Kangaroo Point Developments MP Property Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd & Ors [2021] QSC 30

"... we hold instructions to respond, on behalf of our client, to your client's [payment claim] by giving you, on behalf of our client, our client's 'payment schedule' for the purposes of section 76 of the BIFA within the requisite 15 business day time period.

To avoid doubt, on this occasion anything issued to your client by the Superintendent in respect of [the payment claim] is not to be construed as a 'payment schedule' for the purposes of the BIFA as our client will be providing its own response as foreshadowed above."

• [5] On 10 August 2020 the Superintendent appointed pursuant to the contract between the parties issued his assessment of what was due under the payment claim. The contract named this document a payment schedule, see cl 37.2 below.
• [6] On 17 August 2020, within the time limited by the BIFA, the solicitors acting for the applicant sent a letter to the first respondent's lawyers which took various legal points but made it clear that, if there had been a payment claim under the BIFA, "... then this correspondence is our client's payment schedule in response ... for the purposes of section 76(1) of the BIF Act." Further, this letter expressly disputed the position which the first respondent had taken in a letter of 13 August 2020 that the document called payment schedule issued by the Superintendent to the first respondent on 10 August was the payment schedule for the purposes of s 76 of the BIFA.
• [7] Both the Superintendent's assessment and the payment schedule sent by the applicant's solicitors denied most of the payment claim made by the first respondent.

• [8] The first respondent determined to have the dispute adjudicated pursuant to Chapter 3, Part 4 of the BIFA and completed the adjudication application form required by s 79(2)(a) of the BIFA. Section 7 of that form is headed "Payment Schedule Details". It asks, "Has the respondent given you a payment schedule?" There are two options to reply to that enquiry. The first respondent checked the box marked "Yes attach copy". The document attached was the Superintendent's assessment of 10 August 2020. The statutory form required the first respondent to provide the date of the payment schedule, and it provided the date 10 August 2020. That is, it is clear that the first respondent was nominating the Superintendent's assessment of 10 August 2020 as the payment schedule under the BIFA.
• [9] The applicant submits that the assessment issued by the Superintendent on 10 August was not the payment schedule contemplated by s 76 of the BIFA in response to the payment claim. Therefore, it says, the adjudication application made by the first respondent was not an adjudication application within the meaning of s 79 of the BIFA.
• [10] Section 79(2)(a) provides that an adjudication application "must" be in the approved form and s 79(2)(c) says that the adjudication application "must identify the payment claim and the payment schedule, if any, to which it relates". In Galaxy Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd[1] I analysed the provisions of Chapter 3, Part 4 of the BIFA and concluded that the use of mandatory and permissive language in relation to time limits was nuanced and deliberate. In my view, the use of mandatory and permissory language in relation to the obligations at s 79 of the BIFA is consistent with this. The word "must" in each of s 79(2)(a) and 79(2)(c) denotes a mandatory requirement of the Act whereas, in contrast, the word "may" in s 79(2)(e) is used when the applicant for adjudication in fact has a choice as to whether or not to provide submissions.
• [11] The mandatory nature of the requirements at ss 79(2)(a) and (c) is not just evident from the language used, but also from the substantive meaning of these provisions. It is clear from s 81 of the BIFA that it is the adjudication application which is referred to the adjudicator for decision, and clear from ss 82(2), 82(4) and 88 (c) and (d) that the payment claim and payment schedule are the documents which define the dispute which is the subject matter of the adjudication application.[2]
• [12] In my view the Superintendent's assessment delivered on 10 August 2020 was not a payment schedule within the meaning of s 69 of the BIFA. That section provides:

A payment schedule, responding to a payment claim, is a written document that -

(a) identifies the payment claim to which it responds; and

(b) states the amount of the payment, if any, that the respondent proposes to make; and

(c) if the amount proposed to be paid is less than the amount stated in the payment claim - states why the amount proposed to be paid is less, including the respondent's reasons for withholding any payment; and

(d) includes the other information prescribed by regulation."

• [13] The Superintendent's 10 August 2020 assessment did not comply with s 69. Its opening words were:

"This Payment Schedule has been produced pursuant to the Works Contract for the residential flat being constructed at 98 River Terrace, Kangaroo Point, between the Principal 'Kangaroo Point Developments MP Property Pty Ltd' and the Contractor 'RHG Contractors Pty Ltd'. This Payment Schedule confirms that the Superintendent has assessed, calculated and certified the proper value of Work Under the Contract."

• [14] Part way down the first page of the document under the heading "Payment Recommendation" it is stated that, "Payment is recommended for the following amount: -$1,361,442 including GST". It is clear from that page that the recommendation as to payment is made by the Superintendent under the contract to the Principal under the contract, the applicant. The document does not state "the amount of the payment, if any, that the respondent proposes to make" within the meaning of s 69(b) of the BIFA. For that reason I do not think that the Superintendent's document of 10 August 2020 was a payment schedule within the meaning of s 69 of the BIFA.
• [15] As mentioned above, the relevant clause in the building contract between the parties is drafted badly. It provides:

The Superintendent shall, within 10 business days after receiving such a payment claim, issue to the Principal and the Contractor:

(a) a payment schedule evidencing the Superintendent's opinion of the moneys due from the Principal to the Contractor pursuant to the payment claim and reasons for any difference ('payment schedule'); and

(b) a certificate evidencing the Superintendent's assessment of retention moneys and moneys due from the Contractor to the Principal pursuant to the Contract.

If the Contractor does not make a payment claim in accordance with clause 37.1, the Superintendent may issue the payment schedule with details of the calculations and shall issue the certificate in paragraph (b).

If the Superintendent does not issue the payment schedule within 10 business days of receiving a payment claim in accordance with subclause 37.1, that payment claim shall be deemed to be the relevant payment schedule.

The Principal shall within 5 business days after receiving both such certificates, or within 15 business days after the Superintendent receives the payment claim (whichever occurs first), pay to the Contractor the balance of the payment schedule after setting off such of the certificate in paragraph (b) as the Principal elects to set off. If that setting off produces a negative balance, the Contractor shall pay that balance to the Principal within 5 business days of receiving written notice thereof.

Neither a payment schedule nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily. Payment other than final payment shall be payment on account only.

In so far as necessary to ensure compliance with the Security of Payment Act, the Superintendent is deemed to issue any payment schedule under clause 37.2 or final payment schedule under clause 37.4 as the agent of the Principal and each such schedule shall constitute a payment schedule for the purposes of the Security of Payment Act.

For the purposes of and where permitted by the Security of Payment Act, each of the dates for delivery of a payment claim in subclause 37.1 constitutes a reference date." (italics in the original)

• [16] It is the second last paragraph within cl 37.2 which is relevant. In my view the final words of this paragraph, "... and each such schedule shall constitute a payment schedule for the purposes of the Security of Payment Act" could not have the effect that a document which did not comply with s 69 of the BIFA was deemed to be a payment schedule as between the parties to the contract.
• [17] I deal with another point arising from this second last paragraph. It purports to make the Superintendent the agent of the Principal to deliver a payment schedule under the BIFA. Here, before the Superintendent's 10 August 2020 assessment was delivered, that agency was specifically revoked by solicitors acting on behalf of the applicant - see the terms of the letter of 6 August 2020. That letter made it clear that the Principal would deliver a payment schedule by its lawyers, not by the Superintendent. Perhaps that is simply another way of stating that in this case it was not "necessary to ensure compliance" with the BIFA that the Superintendent deliver a payment schedule, to use the introductory words to the second last paragraph of cl 37.2.
• [18] The document of 10 August 2020 was not a payment schedule within the meaning of s 69 of the BIFA and was not the payment schedule delivered by the applicant in this case. It follows that the adjudication application filed on behalf of the first respondent was not valid: in circumstances where a payment schedule had been delivered by the applicant pursuant to the BIFA it did not identify it; instead it identified another document. I agree with the decision of Brown J in Melaleuca View Pty Ltd v Sutton Constructions Pty Ltd & Ors that, "the determination of whether or not a document constitutes a 'payment schedule' is a jurisdictional fact."[3]

• [19] The applicant's second point is similar to the one just dealt with. Before the adjudicator, the applicant contended that it was the solicitors' document of 17 August 2020 which was the payment schedule. The arbitrator found to the contrary, ie, that it was the 10 August 2020 document which was the payment schedule. He determined the adjudication application on that basis, in accordance with the form described at [8] above. That is, the parameters of his adjudication were the payment claim and the document of 10 August 2020, wrongly thought by the adjudicator to be the payment schedule.
• [20] The adjudicator did not have statutory authority to determine that dispute. He had authority only to determine a dispute the parameters which were set by a valid payment claim and a valid payment schedule. This point was dealt with by Muir JA in Heavy Plant Leasing Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd.[4] In that case Muir JA found that "The adjudicator lacked authority to decide an adjudication application, where a payment schedule existed and was relied on by the respondent to the application, other than by reference to that payment schedule." This is an independent reason why the decision of the adjudicator in this case is void.
• [21] I do note that the payment schedule of 17 August 2020 is very much the same as the Superintendent's document of 10 August 2020. In fact, the Superintendent's document was annexed to, and formed the bulk of, the 17 August 2020 document. However, the documents were not identical. When dealing with the jurisdiction granted to a statutory decision-maker, the similarity between the documents of 10 and 17 August 2020 could not be simply regarded as an immaterial technicality.

• [22] A third point was raised on behalf of the applicant. It was said that the adjudicator's decision as to a delay claim was void because it could not be regarded as giving reasons - s 88(5)(b) of the BIFA, and further that no adjudicator acting logically on the material before this adjudicator could have reached the decision which he reached. I am against the applicant on this point.
• [23] A decision on an adjudication application is not one made in a Court. By the BIFA, the submissions to the adjudicator and the adjudicator's decision must be made quickly; the decision as to monies to be paid is not final, but a decision on account. The adjudicator is not bound to act on evidence.
• [24] Here, the first respondent claimed delay damages and made a long list of items which it claimed were caused by the applicant's delay. From the brief description of the items in the list, many do not seem necessarily connected with delay. The only material connecting them with delay was a brief statement by the Contract Administrator on behalf of the first respondent saying that he had consulted the books and records of the first respondent and considered the items on the list were referable to delay.
• [25] The adjudicator gave a written decision in which he expressed himself to be satisfied and persuaded by that evidence, which he described as reliable - see paragraph 214 of his decision.
• [26] The adjudicator was aware of the correct contractual provisions as to delay, and the law relating to the issue. He was properly aware of the competing arguments. The written reasons for decision would not, in my view amount to reasons if they were given by a Judge of this Court.[5] However, in the context of the matters which I have outlined at [23] above I am not prepared to say that the written decision was so unsatisfactory that it is void for this reason.[6] Nor am I prepared to say that there was not sufficient factual material before the adjudicator for him to have made a proper decision.
• [27] However for the reasons given at [18] and [20] above, I declare that the adjudication decision of the third respondent dated 4 December 2020 and issued 8 December 2020 is void.
• [28] I will hear the parties as to costs.

[1] [2020] QSC 51, [22] ff; see [2021] QCA 10, [25] ff on appeal.

[2] Style Timber Floor Pty Ltd v Krivosudsky [2019] NSWCA 171, [45].

[3] [2019] QSC 226, [44].

[4] [2013] QCA 386, [59] cited in Melaleuca View Pty Ltd (above).

[5] DL v The Queen [2018] HCA 26; (2018) 266 CLR 1, [130] ff.

[6] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, [91]; cf Kioa v West [1985] HCA 81; (1985) 159 CLR 550, 585 and see Wainohu v NSW (2011) 243 CLR 181, [56] as to the varying requirement for content and detail of judicial reasons depending upon the nature of the jurisdiction the Court is exercising, and the type of matter with which it is dealing.