual and legal precision on the other'. (footnotes omitted)

61 It is important to observe the boundaries of judicial review, and to ensure it does not become a vehicle for merits review.[44] Or, as Edelman J would prefer to express it, in proceedings for judicial review, it is important to observe judicial restraint.[45] An error about a finding of fact 'which does not constitute or reveal a jurisdictional error concerns the merits of administrative action, not its legality'.[46]

The disposition of the application Grounds 1(1) 1(4)

62 The crucial element in Hamersley's claim to a setoff was the cost to Hamersley to complete the work remaining to be done. I have set out earlier in these reasons the five elements of Hamersley's claim to a setoff.[47] The estimated cost to complete the work was the only one of those elements that was not accepted by the adjudicator.

63 In paragraph 14, the adjudicator found that he was not satisfied that Hamersley had established that its costs to complete the work would exceed Hamersley's own figure of $4.2 million as the unpaid part of the Contract sum. It should be noticed that in paragraph 18, the adjudicator explained that Hamersley would have been entitled to a setoff only if and to the extent that it satisfied him that the cost to complete would exceed $6.45 million.

64 It is not altogether easy to relate Hamersley's detailed and lengthy written submissions to the grounds of its application.

65 In various ways, grounds 1(1) to 1(7) all involve an attack on the conclusions of the adjudicator on a question of fact and sufficiency of proof. That provides a challenging context for a claim of jurisdictional error.

66 Grounds 1(1) 1(4) are rooted in two complaints. The first is the adjudicator's use of the Contract Value as a benchmark for assessing the likely cost to complete the work. The second is the adjudicator's conclusions about likely costs in the mining services sector.

67 In paragraph 14(a) (d), the adjudicator started with Hamersley's estimate of the value of the works to be completed as at 13 December 2013 of $4,234,755. From that he deducted the $641,607 conceded by Hamersley to reflect the value of work done between 13 December 2013 and 24 January 2014. He also referred to the undisputed fact that further work was done between 24 January 2014 and the termination of the Contract on 14 February 2014. From that he concluded that on Hamersley's own figures, the remaining work was not valued at much more than $3 million.

(a) if the cost of completing the work was $13.9 million, then Hamersley would have paid Forge far more than the percentage of work said by Hamersley's engineer to have been completed. The adjudicator found that to be unlikely, in that the correspondence and documents before him revealed that the engineers had been zealous in checking payment claims;[48]

(b) Hamersley wrote to Forge on 24 February 2014 estimating its loss and damage at $3 million.[49]

(a) given Hamersley's assessment of the unpaid balance of the contract sum;

(b) after allowing for the costs of mobilisation and demobilisation; and

(c) allowing for an increase in rates as compared with the Contract,

he was unconvinced that any plausible explanation had been given by Hamersley as to how the cost of completing the work would be more than twice the unpaid remaining value of the Contract sum (costs in excess of $6.45 million, compared to contract value of about $3 million).[50]

70 Thus, in assessing the cost to Hamersley of completion of the Contract work, the adjudicator had regard to the part of the Contract sum that remained to be paid and that was referable to the remaining work. One of Hamersley's central criticisms of the adjudicator's reasons is that, in doing so, the adjudicator erred. Hamersley submits that:

(1) the adjudicator treated the value and price under the Contract of the remaining work as a benchmark, when there was no evidence to support that approach;

(2) in doing so, the adjudicator failed to make his determination on the basis of the parties' application, response and further submissions and their attachments, as he was required to do; and

(3) the adjudicator unjustifiably disregarded or ignored Hamersley's evidence.[51]

71 Contrary to Hamersley's submission,[52] the adjudicator did not use the benchmark of Contract Value as the sole criterion for comparison between the competing estimates of costs. The adjudicator's conclusion that Forge's assessment was 'far more credible'[53] was not based solely on comparison with Contract Value. The adjudicator observed[54] that Hamersley did not provide any detailed schedule in its Response of 31 March 2014, while Forge prepared a detailed schedule of the cost of completion, estimated at about $2.28 million. The adjudicator was correct in that observation. The table in paragraph 30 of Ms McLachlan's statutory declaration of 31 March 2014 had a single line item 'estimated cost to complete $13,900,391'. Nothing in that statutory declaration, or anywhere else in Hamersley's Response, had any form of explanation or substantiation. It was not until Hamersley provided further information on 10 April 2014 that Hamersley provided any form of substantiation. The adjudicator was entitled to take that into account.

72 Moreover, the result of Hamersley proceeding in this way was that Forge did not have any opportunity to respond, at all, to what Hamersley had said by way of substantiation in its Further Submissions of 10 April 2014. Hamersley submits that the adjudicator's characterisation of what is said in Ms McLachlan's statutory declaration of 10 April 2014 as 'new assertions which are not set out in the Response or previous documents' is unfair. For the reasons just given, I reject that submission.

73 In my opinion, the adjudicator's approach in having regard to the Contract Value of the remaining work does not reveal error, much less jurisdictional error. It is not a question of whether a party had led any evidence to the effect that the Contract Value for the remaining work was a benchmark against which the competing estimates of the work to be done could be assessed. By definition, the question of the costs of the remaining work arose in the context of the scheme, under the Contract, of a process of claim and verification of the works done to date, assessed against the value of the Contract sum. In that context, as a matter of logic and common experience, it was open to the adjudicator when assessing costs of completion to have regard to the remaining value of the works under the Contract as had been assessed by Hamersley's engineer. Of course, the price and value under the Contract of the remaining works was by no means conclusive as to the costs likely to be incurred by Hamersley in having the work completed. The adjudicator did not treat Contract Value as conclusive. In having regard to Contract Value, regard would also be had to any evidence about:

(1) additional costs arising from the engaging of a new contractor; and, or alternatively,

(2) any material change, between the date of the Contract and the time of the adjudication, in the rates applicable to work of the relevant character.

74 The adjudicator had regard to evidence of both these types.

75 For these reasons, I reject Hamersley's first and second submissions.

76 As to the third submission, the adjudicator took into account Ms McLachlan's evidence as to additional costs for mobilisation and demobilisation, and the prospect of higher rates.[55] Thus, I reject Hamersley's contention that the adjudicator ignored or disregarded that evidence of Ms McLachlan. The adjudicator did not fail to take into account this evidence. Rather, he took it into account, as part of his assessment of all the relevant circumstances, but reached a conclusion contrary to that invited by Hamersley. That does not reveal any misconstruction of the statute or any misconception of the function which he was performing.

77 More generally, the same is true of how the adjudicator treated the whole of Ms McLachlan's evidence. He did not ignore or disregard it. He considered the evidence but, having regard to the other evidence, facts and circumstances, for reasons which he explained, the evidence did not satisfy him to accept Hamersley's case as to the cost of remaining work.

78 Where, as here, the complaint is really that the decisionmaker failed to give something sufficient weight, the complaint is not one of failing to take into account a relevant consideration. Weight is a question for the decisionmaker, unless weight provides 'a path by which a conclusion of unreasonableness may be reached'.[56] For reasons to be explained in dealing with ground 3, the adjudicator's decision was not manifestly unreasonable.

79 For these reasons, I reject grounds 1(1) 1(4), insofar as they rely on the use of Contract Value as a benchmark.

80 I do not accept Hamersley's complaint about the adjudicator's observations concerning costs in the mining services sector. Contrary to Hamersley's assertions,[57] the adjudicator's reasons relating to the mining services sector were not drawn from the adjudicator's own knowledge and without reference to any evidence. The adjudicator relied, as he was entitled to do, on a newspaper article, attached to Hamersley's Response, which stated '[a] major pullback in capital expenditure among companies in the mining sector has hit the mining services sector hard. Companies ranging from industry heavyweights Worley Parsons and Monadelphous through to smaller players such as Ausdrill and Macmahon Holdings have all suffered significant profit downgrades'. The adjudicator was entitled to draw inferences from the article provided to him.

81 In those circumstances, the adjudicator's observation that the mining services sector would be looking for work, so that Hamersley would be in a strong bargaining position in offering further work, does not reveal any jurisdictional error.

82 Hamersley submits[58] that the effect of the Act is that an adjudicator must, and has power to, make a determination only on the basis of the application and its attachments, the response and its attachments, and any submissions, information or documents provided in response to an adjudicator's request, so that an adjudication made on the basis of any other material is beyond power. In this respect, Hamersley relies on a number of New South Wales and Queensland cases.[59] As Forge's submissions correctly point out, the New South Wales and Queensland security of payment legislation is in materially different terms. The legislation in those States specifically prescribes that the adjudicator is to consider only the adjudication documents.[60]

83 In any event, it is unnecessary to express a view on this point of principle. For the reasons I have given, I am not satisfied that the adjudicator impermissibly relied on anything outside of the materials that had been put before him by the parties in the adjudication.

Ground 1(5) - failure to dismiss under s 31(2)(a)(iv)

(1) the question of the estimated cost to complete the work was the key issue;

(2) the adjudicator had conflicting information about those costs;

(3) the only way to determine the conflict, consistent with the obligation of the adjudicator to afford procedural fairness to the parties, was to hold an oral hearing;

(4) the adjudicator's reasons for not dismissing the application under s 31(2)(a)(iv) revealed a misconception of his function; and

(5) in the circumstances the adjudicator, acting properly, could not have been satisfied that it was possible to make a fair determination.[61]

86 I do not accept these submissions. In particular I do not accept the last three propositions.

87 I do not accept that procedural fairness required that the adjudicator hold an oral hearing to choose between the conflicting material before him in relation to the estimated cost of completing the work under the Contract. The content of the requirements of procedural fairness depends upon the statutory framework and all the circumstances of the case.[62] Regard must be had to the character and consequences of an adjudication in determining whether procedural fairness required an oral hearing to determine a conflict. An adjudication determination does not finally determine substantive legal rights. It does not preclude the parties from commencing litigation or arbitration. Under s 31(2), an adjudicator is required to give the decision, with reasons, within 14 days of service of the response. In all the circumstances, it was open to the adjudicator to determine the application consistently with the requirements of procedural fairness, without holding an oral hearing.

88 It is not for this court to determine, for itself, whether the adjudicator should have or should not have been satisfied that it was not possible to fairly make a determination for the reasons referred to in s 31(2)(a)(iv). As I have explained, the jurisdictional facts in s 31(2)(a) are jurisdictional facts in the wide sense. A decision of an adjudicator in respect of one of the jurisdictional facts will be set aside if the decision:

(a) was so unreasonable that no reasonable decisionmaker could have reached that conclusion;

(c) took into account irrelevant considerations or failed to take into account mandatory relevant considerations;

(d) manifested serious irrationality or illogicality; or

(e) involved a misconception of the nature of the function which the adjudicator was performing.

89 In my view, none of those is demonstrated here. Hamersley submits that the adjudicator's reasons reveal that he misconstrued his function. The adjudicator found that he could fairly determine the dispute because the determination required consideration of only 20 documents and a modest number of authorities for the amount that was in dispute. This reveals no error. The adjudicator was entitled to consider the scope and quantity of documents and authorities in reaching his decision. He did so in concluding that he could fairly reach a determination.

90 The adjudicator's decision not to dismiss the application under s 31(2)(a)(iv) was one that was open to him, and does not reveal jurisdictional error.

91 Hamersley submits that the adjudicator failed to give adequate reasons for considering that Hamersley's cost estimation was exaggerated or implausible, in that he gave no adequate reasons for concluding that the value of the remaining work under the Contract was an applicable benchmark, or for concluding that there was a competitive market resulting from the downturn in mining services work that affected the costs of the work to complete.[63] Hamersley also submits that the adjudicator failed to give adequate reasons for concluding that it was improbable that Hamersley overcertified the work completed.[64] Hamersley further submits that the adjudicator failed to give adequate reasons for disregarding or ignoring Hamersley's estimated costs of completing the works under the Contract, and for preferring the estimate contained in Forge's schedule.[65]

93 What is required by way of adequate reasons on the part of an adjudicator must take account of the statutory context. An adjudicator is required to hand down a decision within 14 days. An adjudicator's decision is interim in character. It does not finally affect the rights of the parties. Obviously, an adjudicator's reasons are not required to be expressed with the same degree of precision and detail as the reasons of a court.

94 Relevantly, the issue before the adjudicator was whether he was satisfied in relation to Hamersley's claimed right to a setoff. That, in turn, depended upon whether Hamersley had proved, to the satisfaction of the adjudicator, that its likely costs of completion of the work under the Contract were not less than $6.45 million. The adjudicator explained his reasons for concluding that he was not so satisfied. He also adequately identified the evidence and considerations on which he relied. I refer to the outline of his reasons I have already given in dealing with grounds 1(1) 1(4)[66] and to the summary in relation to ground 3.[67] The adjudicator was not required to give reasons for each subsidiary observation, as is implicit in Hamersley's submissions.

Ground 1(7) failure to consider Hamersley's further submissions

95 I am not satisfied that the adjudicator failed to give genuine, proper and realistic consideration to Hamersley's Further Submissions, including Ms McLachlan's further statutory declaration.

96 The adjudicator made detailed reference to Hamersley's Further Submissions and to Ms McLachlan's further statutory declaration in the course of his reasons, including in paragraph 14.[68]

97 In concluding that he was not satisfied by Ms McLachlan's statutory declaration, and its attachment, the adjudicator made reference to earlier conduct and statements on the part of Hamersley and its engineer, to the fact that claims made by Ms McLachlan in her second statutory declaration had not previously been articulated, and that Forge had had no opportunity to respond to them. That approach does not reveal any jurisdictional error on the part of the adjudicator. As I have said, the adjudicator was entitled to take into account that in its Response of 31 March 2014, Hamersley did not provide any substantiation of its assertion that the estimated costs were of the order of $13 million.

98 I refer to my observations at [76] [78]. Hamersley's complaint is really about the conclusion reached by the adjudicator in assessing the material before him in determining whether he was satisfied by Hamersley of a crucial element of its setoff claim. The adjudicator took Ms McLachlan's statutory declaration into account, but was not persuaded that he should accept its contents in this respect. If anything, that is a complaint about weight. Insofar as this complaint is properly understood as one of unreasonableness, for the reasons given in relation to ground 3, the adjudicator's decision was not manifestly unreasonable.

99 Hamersley asserts that the adjudicator failed to afford it procedural fairness in three respects. First, the adjudicator used Contract Value as an applicable benchmark and considered that the market conditions in the mining sector meant the costs were not as high as suggested by Hamersley, when there was no evidence to these effects, and when it could not reasonably have been anticipated that they would be matters that would affect the adjudicator's determination.

100 Secondly, Hamersley complains that the adjudicator failed to provide Hamersley with an opportunity to provide information or make submissions regarding the issues that were, in the end, critical to the adjudicator's reasons for rejecting Hamersley's evidence, relating to the credibility and plausibility of Hamersley's estimate.

101 Thirdly, Hamersley complains that the adjudicator failed to afford procedure fairness in failing to hold an oral hearing to determine the conflict. I have already explained why I reject this third contention, and will say no more about it.

102 I do not accept Hamersley's other two complaints.

103 A decisionmaker is generally not obliged to invite comment on his evaluation of a person's case, or to provide an opportunity to review the proposed conclusion. The position may be different where the decisionmaker draws an adverse conclusion on materials supplied by or known to the subject which is not a natural evaluation of that material and could not reasonably have been anticipated.[69]

104 The statutory context is relevant to the content of procedural fairness. I repeat what I said at [59] [60] and [87].

105 In my view, procedural fairness did not require the adjudicator to disclose to Hamersley his tentative view that the value of the work remaining under the Contract was a relevant benchmark in assessing the cost to complete; nor was the adjudicator obliged to forewarn Hamersley in relation to his observations about the mining services market costs. Having regard to Contract Value in assessing the competing cases on the cost estimates was something that could reasonably have been anticipated. In light of Forge's reliance on the newspaper article, the same is true of the substance of the observations made by the adjudicator about mining services costs.

106 Procedural fairness did not require the adjudicator to disclose his views as to the credibility or plausibility of Hamersley's estimate. Where each of the parties gave competing estimates, it could reasonably have been anticipated that the issues of credibility and plausibility of those estimates would be considered by the adjudicator.

107 Ground 3 asserts that on the material before the adjudicator he could not reasonably or rationally have failed to be satisfied by Hamersley's evidence.

108 Hamersley's complaint in this respect relates to a finding of fact by the adjudicator, not an exercise of discretion. Whether Wednesbury unreasonableness is a ground of review of a finding of fact is, at the least, open to serious doubt. The position was analysed in some detail by Edelman J in Pilbara Infrastructure Pty Ltd v Economic Regulation Authority.[70] It is not necessary to determine the question of whether Wednesbury unreasonableness is a ground of review of a finding of fact. This application can be determined on the basis of an assumption, favourable to Hamersley, of an affirmative answer. For the reasons that follow, the adjudicator's decision was not manifestly unreasonable in the relevant sense.

109 Traditionally, Wednesbury unreasonableness has been identified as involving an exercise of discretion that was so unreasonable that no reasonable decisionmaker could have arrived at it.[71] In Minister for Immigration and Citizenship v Li,[72] Hayne, Kiefel and Bell JJ stated that the legal standard of unreasonableness is not limited to a decision that is so unreasonable that no reasonable person could have arrived at it. In Minister for Immigration v Li, the plurality explained one sense of unreasonableness as involving an overarching explanation for the various grounds on which an exercise of statutory power may be found to have been abused.[73] Their Honours referred to the analogy with the appellate review of discretionary decisions and the principles explained in House v The King.[74] Even though no express error can be identified, in some cases error can be inferred from the result.

110 A decision will be unreasonable where it is outside the parameters of reasonable decisionmaking contemplated by the statute.[75] Manifest unreasonableness may be found in a decision which is arbitrary, capricious or fanciful,[76] a decision which lacks an evident and intelligible justification,[77] or a decision where, in the circumstances, 'the result itself bespeaks error'.[78]

111 The test for manifest unreasonableness remains a stringent one, and a finding of jurisdictional error on the ground of manifest unreasonableness will be uncommon.[79]

112 In my view, the adjudicator's decision was not manifestly unreasonable in any relevant sense. It was not irrational; it did not lack an evident and intelligible justification. A reasonable decisionmaker could have arrived at it. I refer to what I have said in dealing with grounds 1(1) 1(4). By way of summary, the adjudicator:

(a) found that Hamersley bore the onus of establishing that its cost to complete exceeded the unpaid portion of the contract sum - in fact it was necessary for Hamersley to establish that its cost to complete exceeded the sum of $6.45 million;[80]

(b) found that on Hamersley's figures, the remaining work under the Contract did not have a Contract Value of much more than $3 million;

(c) took into account that if the cost of completing the work was $13.9 million, then Hamersley would have paid Forge far more than the percentage of work said by Hamersley's engineer to have been completed. The adjudicator found that to be unlikely, in that the correspondence and documents before him revealed that the engineers had been zealous in checking payment claims;

(d) took into account that Hamersley did not provide any substantiation in the Response of 31 March 2014, and that, as a result, Forge had no opportunity to respond to Hamersley's substantiation in its Further Submissions of 10 April 2014;

(e) took into account that Hamersley wrote to Forge on 24 February 2014 estimating its loss and damage at $3 million;

(f) took into account the newspaper article already referred to in concluding that the mining services sector would be looking for work so that Hamersley would be in a good position in offering further work;

(g) concluded that even after allowing for the costs of mobilisation and demobilisation, and an increase in rates as compared with the rates in the Contract, no plausible explanation had been given by Hamersley as to how the cost of the remaining work could double from its Contract Value of just over $3 million to a figure in excess of $6.45 million.

114 It follows that I would dismiss Hamersley's application to set aside the adjudication determination. I now turn to the question of whether leave to enforce the adjudication determination should be granted.

Forge's application for leave to enforce the adjudication determination

115 Forge seeks leave under s 43 of the Act to enforce the adjudicator's determination of 14 April 2014.

116 The following principles relevant to s 43 have been established by the cases:

(1) Given that the Act does not expressly identify the matters to which regard should be had on the question of leave, consideration must be given to the context, objects, purpose and policy of the Act.[81] The object of the Act is to keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes.

(2) It is for a party resisting enforcement to demonstrate a reason why enforcement should not occur. There is a predisposition in favour of the grant of leave.[82]

(3) Generally speaking, the fact that a party resisting enforcement alleges that it has other pending claims which could be set off against the determination amount will not justify the refusal of leave.[83]

(4) There are no closed categories of circumstances that may be relevant to the question of whether leave should be granted.[84] All the circumstances must be considered.

Hamersley's grounds for resisting enforcement, and Forge's response

117 In essence, Hamersley relies on Forge's insolvency, coupled with Hamersley's claim to be entitled to damages against Forge exceeding the amount of the adjudication determination (the Adjudicated Sum). Hamersley contends that in those circumstances, s 553C of the Corporations Act 2001 (Cth) is engaged, and consequently leave should be refused.

(1) the material before this court demonstrates that Hamersley has an arguable case, giving rise to a serious question to be tried, of a counterclaim against Forge that substantially exceeds the amount of the Adjudicated Sum;

(2) Hamersley's contingent and partly unliquidated counterclaim is a mutual dealing for the purposes of s 553C of the Corporations Act;

(3) s 553C operated as at the date of the administration, which is the day the winding up is taken to have begun, to mean that the Adjudicated Sum was only one of the entries in the account required to be taken, and Hamersley's contingent partly unliquidated counterclaim was another entry in that account. Only the balance due after the taking of the account is payable. The balance lies in favour of Hamersley, or there is at least a serious question to be tried in that respect; and

(4) in those circumstances, leave to enforce the adjudication determination should be refused.

119 Forge challenges all of these assertions. More specifically, Forge contends that:

(1) as to the first contention, Hamersley has failed to establish a serious question to be tried as to its counterclaim for cost of completion, because there is no serious question to be tried that the scope of the works the subject of the new contracts Hamersley entered into is the same as the scope of the works the subject of the Contract.[85] That was the sole challenge to Hamersley's first contention;[86]

(2) as to the second and third contentions, Hamersley's counterclaim is of such a nature that s 553C does not apply to it. In particular, the counterclaim, or a substantial majority of it, did not exist as at the relevant date, namely the date of administration, and the claim is unquantified;[87]

(3) further or alternatively to (2), there is no mutuality of beneficial interest between Forge's claim to the Adjudicated Sum and Hamersley's counterclaim. That is because Forge had earlier granted a charge in favour of Australia and New Zealand Banking Group Ltd (ANZ), having the effect of assigning beneficial title to Forge's debts, including its claims against Hamersley, to ANZ;[88]

120 For the reasons that follow, with one qualification I accept Hamersley's contentions, and do not accept Forge's responsive contentions. The qualification is that I would not dismiss the application for leave. Rather, I would stay that application pending resolution of Hamersley's counterclaim.

121 I start with both parties' first contentions, regarding the evidence in support of Hamersley's counterclaim.

122 Hamersley relies on the affidavit of Fotios Souris sworn 19 August 2014, and its voluminous attachments, to demonstrate a serious question to be tried in relation to its counterclaim against Forge that substantially exceeds the amount of the Adjudicated Sum.

123 It is convenient to begin with Mr Souris' summary of Hamersley's claims and the amounts that Hamersley acknowledges it owes to Forge. That summary is as follows:

(c) other charges (flights/accommodation) $1,278,079.24

Total owed to Hamersley excluding GST $2,179,737.00

124 From this summary it can be seen that Hamersley claims that after deducting all amounts owed by Hamersley to Forge, including the Adjudicated Sum, the total amount owed by Forge to Hamersley is an amount in excess of $2.1 million.

125 The claim for liquidated damages arises under cl 63(b), read with Item 10 of the Contract.[89] In support of the claim for liquidated damages, Mr Souris says that the required date for completion of Separable Part One under the Contract was 23 August 2013.[90] That work had not been completed as at 12 February 2014.[91] The Contract provides for liquidated damages at $33,650 per day, but with a cap of 5% of the Contract Value. The amount owed by liquidated damages was the sum of $2,088,489.00, being the capped maximum amount payable.

126 The affidavit of Mr Souris satisfies me that there is a serious question to be tried in relation to Hamersley's counterclaim for liquidated damages in the sum claimed of $2,088,489.00. So far as I understood, Forge did not submit otherwise in these proceedings.

127 Hamersley also counterclaims an amount of $1,278,079.24 in respect of charges for flights and accommodation incurred by Hamersley and reimbursable by Forge under the Contract. Hamersley's claim arises under General Condition 21[92] and Appendix A - Site Specific Requirements.[93] Mr Souris says that on 12 February 2014, following the announcement that Forge workers at West Angelas no longer had jobs, Hamersley made arrangements to return all Forge workers to the capital cities closest to their homes.[94] Hamersley's cost of doing so totalled $1,278,079.24.[95]

128 Forge did not make any submissions in relation to this aspect of Hamersley's counterclaim. I am satisfied that Hamersley has demonstrated a serious question to be tried in relation to its counterclaim for accommodation and flight backcharges in the amount claimed of $1,278,079.24.

129 Hamersley also counterclaims damages under general contract law for Forge's repudiation in dismissing its workforce, Hamersley having terminated the Contract on 24 February 2014. It claims its cost of completing the remaining work under the Contract, less the price it would have paid to Forge under the Contract for that work.

130 Mr Souris says the following in relation to Hamersley's counterclaim for its costs of completing the Works:

(a) After consideration and analysis, Mr Souris on behalf of Hamersley decided that the most efficient approach to completion of the Works was for Hamersley to oversee and arrange for the completion of the Work.[96]

(b) Hamersley prepared a schedule that was reproduced as Annexure 1 to the statutory declaration of Kate McLachlan dated 10 April 2014 reflecting its estimate of the cost of completion.[97]

(c) Subsequently Hamersley awarded 63 new contracts and varied 10 contracts. These contracts and contract variations 'were a direct result of Forge's insolvency and were needed in order to complete the Works'.[98] The Works is the scope of work that Forge was required to complete under the Contract.[99]

(d) With limited exceptions, the Works are now substantially complete, and Hamersley claims the actual costs of completion, assessed at $9,322,974.15, comprising $5,560,341.76 in contractor costs and $3,762,632.00 in the costs of additional manpower retained by Hamersley.[100]

(e) A summary of the actual costs is set out in the table at FS 5. That table is based up on and derived from the underlying documents supporting each item of costs, which are attachment FS 6.[101]

(f) The manpower costs is summarised in table FS 7. The need for the additional manpower is explained by Mr Souris.[102]

131 Forge contends that Hamersley has failed to establish a serious question to be tried as to its counterclaim for the cost of completion, because there is no serious question to be tried that the scope of the works the subject of the new contracts Hamersley entered into is the same as the scope of the works the subject of the Contract. I do not accept that submission. Notwithstanding the general terms in which it is expressed, for the purposes of establishing a serious question to be tried, Mr Souris' evidence that the Contracts were 'a direct result of Forge's insolvency and were needed in order to complete the Works' is sufficient. In that respect it should be borne in mind that even if one or some of the new contracts were subsequently found to have a scope wider than the scope of the Contract, that in itself would not prevent Hamersley's counterclaim from exceeding the Adjudicated Sum. As formulated, Hamersley's counterclaim exceeds the Adjudicated Sum by more than $2.1 million.

132 For these reasons, I am satisfied that Hamersley has an arguable case, giving rise to a serious question to be tried, in relation to each of the components of its counterclaim against Forge, substantially exceeding the amount of the Adjudicated Sum.

133 The legal principles relevant to s 553C provide the framework for consideration of Hamersley's second and third contentions, and Forge's second contention in response.

Section 553C of the Corporations Act - legal principles; Hamersley's second and third contentions

134 Section 553C of the Corporations Act provides as follows:

(1) Subject to subsection (2), where there have been mutual credits, mutual debts or other mutual dealings between an insolvent company that is being wound up and a person who wants to have a debt or claim admitted against the company:

(a) an account is to be taken of what is due from the one party to the other in respect of those mutual dealings; and

(b) the sum due from the one party is to be set off against any sum due from the other party; and

(c) only the balance of the account is admissible to proof against the company, or is payable to the company, as the case may be.

(2) A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving credit to the company, or at the time of receiving credit from the company, the person had notice of the fact that the company was insolvent.

135 The object of the section was explained in the context of the cognate section of the Bankruptcy Act 1966 (Cth) in Gye v McIntyre[103] as follows:

It has often been pointed out that the object of setoff in bankruptcy is, in the words of Parke B in Forster v Wilson 'to do substantial justice between the parties, where a debt is really due from the bankrupt to the debtor to his estate'. Where there are genuine mutual debts, credits or other dealings, it would be unjust if the trustee in bankruptcy could insist upon having one hundred cents in the dollar upon the whole of the debt owed to the bankrupt but at the same time insist that the bankrupt's debtor must be satisfied with a dividend of some few cents in the dollar on the whole of the debt owed by the bankrupt to him. It was to prevent such injustice that the 'mutual credits' and 'mutual debts', and later 'mutual dealings', provisions were introduced into bankruptcy legislation (see, e.g., In re Daintrey; Ex parte Mant; Day and Dent Constructions Pty Ltd v North Australian Properties Pty Ltd. To the extent necessary to achieve that legislative purpose of 'substantial justice' to the parties, it is established by authority that a provision such as s 86 of the Act should be given 'the widest possible scope' [citations omitted].

136 This section operates regardless of in whose favour there is a balance.[104] It operates whether the party seeking to make a claim is the company in liquidation or the other party.[105]

137 The section is a statutory directive which operates as at the time the liquidation takes effect. It produces a balance upon the basis of which the liquidation can proceed. Only that balance can be claimed in the liquidation or recovered by the liquidator. The section is selfexecuting in that it is not dependent on anything done by either party, such as the lodging of a proof of debt.[106]

138 The requirement of mutuality does not require that the credits, debts or claims arise from the same dealing.[107]

139 Forge submits that Hamersley's counterclaim for the cost of completion of the Works is of such a nature that s 553C does not apply to it. Forge submits that a substantial part of the counterclaim did not exist at the relevant date because, at that date, Hamersley had not yet terminated the Contract.[108] For the reasons in the next three paragraphs, I do not accept that that circumstance renders s 553C inapplicable.

140 Section 553C applies to liabilities which, at the date of insolvency, may be due but not yet payable, or may be unascertained in amount, or contingent.[109] This includes a liability that may or may not arise, depending upon whether uncertain future events occur, so long as the liability arises under a contract that is on foot, at the relevant date, between the insolvent party and the other party.[110] Thus, a contingent claim can be set off under s 553C even if the contingencies giving rise to the claim arise after the winding up commences.

141 The point is illustrated by the decision in JLF Bakeries Pty Ltd v Baker's Delight Holdings. In that case, an agreement was on foot as at the relevant winding up date. Under the agreement, the other party had an option to purchase property from the insolvent party. Subsequent to the relevant insolvency date, the other party exercised its option. The court found that the other party was entitled to set off moneys payable by it pursuant to the exercise of the option against moneys owed to it by the insolvent party.

142 The account to be taken under s 553C must be taken at any time it is necessary to determine the effect that the section had.[111]

143 One well established example of a lack of mutuality is where the beneficial entitlements and liabilities in respect of the countervailing credits and debits do not correspond.[112] Forge relies on the absence of mutuality of beneficial interests, based on the charge it is said to have entered with ANZ. I will return to the question of mutuality of beneficial interest in the next section of these reasons.

144 Subject to the question of mutuality of beneficial interests, in my opinion the legal principles I have stated sustain Hamersley's second and third contentions. I am satisfied that:

(1) each of Hamersley's counterclaims constitute a mutual dealing for the purposes of s 553C of the Corporations Act;

(2) in order to determine what sum, if any, is payable by Hamersley to Forge, s 553C requires that an account be taken of amounts due from each party to the other, including the Adjudicated Sum and the counterclaim, and the sum due from one party is to be set off against the sum due from the other party, so that only the balance of the account is payable to or by Forge; and

(3) on the evidence of Mr Souris there is, at the least, a serious question to be tried that the balance lies in favour of Hamersley.

145 That brings me to Forge's third contention. Forge contends that there is no mutuality of beneficial interest between its claim to the Adjudicated Sum and Hamersley's counterclaim. That is because, Forge submits, it granted a charge in favour of ANZ, which had the effect of assigning beneficial title to Forge's debts, including its claims against Hamersley, to ANZ.

146 For the reasons that follow, I do not accept that submission.

147 Insofar as any charge was floating, the charge crystallised after the administrator was appointed. The combined effect of s 446A(1)(a), s 446A(2)(a), s 513B(b) and s 513C(b) of the Corporations Act is that the winding up of Forge is taken to have commenced on the day on which the administration began.[113] Section 553C operates as of the relevant date, namely when the winding of the company is taken to have begun.[114] The administration began before the receivers were appointed.[115]

148 Forge's written submissions[116] assert that the ANZ charge is fixed over collateral, including its claims against Hamersley. However, there is no evidence to sustain that assertion. After Hamersley had completed its oral submissions, and in the course of its oral submissions, Forge applied for leave to adduce further evidence by tendering the ANZ charge.[117] I reserved my decision on that application. For the reasons that follow, I refuse Forge's application to adduce further evidence.

149 In summary, I refuse the application because if the application were allowed, it would be necessary for there to be a further hearing of these proceedings, and I am not satisfied that Forge has provided any adequate explanation for the extremely late stage at which it made the application to adduce further evidence.

150 In exercising the discretion whether to grant leave to Forge to adduce new evidence, the considerations explained in Aon Risk Services Australia Ltd v Australian National University[118] provide assistance.[119] In summary:

(a) the effect of an application to adduce further evidence on the court and on other litigants is relevant;

(b) there is no right to adduce all arguably relevant evidence, no matter the stage at which the application is made and no matter the effect upon the course of the litigation;

(c) justice requires that parties have a fair opportunity to adduce evidence in support of their case, but limits may be placed on late applications to adduce further evidence;

(d) the nature and importance of the proposed new evidence to the party seeking to lead it must be taken into account;

(e) attention must be given to the extent of the delay, and the costs associated with it, the prejudice which might reasonably be assumed to follow from that delay, and any prejudice that is shown;

(f) the point in the litigation relative to the trial may be an important consideration;

(g) where a discretion is sought to be exercised in favour of a party, an explanation will be called for; and

(h) the point can be reached where a party has had sufficient opportunity to adduce evidence in support of its case.

151 Forge's application to adduce further evidence must be viewed in the context of the history of these proceedings, and the other related proceedings. All four proceedings were admitted to the CMC list in June 2014. On 26 June 2014, directions were made for the filing of affidavits and the exchange of submissions.

152 On 29 July 2014, the four proceedings were listed for hearing for three days from 18 to 20 November 2014.

153 In August 2014 extensions were granted for the filing of such of the submissions as had not been filed.

154 In late October 2014 the parties jointly applied to adjourn the hearing of all four proceedings from the listed dates of 18 November 2014 to a date after 17 December 2014. In the course of hearing submissions in support of that application, the court made clear that there was substantial difficulty in finding further hearing days in the period reasonably soon after 17 December 2014. Reference was also made to the need for reasonable expedition in resolving the proceedings, given the nature and purpose of adjudications under the Act. In the event, all four matters were listed to be heard for one day, on 22 December 2014, on the basis of the parties' submission that significant parts of the four proceedings could be dealt with on the papers.

155 On 10 November 2014, Hamersley filed and served further submissions in the two enforcement proceedings. Those submissions directly pointed to the fact that the ANZ charge was not in evidence, and that there was no evidence of its alleged crystallisation and effect.[120]

156 In the six weeks following Forge's receipt of Hamersley's submissions of 10 November 2014, Forge did not file, or apply to rely upon, any further affidavit annexing the ANZ charge.

157 By the time Hamersley had completed its oral submissions on 22 December 2014, Forge had not made any application to adduce further evidence.

158 The application was not made until after the lunch adjournment on 22 December 2014.

159 In circumstances where Forge applied to adduce further evidence at such a late stage in the proceedings, it was incumbent upon Forge to provide an explanation for why the evidence was not adduced earlier and why no application was made at any earlier stage. In my opinion, Forge has not provided any satisfactory explanation in this respect.

160 Any explanation offered by Forge was offered by way of assertion from the bar table, and not by way of evidence. What was said on behalf of Forge in these respects was, in my respectful opinion, not entirely easy to follow. In substance, the explanation proffered was that:

(1) the question of when the charge crystallised would only become relevant if Hamersley's counterclaim arose before the relevant date, namely the date of the administration;

(2) Forge had understood Hamersley's claim for the costs of completion in a way that meant that claim arose after the relevant date;

(3) the affidavits served on Forge on 19 December 2014 and 22 December 2014, and counsel for Hamersley's oral submissions in relation to the affidavit of 22 December 2014, indicated that Hamersley's claim was potentially of a different character, and may arise before the relevant date; and

(4) in light of that, Forge sought leave to adduce evidence of the charge.[121]

161 To my mind those assertions are unsatisfying and unsatisfactory. The issue of whether Hamersley's counterclaim for the cost of completion is not caught by s 553C on the grounds that it arises after the relevant date, and the issue of the time at which any charge crystallised, are distinct and independent. Moreover, in its written submissions of 8 September 2014[122] Forge asserts that by reason of the ANZ charge, ANZ has beneficial title to Forge's debts. Nothing is said to suggest that the time at which the claim arises is in any way relevant to that contention.

162 Further, in my view, there was no reasonable foundation for Forge to have understood Hamersley's counterclaim for the costs of completion, as articulated in Mr Souris' affidavit and in Hamersley's written submissions in these proceedings, as being based on cl 51 of the Contract, as distinct from general law damages for loss of bargain after the Contract was terminated on grounds of Forge's repudiation. Insofar as the adjudicator in CIV 1890 of 2014 had understood Hamersley's counterclaim as based on cl 50 and cl 51 of the Contract, Hamersley submitted in these proceedings, in the plainest of terms, that that was erroneous, and that Hamersley's claim was for loss of bargain damages for Forge's repudiation.[123] Moreover, submissions made by Forge's counsel earlier in the morning on 22 December 2014 (before Hamersley's counsel referred to Mr Jackson's affidavit of 22 December 2014), indicated that Forge understood that Hamersley's claim was for general law loss of bargain damages for termination, based on the termination on 24 February 2014, almost two weeks after the administration began on 11 February 2014.[124] Thus, I do not accept the second and third assertions outlined above as explanations for the lateness of the attempt to adduce evidence of the terms of the ANZ charge.

163 Further and in any event, I reject Forge's third contention on an additional ground. On no view of Hamersley's claim for the cost of completion did the claim exist at or before the date of administration. A claim based on s 51 of the Contract would (obviously) not arise until after the date of administration. A claim based on a general claim for damages would have arisen only at the time of termination, which was almost two weeks after the date of administration. So, on either view, the claim arose after the date of administration. Thus, any change in Forge's understanding of the source and character of Hamersley's claim for the costs of completion did not alter the fact that the claim did not exist until further events occurred, subsequent to the date of administration.

164 The absence of evidence of the charge was specifically emphasised by Hamersley's submissions of 10 November 2014. As I have already noted, that did not lead Forge to file an affidavit annexing the charge, or to seek leave to do so.

165 Further, the draft statements of claim attached to Mr Jackson's affidavit of 22 December 2014 do not contain any new facts of substance. The draft statement of claim is, as Hamersley's counsel submitted, no more than a convenient summary of Hamersley's claims the subject of Mr Souris' affidavit. It has not been necessary for me to have regard to Mr Jackson's affidavit in determining this application.

166 It was common cause on the application that, if Forge's application to adduce further evidence were accepted, the hearing would need to be adjourned to sometime in 2015.[125] In the circumstances, the reserving of the decision on the application to adduce further evidence did not occasion any delay to the progression of the proceedings.

167 The impact on the resources of the court, and on other litigation, of the adjournment of the hearing to a further date sometime in 2015 must be weighed in the discretion whether to grant the application. In that respect, it is also relevant that the parties have already successfully applied for an adjournment of the hearing dates that were originally listed for three days in November 2014.

168 It is also relevant to consider the nature of these proceedings, for the enforcement of an adjudication determination under the Act. The object of that legislation calls for reasonably expeditious resolution of legal proceedings affecting or enforcing an adjudication determination. Of course, I take into account that it is Forge which has the benefit of the adjudication determination and which is directly prejudiced by a delay in proceedings for enforcement of the determination. Nevertheless, in my view, the nature of these proceedings tends against the further delay that will flow from the grant of the application.

169 I also take into account the prejudice to Forge in not being able to adduce evidence of the terms of the charge. The proposed additional evidence could potentially have affected the result of this application. Notwithstanding that important consideration, in the circumstances I have outlined, I consider that the application must be dismissed. In summary:

(a) the application was made at an extremely late stage, in the course of the hearing of these proceedings;

(b) Forge did not provide any satisfactory explanation for the delay in attempting to adduce the proposed additional evidence;

(c) Forge was on notice of the absence of evidence of the terms of the charge since Hamersley's submissions of 10 November 2014;

(d) Forge has had ample opportunity to adduce this proposed evidence at an earlier stage;

(e) receipt of the application would require a further hearing, which has an impact on the resources of the court and on other litigation;

(f) the hearing of these proceedings has already been adjourned once; and

(g) the nature of these proceedings favours a reasonably expeditious resolution.

170 In my view, in the circumstances of this case, as I have outlined them, the application for leave to enforce the adjudication determination should not be granted. In essence, that is because:

(1) Hamersley has established a serious question to be tried that it has a counterclaim exceeding the Adjudicated Sum;

(2) Hamersley's counterclaim constitutes mutual dealings for the purposes of s 553C of the Corporations Act;

(3) s 553C operated as at the date of the administration to mean that the Adjudicated Sum and Hamersley's counterclaim must both be taken account of in determining the net balance payable by one party to the other; and

(4) there is, at least, a serious question to be tried that the balance, assessed as required by s 533C, lies in favour of Hamersley.

171 To my mind, to grant leave to enforce the determination in these circumstances would defeat the purpose and object of s 553C. A grant of leave to enforce would mean that Forge would receive from Hamersley the full amount of the Adjudicated Sum, whereas Hamersley would be left to prove in the liquidation of Forge in respect of its counterclaim. Moreover, in circumstances where Forge as contractor is insolvent, and in liquidation, the object of the Construction Contracts Act - keeping the money flowing in the contracting chain by enforcing timely payment and sidelining protracted and complex disputes - does not demand the grant of leave to enforce the adjudication determination.

172 For these reasons, I consider that s 553C requires that leave to enforce be declined, or, alternatively, the operation of that section in the circumstances of this case provides a good reason to decline to grant leave to enforce the adjudication determination.

173 In my opinion, the application for leave to enforce should be stayed, not dismissed. At this stage, Hamersley has not proved its counterclaim. Rather, it has only demonstrated a serious question to be tried. If this application is dismissed, and if Hamersley did not pursue proceedings to advance its counterclaim, Hamersley would avoid payment of the Adjudicated Sum without ever having proved its counterclaim. In the circumstances I think justice between the parties requires that this application for leave be stayed pending resolution, by legal proceedings or by agreement, of Hamersley's counterclaim.

(1) dismiss Hamersley's application to set aside the adjudication determination; and

(2) stay Forge's application for leave to enforce the adjudication determination.

175 I would hear from the parties as to the orders to be made, and as to costs.

[1] Affidavit of Matthew Ian Blycha sworn on 5 June 2014 152 and following.

[8] McLachlan statutory declaration [30].

[9] Application [7.8], Attachments 29 and 33.

[10] Forge's further submissions dated 7 April 2014; Blycha affidavit 845 1134.

[13] Blycha affidavit 853[5.8] [5.9].

[14] Blycha affidavit 1145 [4.1] [4.3].

[17] Adjudication reasons [12.3] [12.4].

[18] Adjudication reasons [12.6], [12.10], [12.12], [12.13].

[21] Adjudication reasons [16], [17].

[24] Construction Contracts Act 2004 (WA), s 6.

[25] Construction Contracts Act, s 32(3)(a).

[26] Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319 [8], [92].

[27] Perrinepod [7] [8], [121] [126].

[28] As to which see Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531 [67] [70].

[29] Perrinepod [118]; Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304 [83]; Re David Scott Ellis; Ex parte Triple M Mechanical Services Pty Ltd [No 2] [2013] WASC 161 [75], [79]; WQUBE Port of Dampier v Philip Loots of Kahlia Nominees Ltd [2014] WASC 331 [14] [15], [28].

[30] Perrinepod [118]; Re Ellis [79]; WQUBE v Philip Loots [28].

[31] Perrinepod [10] [12], [115].

[34] Re Ellis [86] [88]; Red Ink Homes Pty Ltd v Court [2014] WASC 52 [85] [90]; WQUBE v Philip Loots [78] [79].

[35] Cape Range [74] [75], [125]; Red Ink Homes v Court [86] [87].

[36] Re Carey; Ex parte Exclude Holdings Pty Ltd [2006] WASCA 219; (2006) 32 WAR 501 [181]; Re The State Administrative Tribunal; Ex parte McCourt [2007] WASCA 125; (2007) 34 WAR 342 [6]; Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163, 179.

[38] A v Corruption and Crime Commissioner [2013] WASCA 288; (2013) 306 ALR 491 [88] [92].

[39] Re Shire of Carnarvon; Ex parte Humphrey [2005] WASCA 182

[40] Cape Range [58]; Red Ink Homes v Court [91]; Re Ellis [84].

[44] See for example The Minister for Aboriginal Affairs v PekoWallsend [1986] HCA 40; (1986) 162 CLR 24, 40 41; Mineralogy v The Honourable Warden K Tavener [2014] WASC 420 [39].

[45] Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 346 [142] [147].

[46] Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 [149].

[49] Adjudication reasons [14(m)], [18(6)].

[50] Adjudication reasons [18.3] [18.7].

[51] Grounds 1(1), 1(2), 1(4); Hamersley's submissions dated 24 July 2014 [25] [28], [33], [34], [69], [70]; Hamersley's reply submissions dated 16 September 2014 [13], [14], [31] [34].

[52] Hamersley's submissions dated 24 July 2014 [25].

[55] Adjudication reasons [14(k)], [18.4].

[56] Minister for Immigration v Li [2013] HCA 18; (2013) 249 CLR 332 [74]; Minister for Aboriginal Affairs v PekoWallsend [1986] HCA 40; (1986) 162 CLR 24, 41.

[57] Ground 1(1), 1(3); Hamersley's submissions dated 24 July 2014 [30] [34], [69]; Hamersley's reply submissions dated 16 September 2014 [15] [17], [31] [34].

[58] Hamersley's submissions dated 24 July 2014 [61].

[59] Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd [2007] NSWCA 32 [26] [29]; Laing O'Rourke Australia Construction Pty Ltd v H&M Engineering & Construction Pty Ltd [2010] NSWSC 818 [26], [27], [32] [39], [113] [114]; QCLNG Pipeline Pty Ltd v McConnell Dowell Constructors (Australia) Pty Ltd [2011] QSC 292 [117], [121], [123].

[60] Building and Construction Industry Security of Payment Act 1999 (NSW), s 22(2); Building and Construction Industry Security of Payment Act 2004 (Qld), s 26(2).

[61] Hamersley's submissions dated 24 July 2014 [74] [82]; Hamersley's reply submissions dated 16 September 2014 [43] [50].

[62] Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 [37]; Mijatovic v Legal Practitioners Complaints Committee [2008] WASCA 115; (2008) 37 WAR 149 [3] [4].

[63] Hamersley's submissions dated 24 July 2014 [71].

[64] Hamersley's submissions dated 24 July 2014 [71].

[65] Hamersley reply submissions dated 16 September 2014 [37].

[68] See adjudication reasons [14(d)], [14(h)(i), (ii), (iii), (iv), (v)], [14(j)], [14(k)], [18.4].

[69] Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd [1994] FCA 1074; (1994) 49 FCR 576, 591 592; McKay v Commissioner of Main Roads [2013] WASCA 135 [157]; Apache Northwest Pty Ltd v Agostini [No 2] [2009] WASCA 231 [217] [218].

[70] Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 346 [148] [194].

[71] See, for example, Minister for Aboriginal Affairs v PekoWallsend [1986] HCA 40; (1986) 162 CLR 24, 41.

[72] Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332 [68].

[73] Minister for Immigration v Li [68] [76].

[74] House v The King (1936) 55 CLR 495, 505; Minister for Immigration v Li [75] [76].

[75] Minister for Immigration v Li [67]; Blanket v The Housing Authority [2014] WASC 409 [123] [124].

[76] Minister for Immigration v Li [28], [65].

[77] Minister for Immigration v Li [76].

[78] Minister for Immigration v Li [85].

[79] Minister for Immigration v Li [113]; Blanket v The Housing Authority [125].

[81] O'Donnell Griffin Pty Ltd v John Holland Pty Ltd [2008] WASC 58; (2008) 36 WAR 479 [13], [41]; Thiess Pty Ltd v MCC Mining (Western Australia) Pty Ltd [2011] WASC 80 [24] [25]; Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304 [49].

[82] O'Donnell Griffin [41]; Thiess [27]; Cape Range [49].

[83] O'Donnell Griffin [70] [74]; Cape Range [155].

[84] Thiess [27], [29]; Cape Range [49].

[85] Forge's reply submissions dated 8 September 2014 [10] - [12]; ts 24 26, 39 40.

[88] Forge's reply submissions dated 8 September 2014 [13] - [19]; ts 70 71.

[90] Affidavit of Fotios Souris sworn 19 August 2014 [8].

[91] See Souris affidavit [9] [11].

[95] Souris affidavit [9], Attachment FS2.

[103] Gye v McIntyre [1991] HCA 60; (1991) 171 CLR 609, 618 619.

[105] Gye v McIntyre (621 622); GM & AM Pearce & Co Pty Ltd v RGM Australia Pty Ltd [1998] 4 VR 888, 890, 895, 896.

[106] Gye v McIntyre (622); GM & AM Pearce (891, 896, 899); JLF Bakeries Pty Ltd (in liq) v Baker's Delight Holdings Ltd [2007] NSWSC 894; (2007) 64 ACSR 633 [17].

[109] Gye v McIntyre (623 624); Hiley v The People's Prudential Assurance Co Ltd [1938] HCA 40; (1938) 60 CLR 468, 497; JLF Bakeries v Baker's Delight [18] [19].

[110] See the cases referred to in the preceding footnote.

[111] Stein v Blake [1995] UKHL 11; [1996] 1 AC 243, 253; MK Builders Pty Ltd v 36 Warrigal Road Pty Ltd [2014] VSC 149 [36]; Handberg v Smarter Way (Aust) Pty Ltd [2002] FCA 469; (2002) 190 ALR 130 [56].

[112] Gye v McIntyre (619); Coventry v Charter Pacific Corp Ltd [2005] HCA 67; (2005) 227 CLR 234 [56].

[113] See JLF Bakeries v Baker's Delight [9].

[114] Corporations Act s 9, s 553, s 553C; Re Parker (1997) 80 FCR 1, 15 16; JLF Bakeries v Baker's Delight [9], [17].

[116] Forge's reply submissions dated 8 September 2014 [14].

[118] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 [89] [103], [111] [112].

[119] See, for example, AttorneyGeneral of Botswana v Aussie Diamond Products Pty Ltd [No 2] [2009] WASC 301 [80]; McKay v Commissioner of Main Roads [No 6] [2010] WASC 274 [18].

[120] Hamersley's submissions dated November 2014 [2].

[123] Hamersley's submissions dated 1 August 2014 [24], [26], [103] [109].