It included the terms of s 26 and continued:
"We confirm if in the event Adjudicate Today was to receive another Adjudication application from Made Contracting Pty Limited pertaining to the payment claim referenced in the above mentioned [sic] Adjudication application, it would be administered in accordance with the above mentioned [sic] requirements. We suggest independent legal advice is sought to clarify any potential issues with a proposed subsequent Adjudication application."
16 On 18 July 2007 the first defendant notified the plaintiff and the third defendant as follows:
"As the adjudicator has not made a determination within the time allowed by Section 21(3) we now give formal notification of withdrawal of the application as allowed under Section 26 of the ACT [sic]."
17 On 24 July 2007 the first defendant lodged with the third defendant a new adjudication application (the second adjudication application) with related submissions.
18 On 27 July 2007 the third defendant notified the plaintiff and the first defendant that the adjudicator had accepted appointment as adjudicator of the second adjudication application.
19 On 1 August 2007 the plaintiff lodged its adjudication response and related submissions which included submissions to the effect that the second adjudication application was invalid, and, by reason of the withdrawal of the first adjudication application, it was not open to the first defendant to lodge a new application under s 26 of the Act.
20 On 14 August 2007 the adjudicator delivered his adjudication determination in favour of the first defendant in the amount of $9,290. In the preamble to his reasons for determination the adjudicator said:
"On 27 June 2007 the Claimant applied for adjudication of this matter, however, the Claimant failed to submit a part of its adjudication documents in the time allowed by the Act and therefore the adjudicator did not make a determination in the time required by s 21(3) of the Act.
Pursuant to s 26(2)(a) of the Act, the Claimant formally withdrew the adjudication application on 18 July 2007, and made a new adjudication application under s 26(2)(b) of the Act on 24 July 2007. This is the adjudication application to be determined by me …
…
The Respondent disputes the Claimant's right to make a new application, submitting that the Claimant informally withdrew the application in correspondence to the ANA on 6 July 2007, before the adjudicator could make a determination. There is no right under the Act for the claimant to withdraw a claim before one of the times in s 26(1) has expired. The alleged "informal" withdrawal is a nullity. The Act makes no distinction as to the reasons why an adjudicator may chose [sic] to make no determination and I find this new application valid under the Act."
21 On 24 August 2007 the adjudication certificate was issued pursuant to s 24 of the Act for the total amount of $12,138.21, being the adjudicated amount of $9,290, interest and fees. On the same day the first defendant obtained judgment in the Local Court, Manly, for the certified amount and costs against John Holland Group Pty Ltd (instead of the plaintiff).
22 On 5 October 2007 the judgment entered against John Holland Group Pty Ltd was, by consent, set aside and, in exercise of the slip rule, judgment was entered against the plaintiff for the sum of $12,277.88, being the certified amount plus interest.
The legislation
23 The scheme for the adjudication of disputes concerning a payment claim is established under Pt 3, Div 2 of the Act. The scheme is in accordance with the object of the Act as stated in s 3(3) as follows:
"3 Object of Act
…
(3) The means by which this Act ensures that a person is able to recover a progress payment is by establishing a procedure that involves:
(a) the making of a payment claim by the person claiming payment, and
(b) the provision of a payment schedule by the person by whom the payment is payable, and
(c) the referral of any disputed claim to an adjudicator for determination, and
(d) the payment of the progress payment so determined."
24 Section 17(1) concerns the circumstances in which a claimant may apply for adjudication of a payment claim. Section 17(3) prescribes matters relevant to the content, and making, of an adjudication application by a claimant. Such application is to be made to an authorised nominating authority which refers it to an adjudicator as soon as practicable (s 17(3)(b) and s 17(6)).
25 An adjudicator may accept the adjudication application by causing notice of the acceptance to be served on the claimant and the respondent (s 19(1)). Upon acceptance, the adjudicator is taken to have been appointed to determine the application (s 19(2)).
26 Section 20 prescribes matters relevant to the content, and making, of an adjudication response. By s 20(2B) a respondent cannot include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule provided to the claimant.
27 The procedure relevant to the conduct of the adjudication is contained in s 21. Relevantly, s 21(3) requires an adjudicator to determine an adjudication application as expeditiously as possible and, in any case, within 10 business days after the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the application, or within such further time as the claimant and the respondent may agree. Subsection (5) provides that the adjudicator's power to determine an adjudication application is not affected by the failure of either or both of the parties to make a submission or comment within time or to comply with the adjudicator's call for a conference of the parties.
28 The requirements imposed upon the adjudicator in determining an adjudication application are found in s 22, which, relevantly provides:
"22 Adjudicator's determination
(1) An adjudicator is to determine:
(a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount ), and
(b) the date on which any such amount became or becomes payable, and
(c) the rate of interest payable on any such amount.
(2) In determining an adjudication application, the adjudicator is to consider the following matters only:
(a) the provisions of this Act,
(b) the provisions of the construction contract from which the application arose,
(c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim,
(d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule, …"
29 Section 26 provides:
"26 Claimant may make new application in certain circumstances
(1) This section applies if:
(a) a claimant fails to receive an adjudicator's notice of acceptance of an adjudication application within 4 business days after the application is made, or
(b) an adjudicator who accepts an adjudication application fails to determine the application within the time allowed by section 21 (3).
(2) In either of those circumstances, the claimant:
(a) may withdraw the application, by notice in writing served on the adjudicator or authorised nominating authority to whom the application was made, and
(b) may make a new adjudication application under section 17.
(3) Despite section 17 (3) (c), (d) and (e), a new adjudication application may be made at any time within 5 business days after the claimant becomes entitled to withdraw the previous adjudication application under subsection (2).
(4) This Division applies to a new application referred to in this section in the same way as it applies to an application under section 17."
30 Section 26 is the only provision which authorises a claimant to withdraw an adjudication application and to make a new one. The terms of s 26(1), s 26(2) and s 26(3) taken together make plain that entitlement to withdraw is confined to the happening of either of the circumstances specified in s 26(1)(a) or s 26(1)(b). In my opinion the effect of these provisions is to preclude the withdrawal of an application by a claimant in any other circumstances, including prior to expiry of the specified period. If it were otherwise, the enactment of s 26(2)(a) would be otiose.
In his reasons for determination of 14 August 2007 the adjudicator, with respect, correctly held:
"There is no right under the Act for the claimant to withdraw a claim before one of the times in s 26(1) has expired. The alleged "informal" withdrawal is a nullity."
31 An issue in these proceedings was the proper construction of s 26(1)(b), and it is convenient at this stage to refer to recent authority on the point. In Multiplex Constructions Pty Ltd v Luikens & Anor [2003] NSWSC 1140, Palmer J said:
"102 An adjudicator may fail to determine an adjudication application for the purposes of s.26(1)(b) for a number of reasons. The adjudicator may become incapable of making the determination within the time required or may for some reason refuse to do so or become disqualified from doing so. But, in my opinion, an adjudicator may also fail to determine an adjudication within time for the purposes of the subsection if the determination is purportedly delivered within time but is not given according to law. For example, where the adjudicator has given a determination within time but it has been procured by fraud, it could hardly be said that the adjudicator has performed the task which the Act requires of him or her within the time stipulated in s.21(3). The same may be said of a case in which the adjudicator delivers a determination within the time stipulated but the determination has been given without jurisdiction. In such cases, it may be said that the determination is of no effect: it is as if the adjudicator had made no decision at all.
103 When an adjudication under the Act is quashed pursuant to judicial review, in my opinion the claimant becomes entitled to withdraw its adjudication application under s.26(2) upon and from the date upon which the quashing order is made because on that date it has been ascertained that the adjudicator did not determine the adjudication according to law within the time allowed by the Act, for the purposes of s.26(1)(b). The claimant may then, within five business days of the quashing order, make a new adjudication application under s.26(3). That subsection, in conjunction with s.17(3)(c), (d) and (e), makes it clear that the adjudication process does not start all over again from the beginning. Rather, there is an adjudication pursuant to a fresh adjudication application, of the dispute as defined by the original payment claim and the original payment schedule. The respondent may not, therefore, make any submissions to the new adjudicator in reliance upon reasons for withholding payment of the original payment claim which were not indicated in its original payment schedule, as provided in s.14(3) and s.20(2B). The new adjudicator appointed by the nominating authority under s.19 may, or may not, be the adjudicator who conducted the original adjudication, as considerations of convenience, saving of expense and perceptions of pre-judgment may require. In conducting the new adjudication, the adjudicator would, doubtless, have regard to the reasons of the Supreme Court for quashing the original determination. By this procedure, the saving in time and expense envisaged by the adjudication machinery of the Act may not be totally lost."
32 Palmer J's approach was followed in, for example, Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd [2004] NSWSC 116, per Barrett J (par 38), and Emergency Services Superannuation Board v Robert Sundercombe & Anor [2004] NSWSC 405, per Bergin J (par 23) and, with respect, in my opinion it is correct. These cases indicate that the verb "fails" is to be given a wide meaning equivalent, in my opinion, to "does not". Such usage is consistent with the usage of the same term in s 26(1)(a).
33 This construction is also consistent with the underlying intention of the legislature that, upon appointment, the adjudicator is under a statutory duty to determine the application according to law within the time stipulated in s 21(3). If the adjudicator does not do so he or she will be taken to have failed to determine the adjudication application within the meaning of s 26(1)(b).
34 Analysis of the statutory scheme establishes that an adjudicator's task is to determine the amount of the progress payment (if any) to be paid. In order to provide a speedy mechanism for the determination of claims and the resolution of disputes it was the legislature's intention that issues for adjudication be confined to those limited by the payment claim and the payment schedule. Submissions may be made in support of the payment claim (s 17(3)(h)), and in support of the payment schedule (s 20(2)(c)).
35 In Downer Construction (Australia) Pty Ltd v Energy Australia & Ors [2007] NSWCA 49, Giles JA (Santow, Tobias JJA agreeing) said:
"63 … the submissions do not set the parameters of the application or its determination. It may be that there are no submissions or only partial submissions, and submissions in support of a progress payment in relation to the construction work (or related goods and services) other than that identified in the payment claim should be put aside.
64 Accordingly, if an adjudication application does what s 17(3)(f) requires, ie identifies the payment claim and the payment schedule (if any) to which it relates, it is a sufficient application and the adjudicator can carry out the statutory task. The application is not changed by the submissions accompanying it, and it remains an application for adjudication of the identified payment claim. To repeat, there may not be any submissions in support of the payment claim. The adjudicator must still make the determination, perhaps invoking the powers under s 21(4) …"
36 The adjudication process instituted by the making of an adjudication application is governed by the Act. It is the Act which delimits the source and ambit of the rights of the parties and of the powers of the adjudicator. The adjudicator must determine the adjudication application within the time provided under s 21(3) and the parties have an interest in the performance of that duty. There are no provisions for procedures similar to those applicable to court proceedings whereby the making of a determination may be suspended or stayed, or an adjudication application may be discontinued or summarily dismissed.
37 Relevant to the issues in this case, there is no provision which allows a claimant to withdraw an adjudication application except in the circumstances prescribed by s 26(1). In my opinion, it follows that, upon the appointment of an adjudicator, a claimant who no longer wishes to pursue an adjudication application cannot oppose its determination. Furthermore, in my opinion, there are no unexpressed powers or rights which allow for the termination of an adjudication application other than by the determination of the adjudicator, which includes a determination by consent of the parties.
Consideration
38 The plaintiff submitted that the effect of the first defendant's notice of 6 July 2007 was to generally withdraw the adjudication application from the determination process. It was put that, when understood as the response to the adjudicator's advice earlier that day, the notice represented the first defendant's intention to put an end to the adjudication process and nothing in it indicated that it was claimed to be under s 26 of the Act. In the circumstances, it was put, the withdrawal should be taken to be the valid exercise of a right to do so outside the operation of the Act.
39 It was argued that the true effect of the withdrawal was to leave the adjudicator with no adjudication application for determination, a situation which he acknowledged on 9 July 2007 by advising the parties that he would not deliver a determination, and had closed the file. It was submitted that, as a consequence, it was only open to the first defendant to serve another payment claim under s 13(4)(b) and begin fresh proceedings for recovery.
40 The plaintiff also referred to the first defendant's facsimile of 7 July 2007 in which it purported to give notice of withdrawal under s 26 of the Act. It was submitted that this document was invalid on grounds that withdrawal had already been effected by the notice of 6 July 2007 and, in any event, because it was given before expiry of the time allowed under s 21(3), the requirement under s 26(1)(b) had not been fulfilled.
41 The plaintiff then challenged the first defendant's letter of 18 July 2007 in which notification was given of withdrawal of the application under s 26 of the Act. It was accepted that 17 July 2007 was the last day for the determination of the first adjudication application, and that the second adjudication application complied with s 26(3). However, it was argued that in circumstances where the first adjudication application had been withdrawn from the adjudicator prior to the expiry of the time for its determination, it could not be said that the adjudicator's decision on 9 July 2007 not to determine the matter constituted a failure to do so within the meaning of s 26(1)(b). Accordingly, it was submitted, the first defendant was not entitled to make the second adjudication application under s 26(2) which was, therefore, invalid with the result that the adjudication determination was invalid.
42 The first defendant's submissions may be briefly summarised. It submitted that its notices of withdrawal of 6 July 2007 and 7 July 2007 were invalid and not within the terms of s 26(2). It was put that as the notices were given prior to the expiry of the time allowed by s 21(3) on 17 July 2007, the circumstance specified in s 26(1)(b) was not established and, accordingly, there was no entitlement to withdraw the first adjudication application then. It denied the plaintiff's contention that the notice of 6 July 2007 operated as a general withdrawal outside the Act, and that the first defendant was entitled to withdraw otherwise than in the circumstances under s 26(1). It was put, in effect, that the adjudicator's decision not to proceed to determine the first adjudication application as advised on 9 July 2007 was inconsistent with his duty pursuant to s 21(3).
43 The first defendant submitted that by 18 July 2007 the adjudicator had failed to determine the first adjudication application within s 26(1)(b), which entitled it to withdraw that application and make a new one under s 26(2). This it did by its notice of 18 July 2007, and the second adjudication application of 24 July 2007. Accordingly, it was put, the second adjudication application was properly before the adjudicator, whose determination was valid, and should be upheld.
44 As earlier stated, in my opinion, the only circumstances which entitle a claimant to withdraw an adjudication application are those specified in s 26(1) of the Act. It follows that the notices of 6 July 2007 and 7 July 2007 were incapable of operating as valid withdrawals of the first adjudication application from the adjudicator, and to prevent his determination under s 21(3). Consistent with the approach taken in Multiplex Constructions, I find that the adjudicator's decision on 9 July 2007 not to determine this application inevitably resulted in a failure on his part within s 26(1)(b). It follows, and I find, that under s 26(2) and s 26(3) the first defendant became entitled to withdraw the first adjudication application on 18 July 2007, and to make the second application on 24 July 2007. On these issues I generally accept the first defendant's submissions.
45 The plaintiff next submitted that, in the circumstances, the first defendant was estopped from lodging the second adjudication application, and the adjudicator from determining it. As I understood the submissions, the plaintiff contended that by notice of 6 July 2007 the first defendant represented that it had withdrawn the adjudication application outside the operation of the Act which induced the plaintiff to believe that nothing more was required to be done on its part. This understanding was reinforced by the adjudicator's decision on 9 July 2007 not to determine the application, and to close the file. It was submitted that the combined effect of these communications evidenced an assumed state of affairs that the adjudication process had been brought to an end outside the Act with the result that there was nothing further for the plaintiff to do. It was also put, in effect, that this state of affairs could not be changed by the subsequent correspondence which referred to withdrawal under s 26 of the Act.
46 The plaintiff submitted that in reliance on the first defendant's notification of 6 July 2007 as a blanket withdrawal, it suffered detriment in that it was denied the opportunity to reject the withdrawal and to compel the adjudicator to make his adjudication determination in accordance with the Act without consideration of the narrative document.
47 The first defendant denied that the estoppel as claimed by the plaintiff had been established.
48 In Ryledar Pty Ltd & Anor v Euphoric Pty Ltd [2007] NSWCA 65, Tobias JA (Mason P, Campbell JA agreeing) reviewed the principles of estoppel. His honour explained (par 194) that estoppel by convention is founded upon an assumed state of affairs by the parties whether as to a matter of fact or a matter of legal effect which both will be estopped from denying. His honour restated the relevant principles as follows:
"200 …
(a) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant
(b) the defendant has adopted the same assumption;
(c) both parties have conducted their relationship on the basis of that mutual assumption;
(d) each party knew or intended that the other act on that basis; and
(e) departure from the assumption will occasion detriment to the plaintiff."