The first defendant, A-Civil Aust Pty Ltd (A-Civil), undertook certain early civil works for the plaintiff, Iridium Developments Pty Ltd (Iridium), in respect of a property development at 49-57 Gerrale Street, Cronulla, New South Wales.
On 8 February 2021, A-Civil issued progress claim 11 under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the SOP Act) for $3,702,858. The claim attached a schedule entitled "Progress Claim Breakup" that was divided into Sections A and B for "Contract Works" and "Variation Works" respectively. The items in Section B included item "V18", described as being for "Section 73 Works and Installation", for which an amount of $240,000 was claimed.
On 16 February 2021, Iridium issued a payment schedule denying any payment in respect of payment claim 11.
The payment schedule stated that the reasons for denial of the whole of the payment claim were set out in an attached explanatory memorandum. The reasons included:
"Claim out of time
3. Section 13 (4) of the SOPA provides that a claim may only be made within 12 months of the date of the last construction work to which the claim relates was carried out.
4. On 30 May 2019 the claimant confirmed in writing by way of letter on its letterhead that practical completion under the relevant contract for works was reached on 29 May 2019.
5. The Claimant has done no work on the site since about May 2019.
6. Claim 11 was served on 8 February 2021. This is significantly outside the time for a valid claim to be made under the SOPA.
7. The claim is invalid, void and of no effect."
At the time relevant to these proceedings, s 13 relevantly provided:
"13 Payment claims
(1) A person referred to in section 8(1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
(2) A payment claim -
(a) must identify the construction work (or related goods and services) to which the progress payment relates, and
(b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and
(c) if the construction contract is connected with an exempt residential construction contract, must state that it is made under this Act.
…
(4) A payment claim may be served only within -
(a) the period determined by or in accordance with the terms of the construction contract, or
(b) the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),
whichever is the later.
…"
On 2 March 2021, A-Civil lodged an adjudication application under s 17 of the SOP Act for an adjudication determination of the disputed payment claim.
Pursuant to s 17(6) of the SOP Act, the application was referred to the second defendant as adjudicator to determine the disputed claim.
Iridium filed and served an adjudication response pursuant to s 20 of the SOP Act on 9 March 2021. Iridium's response acknowledged that the adjudicator had the capacity to determine whether he had jurisdiction to adjudicate the payment claim under the SOP Act. The response then set out matters relied on by Iridium in support of its contention that the adjudicator lacked jurisdiction, including the matter on which Iridium relies in these proceedings:
"Payment claim out of time - absolute time bar
Section 13 (4) of the SOPA provides that a claim may only be made within 12 months of the date of the last construction work to which the claim relates was carried out.
On 30 May 2019 the claimant confirmed in writing by way of letter on its letterhead that practical completion under the relevant contract for works was reached on 29 May 2019 (Annexure A to these submissions)
The Claimant has done no work on site under the contract since about May 2019.
Claim 11 was served on 8 February 2021. This is significantly outside the time for a valid claim to be made under the SOPA.
The claim is invalid, void and of no effect.
…
The respondent understands that it is alleged by the claimant that construction works were undertaken in the period from or about 10 February 2022 [sic - 2020] to 10 February 2021 being the relevant 12 month period for the calculation of the relation-back time bar under the SOPA.
These works are said to be
1. De-stressing of undergrowth anchors by a subcontractor of the applicant Rix;
2. attendances on-site for works by a further subcontractor of the applicant, Absolute Plumbing.
The respondent disputes these works were undertaken for the reasons set out below.
However, for present purposes, and assuming these works are [sic] undertaken, they are not part of the payment claim 11.
There is no charge made in claim 11 for works of the kind said to have been undertaken within the 12 month relation back period. Accordingly, applying the principles set out in the decisions the applicant relies upon, there are no works within the claim made within the relation back period. In this context the observations of Hodgson JA Barclay Mowlem are absolutely fatal to the applicant in establishing that the payment claim relates to works undertaken within the 12 month relation back period."
On 17 March 2021, the adjudicator determined that Iridium was liable to pay A-Civil the sum of $665,512.19 in respect of progress claim 11. [1]
The adjudicator's reasons for determination acknowledged the jurisdictional challenges raised by Iridium, including that:
"None of the works included in payment claim 11 was undertaken within a period of 12 months after the construction work to which the claim relates was last carried out being 10 February 2020;
a. Specifically, payment claim 11 was issued circa 20 months after practical completion was reached."
The adjudicator rejected that challenge, stating:
"Payment Claim Out of Time Absolute Time Bar
41. In summary of the Respondents submissions at paragraph 27 above and AR10 to 16 inclusive, the Respondent asserts that the Claimant has not undertaken work on site since May 2019.
42. The Respondent has narrowed the issues and directed my attention to two elements of work being.
a. De-stressing of underground anchors by a subcontractor called Rix; and
b. Work undertaken by Absolute Plumbing primarily for variation 18 Section 73 Works.
43. Critically the Respondent says these works are not part of Payment Claim 11 and the Claimant cannot establish when these works were undertaken. Consequently, the payment claim fails to comply with section 13(4)(b) that a payment claim must be served within the period of 12 months after the construction work (or related goods and services) was last carried out.
44. It is common ground that section 13(4)(b) imparts a restriction of 12 months from when the work was last carried out. Both parties refer to Estate Property Holdings Pty Ltd v Barclay Mowlem Construction Ltd (2004) and [21] 'which suggest items more than twelve months old may be included in a payment claim, when they have been included in previous claims, so long as the payment claim does relate to some work carried out within the twelve-month period'.
45. At AA24 the Claimant says the De-stressing of underground anchors and Variation 18 Section 73 Works were both undertaken within approximately 2 to 3 months prior to the date of the payment claim.
46. Specifically, at CDX12 the Claimant provides an extract from the 6 February 2020 PCG minutes that states the temporary shoring anchors could be destressed subject to the slab pour reaching 25MPa.
47. My reading of the minutes is that the earliest date for access for this element of work is 10 February 2020. That is to say, assuming the slab could be tested the next day on the Friday 7 February 2020 and the subcontractor could mobilize the following business day the 10 February 2020 is the first date that the temporary shoring anchors could be destressed.
48. However, at CDX13 the Claimant says their subcontractor Rix completed the de-stressing of the temporary anchors on or about 20 July 2020 and enclosed a copy of a letter from Rix dated 20 July 2020 confirming this work had been completed.
49. At AR11 to 14 the Respondent replies to AA16 to 25 and in summary says 'the Mostafiz statutory declaration asserts as a statement of fact that de stressing the temporary anchors on site did not commence until after 6 February 2020. The 'objective' evidence called in support of this letter from the contractor dated 20 July 2020. The letter provides nothing more than de-stressing works had been completed. The letter does not refer to when this stressing work was undertaken.'
50. I agree with the Respondent that the Mostafiz statutory declaration and the letter does not provide a precise date on when the de-stressing works were completed. However, a precise date is not necessary because it is evident that this works was undertaken within a period of 10 February 2020 to 20 July 2020 and importantly within a period of 12 months from the date of the payment claim. Furthermore, I note the Respondent does not provide any competing information or contest this work was undertaken, the Respondent's primary complaint is the lack of particulars.
51. In the absence of any submissions from the Respondent on the date the de-stressing works were completed, I am satisfied this work was undertaken within a period of 10 February 2020 to 20 July 2020 and therefore the Payment Claim complies with section 13(4)(b) of the Act.
52. At ND5 the Claimant provides a statement that Elias Matouk of Absolute Plumbing had completed the variation works for section 73 sewer diversion in the period of 2 to 3 months prior to the Payment Claim.
53. At AR14 the Respondent provides a contemporary record from Elias Matouk of Absolute Plumbing saying except for site meetings Absolute Plumbing had not attended site since December 2019.
54. There is clearly conflicting documentation from Elias Matouk of Absolute Plumbing regarding the date for undertaking the sewer diversion works, however Mr. Matouk does confirm they attended site meetings. Relevantly section 6(b)(iii) of the Act includes such activities specifically building, engineering advisory services in relation to construction work. Accordingly, I find the variation works for section 73 sewer diversion works complies with section 13(4)(b) of the Act.
55. As I have found the de-stressing of underground anchors and construction work by Absolute Plumbing to be within a period of twelve-months from the date of the Payment Claim I am of the opinion the Respondents jurisdictional challenge that the Payment Claim is out of time fails and I find the payment claim does include construction work that was carried out within a period of twelve-months from the date of the Payment Claim pursuant to section 13(4)(b) of the Act."
After addressing the other jurisdictional challenges raised by Iridium, the adjudicator then proceeded to value each of the variations included within the claim that were pressed by A-Civil. In relation to "V18 - Section 73 works and installation", the adjudicator stated that Iridium had certified and paid $180,000 of the claim for $240,000 and had not provided any reason in the payment schedule for the difference of $60,000. The adjudicator referred to Iridium's submission made in its adjudication response that the works were yet to be completed by A-Civil. However, referring to s 20 of the SOP Act, the adjudicator determined that he was unable to consider that submission as it had not been included in the payment schedule. The adjudicator referred to the statutory declaration made by an officer of A-Civil to the effect that the remaining s 73 sewer works had been completed and valued V18 as $60,000, being the contract value of $240,000 less the amount of $180,000 already certified and paid. [2]
These proceedings were commenced on 26 March 2021.
On that date, the Court made an interim order restraining A-Civil until 9 April 2021 from obtaining any adjudication certificate in respect of the adjudicator's determination under s 24(1)(a) of the SOP Act and from filing any adjudication certificate as a judgment debt in any court of competent jurisdiction under s 25(1) of the SOP Act. The order was made upon Iridium giving the usual undertaking as to damages and on the condition that Iridium pay into court the sum of $700,481.46. That sum was paid into court. On 8 April 2021, the Court made an order continuing the interim order until further order.
[2]
ISSUES FOR DETERMINATION
In these proceedings, Iridium claims:
"1. An order setting aside the purported adjudication determination of the Second Defendant dated 17 March 2021 under section 22 of the Building and Construction Industry Security of Payment Act 1999 (NSW) which determined a disputed payment claim made by the First Defendant dated 8 February 2021 (the Determination), alternatively a declaration that the Determination is void and unenforceable against the Plaintiff on the basis of jurisdictional error on the part of the Second Defendant.
2. A final injunction permanently restraining the First Defendant itself, or its servants or agents from enforcing or seeking to enforce the Determination."
Iridium accepts that an adjudication determination cannot be set aside by the Court, except for jurisdictional error on the part of the adjudicator: Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 (Probuild) at [35]-[52] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).
Iridium initially submitted that the adjudicator committed a jurisdictional error because, whilst the adjudicator had determined that de-stressing works and s 73 works had been carried out within 12 months prior to service of the payment claim, he had failed to determine whether the payment claim related to those works. That submission was withdrawn during the course of the hearing on 7 September 2021. Senior counsel for Iridium candidly accepted that paragraphs 54 and 55 of the adjudicator's reasons for determination, read in the context of those reasons as a whole (and particularly paragraphs 41 to 55 of the reasons), is a determination that some of the s 73 works that were the subject of variation 18 included in the payment claim were conducted within the 12 month period referred to in s 13(4)(b) of the SOP Act. [3] A-Civil informed the Court that it no longer contends that the de-stressing works referred to in paragraph 42(a) of the adjudicator's reasons were included in the payment claim.
Senior counsel for Iridium submitted that the adjudicator's determination that some of the s 73 works included in the payment claim were carried out within the requisite 12 month period was wrong, and that it was a jurisdictional matter that the Court can and must determine for itself on an application to set aside or declare void an adjudicator's determination under the SOP Act for jurisdictional error. It was submitted that the evidence before the adjudicator did not support his finding that some of the s 73 works that were the subject of variation 18 in the payment claim were performed within the 12 month period stipulated by s 13(4)(b) of the SOP Act.
This was the only alleged jurisdictional error relied on by Iridium in these proceedings. Iridium withdrew a submission that the adjudicator's determination was void for denial of natural justice. [4]
[3]
Consideration and determination
Section 13(4)(b) of the SOP Act will be satisfied if some of the construction work to which the payment claim relates was carried out within the 12 month period stipulated in that section: Estate Property Holdings Pty Ltd v Barclay Mowlem Construction Ltd (2004) 61 NSWLR 515; [2004] NSWCA 393 at [17]-[21].
Iridium's submissions raise the same threshold question that was considered and determined in EQ Constructions Pty Ltd v A-Civil Aust Pty Ltd [2021] NSWSC 1604 (EQC v A-Civil), namely whether s 13(4)(b) is a matter to be determined objectively by the Court on an application for judicial review of an adjudicator's decision on the grounds of jurisdictional error.
In Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2018] NSWCA 339 (Icon), Basten JA said (at [13], Meagher and Leeming JJA agreeing) (citations omitted):
"It is a fundamental principle that the engagement of a statutory power may depend either upon the existence of an identified state of affairs, or a state of satisfaction of the decision-maker as to an identified state of affairs. In the first category, the actual state of affairs, being the criterion of engagement of the power, is described as a 'jurisdictional fact', meaning that the lawful exercise of the power may ultimately depend upon a finding of a court exercising judicial review as to whether or not the required state of affairs existed. The second category is sometimes also said to involve a jurisdictional fact, but only in the sense that the relevant fact is an opinion formed by the decision-maker; in that case a reviewing court can only be concerned with the existence and lawful formation of the opinion."
Iridium submitted that, as a matter of statutory construction, s 13(4)(b) of the SOP Act is a jurisdictional fact within the first category identified by his Honour. A-Civil submitted that s 13(4)(b) is within the second category.
Senior counsel for Iridium accepted that, if s 13(4)(b) falls into the second category, requiring an opinion or state of satisfaction on the part of the adjudicator rather than establishment of the objective fact to enliven the adjudicator's jurisdiction, then these proceedings must be dismissed. Iridium does not contend that the adjudicator in this case did not form the requisite opinion: see [17]-[18] above. Nor does Iridium contend that the adjudicator's opinion was not lawfully formed. Rather, Iridium simply contends that the opinion was erroneous.
In EQC v A-Civil, I held that s 13(4)(b) of the SOP Act is a jurisdictional fact within the second category referred to in Icon. My reasons explained at [32]-[69] of that judgment address the substance of the parties' submissions in this case. For those same reasons, the adjudicator's finding in this case that the payment claim included some construction work that had been carried out within the period of 12 months prior to service of the payment claim was sufficient to enliven his statutory jurisdiction to determine the adjudication application, even if that finding was erroneous. It is not for the Court to determine whether the finding was correct or erroneous.
That conclusion renders it unnecessary to address A-Civil's submission that s 20(2B) of the SOP Act precludes Iridium from advancing its claim for relief on the grounds of the alleged jurisdictional error relating to s 13(4)(b). Had it been necessary to do so, I would have rejected that submission for two reasons. First, the payment schedule issued by Iridium did raise the issue of alleged non-compliance with s 13(4)(b): see [4] above. Second, s 20(2B) does not preclude a respondent from raising grounds, not included in its payment schedule, on which it is asserted that the adjudicator lacks jurisdiction: see Acciona Infrastructure Australia Pty Ltd v Holcim (Australia) Pty Ltd [2020] NSWSC 1330 at [38]-[39] and the authorities there referred to.
The proceedings must be dismissed for those reasons. There is no apparent reason why Iridium should not pay A-Civil's costs of the proceedings and no party submitted that they would wish to be heard in relation to costs. Senior counsel for Iridium indicated that, if Iridium were unsuccessful, it would wish to be heard about whether the moneys paid into court pursuant to the interim orders made on 26 March 2021 should be paid out to A-Civil. Senior counsel foreshadowed a notice of motion for a stay of any order for payment of those moneys out of court in circumstances where Iridium apprehends that A-Civil is insolvent (which is disputed by A-Civil) and there are other proceedings on foot in the Technology and Construction List in which Iridium claims damages against A-Civil for alleged breaches of contract and in which the parties' final entitlements under their contract will be determined. [5]
In those circumstances the appropriate course is to direct the parties to prepare short minutes of order giving effect to these reasons (including orders as to the moneys paid into court) and, in the absence of agreement about those orders, to serve written submissions in support of the orders for which they contend. The matter will be listed at 9.30am on 15 December 2021 for the making of orders, and any notice of motion of the kind referred to above should be filed and served together with any supporting evidence and made returnable at the same time.
My observations immediately above should not be read as encouraging or indicating any view about the likely prospects of the motion foreshadowed by Iridium. I note that any such motion will need to contend with the following observations of Kiefel CJ, Bell, Keane, Nettle and Gordon JJ in Probuild at [51] (citations omitted):
"… it takes the matter no further to say, as Probuild submitted, that it is 'absurd' that a 'manifestly' erroneous determination, in the sense that it is affected by non-jurisdictional error of law, may stand. A non-jurisdictional error of law may have serious consequences. But those consequences are dealt with by s 32 of the Security of Payment Act. The limited exclusion of review does not irrevocably entrench the consequences of an erroneous determination. Where it is contended that an adjudicator has made an error of law within jurisdiction, resulting in a progress payment that is inadequate or excessive, the dispute may be resolved through civil proceedings under the construction contract. If necessary, a restitutionary order can be sought. The risk that the party placed at an advantage by an underpayment or overpayment may later become incapable of meeting such an order is a risk that is assigned to the other party. What Probuild characterised as an 'absurd' outcome is more aptly seen as the coherent application of a statutory choice of forum rule."
The directions and orders of the Court are as follows:
1. Direct the parties to prepare short minutes of order giving effect to these reasons for judgment.
2. In the event that the parties are unable to agree on the terms of the orders to give effect to these reasons for judgment, each party is to prepare a minute of the orders that it contends are appropriate to give effect to these reasons together with written submissions of no more than 2 pages in support of the orders for which it contends.
3. Direct the parties to provide the short minutes (and any accompanying submissions) referred to in orders 1 or 2 above (as applicable) to my Associate by email by 5pm on 13 December 2021.
4. Any notice of motion seeking a stay of any order that is to be made to give effect to these reasons is to be made returnable at 9.30am on 15 December 2021 and is to be filed and served, together with any evidence and written submissions relied on in support of the motion, by 5pm on 13 December 2021.
5. The proceedings are listed at 9.30am on 15 December 2021 for the making of orders and the hearing of any notice of motion filed in accordance with order 4 above.
[4]
Endnotes
Notice of adjudication determination in relation to adjudication number ABCDRS NSW 361.
Paragraphs 178-184 of the adjudicator's determination.
T10.10-10.40.
T30.8-30.15.
T15.15-15.30.
[5]
Amendments
17 December 2021 - Typographical Errors.
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Decision last updated: 17 December 2021