CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS –
REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO
AND RECOVERY OF
PROGRESS PAYMENTS –
Source
Original judgment source is linked above.
Catchwords
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS –REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TOAND RECOVERY OFPROGRESS PAYMENTS –PAYMENT CLAIMS – where the plaintiff was the principal contractorunder a head contract for construction work to be performedat the Gold CoastAirport – where the plaintiff entered into a sub-contract with the firstdefendant – where the firstdefendant delivered a payment claim to theplaintiff in the amount of $1,215,733.23 – where an adjudication decisionwas madein respect of the sub-contract in the amount of$995,081.18 – where the plaintiff seeks a declaration that theadjudication decision is void – whether such a declarationought to bemadeADMINISTATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW –JURISIDCITIONAL MATTERS
Judgment (437 paragraphs)
[1]
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS -
[2]
PAYMENT CLAIMS - where the plaintiff was the principal contractor under a head contract for construction work to be performed at the Gold Coast Airport - where the plaintiff entered into a sub-contract with the first defendant - where the first defendant delivered a payment claim to the plaintiff in the amount of $1,215,733.23 - where an adjudication decision was made in respect of the sub-contract in the amount of
[3]
$995,081.18 - where the plaintiff seeks a declaration that the adjudication decision is void - whether such a declaration ought to be made
[4]
ADMINISTATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - JURISIDCITIONAL MATTERS
[5]
where an adjudication decision in the amount of $995,081.18 was made under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) - where the border between Queensland and New South Wales runs through the construction work to be performed - where the plaintiff asserts that s 61(4) excludes from the operation of the Act construction work carried out outside of Queensland - whether the proper construction of s 61(4) of the Act gives rise to a jurisdictional fact - whether a payment claim in a cross-border project must reasonably identify the location of the construction work
ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - PROCEDURAL FAIRNESS -
where the plaintiff submits that a failure by the adjudicator to consider submissions was a breach of natural justice in the decision-making process - whether the adjudicator failed to consider the submissions - whether any such failure was material
ADMINISTRATIVE LAW - JUDICIAL REVIEW - REVIEWABLE DECISIONS AND CONDUCT - DISTINCTION BETWEEN ADMINISTRATIVE AND JUDICIAL FUNCTIONS - where
[6]
the land upon which the Gold Coast Airport is sited is regulated under the Commonwealth Places (Application of Laws) Act 1970 (Cth) - whether the adjudicator was exercising judicial power within the meaning of s 4 of that Act
Wiggins Island Coal Export Terminal Pty Ltd v Monadelphous Engineering Pty Ltd & Ors[2015] QSC 307
[70]
G Beacham KC and D Byrne for the first defendant GJ De Villar KC S-G and FJ Nagorcka for the third defendant
[71]
Baker McKenzie for the plaintiff Holding Redlich for the first defendant Crown Law for the third defendant
[72]
[1] This proceeding has been brought by Lendlease Building Pty Ltd ("Lendlease"). Lendlease seeks a declaration that an adjudication decision issued on 6 December 2022 in the amount of $995,081.18 (inclusive of GST) be declared void, at least in part.
[2] Lendlease was the principal contractor under a head contract for construction work which was to be performed at the Gold Coast Airport.
[3] Lendlease entered into a sub-contract with the first defendant, BCS Airport Systems Pty Ltd ("BCS"). BCS is referred to in the relevant sub-contract as the sub-contractor. The adjudication decision is made in respect of the sub-contract between Lendlease and BCS. For the purpose of clarity, I will refer to the sub-contract in these reasons simply as "the contract".
[4] The issues in this proceeding centre around two unusual circumstances. The first is that the border between Queensland and New South Wales runs both through the Gold Coast Airport and, more particularly, the area where the construction work under the contract was to be performed by BCS.
[5] The second issue is that the land upon which the Gold Coast Airport is sited is a designated "Commonwealth Place" and is regulated under the Commonwealth Places (Application of Laws) Act 1970 (Cth) ("CPAL Act"). In the context of those circumstances, the issues in this proceeding can be summarised in the following ways.
[6] First, what is the proper construction of s 61(4) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) ("BIF Act")? This question involves a consideration of how that section excludes from the operation of the BIF Act construction work which is carried out outside of Queensland. It involves the further question of whether the proper construction gives rise to a jurisdictional fact, and what any such jurisdictional fact consequently requires to be established in order to preclude the operation of the BIF Act.
[73]
General for the State of Queensland ("SQ"), participated in the proceeding and made specific submissions.
[74]
[11] In respect of the last issue, each of the parties and SQ submitted that the Court ought not to express a view on the issue if the application could otherwise be fully resolved by reference to the earlier issues. I will abide by the request of the parties and the SQ.
[12] Before turning to any of the issues, it is appropriate to set out the relevant background facts.
[75]
[13] The contract between Lendlease and BCS is dated 3 July 2019. It was for the design and construction of certain baggage handling works at the Gold Coast Airport.
[14] As with most contracts involving significant construction tasks, the contract itself has a variety of constituent parts. In this case, there is a head page, a Formal Instrument of Agreement, a set of standard terms, an appendix, schedules and a series of annexures. In summarising the contract below, I will make reference to various of those constituent parts.
[15] The head page of the contract provided relevantly as follows: "MAJOR WORKS SUBCONTRACT
[16] The site address given is one which is within Queensland, and the project is referred to as the Gold Coast Airport, but as stated above, it is uncontentious in this proceeding that part of the construction works which were to be performed were sited in New South Wales.
[17] The Formal Instrument of Agreement defined Lendlease by that descriptor, but described BCS as the "sub-contractor" for the purposes of the contract.
[18] The standard terms of the contract were, in part, amended by certain other special conditions contained in Annexure G. For the purposes of continuity, when I set out the standard terms below, I have simply incorporated those amendments contained in Annexure G and footnoted the special condition clause in which the amendment appears. With that qualification, the standard terms of the contract relevantly provided as follows:
[79]
In the Subcontract, unless the context requires otherwise:
[80]
Drawings - the drawings and other documents identified in Annexure D: Drawings.
[81]
Subcontract Sum - the amount stated in the Appendix, as may be further described in Annexure A: Subcontract Sum, or such other sum or sums as may become payable under the Subcontract.
[82]
Works - the whole of the work to be executed in accordance with the Subcontract by the Subcontractor, including Variations provided for by the Subcontract, which is to be handed over to Lendlease.
WUC ('work under contract') - the work which the Subcontractor is or may be required to carry out and complete under the Subcontract and includes Variations, remedial work, Plant and temporary works.
[83]
(b) The Subcontractor must perform WUC and complete the Works in accordance with:
(i) Annexure C: Drawings Annexure D: Scope of Work and Annexure E: Specification;1
(ii) any directions of Lendlease, including directions to perform any Variation; and
(iii) all other requirements of the Subcontract.
[84]
(a) If the Subcontractor satisfies Clause 19.3 and demonstrates to Lendlease's satisfaction that:
(i) Substantial Completion will be delayed by an event referred to in the Appendix;
(ii) to the extent the delay occurs on or before the Date for Substantial Completion, the delay affects activities which are critical to achieving Substantial Completion by the Date for Substantial Completion; and
(iii) if the delay has more than one cause, each of the causes is an event of the type referred to in Clause 19.3(a)(i).
subject to Clause 19.5, Lendlease must extend the Date for Substantial Completion by the number of days by which, as a result of the delay, the Subcontractor will be delayed in achieving Substantial Completion.
[85]
(6) Where the Subcontractor is granted an extension of time pursuant to clause 19.3(a), the Subcontract will be entitled to be paid (as an adjustment to the Subcontract Sum) the reasonable additional direct costs determined by Lendlease (acting reasonably) that the Consultant has reasonably and necessarily incurred due to, and arising directly from, the relevant delay, provided that:
[86]
(a) the Subcontract must claim such costs in compliance with clause 19.2;
(b) such costs must not include any off-site overheads;
(c) such costs have not been, and will not be, paid under any other express provision of this Agreement; and
(d) the Subcontractor's entitlement to claim for such costs is capped at the daily rate specified in the Appendix.
For clarity, the parties agree that delay and disruption costs arising from a Variation (if any) are deemed to be included in the value of
[87]
1 I note that this sub-clause misdescribes the lettering adopted for the Annexure; nothing turns on this.
[88]
the Variation determined under clause 21.5. The Subcontractor will have no claim with respect to, or in connection with, any delay or cause of delay, other than as set out in this clause 19.3.2
[89]
The Subcontractor's entitlement to an extension to the Date for Substantial Completion under Clause Error!3 Reference source not found (a) and delay costs under clause 19.3(b) are the Subcontractor's sole remedy for any delay or disruption in the execution of WUC, whether caused by an act or omission of Lendlease (including any suspension of WUC or change to workings hours directed by Lendlease under Subcontract), a breach of the Subcontract by Lendlease, negligence or other default of Lendlease, or howsoever otherwise caused.
Subject to Clause 4(c) and Clause 4(d) of Schedule F: Programming Requirements, the Subcontractor accepts the risk of all increased costs and other Losses resulting from any delay or disruption in the execution of WUC.4
[90]
22. MEASUREMENT, PAYMENT AND ADJUSTMENT OF THE SUBCONTRACT SUM
[91]
(c) A payment claim must show:
(i) the Subcontract value of WUC completed (excluding Variations, but allowing for Variation omissions), valued in accordance with Clauses 22.3 and 22.4;
(ii) the value of work completed on Variations, valued in accordance with Clause 21.5;
(iii) the total amount determined under Clauses 22.2(c)(i) and 22.2(c)(ii), less the amount previously paid to the Subcontractor; and
(iv) any other amounts to which the Subcontractor is then entitled under the Subcontract.
[92]
[19] The contract then contained an appendix, which was to be read with the standard terms. That appendix relevantly provided as follows:
[93]
2 Clause 19.3(b) was amended by Special Condition 15.1 in the form of the underlining.
[94]
3 This error appears in the contract; nothing turns on it.
[95]
4 Clause 19.8 was amended by Special Condition 15.2 in the form of the underlining.
[96]
1.1 Date for Practical Head Contract Project Dates for Completion Practical Completion are
1.1 Stage(s) Separable Portion 1 (SP1)- comprising all WUC necessary for GCA to commence ORAT and otherwise operate the new baggage handling system installation, new baggage handling room mezzanines and baggage handling HLC upgrade, and all other WUC not described in SP2 in relation to the Baggage handling works.
Separable Portion 2 (SP2)- comprises BHS Separable Portions 2&3 and final validation and completion of the baggage handling HLC upgrade as described in the AvLogix BHS performance Specification (Tender Issue 19/07/2018); generally being those WUC relating to the baggage handling system that are to be conducted in the existing baggage hall.
[98]
1.1 Subcontract Sum The lump sum of Six million three
hundred and fifty nine thousand dollars ($6,359,889.00) including provisional sums of $0 for that part of the Works referred to in Annexure A: Subcontract Sum.
[99]
19.3(a)(i) Events which entitle
an extension of time ... Any:
Delay by Lendlease in providing access to the Subcontractor to the Site; or..."
[100]
[20] The contract then included schedules. Schedule D set out the design requirements as follows:
[101]
(a) The Subcontractor must, without limitation, design and document the Works in accordance with the requirements of the Subcontract (the Design).
(b) The Subcontractor must ensure that the Design complies with:
(i) Annexure D: Drawings;
(ii) Annexure E: Scope of Work;
(iii) Annexure F: Specification; and
(iv) Program of Works - GCA STE - Overall Target Schedule (Status 26.04.19)
which documents outline Lendlease's requirements for the design of the Works (Lendlease's Design Requirements)."
[102]
[21] It can be seen that Schedule 3 required the design for the ultimate works to be in accordance with the Annexure D Drawings, the Annexure E Scope of Work and the Annexure F Specifications, so as to meet an identified contractual program.
[22] The next documents were the annexures.
[23] Annexure A broke up the contract price in accordance with 10 listed items. It can be observed that the bulk of the contract price lay in what was defined as 'Severable Portion 1', made up of Item Groups 1 to 8. Annexure A relevantly provided as follows:
Project and Site management (incl program integration
[105]
All Certifications (Structural, Mechanical, Electrical,
[106]
New STE Sortation Line & Modifications required to existing Sort lines
[107]
Allowance for roller doors existing southern precast wall-
[108]
Changes to merge point and carousel layout of reclaim 4
[109]
Installation of steel platform for BHS mezzanine in new bag hall.
[110]
Specification SP 2 - Design and Installation of a new recirculation line from the existing sort line feeding Make-up carousels 1, 2 and 3. Ref Section 4.9
[111]
Specification SP 3 - Modifications to Makeup 1 Carousel for Vehicle Circulation
[112]
[24] In the case of Annexure D, it listed out, and thereby incorporated into the contract, a large series of drawings. The full drawings themselves were not in evidence before me. Whilst some of the affidavits reproduced certain drawings, the evidence generally did not identify if they were from Annexure D or if they had been produced as part of the design and construct obligation which BCS had under the contract.
[25] In the case of Annexure E, it provided as follows: "Annexure E: Scope of Work..."
[113]
3.3 Trade specific requirements The Works includes:
[114]
Design and installation of a new sortation loop to allow sortation to an expanded make-up hall.
Design and installation of three (3) new makeup carousels 4, 5 and
[115]
Design and installation of three (3) new reclaim carousels.
Design and installation of two (2) new reclaim breakdown feed lines for 2 of the new reclaim carousels for swing operators.
Segregation of the International and Domestic Operations where necessary including remote inbound baggage breakdown conveyors feeding new makeup carousels where indicated.
Design and installation of steel platform for BHS mezzanine in the existing bag hall.
Design of steel platform for BH mezzanine in the new bag hall.
Design and installation of OOG international reclaim conveyor.
Design and installation of OOG Domestic reclaim conveyor.
Design and installation of a new recirculation line for the new sort loop.
Design of new early baggage storage (EBS) facility above the new bag make-up hall
[116]
[26] The item breakup in Annexure A can be better understood by reference to a coloured drawing which was produced after the formation of the contract. It helpfully identifies where certain of the items contained in Annexure A are situated, including by reference to the Queensland and New South Wales border. It does this by use of both colours and descriptions which are linked to certain items. By reference to that drawing, the following locations can be identified:
[117]
(a) Item 2 of Annexure A is the grey coloured item in the centre of the drawing, labelled New Sortation Loop (CB Line);
(b) Item 4 of Annexure A are the three carousels coloured red, then blue, then red, with each of their feed lines coloured blue, located in the bottom right quarter of the drawing and labelled Make Up Carousels 4, 5 and 6 with their feed lines labelled Lines 4, 5 and 6;
(c) Item 5 of Annexure A are the three carousels coloured red, then green and then red, with their two feed lines coloured yellow and then green in the top third and the far right side of the drawing, labelled Reclaim Carousels 4, 5 and 6 and Reclaim 4 and 5 Feed Lines;
(d) Item 6 of Annexure A is the Out of Gauge Lines 1 and 2, with Out of Gauge Line 1 (international) being on the far right top quarter of the drawing in the form of a straight red coloured vertical line and Out of Gauge Line 2 (domestic) being on the far left of the top quarter of the drawing, in the form of a straight green coloured vertical line;
(e) Item 9 of Annexure A is located solely in Queensland,5 and includes, at the least, the green coloured recirculation line located in the centre left of the diagram labelled Recirculation Line 01; and
(f) Item 10 of Annexure A is not clearly identified on the document other than it was in the vicinity of the existing Make Up Carousel 1, which is uncoloured and appears just left of the centre of the drawing with the label Make Up Carousel 1.
[118]
[27] Having identified the broad location of items, it can relevantly be observed that the diagonal dotted line moving from the bottom left to the top right of the drawing is the Queensland and New South Wales border.
[28] The drawing, together with the breakdown of the Item Groups contained in Annexure A, illustrate that some of the construction work that was to be undertaken was to occur in respect of structures which were:
[119]
(a) wholly in Queensland;
(b) partly in Queensland and partly in New South Wales; and
[120]
[29] On 22 July 2022, the relevant payment claim was delivered by BCS to Lendlease. It included a front sheet which in part provided as follows:
[121]
[30] One of the documents which formed part of the payment claim was a detailed schedule. That schedule, in part, broke down part of the amount claimed by reference to each of the items and sub-items described in Annexure A to the contract. Most of those items and sub-items had previously been certified and allowed for in full, but there was a small additional amount claimed for certain portions of sub-items, amounting to approximately $54,000.
[31] More importantly, there was also a second detailed schedule which broke down the rest of the amount claimed in the payment claim by reference to what were described as variations. Again, many of those variations had already been approved and paid in full. Relevantly, there were four purported variations which did not fall within this class. It was these four which are relevant to the current proceeding. They are VPR22, VPR23, VPR24 and VPR25. I have reproduced from that schedule the details for only those four variations as follows:
February 2022 including attachment Project Variation Form Ref VPR022 -
[125]
copies of which are attached to this payment claim)
[126]
Delay Damages Claim dated 20 May 2022 ref BCS-BH-NOT-ETR-00-004-
[127]
PDF[A] - particulars are set out in Schedule 3 of this payment claim (See also Aconex ref BCSAS-GCOR- 001219 dated 20 May 2022 including attachment and document named BCS-BH-NOT-ETR-00-004-PDF-A -
[128]
Claim for delay damaged - copies of which are attached to this payment
[129]
Make up loop 04 damage repair (See also Aconex Ref BCSAS-GCOR- 001228 dated 27 May 2022 including attachment ref VPR024 MU04 carousel repair - copies of which are
[130]
Installation of additional E-stops (See also Aconex ref BCSAS-GCOR- 001241 dated 3 June 2022 including attachment VPR025 - Installation of
[131]
additional E stops - copies of which are attached to this payment claim)
[132]
[32] The payment claim also contained certain material which provided further information in respect of those four purported variations.
[33] In relation to VPR24, the attached material identified that the variation was for rectification of damage which had occurred to Make Up Loop 4. Whilst Make Up Loop 4 was predominantly in New South Wales, a portion was within Queensland. The attached material did not identify in which State the rectification work was carried out.
[34] In relation to VPR25, the attached material identified that the work constituted the installation of what are known as E Stops or Emergency Stops. It was uncontentious that some of that installation work was carried out in Queensland and some was carried out in New South Wales.
[35] As previously identified, VPR23 was not in truth a variation but was rather a delay damages claim made pursuant to cl 19 of the contract. In relation to VPR23, the original claim for delay damages was attached. That document was dated 20 May 2022 and gave particulars of the claim for delay as follows:
[133]
(a) Project Management: additional hours required to cover for the delay of the BHS works schedule from 7 December 2021 to 13 May 2022 inclusive;
(b) Other project costs: additional costs required to cover for the delay the BHS works schedule from 7 December 2021 to 13 May 2022 inclusive;
(c) Storage: additional storage required to cover for the delay of the BHS works schedule from 7 December 2021 to 13 May 2022 inclusive;
(d) Disruption of two installation works: additional costs incurred due to ongoing disruptions, equipment, location and staged installation works;
(e) Equipment warranty extensions: additional costs incurred as a result of extended equipment warranties an additional 12 months; and
(f) Exclusions (items not included): any contract labour, accommodation or car travel for the BHSWUC after 13 May 2022 for either the project manager, LLC engineer and site manager.
[134]
[36] That claim was initially priced at $966,895. In the attached material, it was shown as having been subsequently reduced to $832,481. That amount was calculated as follows:
[135]
Claim for delay damages Ref BCS-BH-NOT-ETR-00-004-PDF-A
[136]
[37] The payment claim also attached a schedule which itemised the hours of work and rates for the project manager, site manager, LLC engineer, mechanical fitter and electrician referred to in the above calculations, together with a spreadsheet identifying individual hours for individual dates for each of the project manager, site manager and LLC engineer. A load factor was then applied to the LLC engineer, mechanical fitter and electrician's total hours worked during the period. In the case of the LLC engineer, it was a 25 per cent load factor, so that only a quarter of his or her time formed part of the claim. In relation to the mechanical fitter and electrician, a load factor of 50 per cent was applied, so only half of their total time formed part of the claim. The material did not provide an explanation for the load factors.
[38] On 5 August 2022, Lendlease served a payment schedule on BCS. That payment schedule accepted that an amount of $59,282.80 was certified and payable, in respect of the total $1,215,733.23 which had been claimed. The payment schedule provided, in part, as follows:
[137]
[39] It also contained a similar schedule to the two schedules which had formed part of the payment claim. The first part of the schedule dealt with Annexure A items individually. Most, but not all, of the claims for Items 1 to 10 of Annexure A were allowed. No part of the dispute concerning the adjudication decision involves how those items were dealt with by the parties. Accordingly, I have not reproduced this Schedule.
[40] The relevant part of the schedule for the purposes of this proceeding concerns the purported variations. For the purposes of this proceeding, I have extracted from the schedule only information relating to VPR22, VPR23, VPR24 and VPR25, and then only certain of columns which appeared for each such variation.
[138]
Reasons why the value assessed is less / different than the claimed amount
[139]
Relocation of services resulting from BCS design of works in the Existing Bag Hall
[140]
and 5 combined works - additional ISS costs. ISS invoice SISE114103
[141]
Additional civil works resultant of EBH structural design by BHS. Refer BCSAS- TRANSMIT- 000225
[142]
This claim does not comply with the Contract. The Contractor has assessed entitlement as nil. [Lendlease note this claim has been amended from previous advice and BCS Systems have submitted new supporting documentation. Lendlease
[143]
Reasons why the value assessed is less / different than the claimed amount
[144]
is preparing a response to BCS Systems based on this information].
[145]
Tug Damage Rectification - instructed to proceed. (Client approved). Works assessed as 40% complete at time of payment claim.
[146]
Entitlement has been tested and the Contractor advises these works were a compliance issue to Works Under Contract. On this basis, Lendlease has assessed at nil. **Lendlease is preparing a response to BCS Systems based on new information provided with Jul-22 Payment Claim**
[147]
[41] The adjudication application was then delivered by BCS on 16 September 2022. The evidence placed before the court did not contain all of the attachments to the adjudication application. What is apparent from the adjudication application is that BCS, by the adjudication application, was only claiming three variations which were then in dispute with Lendlease. They were:
[148]
(a) VPR22 - the PLC upgrade for $20,069.50;
(b) VPR23 - the extension of time claim for $915,728.80; and
(c) VPR25 - the installation of additional E-stops for $64,753.64.
[149]
[42] There was no claim for VPR24 in the adjudication application.
[43] In respect of the three remaining variations, it is uncontentious that VPR22 involved construction work carried out only in Queensland. For the purposes of this proceeding, Lendlease accepted that the adjudication decision would not be invalid in respect of the sum representing VPR22, namely $20,069.50 (inclusive of GST).
[44] VPR25 involved construction work which was performed both in Queensland and in New South Wales. A statutory declaration of Mr Southon dated 27 October 2022 establishes that fact. The adjudication decision ultimately assessed $0 for VPR25. As a result of this, no argument in this proceeding has concerned VPR25.
[45] The argument in this proceeding has centred on VPR23. VPR23 arose as a result of delays to access, inter alia, to certain areas relating to particular structures which were to be situated variously:
[150]
(a) wholly in Queensland;
(b) partly in Queensland and partly in New South Wales; and
(c) wholly in New South Wales.
[151]
[46] Those structures included Reclaim Carousel 6 (which was sited mostly in New South Wales but partly in Queensland) and Out of Gauge Line 1 (international) (which was sited wholly in New South Wales). As previously stated, those particular structures are situated in the top right third of the drawing attached to these reasons. Whether
[152]
the delay damages within VPR 23 represented construction work carried out outside of Queensland is a critical matter in issue in this proceeding.
[153]
[47] On 28 October 2022, Lendlease delivered its adjudication response.
[48] Again, the evidence before me did not include all of the attachments to the adjudication response. At paragraph [7.1] of the adjudication response submissions, Lendlease made clear that it disputed each of VPR22, VPR23 and VPR25.
[49] The adjudication response submissions at paragraphs [9.1]-[13.4] raised the proper construction of s 61(4) of the BIF Act. Lendlease submitted that the application of s 61(4) of the BIF Act precluded the adjudicator from having jurisdiction.
[50] The raising of the s 61(4) issue led to the adjudicator on 13 November 2022 to call for further submissions, inter alia, on that issue by 16 November 2022.
[51] On 16 November 2022, solicitors for Lendlease made additional further submissions on the s 61(4) issue by way of letter, particularly at paragraphs [1.1]-[1.32] of the letter.
[52] On 16 November 2022, BCS, by its solicitors, also made further submissions, inter alia, on the s 61(4) issue, particularly at paragraphs [2]-[25].
[53] On 16 November 2022, solicitors for Lendlease sent reply submissions, in part directly responding to BCS' submission made that same date. The reply submissions addressed the s 61(4) issue at paragraphs [1.1]-[1.38].
[54] On 16 November 2022, the solicitors for BCS also replied to Lendlease's first set of submissions made on the same date. The reply submissions addressed the s 61(4) issue at paragraphs [1]-[25].
[55] As a result of those various rounds of further submissions and replies, on 21 November 2022, the adjudicator requested a second round of further submissions and replies. In doing so, the adjudicator expressed a preliminary view in the following terms, "I'm not persuaded by the claimant's or respondent's arguments about the relevant jurisdiction for the purpose of the Security of Payment legislation over the Gold Coast Airport." The adjudicator went on to articulate a preliminary view to the effect that the CPAL Act operated so that either the Queensland or New South Wales Security of Payment legislation applied. He asked for further submissions to be provided on the issue of whether the security payment legislation applied to construction work at the Gold Coast Airport, which was a Commonwealth Place. Those submissions were asked to be supplied by 23 November 2022. He also requested reply submissions by 24 November 2022. In effect, the adjudicator was communicating a preliminary view that he had jurisdiction to carry out an adjudication by reason of the CPAL Act, under either the BIF Act or the New South Wales equivalent, and, by implication, s 61(4) and its New South Wales equivalent did not deny jurisdiction.
[154]
New South Wales equivalent, each had the effect of removing the jurisdiction of the adjudicator in the circumstances of the case.
[155]
[57] On 23 November 2022, solicitors for BCS made submissions on the operation of the CPAL Act to the effect that it resulted in the BIF Act applying to the exclusion of the equivalent New South Wales Act, and, accordingly, concluded that the adjudicator had jurisdiction.
[58] On 24 November 2022, solicitors for Lendlease purported to reply to the submissions of BCS from 23 November 2022. It did so, in part, by raising a fresh jurisdictional point, which is the point identified as the fifth issue in this proceeding. It had not been raised previously. This new point was raised at paragraphs [1.1]-[1.26] of the 24 November 2022 reply submissions.
[59] On 24 November 2022, solicitors for BCS put in reply submissions. These submissions only replied to Lendlease's submission of 23 November 2024 and only dealt with the s 61(4) issue.
[60] The adjudicator requested, and was granted by the parties, an extension of time up to 6 December 2022 to deliver the adjudication decision.
[61] On 6 December 2022, the adjudicator released his adjudication decision to the parties and awarded an amount of $995,081.18 (inclusive of GST). Ultimately, that was made up by allowing VPR22 in full for $18,245 (exclusive of GST), VPR23 in full for $832,480.73 (exclusive of GST) and other undisputed items in the sum of
[156]
$53,893.52 (exclusive of GST). The adjudicator then added GST on to each of the figures to come to the $995,081.18 total adjusted sum. As previously observed, $0 was allow for VPR25.
[157]
[62] In the adjudication decision, the adjudicator dealt with Lendlease's assertion that the payment claim was invalid because some work was carried out in New South Wales and some was carried out in Queensland, and that the Act did not apply as it was not possible to distinguish which work was performed in which State.6
[63] The adjudicator's decision on this particular issue can be seen at paragraphs [120]- [135]. At paragraph [120] the reasons refer to the adjudicator having called for further submissions and replies by 23 and 24 November 2022. Earlier at paragraphs [59]- [60], the adjudicator had recorded that each of Lendlease and BCS had provided him with their 23 and 24 November 2022 responses to his request for the parties to consider the CPAL Act.
[64] The adjudicator's reasoning which followed on the issue of his jurisdiction essentially reflected the reasoning in the adjudicator's correspondence of 21 November 2022. In essence, the adjudicator reasoned that the CPAL Act resulted in the availability of both the BIF Act and also the New South Wales equivalent Act in respect of work carried out on the Gold Coast Airport. Consequently, he concluded that the BIF Act applied to the work carried out under the contract and, consequently, the payment claim was valid.
[65] No specific mention of s 61(4) of the BIF Act or s 4(5) of the CPAL Act was made.
[158]
[66] It is against this background of facts which the issues should now be considered.
[159]
Issue 1: The proper construction of s 61(4) of the BIF Act
[160]
[67] The proper construction of s 61(4) will require a consideration of a variety of sections of the BIF Act. The most relevant sections for consideration in that respect are the following:
[161]
(1) The main purpose of this Act is to help people working in the building and construction industry in being paid for the work they do.
[162]
(2) The main purpose of this Act is to be achieved primarily by -
[163]
(a) requiring the use of statutory trusts for particular contracts related to the building and construction industry; and
(b) granting an entitlement to progress payments, whether or not the relevant contract makes provision for progress payments; and
(c) establishing a procedure for -
(i) making payment claims; and
(ii) responding to payment claims; and
(iii) the adjudication of disputed payment claims;
[164]
Division 1 Application and operation of chapter
[165]
(1) Subject to subsections (2) to (4), this chapter applies to construction contracts -
[166]
(a) whether written or oral, or partly written and partly oral; and
(b) whether expressed to be governed by the law of Queensland or a jurisdiction other than Queensland; and
(c) whether entered into before or after the commencement of this section, other than to the extent the repealed Building and Construction Industry Payments Act 2004 continues to apply to unfinished matters under section 205.
[167]
(a) a construction contract to the extent that it forms part of a loan agreement, a contract of guarantee or a contract of
insurance under which a recognised financial institution undertakes -
(i) to lend an amount or to repay an amount lent; or
(ii) to guarantee payment of an amount owing or repayment of an amount lent; or
(iii) to provide an indemnity relating to construction work carried out, or related goods and services supplied, under the construction contract; or
(b) a construction contract for the carrying out of domestic building work if a resident owner is a party to the contract, to the extent the contract relates to a building or part of a building where the resident owner resides or intends to reside; or
(c) a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated other than by reference to the value of the work carried out or the value of the goods and services supplied.
[168]
(3) This chapter does not apply to a construction contract to the extent it includes -
[169]
(a) provisions under which a party undertakes to carry out construction work, or supply related goods and services in relation to construction work, as an employee of the party for whom the work is to be carried out or the related goods and services are to be supplied; or
(b) provisions under which a party undertakes to carry out construction work, or to supply related goods and services in relation to construction work, as a condition of a loan agreement with a recognised financial institution; or
(c) provisions under which a party undertakes -
(i) to lend an amount or to repay an amount lent; or
(ii) to guarantee payment of an amount owing or repayment of an amount lent; or
(iii) to provide an indemnity relating to construction work carried out, or related goods and services supplied, under the construction contract.
[170]
(4) This chapter does not apply to a construction contract to the extent it deals with construction work carried out outside Queensland or related goods and services supplied for construction work carried out outside Queensland.
[171]
(5) In this section - resident owner, in relation to a construction contract for carrying out domestic building work, means a resident
(b) directly or indirectly, cause construction work to be carried out; or
(c) provide advisory, administrative, management or supervisory services for carrying out construction work.
[174]
construction contract means a contract, agreement or other arrangement under which 1 party undertakes to carry out construction work for, or to supply related goods and services to, another party.
[175]
(1) Construction work means any of the following work -
[176]
(a) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures, whether permanent or not, forming, or to form, part of land;
(b) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of any works forming, or to form, part of land, including walls, roadworks, powerlines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for land drainage or coast protection;
(c) the installation in any building, structure or works of fittings forming, or to form, part of land, including heating, lighting,
air-conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems;
(d) the external or internal cleaning of buildings, structures and works, so far as it is carried out in the course of their construction, alteration, repair, restoration, maintenance or extension;
(e) any operation that forms an integral part of, or is preparatory to or is for completing, work of the kind referred to in paragraph (a), (b) or (c), including -
(i) site clearance, earthmoving, excavation, tunnelling and boring; and
(ii) the laying of foundations; and
(iii) the erection, maintenance or dismantling of scaffolding; and
(iv) the prefabrication of components to form part of any building, structure or works, whether carried out on- site or off-site; and
(v) site restoration, landscaping and the provision of roadways and other access works;
(f) the painting or decorating of the internal or external surfaces of any building, structure or works;
(g) carrying out the testing of soils and road making materials during the construction and maintenance of roads;
(h) any other work of a kind prescribed by regulation.
[177]
(3) However, construction work does not include any of the following work -
[178]
(a) the drilling for, or extraction of, oil or natural gas;
(b) the extraction, whether by underground or surface working, of minerals, including tunnelling or boring, or constructing underground works, for that purpose.
[179]
(1) Related goods and services, in relation to construction work, means any of the following -
[180]
(a) goods of the following kind -
(i) materials and components to form part of any building, structure or work arising from construction work;
(ii) plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of construction work;
(b) services of the following kind -
(i) the provision of labour to carry out construction work;
(ii) architectural, design, surveying or quantity surveying services relating to construction work;
(iii) building, engineering, interior or exterior decoration or landscape advisory services relating to construction work;
(iv) soil testing services relating to construction work;
(c) goods and services, relating to construction work, of a kind prescribed by regulation.
[181]
(2) In this chapter, a reference to related goods and services includes a reference to related goods or services.
[182]
(1) A payment claim, for a progress payment, is a written document that -
[183]
(a) identifies the construction work or related goods and services to which the progress payment relates; and
(b) states the amount (the claimed amount) of the progress payment that the claimant claims is payable by the respondent; and
(c) requests payment of the claimed amount; and
(d) includes the other information prescribed by regulation.
[184]
(2) The amount claimed in the payment claim may include an amount that -
[185]
(a) the respondent is liable to pay the claimant under section 98(3); or
(b) is held under the construction contract by the respondent and that the claimant claims is due for release.
[186]
(3) A written document bearing the word 'invoice' is taken to satisfy subsection (1)(c).
(1) A person (the claimant) who is, or who claims to be, entitled to a progress payment may give a payment claim to the person (the respondent) who, under the relevant construction contract, is or may be liable to make the payment.
[189]
[68] It is worth setting out s 61(4) of the BIF Act again. It states:
[190]
"This chapter does not apply to a construction contract to the extent it deals with construction work carried out outside Queensland or related goods and services supplied for construction work carried out outside Queensland."
[191]
[69] The starting point for a summary of the parties' positions is to recognise that they both accept that s 61(4) of the BIF Act is a section which goes to the jurisdiction of an adjudicator and involves a jurisdictional fact.
[70] I turn first to the position of Lendlease on the proper construction of s 61(4) of the BIF Act. Lendlease identified that Chapter 3 of the BIF Act is the chapter that contains a claimant's right to make a payment claim and provides for how that right is ultimately able to be adjudicated on.
[71] Lendlease points out that s 61(1) of the BIF Act expressly identifies that Chapter 3 applies to a construction contract. That is an inclusive expression of jurisdiction. Lendlease then points out that the language of s 61(1) makes it subject to ss 61(2)-(4) of the BIF Act, which Lendlease describes as "exclusions" of jurisdiction.
[72] Lendlease points to the language at the commencement of s 61(4) of the BIF Act, where it says "This chapter does not apply...". Lendlease submits that this language makes clear that Chapter 3 has no operation in respect of the subject matter which is then identified in the section.
[73] Lendlease says that this language gave rise to the subject matter that follows being the subject of a jurisdictional fact, namely a fact which the adjudicator can determine for the limited purpose of making his or her decision, but cannot conclusively determine. A jurisdictional fact can only be conclusively determined by a court. On such an occasion, a court may receive evidence on this question, which goes beyond the material which was before the adjudicator.
[74] Turning then to the words "to the extent it deals with..." as they appear in s 61(4) of the BIF Act, Lendlease submitted that they indicated a dis-application of Chapter 3 not to the entirety of the construction contract, but only to the extent that it deals with construction work carried out outside of Queensland. It submitted that there was nothing in the text of s 61(4) which implied an all-or-nothing approach, depending on whether a contract or a project had a closer connection to Queensland or, alternatively, to New South Wales.
[75] The submission continued that the dis-application of the operation of part of the construction contract was consistent with authorities concerning the equivalent of s 61(3) of the BIF Act in other States. As an example, reference was made to the decision in , which concerned the New South Wales equivalent of s 61(3)(c)(iii).7
[192]
(a) a payment claim is invalid and/or ineffective, either in whole or at least to the extent that it includes a claim based on the parts of the contract to which Chapter 3 does not apply;
(b) an adjudication application is invalid and/or ineffective, either in whole, or at least to the extent that it includes a claim based on parts of the contract to which Chapter 3 does not apply; and
(c) if the invalid and/or ineffective parts of a payment claim or an adjudication decision are inseverable from the valid and effective parts, the whole of the payment claim and the adjudication application is invalid.
[193]
[77] That position was modified during oral submissions to the extent that Lendlease accepted that the adjudication decision was valid to the extent that it dealt with VPR22. In the case of VPR22, it should be recognised that both parties accepted that it dealt entirely with construction work carried out inside of Queensland. Whilst not stated, presumably the uncontested amounts which had been set out in the payment schedule also fall into this category. Such a concession carried with it a concession that the effect of s 61(4) was not one which would result in the adjudication application being entirely void.8
[78] Lendlease submitted that there was an important intersection between the requirements of s 68(1)(a) of the BIF Act which concerned what a payment claim must contain on the one hand, and the dis-application effected by s 61(4) of the BIF Act on the other hand. It was said, at least in the unusual circumstances of the present case, that BCS needed to identify (or at least make a good faith attempt to identify) which work was carried out in New South Wales and which work was carried out in Queensland. The submission continued that the identification of those matters was, at least in the present case, part and parcel of identifying the construction work or related goods and services to which the progress payment relates to, as required by s 68(1)(a) of the BIF Act.
[79] It was submitted by Lendlease that the requirement in s 68(1)(a) of the BIF Act to identify the construction work and related goods and services to which the progress payment relates had previously been found to be an essential requirement for a payment claim to exist.9
[194]
This decision went on appeal but the appellant decision does not render the reference to the first instance decision inappropriate.
[195]
8 The concession in oral argument was not evidently linked to an application of s 101(4) of the BIF Act.
[196]
T & M Buckley Pty Ltd v 57 Moss Rd Pty Ltd[2010] QCA 381 at [36] and KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd & Ors[2019] QSC 178 at [12].
[197]
[80] Next, Lendlease submitted that the phrase "construction work carried out" as it appears in s 61(4) of the BIF Act was a reference to the activity of carrying out work, as opposed to the final product of the activity. In this respect, the phrase referred to the definition of "construction work" contained in s 65(1) of the BIF Act, and in particular, each of the identified categories contained in s 65(1)(a)-(d) of the BIF Act. It was said that each pointed to an activity which related to the production of a defined thing, but was not limited to the defined thing itself. Lendlease submitted that the language of s 61(4), which talks of "construction work carried out" was referring to the locus of the activity not the locations of the building, structure or works in relation to which those activities are done to or relate to.
[81] Lendlease submitted that BCS's construction fails to focus on the location of the activities when answering the s 61(4) question. Instead, Lendlease says that BCS focuses on the location of the building, structure or work to which the activity applies. Lendlease says that BCS identifies the wrong integer for the s 61(4) question and thus produces the wrong answer.
[82] I turn then to the contentions of BCS on the proper construction of s 61(4) of the BIF Act.
[83] As previously identified, BCS agreed that s 61(4) of the BIF Act was jurisdictional and involved the identification of a jurisdictional fact.
[84] BCS also accepted that to the extent that Lendlease could satisfy the court that the adjudication decision (or parts thereof) awarded a sum for construction work carried out outside Queensland, then that part of the decision would be liable to be set aside. Embedded in that accepted proposition was BCS's primary construction contention. That is, on its proper construction, where s 61(4) refers to "construction work carried out outside Queensland", it refers to construction work on, or relating to, a building or structure or works situated wholly outside Queensland.
[85] On BCS's construction of s 61(4), the concept of "wholly" is incorporated into the sub-section so that it reads "this chapter does not apply to a construction contract to the extent it deals with construction work carried "wholly" outside Queensland or related goods and services supplied for construction work carried out "" outside Queensland.
[198]
(a) certain types of activities (construction, alteration, etc);
(b) those activities being performed on, or in relation to "buildings", "structures", or "works"; and
(c) the end result of the work forming part of land.
[199]
[92] Section 65(1)(d) included as construction work any cleaning carried out in the course of the work dealt with in s 65(1)(a)-(c). Finally, s 65(1)(e) included as "construction work" any operation that forms an integral part of, or is preparatory to, or is for completing, work of the kind referred to in ss 65(1)(a)-(c).
[93] BCS submitted that if the construction was, for example, the construction of a building that straddles the Queensland/New South Wales border, the "building" is not "external to...beyond the limits of" Queensland, and therefore the work of constructing it (as a whole) is not "external to...beyond the limits of" Queensland. Contrast this to where there is a contract to build two separate buildings, one being in Queensland and one being in New South Wales. The New South Wales building would be "external to...beyond the limits of" Queensland.
[94] BCS sought to contrast its interpretation of "construction work carried out outside Queensland" with that of Lendlease. It said of Lendlease that its interpretation would seek to divide up a building, structure or work by treating each task that could be
[200]
performed as a separable item that could be excluded from the Act. It articulated this concept in the following way:
"Thus, Lendlease does not ask whether the "construction work" - the construction of the building - is carried out outside of Queensland; rather, it asks whether (for example) the construction of a wall, or a window, or a part of a wall or window, is carried out outside Queensland."
[201]
[95] BCS submitted that its interpretation above is more practical and workable and therefore more likely to have been the statutory intention.10 For work which straddles the border, it involved the parties simply asking the question of whether the building, structure or work had a partial footprint in Queensland, or rather whether that footprint was wholly outside of Queensland.
[96] BCS said that Lendlease's interpretation would require a minute analysis of the activities as they apply to any building or structure straddling the border, with any mistakes in dividing up the constituent parts of the portions of the activities forming the construction work between the two locations giving rise to the risk of invalidity (at least to some extent), flowing from the jurisdictional effect of s 61(4).
[97] BCS also submitted that its construction would be more consistent with the intended purpose of the Act to provide an entitlement for the payment of builders, which is to be determined informally, summarily and quickly.11 An interpretation which would favour the parties knowing precisely where they stand at any point in time is one which it submitted would accord with the purpose and objects of the BIF Act.12
[98] BCS further submitted that s 61(4) of the BIF Act would not operate to invalidate a payment claim or an adjudication application merely because it included a component for construction work carried out wholly outside of Queensland. BCS accepted that such a component could not be adjudicated on, but submitted its presence in the payment claim did not invalidate the payment claim.
[99] BCS submitted that this position was supported by s 75(1) of the BIF Act. BCS contended that a person does not fail to meet the description of someone who "is or who claims to be entitled to a progress payment" merely because it is determined that they claimed a component item in a payment claim for which there is ultimately no liability.13
[100] It was submitted by BCS that taking Lendlease's submission to its logical conclusion would mean that where a payment claim was seeking payment of $1 million, the inclusion of a $1000 line item for work performed outside of Queensland would mean that the claimant could not utilise the scheme to recover the remaining 99.9 per cent of the claim. BCS contended that that could not possibly have been the legislature's intention.
[101] The starting point for the construction of s 61(4) of the BIF Act is the well understood principle that the objects and purpose of the legislation must be considered with the text of the Act as a whole when construing individual provisions. As was acknowledged in Project Blue Sky v Australia Broadcasting Authority[1998] HCA 35; (1998) 194 CLR 355, the primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all of the provision of the statute.
[102] In this regard, it is important to observe that s 3 of the BIF Act sets out its main purpose. That is, to aide people working in the building and construction industry in being paid for the work they do. It is to be achieved by:
[207]
(a) granting an entitlement to progress payments, even if the contract does not do so; and
(b) establishing a procedure for making payment claims, responding to payment claims, adjudication of disputed claims, and recovery of the amounts claimed.14
[208]
[103] The purpose and object of the BIF Act is to provide a quick and inexpensive interim procedure for builders to be paid for their work. This is an important and relevant consideration for construing how individual provisions within the BIF Act operate. This includes whether they give rise to jurisdictional facts.
[104] In BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd[2022] NSWCA 82; (2022) 108 NSWLR 350, the New South Wales Court of Appeal, sitting as a five bench appellate court,15 approved of the observation of Spigelman CJ in Chase Oyster Bar, where his Honour observed "that the purpose of the legislative scheme is best served by restricting the scope of intervention by the courts."16 In BSA Advanced, the Court rejected the proposition that there was an implied jurisdictional requirement in the New South Wales equivalent of s 68(1) of the BIF Act for a payment claim to identify the construction contract to which the payment claim relates. In doing so, they had regard to the purpose and objects of the relevant Act.
[105] In Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd[2012] QCA 276; [2013] 2 Qd R 75, the Court of Appeal had to consider an argument that there was jurisdictional error when an adjudicator determined the extent and quantum of work that comprised "construction work", in circumstances where the construction contract in that case had contained a mixture of types of work. Some of the work fell within s 65(1) of the BIF Act, but some of the work fell within the exclusions contained in s 65(3) of the BIF Act. The Court of Appeal, in rejecting the argument, relied, in part, on the conclusion that the construction proposed did not promote the object of the Act, namely to provide a speedy interim solution to progress payment disputes arising under construction contracts. Indeed, the Court identified that the construction called for by the argument would undermine the Act's object in that it would result in the
[209]
This was so because a challenge had been made to the correctness of a prior intermediate appellant decision.
invalidity of an adjudication determination no matter how small the component incorrectly determined to be construction work was.17
[212]
[106] Turning then to s 61(4) of the BIF Act, I ultimately favour the construction of s 61(4) put forward by BCS. My reasoning is as follows.
[107] First, I accept both parties' submissions that s 61(4) of the BIF Act provides a jurisdictional limit and gives rise to a jurisdictional fact. That conclusion is consistent with the introductory words of s 61(4) that, "This chapter does not apply to...". They are clear and emphatic words which indicate that the subject matter of the section is being excluded from the application of the Chapter. The overall operation of s 61 of the BIF Act can be described as follows. Section 61(1) identifies in a positive way when Chapter 3 applies. That is, to a "construction contract". Section 61(1) of the BIF Act (and its interstate equivalents) have been consistently construed as imposing an essential and necessary pre-condition that there be a "construction contract". That pre-condition involves a jurisdictional fact. Each of ss 61(2), (3) and (4) then deal with jurisdiction in a negative way. That is, they each indicate what is excluded from the operation of Chapter 3.
[108] The New South Wales equivalent of s 61(4) of the BIF Act has construed to result in a jurisdictional limit and involve a jurisdictional fact.18
[109] Secondly, the words "to the extent" it deals with construction work are indicative that the dis-application of a construction contract is only to a particular degree.
[110] A construction which favours a dis-application to a particular degree is also supported by the use of the same phrase in ss 61(2)(b) and 61(3) of the BIF Act. Each of those particular sections contemplate that the Chapter will continue to operate for at least a portion of the construction contract.
[111] Thirdly, once it is understood that s 61(4) of the BIF Act goes to jurisdiction and gives rise to a jurisdictional fact, the operation of that section will carry with it a hard dividing line for the dis-application of Chapter 3. That is, construction work will either sit within jurisdiction for an adjudicator or will sit outside of jurisdiction for an adjudicator.
[112] Fourthly, in my view, s 65 of the BIF Act does have an influence on the proper construction of s 61(4). Section 65(1) provides a definition of "construction work". Sections 65(1)(a)-(c) of the BIF Act focuses on activities which are undertaken to buildings, structures or other works which form part of the land. Sections 65(1)(d) and (e) are still linked to the operation of ss 65(1)(a)-(c).
[213]
17 Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd[2012] QCA 276; [2013] 2 Qd R 75 per Philippides J at [102]- [104], with that portion of her Honour's reasoning being accepted by Holmes CJ at [3] and White JA at [7]. In that case, the excluded work under s 65(3) of the BIF Act was not found to be a jurisdictional constraint and did not give rise to a jurisdictional fact. Whether and to what extent the work claimed came within the s 65(3) exclusion was ultimately a question for the adjudicator to determine within the scope of his or her jurisdiction.
[214]
18 See Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd & Anor[2011] NSWSC 165.
[215]
structure or other work. Contrary to the submission of Lendlease, the geographic focus of s 61(4) is the location of the thing to which an activity is applied to.
[216]
[114] Sections 61(4) and 65(1) of the BIF Act can best sit together with the primary touchstone for each section being the location of the building, structure or works, as opposed to where each particular activity might take place disconnected from the location of the ultimate building, structure or works involved. That is entirely consistent with the decision in Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd & Anor[2011] NSWSC 165, where Ball J was dealing with a contract for the construction of certain buildings in the Commonwealth Jervis Bay Territory. Justice Ball identified that the question which the New South Wales equivalent to s 61(4) posed was to be answered by a consideration of the terms of the relevant construction contract in the context in which they operated. This required the court to identify the subject matter of the contract and to ask whether the subject matter had the required quality, that is, dealing with construction work or related goods and services of the type referred to in s 7(3) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the "SOP Act") (which was the equivalent to s 61(4) of the BIF Act). Where the contract in that case simply spoke of the construction of building works at a site within the Territory in a turnkey manner, even though goods and work may have been sourced or undertaken outside the Territory, and in New South Wales, the construction contract in that case only dealt with construction work in the Territory.
[115] Here, assume that some welding or trimming work was performed on steel just on the New South Wales side of the border, but for the construction of a carousel structure solely situated in Queensland. On Lendlease's construction of s 61(4) the cutting or welding work would presumably be construction work carried out outside of Queensland, whilst the placement of the welded or trimmed steel which would be on the Queensland located carousel would be construction work carried out inside of Queensland. Such a construction which focuses on activity shorn of its relationship to the building, structure or works incorrectly ignores that the BIF Act in s 65(1) necessarily uses a connection to those tangible physical things as part of the concept of "construction work". It is a more practical and workable construction which results in both the welding and trimming of the steel on the one part and the installation of the steel on the other part being seen as "construction work" carried out inside Queensland where the carousel ultimately being constructed is, in part, inside Queensland. Another possible argument is that the welding and trimming might be caught by s 65(1)(e). Even if that were the case, that section expressly links back to ss 65(1)(a)-(c), and thereby still uses a connection to those tangible physical things which are being constructed.
[217]
conclusions reached on such an analysis. On any determination of the jurisdictional fact, there would be greater scope for the adjudicator's decision being found to be void in whole or in part if Lendlease's construction was adopted.
[218]
[118] I accept that my preferred construction set out above may still give rise to difficulties in the articulation of what is inside or outside of Queensland in a given case. However, it would nonetheless, significantly reduce the scope for uncertainty in any jurisdictional fact analysis.
[119] Sixthly, the preferred construction maintains an appropriate territorial nexus with Queensland by way of the underlying building, structure or works being situated partly in Queensland. This particular factor does not strongly support the preferred construction. Its relevance is that an absence of a territorial nexus would point against the preferred construction.
[120] Seventhly, the preferred construction is one which best promotes the purpose and object of the BIF Act. In contrast, the construction promoted by Lendlease would result in a jurisdictional fact which would be difficult to implement in practice where there was a building, structure or works which straddled a border with Queensland. While that is likely to involve a small amount of contracts, nonetheless a construction which promotes the purpose and object of the BIF Act ought to be preferred.
[121] Accordingly, then, on the proper construction of s 61(4) of the BIF Act, I am satisfied:
[219]
(a) section 61(4) does give rise to a jurisdictional exclusion in respect of the operation of Chapter 3 as it applies to a construction contract in respect of a degree of the construction work within that contract;
(b) the jurisdictional exclusion means that the identity of that degree of construction work excluded construction work will be the subject of a jurisdictional fact; and
(c) the identity of the excluded construction work will be construction work carried out on a building, structure or works situated wholly outside of Queensland.
[220]
Issue 2: Does the BIF Act require a payment claim in a cross-border project to purport in a reasonable way to identify the location of the construction work? If so, did the payment claim in issue here purport in a reasonable way to identify the location of the work the subject of VPR23?
[221]
[122] The relevant provisions in respect of this issue have already been set out under Issue 1.
[222]
[123] Lendlease's contentions and BCS's contentions have already been set out under Issue 1.
[223]
[124] I conclude that the BIF Act does not require a payment claim in a cross-border project to purport in a reasonable way to identify the location of the construction work. My reasoning for this conclusion is as follows.
[125] First, it is not a consequence of s 61(4) of the BIF Act that a payment claim which includes a component of excluded construction work cannot be a payment claim within the meaning of the BIF Act.
[126] The existence of a payment claim is an essential pre-condition for the process of adjudication to commence. If a document is not a payment claim within the meaning of the BIF Act, then the adjudicator can have no jurisdiction at all and indeed there can be no ultimate adjudication decision.
[127] Pursuant to s 75(1) of the BIF Act, a person who is "or claims to be" entitled to a progress payment may give a payment claim to the other person. "Progress payment" is defined in s 64 of the BIF Act in effect to mean a payment which a person is entitled under s 70.
[128] Section 68(1)(a) of the BIF Act defines a payment claim for a progress claim to be a written document which "identifies the construction work or related goods and services to which the progress payment relates".
[129] The authorities support that the obligation to identify the construction work or related goods and services to which the progress claim relates requires a minimum identification so that the recipient can understand what is the construction work and related goods said to be claimed in order for that recipient to be able to respond in an intelligible way by a payment schedule.
[130] In T & M Buckley Pty Ltd v 57 Moss Rd Pty Ltd[2010] QCA 381 at [38], Philippides J identified the nature of the requirement in the following terms:
[224]
"...not whether the payment claim explained in every respect the means by which a particular claim item had been calculated, but whether the relevant construction work or related goods and services was sufficiently identified...That is, whether the payment claim reasonably identified the construction work to which it related such that the basis of the claim was reasonably comprehensible to the applicant."
[225]
[131] In deciding whether or not work has been sufficiently identified, the background of each of the parties "derived from their past dealings and exchanges of documentations" is to be taken into account.19
[132] I do not accept that this minimum requirement in s 68(1)(a) of the BIF Act, as explained by the authorities, includes an obligation to identify (or at least make a good faith attempt to identify) which work was carried out in New South Wales and which work was carried out in Queensland.
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19 MWB Everton Park Pty Ltd (as trustee for MWB Everton Park Unit Trust) v Devcon Building Co Pty Ltd[2024] QCA 94 at [24], per Dalton JA with whom the other members agreed; see also KDV Sport Pty Ltd v Muggeridge Constructions Pty Ltd & Ors[2019] QSC 178 per Brown J.
[227]
[133] As referred to above, it is s 75(1) of the BIF Act which governs the making of a payment claim. Importantly, s 75(1), in identifying who may make a payment claim, uses the words "or who claims to be" entitled to a progress payment. That phrase comprehends somebody who merely claims to be entitled to a progress payment, where such an entitlement may ultimately not exist. That particular language is inconsistent with absolute entitlements having to exist at the moment the payment claim is given. The requirement for identification of the construction work or related goods to which the progress payment relates, which is the obligation contained in s 68(1)(a) of the BIF Act, needs to be read consistently with s 75(1) of the BIF Act. That is, within a payment claim, a claimant may claim a component which ultimately turns out not to be a component which that claimant is entitled.
[134] That non-entitlement can be for a number of reasons. It may be, for instance, that a component of the claim is ultimately found to be excluded construction work as a result of the application of s 61(4) of the BIF Act. Equally, it may be because part of the claim is found to be excluded construction work because of the operation of s 65(3) of the BIF Act. In each case, the claimant is a person who claims to be entitled to that component part of the payment claim as a progress payment. So long as the claimant has identified in the payment claim the construction work to which it related such that the basis of the claim was reasonably comprehensive to the recipient, that is all that is required by s 68(1) of the BIF Act. That obligation does not require a claimant to justify a jurisdictional requirement contained in s 61 of the BIF Act. For example, the New South Wales Court of Appeal in BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd[2022] NSWCA 82; (2022) 108 NSWLR 350 found that s 13 of the SOP Act (which included the equivalent of s 68(1)(a) of the BIF Act) did not require the payment claim to identify the construction contract.20 In making that observation, the Court had previously identified that s 7(1) of the SOP Act (the equivalent to s 61(1) of the BIF Act) made the existence of a construction contract an essential element of the statutory scheme.21
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Issue 3: Does variation VPR23 fall outside the operation of the BIF Act by reason of the proper construction of s 61(4)?
[229]
[136] The relevant provisions in respect of this issue have already been set out under Issue 1.
[137] Lendlease contends that s 61(4) operates to exclude VPR23 from the jurisdiction of the adjudicator as it seeks payment for construction work carried out in New South Wales which cannot be identified and removed from the VPR23 claim. Given the preferred construction of s 61(4) previously set out, the submissions by Lendlease will have to be that VPR23 impermissibly sought payment for construction work carried out in respect of a structure wholly outside of Queensland, in a way which does not allow that component to be identified and removed from the large VPR23 claim.
[138] Lendlease noted that the delay damages were payable under the amended cl 13(b) of the contract. It submitted that the costs the subject of the claim had been broken down between:
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(a) labour costs;
(b) other project costs (car travel, accommodation, bank guarantees and storage);
(c) costs described as "disruption to installation works"; and
(d) an amount described as "equipment defect liability period extension".
[233]
[139] It also noted that there were associated timesheets provided in support of the breakdown of costs in categories (a) and (c) above. Lendlease submitted that there was nothing within the payment claim itself which allowed a reader to identify locations of the work which the project manager, site manager, LLC engineer, mechanical fitter or electrician were carrying out or supporting.
[140] Lendlease relied upon the lay evidence of Mr Southon to the effect that during the period of delay from 7 December 2021 to 13 May 2022, at various times, work was being undertaken on, inter alia, Reclaim Carousel 6 and Out of Gauge Line 1 (international). Reclaim Carousel 6 was a structure located partly in Queensland and partly outside of Queensland, but Out of Gauge Line 1 (international) was located solely in New South Wales. Lendlease noted that the witness for BCS, Mr Pride, did not dispute this evidence. The above evidence was identified as being sourced from weekly production and delay reports which were produced by BCS during the period of delay.
[141] Lendlease submits that where a component in a payment claim is built up, in part, by reference to amounts which derive from provisions of the contract to which the Act had been dis-applied, that component was invalid in whole where the offending parts of that component cannot be specifically identified and excised.
[142] Lendlease submitted that there did not appear to be a serious factual dispute between the parties as to the location of the structures the subject of the claim. It continued, the only real dispute was whether the claim for delay costs involved a claim for work carried out in a particular location.
[143] Lendlease contended that BCS's case was that the:
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(a) VPR23 delay claim does not have a geographical location; and
(b) VPR23 claim was for increased costs that would be incurred by BCS by reason of the prolongation to the works caused by the delay such that the claim area does not have a physical location.
[235]
[144] Lendlease's response to BCS's position (as Lendlease stated it to be) was that BCS conflated the location of the claim with the location of the work the subject of the claim. Further, Lendlease contended that BCS conflated the absence of a geographical location with a failure by BCS to identify the geographical location of the work. Lendlease noted that the costs of VPR23 included labour costs, which Lendlease contended was for work which must have been carried out somewhere. In other categories of costs without an inherent geographical element, such as accommodation and storage costs, Lendlease submitted that to the extent that BCS submitted that this supported that the delay claim generally did not have a physical location, this was based on a proposition that the delay claim was for hypothetical work. Lendlease submitted that BCS's proposition should not be accepted. In part, they pointed to the fact that the VPR23 claim was based on actual hours contained in timesheets and therefore was for actual work carried out in an actual physical place.
[145] Next, Lendlease pointed to cl 13(b) (as amended), which provided that BCS was only entitled to be paid "direct costs...that [BCS] has reasonably and necessarily incurred." It was said that that was plainly a reference to actual costs incurred somewhere. If the costs related to work performed then the relevant geographic location is the place at which the work was performed. If the costs related to goods or services, then it was said by Lendlease that the relevant geographical location was either a place at which the goods were delivered or the services were provided, or alternatively, the location of the construction work to which such goods or services related. Lendlease submitted that to the extent that BCS could not identify which costs were incurred in Queensland and which costs were incurred outside of Queensland, this was no answer to Lendlease's submission, rather it was fatal to BCS's claim.
[146] Finally, Lendlease submitted that the short way through the issue was said to be that there was common ground (or at least there was on Lendlease's case) that BCS quantified its claim for delay damages by reference to actual construction work, including actual work carried out in New South Wales. In that sense, Lendlease submitted that the construction contract "dealt with" construction work carried out outside of Queensland because, in part, work which had been carried out wholly outside of New South Wales was a jurisdictionally impermissible foundation for the quantification of the delay claim.
[236]
payable under the contract. That, of course, is the situation here.22 The issues in that particular decision included whether the delay damages were amounts for "construction work" under the SOP Act. Lendlease pointed to the statement by Hodgson JA that, "if in substance they represent the increased cost or price of construction work actually carried out, in my opinion, they are clearly for construction work carried out...if they represent off-site costs or other on-site costs, it may be a question of fact and degree whether they were for construction work, that they would properly be regarded at least as part of the price for the totality of construction work."
[237]
[149] Lendlease says, by reference to Coordinated Construction, that as the delay claim was built up in part by project management costs actually incurred during the period of delay, and because there was, at least for a short period, construction work undertaken for Out of Gauge Line 1 (international), which was wholly in New South Wales, those project management costs should therefore be regarded as partly constituted by construction work for the construction of the Out of Gauge Line 2 (international). Lendlease's position was that once there is properly to be understood to be some undefined component of construction work carried out wholly outside of Queensland, then the whole of VPR23 must fail, because in the circumstances of this case there was no ability to excise that portion of the costs for wholly New South Wales construction work from the costs for the rest of the construction work.
[150] I turn then to BCS's contentions.
[151] BCS submits that in order for s 61(4) to be engaged, Lendlease must satisfy the court that VPR23 is based on a part of the contract that deals with construction work wholly outside of Queensland (or related goods and services supplied for construction work carried out wholly outside of Queensland). On BCS's case, Lendlease cannot do that.
[152] BCS submitted that VPR23 was a claim for delay costs under cl 19.3(b) (as amended) of the contract. It says that the text of the clause is silent as to the location of the work and that is because a delay claim does not have a geographical location.
[153] BCS provided what it said were examples of other claims which potentially could be made under the contract, and which could similarly be categorised as not having geographical locations. The examples it gave were as follows:
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(a) claim for the release of security under cl 4.2 of the contract;
(b) claims under cl 12.2 for an increase in the contract sum where there has been a change in statutory requirements; and
(c) claims by Lendlease for liquidated damages under cl 19.7 of the contract.
[239]
[154] BCS says that Mr Southon, the witness for Lendlease, at paragraph [103] of his first affidavit, has frankly admitted that he does not know the location of the works the subject of VPR23.
[240]
22 See cl 1.1 definition of "Subcontract Sum" which includes in the definition "other such sums as may become payable under the subcontract", and cl 22.2(c)(iv) which provides for a payment claim to contain "any other amounts to which the subcontractor is then entitled to under the subcontract."
[241]
[155] In support of its submission that the delay claim does not have a geographical location, BCS also relied upon Coordinated Construction, particularly at paragraph
[242]
[41] where Hodgson JA observed as follows:
"In my opinion, the circumstance that a particular amount may be characterised by a contract as "damages" or "interest" cannot be conclusive as to whether or not such an amount is for construction work carried out or for related goods and services supplied. Rather, any amount that a construction contract requires to be paid as part of the total price of construction work is generally, in my opinion, an amount due for that construction work, even if the contract labels it as "damages" or "interest"; while on the other hand, any amount which is truly payable as damages for breach of contract is generally not an amount due for that construction work."23
[243]
[156] BCS submitted that even if the cause of the delay was in part a structure wholly outside of Queensland, the delay damages which may result would not be within the operation of s 61(4) of the BIF Act. All that cl 19.3 did was increase the overall construction price.
[244]
[157] In relation to VPR23, I conclude that to the extent that VPR23 dealt with prolongation costs, they were not construction costs for construction work carried out on a particular structure wholly outside of Queensland. I also find that in respect of each of the components of VPR23, Lendlease has not discharged its onus to prove that a part of that component of VPR23 was for construction work carried out on a structure situated wholly outside of Queensland. My reasoning for this is as follows.
[158] First, the delay claim which underpins VPR23 and is dated 10 December 2021 identified that the event of delay was Lendlease's failure to provide access to four structural areas. They were Baggage Reclaim 4 which was wholly within Queensland, Baggage Reclaim 6 which was partly in Queensland but mostly in New South Wales, Out of Gauge Line 2 (domestic) which was wholly within Queensland and Out of Gauge Line 1 (international) which was wholly in New South Wales.
[159] The period of delay identified in the delay claim was 7 December 2021 to 13 May 2022. The affidavit of Mr Pride at paragraph [67] details certain of the information which was contained in a selection of the weekly production and delay reports produced by BCS during the delay period. That summary only commences at 14 January 2022. However, copies of reports going back to 20 December 2021 were separately contained in the evidence.
[160] Whatever the period of delayed access was for Out of Gauge Line 1 (international) was not identified expressly in the Pride summary of the weekly production and delay reports. That summary covered the period 14 January 2022 - 13 May 2022. The summary made no mention to there being a continuing failure to provide access for the Out of Gauge Line 1 (international).
[161] I was invited at my leisure to review the various production and delay reports which were exhibited as evidence. I note the following from that review. A 20 December 2021 production and delay report estimated that access to Out of Gauge Line 1 (international) would be available by 13 January 2022. A 14 January 2022 production and delay report recorded that the prior failure to provide access to Reclaim Carousel 6 had been rectified by 14 January 2022. It also recorded an ongoing failure to grant access to Out of Gauge Line 2 (domestic) and Reclaim Carousel 4. Subsequent reports only ever refer to the continuing access issues being in respect of Out of Gauge Line 2 (domestic) and Reclaim Carousel 4. A report of 28 January 2022 recorded that work on Out of Gauge Line 1 (international) was potentially going to start the following week. The obvious factual inference was that access to the Out of Gauge Line 1 (international) area had been rectified prior to 14 January 2022. I find accordingly.
[162] In relation to the project management costs component of VPR23, it is correct that the evidence establishes that they were calculated by project management costs which were actually incurred as a cost during the period when the delay was felt, as opposed to the period after the delay had ceased. Those costs were incurred between 7 December 2021 to 13 May 2022.
[163] However, the fact that those costs were incurred costs during the delay period does not make them costs for construction work carried out on individual specific structures which were then under construction at the site.
[164] The project management costs were presented as delay damages arising from the prolongation of the construction program. In essence, the project management costs were being incurred because the program for construction was being extended by the delay. In that sense, the prolongation delay costs represented an increase to the contract sum for project management resources which had to be deployed on the project for a longer period than originally programmed. Whilst they represent an increase in the contract price, they represent what is commonly called site or job related overheads. Hudson's Building and Engineering Contracts, 14th ed at 6.074 describes those types of costs as non-productive costs which a contractor will view as a necessary expenditure to carry out the works. The learned authors give as an example of such costs supervision and site management. BCS referred in this respect to "Dealing with Delay and Disruption on Construction Projects" Sweet & Maxwell 27 August 2020 at 5-021 for the following proposition:
[247]
"...one text states that these costs "do not directly relate to the production of physical units of work" and that they are time related costs because "they are a function of time - the longer the duration of the project of [sic]24 the duration of a work activity to which they are allocated, the longer the run-rate for those costs"..."
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[165] The cost to construct a particular structure does not change per se, but the overall cost of the project does. Whilst not determinative of the matter, it is relevant to note that in the Annexure A articulation of the subcontract sum, Item 1 contains things which are generally not the cost to actually construct a particular structure. The sub items to Item 1 include things such as project and site management, and preliminaries.
[249]
[166] Prolongation costs can be contrasted with a claim for disruption costs. Hudson's at
[250]
6.075 describes disruption costs for plant and labour in the context of a delay damages claim as follows, "the Contractor's construction activity may be affected and made less productive, either because the activity has to be carried out over a longer period with a fixed resource, or because the activity has to be carried out in a different and less productive sequence. Both effects are commonly referred to as disruption to labour and plant, but the former is strictly a consequence of delay. As identified by Hudson's, disruption costs in a delay claim may be able to be linked to a specific increase in the cost to construct a particular structure.
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[167] Secondly, I do not accept the submission that the authority of Coordinated Construction stands for the proposition which Lendlease contends. The central issue in Coordinated Construction25 was whether delay damages could be made the subject of a payment claim at all.
[168] At paragraphs [38]-[45] of Coordinated Construction, Hodgson JA analysed various sections of the SOP Act, which still broadly reflect the BIF Act in its current form. Justice Hodgson, as part of his Honour's reasons, pointed to s 13 of the New South Wales Act, which section included the equivalent of s 75(1) of the BIF Act. This section provided the definition of "claimed amount". Part of that definition provided that the progress payment must be "for" construction work carried out or for related goods and services supplied. Ultimately, his Honour's analysis of the SOP Act indicated, at the very least, that this concept of the progress payment having to be "for" construction work carried out supported that the word "for" should not be given a narrow construction. In making that observation, Hodgson JA stated that he thought it should mean more than merely "in respect of" or "in relation to" construction work carried out. His Honour formed the view that where a contract required an amount to be paid as part of the total price of construction work, generally, in his opinion, that would be an amount due for that construction work.
[169] In this respect, his Honour concluded as follows: 26
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"[43]If in substance they represent the increased cost or price of construction work actually carried out, in my opinion they are clearly for construction work carried out. If they represent the cost or price of goods or services actually supplied in connection with the construction work under the contract, they are for related goods or services supplied, even if not for construction work carried out.
[44] If they represent off-site costs (such as office overheads) or other on-site costs, it may be a question of fact and degree whether they are for construction work carried out or for related goods and services supplied. They would in my opinion properly be regarded at least as part of the price for the totality of the construction work when completed. And it would seem artificial to say that they are excluded from the Act if they are not referable
to work that has already been carried out, particularly when s 9(b) refers to the value of construction work undertaken to be carried out and related goods and services undertaken to be supplied. However, it is not necessary in this case altogether to exclude the possibility that some delay damages claimed under this contract might possibly not be for construction work carried out or related goods and services supplied within the definition of "claimed amount"..."
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[170] Where a part of VPR23 appears to be for prolongation costs, that is, costs actually incurred in the delay period, but separate to the costs under the contract for the actual undertaking of construction work, they are, in my view, still a component "for" construction work carried out in the broad sense referred to by Hodgson JA in paragraph [44]. They may be the subject of a progress claim as they are a component of the price for the totality of the construction work but they are not an increase in the cost of any specific piece of construction work carried out. In that way, the provision of such labour is still for construction work carried out in a broad sense, but it does not have a specific geographical location.
[171] In the same way, other costs which are actually incurred can be said to be costs "for" construction work, but yet they are not costs for the construction of any individual structure. The examples that BCS provided are informative in this respect.
[172] BCS raised an alternative submission if its primary submission on prolongation costs was not accepted. It was to the effect that for project management costs, if they had a geographic presence then it would be across all the works, or at least all of the remaining works in an indivisible way. On this submission, s 61(4) of the BIF Act would not apply as those costs could not be said to be for construction works carried out on a structure "wholly" outside Queensland. Ultimately, I prefer the primary submission which I have accepted above.
[173] It is important to acknowledge that a separate component of VPR23 was described in the 20 May 2022 claim for delay damages in the following terms, "Disruption to installation works: additional costs incurred due to ongoing disruptions, equipment locations and staged installation works." This disruption component to the installation works was identified to be constituted by work hours attributed to a mechanical fitter and an electrician in a total amount of $191,296 (exclusive of GST). Those hours were broken down over the period December 2021 to May 2022. No real additional explanation for the disruption component was provided to me during argument.
[174] As identified above, delay costs can include disruption costs. Disruption costs, in turn, may include that as a consequence of the delay, a particular construction task, (eg the construction of a structure or part of a structure) has increased because the delay has dictated some change in the construction methodology. For example, a structure may have cost $100,000 to construct under the contract, but as a result of the delay a work methodology had to consequently change, so that now that particular structure has cost $150,000 to construct. When disruption costs are used in that sense, they can represent an increase in the direct costs for the construction of a particular structure or part thereof. A disruption claim, when used in this sense, would have a geographical place associated with the incurring of those additional costs. In a real
[256]
sense, that disruption claim involves the cost of direct construction work for a particular structure, or part thereof, which could be wholly outside of Queensland.
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[175] The disruption terminology in the delay claim and the fact that the persons said to be the subject of the claim are a sub-contractor fitter and a sub-contractor electrician, support the possibility that this component of the claim could be referable to specific geographically located work.
[176] However, the evidence before me simply does not allow me to make a finding on what this component specifically related to in terms of specific structures. In this proceeding, Lendlease is a plaintiff seeking declaratory relief. It is Lendlease which bears the onus of proof of establishing that this component or a part thereof was attributable to the increased cost of construction work for a structure wholly situated in New South Wales. This question is part of a jurisdictional fact which Lendlease seeks to have determined in an authoritative and final way by the court. If Lendlease cannot discharge that onus, it cannot have the benefit of a factual finding in its favour.
[177] Turning back to the production and delay reports in evidence, the following points are apparent from them. In the 20 December 2021 report, it did state the Out of Gauge Line 1 (international) was not ready on that day and was estimated to be ready on 13 January 2022. It was one of four structures identified as being on the critical path for the remaining installation work and those four items were said to directly affect the date of substantial completion.
[178] In the production and delay report of 14 January 2022, only Out of Gauge Line 2 (domestic) and Reclaim Carousel 4 are identified as being areas where access had not yet been granted. As set out above, I conclude from this that Out of Gauge Line 1 (international) area had become available prior to 14 July 2022.
[179] The report of 28 January 2022 contemplated that work on the Out of Gauge Line 1 (international) had the potential to start the following week.
[180] The delay report for 4 February 2022 noted for the first time that both the Out of Gauge Line 1 (international) and Out of Gauge Line 2 (domestic) systems had been delivered in incorrect form, with the units being too high. An NCR was recorded as having been raised. NCR is generally a reference to a non-compliance report. It recorded that parts were identified for re-ordering. This report thereby indicated that as at 4 February 2022, the actual components which would make up Out of Gauge Line 1 (international) had only recently been delivered and were defective in form.
[258]
Issue 4: Did the adjudicator in the present case fail to consider Lendlease's submissions on the operation of s 4 of the CPAL Act and s 61(4) of the BIF Act? If so, was any such failure material, including, if relevant, in light of the findings of the court on the previous issues?
[259]
[186] This particular issue concerns ss 84 and 88 of the BIF Act which are in the following terms:
[260]
(1) Subject to the time requirements under section 85, an adjudicator must decide the following as quickly as possible -
[261]
(a) an adjudication application;
(b) applications for extensions of time under section 83.
[262]
(2) For a proceeding conducted to decide an adjudication application, an adjudicator -
[263]
(a) must decide -
(i) whether he or she has jurisdiction to adjudicate the application; and
(ii) whether the application is frivolous or vexatious; and
(b) may ask for further written submissions from either party and must give the other party an opportunity to comment on the submissions; and
(c) may set deadlines for further submissions and comments by the parties; and
(d) may call a conference of the parties; and
(e) may carry out an inspection of any matter to which the claim relates.
[264]
(3) If a conference is called, it must be conducted informally and the parties are not entitled to any legal representation unless allowed by the adjudicator.
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(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 amount became or becomes payable; and
(c) the rate of interest payable on any amount.
[266]
(2) In deciding an adjudication application, the adjudicator is to consider the following matters only -
(b) the provisions of the relevant construction contract;
(c) the payment claim to which the application relates, together with all submissions, including relevant documents, that have been properly 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 documents, that have been properly made by the respondent in support of the schedule;
(e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates.
[268]
(3) However, the adjudicator must not consider any of the following -
[269]
(a) an adjudication response, to which the adjudication application relates, that was not given to the adjudicator within the time required under section 83;
(b) a reason included in an adjudication response to the adjudication application, if the reason is prohibited from being included in the response under section 82.
[270]
(4) Also, the adjudicator may disregard an adjudication application or adjudication response to the extent that the submissions or accompanying documents contravene any limitations relating to submissions or accompanying documents prescribed by regulation.
[271]
(a) be in writing; and
(b) include the reasons for the decision, unless the claimant and the respondent have both asked the adjudicator not to include the reasons in the decision.
[272]
[187] This issue also involves s 4 of the CPAL Act which provides as follows: "4 Application of laws in Commonwealth places
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(1) The provisions of the laws of a State as in force at a time (whether before or after the commencement of this Act) apply, or shall be deemed to have applied, in accordance with their tenor, at that time in and in relation to each place in that State that is or was a Commonwealth place at that time.
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(a) have effect so as to impose any tax;
(b) have effect so as to confer any judicial power; or
(c) extend to the provisions of any law of a State in so far as it is not within the authority of the Parliament to make those provisions applicable in or in relation to a Commonwealth place.
[275]
[188] This issue is couched in terms of natural justice. It concerns the s 61(4) contention and a separate contention focussed on ss 4(1) and (4) of the CPAL Act. The starting point for Lendlease's submissions was the adjudication decision. In particular, Lendlease points to paragraphs [120]-[135] of the decision. Those paragraphs appeared under a heading "Does the Act apply to work carried out on the Gold Coast Airport?".
[189] Whilst there is a statement at paragraph [120] of the adjudication decision that the adjudicator had called for further submissions on this issue to be delivered by 23 and 24 November 2022, Lendlease submitted that there appears to be no reference to the reasoning contained in those requested submissions. Lendlease submitted that the lack of engagement with the reasoning would support an inference that the adjudicator had failed to consider Lendlease's submissions.
[190] Lendlease says that the adjudicator essentially treated s 4(1) of the CPAL Act as the solution to the cross-border jurisdictional problem. Lendlease contended that the adjudicator, in doing so, did not engage with Lendlease's reasoning that s 4(1) of the CPAL Act did not apply the BIF Act in any event by virtue of s 4(5)(b) of the CPAL Act. The reasoning of Lendlease being, that the application of the BIF Act involved the exercise of judicial power and s 4(5)(b) made clear that s 4(1) of the CPAL Act did not allow the application of a State Act which contained a referral of judicial power.
[191] Lendlease also submitted that the decision did not address Lendlease's reasoning that s 4(1) did not give the BIF Act any wider operation than the BIF Act would have had if the Gold Coast Airport were not a Commonwealth Place. This was a failure to engage with its s 61(4) jurisdictional point.
[192] Lendlease pointed to the absence in the adjudicator's reasons of engagement with matters which one would expect to see engaged with if the submission had been considered. Lendlease gave examples of:
[276]
(a) no engagement with the exercise of judicial power reasoning;
(b) no mention of s 4(5)(b) of the CPAL Act; and
(c) no mention of s 61(4) of the BIF Act.
[277]
[193] Lendlease said that a failure to consider Lendlease's submissions was a breach of s 88(2)(d) of the BIF Act, and a breach of the duty to afford procedural fairness which required an adjudicator to consider substantial, clearly articulated arguments. Lendlease also said that this amounted to a constructive failure to exercise jurisdiction.
[194] Lendlease submitted that the proper approach to whether procedural fairness was denied is not to say on the balance of probability what the adjudicator would have done, but rather to ask on the basis of material which was before him or her at the time what the adjudicator could, as a matter of realistic possibility, have done. In that respect, it was submitted that the adjudicator, as a matter of realistic possibility, could have concluded:
[278]
(a) the Commonwealth did not intend the BIF Act apply to the Gold Coast Airport at all;
(b) alternatively, the CPAL Act operated in accordance with its terms to pick up both the BIF Act and the New South Wales equivalent Act, as applicable;
(c) so far as the claim was under the BIF Act, the payment claim included work the subject of the dis-application effected by s 61(4), and thereby there was no jurisdiction to award an amount in respect of that work, and BCS had not discharged its onus of establishing what work was within the scope of the BIF Act;
(d) the adjudicator did not have jurisdiction or, alternatively, the progress claim should be $0 or, alternatively, an amount less than what was awarded.
[279]
[195] Lendlease contended that the adjudicator had an obligation pursuant to s 84(2)(a)(i) of the BIF Act, to decide whether he or she has jurisdiction to adjudicate the application. Lendlease contended that this included a duty to determine any jurisdictional facts upon which the attraction of its jurisdiction depended.27
[196] Lendlease also contended that an adjudicator had a related duty to consider submissions made to him or her, asserting that there was an absence of jurisdiction.28
[280]
Public Service Association of South Australia Incorporated v Industrial Relations Commission of South Australia & Anor(2012) 249 CLR 398 at [56].
For example, Acciona Infrastructure Australia Pty Ltd v Holcim (Australia) Pty Ltd[2020] NSWSC 1330 at [46] being the obiter dictum observation of Hammerschlag J.
[281]
[197] Lendlease submitted that there were multiple overlapping sources for these obligations. One source was said to be the general duty to afford procedural fairness, which included a duty to consider substantial clearly articulated arguments put to the adjudicator. In this respect, it relied upon statements made in the decision of Dranichnikov v Minister for Immigration and Multicultural Affairs(2003) 197 ALR 389 at [24] and [95]. Referring to the same paragraphs, Lendlease referred to this failure to consider such an argument as bespeaking a constructive failure to exercise jurisdiction.
[198] A second source for these obligations was said to be s 88(2)(d) of the BIF Act, which provided that the adjudicator consider all submissions that have been properly made by a respondent in support of the payment schedule. It was submitted that a breach of duty in s 88(2)(d), if material, would amount to jurisdictional error.29
[199] Lendlease described the content of the requirement as "an active intellectual process" and "a process of evaluation, sufficient to warrant the description".30
[200] Lendlease submitted that the question of whether the requisite consideration had been given in the circumstances was a question of fact, where it will often be necessary for inferences to be drawn from the evidence, because the adjudicator would not be called to give evidence. In that respect, it relied upon the observations of Griffiths J in Malek Fahd Islamic School Limited v Minister for Education and Training (No 2)[2017] FCA 1377 at [38]- [50]. Lendlease submitted that the relevant factors included:
[282]
(a) the content of any statements of reasons (including the absence of discussion and the reasons of any material issue);
(b) whether there was a duty to give reasons (Lendlease noted that there is a duty to give reasons imposed by s 88(5)(b) of the BIF Act, which was to be read with s 27(b) of the Acts Interpretation Act 1954 (Qld)); and
(c) the fact that boilerplate statements to the effect that a certain matter had been considered do not require the conclusion that the matter was, in fact, considered, in the requisite sense or at all.
[283]
[201] Lendlease submitted that materiality was ordinarily a necessary condition of jurisdictional error. It contended that the onus of establishing that material effect was on the person asserting jurisdictional error, but submitted the standard of materiality was relatively undemanding and directs attention to ask whether the decision could realistically have been different, not whether it would have been different.31
[202] Lendlease submitted that the process for determining materiality under the law was to first work out whether there was an error and then ask whether, had the error not occurred, there was a realistic possibility of a different decision. It submitted that whether there was a realistic possibility of a different decision was established by proving "historical facts"32, that is, one proves what actually happened as a matter of historical fact, and one then asks the counterfactual question whether there was a realistic possibility of a different decision in the event the error had not occurred.
[284]
29 Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd[2020] QSC 133 at [35]; and
[285]
S.H.A Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd[2020] QSC 307 at [47]- [48].
[286]
30 Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd[2020] QSC 133 at [35].
32 MZAPC v Minister for Immigration and Border Protection(2021) 95 ALJR 441 at [38]-[39].
[289]
[203] These last submissions were made in written reply to a submission of BCS that if a court found as a jurisdictional fact that jurisdiction existed, then a denial of procedural fairness can hardly have been material by a failure to take into account an incorrect submission as to the absence of jurisdiction.
[204] Lendlease made clear that it was not asserting a breach of the adjudicator's duty to give reasons imposed by s 88(5)(b) of the BIF Act. Rather, it submitted there was a presumption that the adjudicator had discharged his duty to give reasons and that the failure to deal with specific submissions made by the parties on jurisdiction meant that the present circumstances involved a case of the kind described by Bond JA in Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd[2020] QSC 133; (2020) 4 Qd R 410 at [38], namely, the reasons do not reflect a genuine consideration of the mandatory matters.
[205] Specifically in respect to the material effect of not providing procedural fairness to consider the s 61(4) jurisdictional issue, Lendlease says there was a realistic possibility that if the adjudicator had considered the submissions, then the adjudicator may have disallowed all or some of VPR23 on the basis that it sought payment for the construction work that was carried out in New South Wales that did not fall within s 65(1)(e)(iv) of the BIF Act. Lendlease submitted that the adjudicator could, for example, have called a conference with the parties to address the issue of where the work was carried out and, where relevant, what other work it was preparatory to.
[206] It is said that the adjudicator's decision on VPR23 should not be permitted to stand because the court and the parties do not know what decision the adjudicator would have reached had he discharged his obligation and considered Lendlease's arguments.
[207] I turn then to BCS's submissions.
[208] BCS submitted that there was no denial of procedural fairness. In doing so, it accepted that if a denial of procedural fairness is made good, and if it is material, it will establish jurisdictional error entitling the aggrieved party to have a determination set aside.33
[290]
33 Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd(2017) 95 NSWLR 82 at [99] per McColl JA, with whom Beazley ACJ and Macfarlan JA agreed.
[291]
34 Equa Building Services Pty Ltd v A&H Floors 2 Doors Australia Pty Ltd[2022] NSWSC 152 at [55] per Hammerschlag J, referring to the applicable High Court authority of MZAPC v Minister for Immigration and Border Protection(2021) 95 ALJR 441.
[292]
[212] BCS said in relation to the obligation to give appropriate reasons that case law recognises that reasons are an artefact35 and that they do not need to disclose logic that is objectively adequate.36 BCS further submitted the decision-maker is not required to refer in the reasons to all the materials supplied by one party before rejecting the other party's claim.37 It also submitted that a court does not need to go through the adjudication decision with a fine-tooth comb.38
[213] BCS referred to paragraphs [120]-[135] of the adjudication decision, and said the adjudicator considered the applicability of the BIF Act to the work carried out on the project. It was submitted that whilst the adjudicator's reasoning in those paragraphs may not have been perfect, in BCS's submission, it met the standard required by the authorities.
[214] In the alternative, BCS submitted that if it is found by the Court that there was jurisdiction as a jurisdictional fact, then it would be an odd thing to submit that there had been a denial of natural justice by an adjudication failing to consider a wrong jurisdictional submission. It submitted that this could not give rise to a material effect. BCS contended that this would amount to arguing that Lendlease lost the opportunity to persuade the adjudicator to wrongly decide jurisdiction. BCS, of course, noted that whilst an adjudicator must determine jurisdiction for his or her self, ultimately that could not be a determinative decision as it involved a jurisdictional fact which only the court could decide determinatively.
[293]
[215] It is common ground between the two parties that a denial of procedural fairness, if made good, and if material, will establish jurisdictional error entitling the aggrieved party to have a determination set aside. Further, it is common ground that the denial of procedural fairness will have been material if there was a realistic possibility of the decision-maker's decision having been different if the breach had not occurred.
[216] The case advanced by Lendlease was said to be one of a denial of procedural fairness. In doing so, that was said to have occurred, at least in part, because there was a failure to comply with the obligation contained in s 88(2) of the BIF Act, which required the adjudicator to consider certain matters.
[217] Given how the case has been advanced, the starting point is to recognise that there is an important distinction between procedural fairness and the question of whether an adjudicator has failed to consider a matter required to be considered pursuant to s 88(2). In Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd[2023] QSC 218, Applegarth J recognised this distinction. In doing so, his Honour approved of the statement in Ceerose Pty Ltd v A-Civil Aust Pty Ltd[2023] NSWCA 215; (2023) 112 NSWLR 225 at [51] to the following effect:
"Because procedural fairness is concerned with the conduct of the adjudicator towards the parties, once it is established what fairness requires in a particular case, the question of compliance will be readily determined by the objective facts, being primarily the communications, or lack of them, between the adjudicator and the parties. By contrast, the question whether the adjudicator has considered a matter for the purposes of s 22(2)39 will involve an inquiry into the private processes of decision-making, and even the mental processes of the adjudicator. While those processes may be revealed by the reasons required to be given under s 22(3), those reasons will not necessarily demonstrate a negative proposition, namely a failure to consider a particular matter required to be considered simply because it is not referred to in the reasons."
[298]
[218] In this case, both Lendlease and BCS do not suggest that the reasons are inadequate. The fact that reasons do not refer to a specific submission of a party does not automatically equate with there having been a failure to consider the submission. In Niclin Constructions,40 Applegarth J explained why a failure to refer to a particular submission in an adjudicator's reasons does not automatically reveal a failure to consider as required by s 88(2) of the BIF Act. His Honour stated as follows:41
[299]
"In general terms, there is a dividing line between a deficiency of reasons that demonstrates that the adjudicator has not performed the decision-making task in compliance with the Act and a deficiency in reasons that does not. On which side of the dividing line certain reasons fall depends on the context. The adequacy of reasons is assessed in the context of an Act under which adjudicators provide their determinations in a "somewhat pressure cooker environment".42
Within that statutory context there are a wide variety of disputes, including complex questions of fact that may require an adjudicator to briefly explain why one party's evidence was preferred over another. Depending upon the circumstances, it may be sufficient if the reasons indicate why the adjudicator arrived at the decision. In other cases the reasons may in all the circumstances reveal a failure to consider submissions. They may reveal "no intellectual justification" for the decision that was made.43 That said, "intellectual justification" is a gloss on the duty "to consider" and courts, including the High Court, have warned about the use of that label.44
A question may arise as to what specific inference is to be drawn from the absence of reference to a particular submission or contention in the adjudicator's reasons. Payne JA in _Ceerose_45 recently explained:
[300]
40 Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd[2023] QSC 218.
[301]
41 Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd[2023] QSC 218 at [28]- [33].
"...There are a range of possible explanations, only one of which is that the material was not considered. Another is that the claim was readily seen to be well-founded and the submissions to the contrary as lacking in substance. However, the latter would be a good reason to omit reference to the issue in the reasons. If the submission had been misunderstood, the facts mistaken or the law wrongly identified, that might explain absence from the reasons of something expected to be addressed, but not lack of consideration. Of course, the duty to consider a submission is separate from the absence of any duty to deal with it correctly, whether in law or in fact. The point is rather that an unreviewable error may explain why the reasons do not advert to a particular matter."
The fact that an adjudicator does not refer in reasons to all of the submissions made on an issue does not necessarily mean that he or she did not consider them.46
[307]
In Avopiling (NSW) Pty Ltd v Menard Bachy Pty Ltd,47 Sackar J stated:
[308]
"Provided it is apparent that the adjudicator has considered pertinent issues in good faith, very considerable latitude in my view should be afforded to an adjudicator as to the manner and form of the determination. To become too pedantic about the way in which the adjudicator has drafted a determination is to introduce an element of artificiality such as might well defeat the object and purpose of the Act and the aim of the process entirely."
Having regard to the nature of the issue that the adjudicator had to decide, I am not satisfied that he failed to give reasons for his decision, or that his reasons are so inadequate that they reveal jurisdictional error, or that the adjudicator has not performed his statutory task."
[309]
[219] As observed by Applegarth J, the New South Wales Court of Appeal in Ceerose,48 cautioned against the adoption of descriptors such as "active intellectual process", being attached to an obligation to consider, such as the one which operates in s 88(2) of the BIF Act. In this respect, the Court in Ceerose referred to the statements made in Plaintiff M1/2021 v Minister for Home Affairs (2022) 96 ALJR 497, by Kiefel CJ,
[310]
Keane, Gordon and Steward JJ as follows:49
"Labels like "active intellectual process" and "proper, genuine and realistic consideration" must be understood in their proper context. These formulas have the danger of creating "a kind of general warrant, invoking language of indefinite and subjective application, in which the procedural and substantive merits of any [decision-maker's] decision can be scrutinised". That is not the correct approach..." (Footnotes omitted)
49 Plaintiff M1/2021 v Minister for Home Affairs (2022) 96 ALJR 497 at [26].
[315]
[220] The New South Wales Court of Appeal in Ceerose further observed at paragraph [62]:50
[316]
"The attempt to articulate, using other language, what is required by the verb "consider" will usually be misconceived. Certainly, it is misconceived in the present statutory circumstance. In a practical sense, the problem for a party challenging a determination is not to identify whether the mental process undertaken by the adjudicator was "active", "intellectual" or "genuine", but rather to identify a basis on which it could be said that consideration did not occur. The mental processes of the adjudicator will be entirely opaque, except to the extent that they are revealed in his or her reasons. However, as already noted, the failure to identify a particular claim or response in reasons will not of itself demonstrate that the adjudicator failed to consider it. That is so for a number of reasons."
[317]
[221] The court went on to list four groups of reasons.
[222] First, there was a recognition that the adjudicator's reasons do not have to be comprehensive in every aspect. The Court acknowledged that when giving reasons a process of selection is undertaken as a necessary part of the process and not merely a concession to judicial frailty.
[223] Secondly, it was recognised that the scope of the reasons inevitably reflect the practical circumstances under which an adjudicator has to determine a matter. The Court pointed to the significant time constraints within the SOP Act.
[224] Thirdly, it was not unusual for the material supplied to an adjudicator to run into the hundreds of pages. It was inevitable that, in accordance with the statutory scheme, the adjudicator will spend more time on some items within a claim than others, and the reasons may reflect that choice.
[225] The fourth point was contained in paragraph [66] of Ceerose. That relevant part of
[318]
[66] is the portion reproduced by Applegarth J in the Niclin extract appearing above. The statement at paragraph [66] concerned the question as to what specific inference is to be drawn from the absence of reference to a particular submission or contention in a set of reasons.
[319]
[226] These four factors then led the court in Ceerose to the following conclusion:51
[320]
"For all of these reasons, there are likely to be few cases in which an applicant for judicial review can establish a breach of the duty to consider the matters set out in s 22(2). That is not to say that there may not be circumstances in which the inference of omission to consider is demonstrated. Thus, failure to refer to a submission on a centrally important matter, clearly articulated and based on uncontested facts, may demonstrate a failure to consider at all. Such is likely to be a rare case."
[227] The second last sentence of the extracted paragraph above was a reference to Dranichnikov v Minister for Immigration and Multicultural Affairs(2003) 197 ALR 389, particularly to the statements made by Gummow and Callinan JJ, with whom Hayne J agreed, at paragraphs [23]-[25].
[228] In Ceerose Pty Ltd v A-Civil Aust Pty Ltd[2023] NSWCA 215; (2023) 112 NSWLR 225, the court, at paragraphs [41]-[48] carefully examined the decision of Dranichnikov. This examination explained how the statements in Dranichnikov translated into the principles applicable to an obligation to consider, as outlined above.
[229] The conclusion which I have come to is that the adjudicator met his obligation under s 84(2)(a)(i), which required him to decide whether he had jurisdiction to adjudicate the application. To the extent that the adjudicator had an obligation under s 88(2) of the BIF Act, or as an implied requirement of s 84(2)(a)(i), to consider submissions which were made on jurisdictional issues, I conclude the adjudicator did consider those submissions. My reasoning is as follows.
[230] First, the issue in question here is one which goes to jurisdiction. The language of s 84(2)(a)(i) of the BIF Act provides that an adjudicator must decide whether he or she has jurisdiction to adjudicate the application.
[231] Sections 84(2)(b) and (c) provide that the adjudicator may ask for further written submissions from either party, so long as he or she provides an opportunity for the other party to comment on those submissions and may set deadlines for further submissions. There is no reason why that section should not apply to the adjudicator asking for further submissions on jurisdiction, given he or she must decide this. As Lendlease has identified, there are authorities which support that an adjudicator must consider submissions on jurisdiction. Such an implied requirement will not be wider than any requirement found in s 88(2)(c).
[324]
"[51]The Respondent [Lendlease] further brought to my attention that as a large part of the work under the Contract was carried out in NSW and as the Act only applies to work carried out in Qld, the
Payment Claim was invalid and the adjudicator has no jurisdiction to determine the application.
[52] The respondent also reminded me that I must decide whether I have jurisdiction, given that a large part of the work under the contract was carried out in NSW."
[325]
[237] The statements in those paragraphs were referring to a set of further submissions delivered by Lendlease on 4 November 2022. Whilst not mentioning s 61(4), those paragraphs are clearly identifying the s 61(4) issue which was raised by Lendlease in those submissions.
[238] At paragraph [54] of the adjudicator's decision, the adjudicator then referred to further unsolicited submissions from Lendlease on 10 November 2022, which again raised a jurisdictional challenge assertion that the adjudicator had no jurisdiction to consider the payment claim because the work was not all carried out in Queensland and, therefore, the Act does not apply. Again, this was clearly identifying the s 61(4) issue.
[239] At paragraph [56] of the decision, the adjudicator referred to his request on 11 October 2022 for an extension of the time to deliver the decision in light of the extensive jurisdictional challenges raised by both parties. The s 61(4) issue was one of those challenges. It had been raised in the adjudication response. The parties agreed to an extension until 29 November 2022.
[240] At paragraph [57], the adjudicator referred to his calling on 14 November 2022 for further submissions on four topics. One of the topics he described was as to the validity of the payment claim because some of the work was carried out in New South Wales and some was carried out in Queensland. Again, whilst not mentioning s 61(4) of the BIF Act expressly, this was a clear reference to the s 61(4) issue.
[241] At paragraph [58] of the decision, the adjudicator referred to further submissions and replies that were received on 16 and 17 November 2022 respectively, from both parties.
[242] At paragraph [59] the adjudicator stated:
[326]
"On 21 November 2022, it appeared to me that neither party considered that the Gold Coast Airport is situated on Commonwealth land and not NSW or Qld. In those circumstances, I ask the parties to consider the Commonwealth Places (Application of Laws) Act 1970 (Cth)."
[327]
[243] This paragraph was referring to a letter sent by the adjudicator on 21 November 202. In that letter, clearly in response to the s 61(4) issue, the adjudicator expressed inter alia, the preliminary view that he thought that both parties' submissions were incorrect and that the solution lay with the operation of s 4(1) of the CPAL Act so as to give him jurisdiction. As this was a new answer being raised by the adjudicator, he accorded procedural fairness by giving an opportunity to each party to make further submissions on his answer to the jurisdiction issue and to then reply to the other parties' further submissions.
[244] At paragraph [60] of the adjudication decision, the adjudicator stated, "On 23 and 24 November 2022, the claimant and the respondent provided me their submissions and replies." This was a reference to the submissions and replies the adjudicator had specifically sought on the particular subject matter of his answer to what was the s 61(4) jurisdictional issue.
[245] At paragraph [61] of the adjudication decision, the adjudicator stated, "On 25 November 2022, I asked the parties to grant me a further extension of time up to 6 December 2022 and both parties agreed on the same day."
[246] The setting out of this chronology in the adjudication decision was consistent with the adjudicator consciously identifying the process which he went through in obtaining and considering submissions on jurisdictional issues, and in particular the s 61(4) jurisdictional issue. It is apparent that he had considered the s 61(4) issue prior to 14 November 2022 because that is what caused him to request further submissions on the issue of what he described as "invalidity of the payment claim because some of the work was said to be carried out in New South Wales and some was said to be carried out in Queensland". It is clear that he considered the next set of submissions because his next request for a further set of submissions and replies made on 21 November 2022 identified that he did not agree with either of the two parties' submissions on what was effectively the s 61(4) issue. He identified why he did not agree with those prior sets of submissions by identifying his preliminary answer to the issue. The adjudicator then took the active step of requesting a further set of submissions and replies in circumstances where in the adjudication decision he records "I asked the parties to consider the (Cth)", being a reference to his preliminary answer to the jurisdictional problem.
[328]
"Therefore, both the Qld Act and the NSW Act will continue to apply to the Sub-contract in respect to construction work performed or related goods and services supplied within the respective State jurisdiction, because there is no Federal security of payment regime that could render either the Qld Act or NSW Act void by operation of s 109 of the Constitution."
[329]
[257] Then at paragraph [1.10] of those primary submissions, Lendlease stated:
[330]
"Respectfully, the Commonwealth Place status of the Gold Coast Airport is not a relevant consideration in the present circumstances.
Given that State legislation continues to apply (to the extent there is no inconsistency with Federal statute), the issue remains whether the Claimant's Payment Claim and Adjudication Application claim payment for work that was carried out outside of Queensland. If the answer to this question is [yes], either in whole or part, then the adjudicator does not have jurisdiction to determine the Application."
[333]
[258] Those were only two of the paragraphs in that set of primary submissions, but it was clear that Lendlease was identifying that the CPAL Act allowed for the application of both the BIF Act from Queensland and its New South Wales equivalent, being the SOP Act. However, Lendlease was still maintaining that the operation of s 61(4) led to the absence of jurisdiction. This also clearly anticipated in the summary paragraph on the first page of the 23 November 2022 letter.53
[259] On 24 November 2022, Lendlease delivered, as requested, reply submissions to BCS's submissions of 23 November 2022. It was only in this document that Lendlease raised for the first time a complex set of submissions which ran to three and a-half pages under the heading, "Secondary Jurisdiction Issue for Adjudicator".
[260] This new submission was presented by Lendlease as a reply to BCS's submissions. It broadly reflects the separate jurisdictional issue which is now Issue 5 in this proceeding.
[261] It effectively submitted the s 4(5) qualified the operation of s 4(1) of the CPAL Act. It submitted that s 4(1) could not apply a State Act if the State Act would confer judicial power. The submissions contended that the BIF Act did confer judicial power by reason of s 93 which allowed an adjudication certificate to be registered as a judgment debt and enforced in a court of competent jurisdiction. At the conclusion of this complex set of submissions, paragraph [1.26] stated:
[334]
"The effect of the above is that, inter alia, the text of s 88 of the Qld Act (dealing with an adjudicator's decision) is not picked up by the [CPAL Act]. And if that text is not picked up, s 88 has no operation
- by reason of s 52(i) of the Constitution and, if s 88 has no operation, then there is no power to decide the adjudication application. Put another way, the adjudicator lacks jurisdiction to decide the Adjudication Application."
[335]
[262] Whilst presented to the adjudicator as a reply to submission to BCS's 23 November 2022 primary submission, this was, in substance, the raising of a separate new jurisdictional challenge. Those reply submissions did not identify in clear terms that this new submission was, in fact, directly contrary to the primary submissions that had been made by Lendlease to the adjudicator the previous day, on 23 November 2022. In the primary submissions, Lendlease had submitted the exact opposite position, namely that s 4(1) operated to apply both the BIF Act and the SOP Act to the contract. There was no ambiguity in the primary submissions on this issue.
[263] The presentation of the submissions in this way can hardly be described as a clearly articulated case on an essentially important matter.
[336]
53 The summary paragraph was the third paragraph on the first page.
[337]
[264] There was likely to have been significant scope for an adjudicator who still had to act within a short timeframe to have been confused by the submissions which were being made, particularly in relation to how the reply submissions operated to qualify, or in this case, completely contradict the primary submissions.
[265] The failure to have referred to s 4(5) of the CPAL Act or the reasoning which applied to it, as contained in the 24 November 2022 letter may have been for a variety of reasons other than a failure to consider it. One obvious such reason would be that the adjudicator did not understand that the s 4(5) CPAL Act issue resulted in the clear and unambiguous primary submission made on 23 November 2022 being abandoned as Lendlease's principal contention. The adjudicator may have thought that there was no reason to mention it, if he thought the primary submission still represented Lendlease's principal argument which, in part, accorded with his view that s 4(1) of the CPAL Act applied both the BIF Act and the SOP Act. The existence of such an obvious reason points against the inference which Lendlease seeks to be drawn.
[266] For the reasons set out above, I am satisfied that the adjudicator considered the submissions which were made by Lendlease on both the s 61(4) issue and the operation of the CPAL Act, including the operation of s 4(5) of the CPAL Act. I am satisfied that the adjudicator decided whether he had jurisdiction to adjudicate the application as required by s 84(2)(a)(i). I am satisfied that the adjudicator complied with his obligation to consider any submissions he had requested in accordance with s 84(2)(b) and (c), or was required to consider in accordance with s 88(2)(d) or as an implied requirement arising out of s 84(2)(a)(i) of the BIF Act.
[267] Accordingly, the answer to this issue is that there was no such relevant failure to consider.
[268] Given this conclusion, it is unnecessary to consider the issue of materiality.
[269] I note that there is no ground of challenge to the adjudication decision on the basis of inadequacy of reasons.
[338]
Issue 5: In determining the adjudication application, was the adjudicator exercising "judicial power" within the meaning of the CPAL Act?
[339]
[270] This issue involves s 4 of the CPAL Act which relevantly provides as follows:
[340]
(1) The provisions of the laws of a State as in force at a time (whether before or after the commencement of this Act) apply, or shall be deemed to have applied, in accordance with their tenor, at that time in and in relation to each place in that State that is or was a Commonwealth place at that time.
[341]
(5) Subsection (1) of this section does not:
(a) have effect so as to impose any tax;
(b) have effect so as to confer any judicial power; or
(c) extend to the provisions of any law of a State in so far as it is not within the authority of the Parliament to make those provisions applicable in or in relation to a Commonwealth place.
[342]
[271] This issue also involves ss 91 - 93, and ss 98 - 101 of the BIF Act, which provide as follows:
[343]
(1) As soon as practicable after being given a copy of a decision by an adjudicator, but no later than 5 business days after being given the decision, the registrar must give the claimant a certificate (an adjudication certificate) of the decision stating the following matters -
[344]
(a) the name of the claimant;
(b) the name of the respondent who is liable to pay the adjudicated amount;
(c) the adjudicated amount;
(d) the date on which payment of the adjudicated amount was required to be paid to the claimant;
(e) the rate of interest payable on the adjudicated amount;
(f) the fees, identified in the decision, that the respondent is to pay;
(g) that the certificate is made under this Act.
[345]
92 Consequences of not paying adjudicated amount
[346]
(1) If the respondent fails to pay the whole or any part of the adjudicated amount to the claimant as required under section 90, the claimant may give the respondent written notice of the claimant's intention to suspend carrying out construction work, or supplying related goods and services, under the construction contract under section 98.
[347]
(2) The notice about suspending work must state that it is made under this Act.
[348]
93 Filing of adjudication certificate as judgment debt
[349]
(1) An adjudication certificate may be filed as a judgment for a debt, and may be enforced, in a court of competent jurisdiction.
[350]
(2) An adjudication certificate can not be filed under this section unless it is accompanied by an affidavit by the claimant stating
[351]
that the whole or a part of the adjudicated amount has not been paid to the claimant at the time the certificate is filed.
[352]
(3) If the affidavit states that part of the adjudicated amount has been paid, the judgment is for the unpaid part of the amount only.
[353]
(4) If the respondent commences proceedings to have the judgment set aside -
[354]
(a) the respondent is not, in those proceedings, entitled -
(i) to bring any counterclaim against the claimant; or
(ii) to raise any defence in relation to matters arising under the construction contract to which the adjudication certificate relates; or
(iii) to challenge the adjudicator's decision; and
(b) the respondent is required to pay into the court, as security, the unpaid portion of the adjudicated amount pending the final decision in those proceedings.
[355]
(1) A claimant may suspend carrying out construction work, or supplying related goods and services, under a construction contract if at least 2 business days have passed since the claimant gave notice of intention to do so to the respondent under section 78 or 92.
[356]
(2) The right conferred under subsection (1) exists until the day on which the claimant receives payment from the respondent of the amount mentioned in section 78(1) or 92(1), and continues for another 3 business days immediately following that day.
[357]
(3) If, in exercising the right to suspend carrying out construction work or supplying related goods and services under a construction contract, the claimant incurs a loss or expense because the respondent removes any part of the work or supply from the contract, the respondent is liable to pay the claimant the amount of the loss or expense.
[358]
(4) A claimant who suspends carrying out construction work, or supplying related goods and services under a construction contract under subsection (1) is not liable for any loss or damage suffered by the respondent, or by any person claiming through the respondent, because of the claimant not carrying out that work or not supplying those goods and services, during the suspension.
[359]
99 Notice required before starting particular proceedings
[360]
(a) after being given a payment claim, the respondent fails to pay the amount stated in the claim on or before the due date for the progress payment to which the claim relates; and
(b) because of the failure to pay, the claimant intends to start proceedings in a court to recover the unpaid portion of the amount owed to the claimant.
[361]
See section 78 for the claimants right to recover from a respondent an amount owed to the claimant.
[362]
(2) Before taking the intended action, the claimant must give the respondent written notice (a warning notice), in the approved form, of the claimant's intention to start the proceedings.
[363]
(3) The claimant must not give the respondent the warning notice later than 30 business days after the due date for the progress payment.
[364]
(4) The claimant must not take the intended action before the end of 5 business days after giving the respondent the warning notice.
[365]
(a) require the claimant to complete the action stated in the notice; or
(b) prevent the claimant from taking different action to that stated in the notice.
[366]
100 Proceedings to recover unpaid amount as debt
[367]
(1) This section applies if a claimant starts proceedings in a court under section 78(2)(a) to recover an unpaid amount from a respondent as a debt owing to the claimant.
[368]
(2) Judgment in favour of the claimant is not to be given by a court unless the court is satisfied that -
[369]
(a) the respondent did not pay the amount to the claimant on or before the due date for the progress payment to which the payment claim relates; and
(b) if the respondent's liability to pay the amount arises because of a failure to give a payment schedule - the respondent did not give the claimant a payment schedule within the time required to do so under this Act.
[370]
(3) The respondent is not, in those proceedings, entitled -
[371]
(a) to bring any counterclaim against the claimant; or
(b) to raise any defence in relation to matters arising under the construction contract.
(1) Subject to section 200, nothing in this chapter affects any right that a party to a construction contract -
[374]
(a) may have under the contract; or
(b) may have under part 2 in relation to the contract; or
(c) may have apart from this chapter in relation to anything done or omitted to be done under the contract.
[375]
(2) Nothing done under or for this chapter affects any civil proceedings arising under a construction contract, whether under this chapter or otherwise, except as provided by subsection (3).
[376]
(3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal -
[377]
(a) must allow for any amount paid to a party to the contract under or for this chapter in any order or award it makes in those proceedings; and
(b) may make the orders it considers appropriate for the restitution of any amount so paid, and any other orders it considers appropriate, having regard to its decision in the proceedings.
[378]
(4) If, in any proceedings before a court in relation to any matter arising under a construction contract, the court finds that only a part of an adjudicator's decision under this chapter is affected by jurisdictional error, the court may -
[379]
(a) identify the part affected by the error; and
(b) allow the part of the decision not affected by the error to remain binding on the parties to the proceeding."
(b) Contentions of the parties
[380]
[272] Some introductory matters are uncontentious on this issue. They can briefly be identified. The Gold Coast Airport is a Commonwealth Place. Such a place is commensurate with a location identified in 52(i) of the Commonwealth Constitution being a "place acquired by the Commonwealth for public purposes". The Constitutional significance of a Commonwealth Place is that the Commonwealth Parliament, to the exclusion of State Parliaments, has "the exclusive" legislative power to make law for the peace, order and good government of the Commonwealth with respect to that place. Accordingly, State laws cannot apply by way of their own force in and with respect to Commonwealth Places.54
[381]
[273] The regulatory gap created by the operation of s 52(i) of the Constitution is filled by the operation of the CPAL Act. The primary provision of that Act is s 4(1). It broadly
applies a State's laws so that they operate in respect of a Commonwealth Place within that State.
[384]
[274] That broad provision for the incorporation of State law by s 4(1) is then qualified by s 4(5). Section 4(5) relevantly provides as follows:
[385]
(b) have effect so as to confer any judicial power..."
[386]
[275] I turn then to Lendlease's submissions. The central contention here arises from Lendlease's submission that adjudicators are said to exercise judicial power as the adjudication certificate, which derives from an adjudication decision, can be filed as a judgment for debt. Lendlease submitted that at least where the potential repository of a judicial power invested by the State law is not a Chapter III Court, s 4(5) of the CPAL Act avoids the application of the State law.
[276] Lendlease conceded that they are not aware of any case interpreting the expression of "judicial power" in s 4(5)(b) of the CPAL Act, however they submit the words at least encompass the "judicial power" referred to in s 71 of the Constitution. Lendlease pointed out that those words evoke a technical legal concept used in the Constitution, and should be given at least the meaning they bear in the Constitution.
[277] Lendlease submitted that for the purpose of the present case, it is unnecessary to traverse the many authorities addressing "judicial power". The reason for this was that Lendlease put its case by reference to a small number of authorities addressing the concept which it said were relevantly analogous to the present situation.
[278] The first and most important authority relied upon was Brandy v Human Rights and Equal Opportunity Commission and Ors[1995] HCA 10; (1995) 183 CLR 245.Brandy concerned the validity of certain provisions of the Racial Discrimination Act 1975 (Cth) where it purported to confer on the then Human Rights and Equal Opportunity Commission power to make a determination and declaration of a contravention, and then to assess damages. One provision of the Act expressly provided that the decision of the Commission was not binding and determinative. Another provision of the Act provided that the determination was required to be lodged in the Federal Court and registered as a judgment of that Court. The High Court unanimously held the scheme to be constitutionally invalid.
[387]
Gaudron and McHugh JJ in Brandy at [269]-[277] as follows:55
"Turning to the present case, it is apparent that the Commission's functions point in many respects to the exercise of judicial power. It decides controversies between parties and does so by the determination of rights and duties based upon existing facts and the law as set out in Pt II of the Racial Discrimination Act. Indeed, the relevant function of the Commission is essentially to determine whether the provisions of ss 9 and 15, which prohibit certain kinds of
racial discrimination, have been contravened. That is clearly indicative of the exercise of judicial power... Moreover, the remedies which the Commission may award (66) include damages as well as declaratory or injunctive relief and, according to whether they may be viewed as punitive or otherwise, make its functions closely analogous to those of a court in deciding criminal or civil cases...
However, if it were not for the provisions providing for the registration and enforcement of the Commission's determinations, it would be plain that the Commission does not exercise judicial power. That is because, under s 25z(2), its determination would not be binding or conclusive between any of the parties and would be unenforceable. That situation is, we think, reversed by the registration provisions.
Under s 25ZAA registration of a determination is compulsory and under s 25ZAB the automatic effect of registration is, subject to review, to make the determination binding upon the parties and enforceable as an order of the Federal Court. Nothing that the Federal Court does gives a determination the effect of an order. That is done by the legislation operating upon registration. The result is that a determination of the Commission is enforceable by execution under s 53 of the Federal Court Act. It is the determination of the Commission which is enforceable and it is not significant that the mechanism for enforcement is provided by the Federal Court...
For these reasons, ss 25zAA, 25ZAB and 25zAC, which combine to make a determination of the Commission binding, authoritative and enforceable, invalidly purport to invest judicial power in the Commission..."
[390]
[280] The second authority relied upon was Attorney-General (Commonwealth) v Breckler (1999) 197 CLR 83. The relevant portion of that decision relied upon was paragraph [42]. In that paragraph, the High Court observed in effect that in Brandy the mere registration in the Federal Court of the determination gave it the effect of an order of the Federal Court. That registration, described as an administrative act, converted a non-binding administrative determination into a binding, authoritative and curially enforceable determination. The Court said it followed that the legislation which so provided thereby contravened Chapter III of the Constitution.
[281] The third authority relied upon was Commonwealth v Anti-Discrimination Tribunal (Tasmania) and Anor(2008) FCR 85 at [206]. That case involved the question of whether the Tasmanian Anti-Discrimination Tribunal exercised judicial power. The Full Court of the Federal Court held that it did. Lendlease relied on the Full Court's statement at paragraph [206], relevantly as follows:56
[391]
"Furthermore, under the Anti-Discrimination Act, a person may enforce a Tribunal order under s 89 by filing a certified copy of the order in the Supreme Court of Tasmania, together with an affidavit stating the extent to which there has been non-compliance with the order: see s 90(1)(a) and (c). If these documents are filed, "the order made by the Tribunal ... is enforceable as if it were an order of the
[392]
56 Commonwealth v Anti-Discrimination Tribunal (Tasmania) and Anor(2008) FCR 85 at [206].
[393]
Supreme Court": see s 90(2). In Brandy[1995] HCA 10; 183 CLR 245, the High Court held that the inclusion of a provision providing for the registration and enforcement of a HREOC determination as an order of the Federal Court turned an exercise of non-judicial power into an exercise of judicial power: cf Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 110..."
[394]
[282] Lendlease then relied on the further statement of the Full Court in paragraph [207], relevantly as follows:57
[395]
"...These differences58 do not, however, detract from the fact that the filing of an order pursuant to s 90 confirms that it is "binding, authoritative and curially enforceable", to quote the joint judgment in Breckler 197 CLR at 110, referring in turn to Kitto J's observations in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd[1970] HCA 8; (1970) 123 CLR 361 at 374. In 2UE [2006] NSWCA 349; 236 ALR 385 (at 398 per
Spigelman CJ, 404 per Hodgson JA and 405 per Ipp JA) the New South Wales Court of Appeal reached a similar conclusion when considering the effect of a legislative scheme that gave "judicial force" to a State tribunal decision upon registration..."
[396]
[283] The fourth authority relied upon was Attorney-General (NSW) v 2UE Sydney Pty Ltd[2006] NSWCA 349; (2006) 226 FLR 62. One of the issues in 2UE was whether the New South Wales Administrative Decision Tribunal exercised judicial power. The portions of that decision relied upon by Lendlease are paragraphs [109] and [112]. In effect, at paragraph [109], the Court emphasised that it was the registration provisions that had the effect in Brandy of the proceedings of the Commission being an exercise of judicial power, because they led to enforceable orders without the intervention of any judicial body.
[284] In paragraph [112], when referring to the registration of a decision so as to take effect as a judgment, the Court of Appeal observed that, "[i]n Brandy, that was enough to taint the administrative decision that based such an order, because the administration tribunal could not, consistent with the Commonwealth Constitution, make any kind of judicial decision whatsoever."
[285] The fifth and final authority relied upon was Citta Hobart Pty Ltd v Cawthorn[2022] HCA 16; (2022) 96 ALJR 476. One of the issues in Citta was whether the Anti-Discrimination Tribunal in Tasmania exercised judicial power. The Tribunal was empowered to resolve disputes and make orders which, upon registration, took effect as an order of the Supreme Court of Tasmania. The High Court held that the Tribunal was vested with judicial power. At paragraph [14], the High Court confirmed the explanation of Brandy which had been given in Breckler. Lendlease submitted that the Court made clear that a tribunal can exercise judicial power even though it does not itself have power to "award execution".59
[397]
57 Commonwealth v Anti-Discrimination Tribunal (Tasmania) and Anor(2008) FCR 85 at [207].
[398]
Those were differences between the schemes as identified by the Court immediately above this extract from the reasons.
That certificate then may be filed as a judgment for a debt in a court pursuant to s 93(1) of the BIF Act. Lendlease also pointed to the fact that the judgment attracts to itself all of the protections articulated in s 93(4)(a). In particular, the party applying to set aside the judgment was not entitled to:
(a) to bring any counterclaim against the entity with the benefit of the judgment;
(b) to raise any defence in relation to matters arising under the construction contract to which the adjudication certificate relates; or
(c) to challenge the adjudicator's decision.
[401]
[288] Lendlease submitted that the effect of s 93 was to convert an administrative determination into a binding, authoritative and curially enforceable determination. That is a determination which has the character of being reached by the exercise of judicial power.
[289] Lendlease submit that as the power to make such a determination was not picked up by s 4(5) of the CPAL Act, this meant that s 4(1) had the effect of, at the very least, not incorporating s 88 of the BIF Act. Lendlease submitted further that at its widest none of the State Act would be picked up.
[290] Lendlease submitted that this construction should not be thought to create significant difficulty in the operation of the scheme as it only arose in respect of Commonwealth Places. It submitted that it was only in the unusual circumstances of a case such as the present that the issue would arise. When that occurred, s 4(1) of the CPAL Act was not intended to pick up and apply as Commonwealth law State laws which vest judicial power in the decision-maker.
[291] I turn then to BCS's submissions on this issue.
[292] BCS accepted that the BIF Act was only capable of applying to the underlying contract if it was picked up by the CPAL Act. It also accepted that the CPAL Act, by s 4(5) did not pick up and apply provisions of the BIF Act which conferred judicial power. It submitted that what was in dispute is whether s 88(1) of the BIF Act conferred judicial power. BCS submitted that it did not do so. BCS further submitted that the five authorities relied upon, including Brandy, all concerned different statutory schemes and that the question must be determined by reference to the terms of the statute in question.
[293] BCS submitted that the purported critical element of the exercise of judicial power, on Lendlease's case, was that it involved a binding and authoritative decision, or in other words, that the exercise of judicial power was conclusive.60
[294] BCS submitted that a determination which was susceptible to a collateral challenge lacked the character of an authoritative or final decision. It contended that the presence of such a susceptibility was an indication that the power was not judicial. In this respect, they relied on Breckler at [46]-[47] and Attorney-General (Cth) v Alinta Limited ; at .
[295] BCS submitted that while the BIF Act regime allowed its rights to be enforced through judgments of courts, the rights were interim in nature. In particular, this was reflected by s 101 of the BIF Act and the equivalent s 32 of the SOP Act. In this respect, BCS relied upon the statement of the majority in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd & Anor[2018] HCA 4; (2018) 264 CLR 1 at [37] and [39], relevantly as follows:61
[404]
"[37] ...it is important to appreciate the subject matter of the Security of Payment Act. The Security of Payment Act is not concerned with finally and conclusively determining the entitlements of parties to a construction contract.
[405]
[39] The Security of Payment Act does not speak of "interim" entitlements and payments, but the label aptly reflects how the statutory entitlement interacts with any underlying contractual liability. In that respect, the statutory entitlement established by the Security of Payment Act stands in marked contrast to the sort of final determination provided for in the legislative scheme considered in Hockey v Yelland (59), the effect of which was permanent." (this emphasis was added by BCS)
[406]
[296] BCS also submitted that the fact that the adjudication decisions were open to challenge for jurisdictional error had, in certain cases, been held to be an indicator against the power being judicial.62
[297] BCS submitted that a number of authorities had held that the security of payment regime did not involve the exercise of judicial power.
[298] BCS pointed to State of Queensland v Epoca Constructions Pty Ltd & Anor[2006] QSC 324 at [32]- [33] per Philippides J, where her Honour found that despite the ability for an adjudication certificate to be registered as a judgment, an adjudication decision did not have a judicial character.
[299] I pause to note that paragraphs [30] to [33] from her Honour's reasons are relevant to this issue. It is appropriate to set them out in full.63
[407]
"[30] The difficulties in distinguishing between decisions that are of a judicial as opposed to executive nature are well known. The line between the two is a blurred one. The making of binding determinations of right by way of adjudication of disputes about rights and obligations arising from the operation of law upon past events or conduct is a classical instance of the exercise of judicial power.64 An often cited description of judicial power was stated by Kitto J in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd:65
[408]
See also Northbuild Construction P/L v Central Interior Linings P/L & Ors[2011] QCA 22 at [3] (Margaret McMurdo P); [53] (White JA).
[409]
63 State of Queensland v Epoca Constructions Pty Ltd & Anor[2006] QSC 324 at [30]- [33].
[410]
Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs(1992) 176 CLR 1 at 67.
"... judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons. In other words, the process to be followed must generally be an inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined; and the end to be reached must be an act which, so long as it stands, entitles and obliges the persons between whom it intervenes, to observance of the rights and obligations that the application of law to facts has shown to exist."
[31]A hallmark of a judicial function is whether the performance of function terminates in a determination that has conclusive effect.66 The decision of the adjudicator as to a progress payment is not a final and authoritative decision. The adjudicator does not decide questions of fact and law once and for all. As Einstein J said in Brodyn Pty Limited t/as Time Cost and Quality v Davenport:67
"What the legislature has provided for is no more or no less than an interim quick solution to progress payment disputes which solution critically does not determine the parties' rights inter se. Those rights may be determined by curial proceedings, the Court then having available to it the usual range of relief, most importantly including the right to a proprietor to claw back progress payments which it had been forced to make through the adjudication determination procedures. That claw back route expressly includes the making of restitution orders."
[413]
[32] Notwithstanding that failure to pay an adjudicated amount may result in an adjudication certificate being issued, which may be filed as a judgment of the court, s 100 enshrines the interim nature of the adjudicator's decision by preserving the parties' rights to the processes of the courts to determine the issue of ultimate entitlement to retain the adjudicated amount. The lack of conclusiveness of an adjudicator's decision and the fact that it is susceptible to attack in collateral curial proceedings is an important indication that the adjudicator's decision is not of a judicial character.
[33] A further indication as to the character of the decision may be gleaned from the way in which the adjudicator exercises his powers.68 A function may be characterised as judicial where it is exercised in accordance with the judicial process.69 The following are significant in that regard. The adjudication
[414]
Evans, J.M., De Smith's Judicial Review of Administrative Action, 4th ed, Stevens & Son Limited, 1980 at pp 81-82.
proceeds on the basis of the material put before the adjudicator in accordance with Part 3 of the BCIPA and there is no provision for the calling and cross examining of witnesses. While an adjudicator may call a conference of the parties and may carry out an inspection, it must be conducted informally and parties are not entitled to any legal representation: s 25(4). There is thus little scope for factual inquiry and a consequent finding of fact in a judicial sense by the adjudicator. Further, while there is some echo in the procedures set out in the BCIPA (for a payment claim, payment schedule, submissions and adjudication response) of the procedure for pleadings in a court, it is somewhat faint. And there is little by way of the judicial trappings or other indicia associated with exercise of a judicial power."
[419]
[300] BCS also referred to the Full Federal Court decision in Birdon Pty Ltd v Houben Marine Pty Ltd & Ors[2011] FCAFC 126; (2011) 197 FCR 25, and in particular to Keane CJ's observations at paragraphs [33] and [53] which relevantly provided as follows:
[420]
"[33]... the Security of Payment Act is not concerned to give effect to the rights of the parties under the construction agreement. As is apparent from the terms of s 32(2), it expressly leaves the determination of those rights to the courts. The process for which the Security of Payment Act provides does not involve a determination, even of a provisional kind, of the actual rights of the parties under their construction contract. Section 23 contemplates an "assessment" by the adjudicator, and this assessment may be enforced as if it were a judgment of a court of competent jurisdiction but only insofar as a court has not determined, or does not determine, otherwise.
[421]
[53] There is nothing about the enforcement of the adjudication certificate as if it were a judgment of a court which is at odds with the fundamentals of the judicial process. The concern which informs the Kable principle is that the other branches of government should not be able to claim the authority of the judicial branch of government for their decisions by representing an executive or legislative decision as an exercise of the judicial power. Section 25 of the Security of Payment Act does not engage that concern. It is readily apparent from the terms of ss 22 to 25 of the Act that the adjudication certificate which s 25 makes enforceable as if it were a judgment of a court is not the product of the exercise of judicial power. It cannot seriously be suggested that s 25 makes the Supreme Court of New South Wales an unsuitable repository of the judicial powers of the Commonwealth. And, in any event, no exercise of the judicial power of the Commonwealth is involved in the enforcement of an adjudication certificate."
[422]
[301] Reference was also made by BCS to Buchanan J's comments at [172] in Birdon.
[302] BCS said that the observations in Epoca and Birdon referred to above had received approval in a number of subsequent authorities. In particular, BCS pointed to Allianz Australia Limited v Probuild Constructions Aust Pty Ltd[2023] NSWCA 56, per Leeming JA at [5]-[7] and [12] (with whom Mitchelmore JA was said to have agreed), Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd[2022] 183 ACTLR 245 per Lee J at [89(d)] and [104]-[105], Ming Tian Real Property Pty Ltd v SGS Platinum Pty Ltd[2020] NSWSC 212; (2020) 145 ACSR 329 at [46] and Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd(2015) 297 FLR 203 at [52].
[303] The Solicitor-General made broadly similar submissions to those of BCS on behalf of SQ. SQ submitted that an adjudicator does not exercise judicial power. Without wishing to repeat the same submissions, it is relevant to note some of the emphasis given by the Solicitor-General to certain of the submissions made on behalf of SQ.
[304] The first was that a hallmark of a judicial function was the performance of the function terminating in a determination that had conclusive effect. SQ submitted that an adjudicator's decision lacks that final and authoritative effect because it does not decide questions of fact and law once and for all. SQ referred to Philippides J's observations in paragraph [32] in about the effect of the then s 100 of the predecessor Act to the BIF Act (being equivalent to the current s 101 of the BIF Act), enshrining the interim nature of the adjudicator's decision by preserving the parties' rights to the process of the courts to determine the issue of ultimate entitlement to retain the adjudicated amount. SQ emphasised that the High Court had recognised that the label "interim" in the context of this Act was accurate as an adjudicator's decision to a claimant's entitlement is on an interim basis, leaving rights and liabilities under the contract to be decided separately.70
proceedings) which combined to make the determination "binding, authoritative and enforceable" and thus an exercise in judicial power.
[425]
[307] SQ also submitted that with some schemes, registration will be relevant because the decision will bear all the hallmarks of a judicial power and will be binding without such registration. It was submitted that sometimes registration will be irrelevant because notwithstanding registration the process lacks other necessary hallmarks of judicial power. SQ submitted that the fact a determination must be complied with is not sufficient by itself to constitute the operation of a judicial power, where a finding concludes nothing between the parties. SQ submitted that while an adjudication determination under the BIF Act was "binding", it was neither final nor authoritative. It was merely interim.
[308] I turn then to Lendlease's submissions in reply. Lendlease submitted that caution needed to be given in respect of a number of the authorities relied upon by BCS and SQ.
[309] It was said that many of the authorities did not apparently have regard to Brandy or the line of cases which have considered Brandy. The most obvious example that was given was Epoca. It was submitted that Epoca ought to be regarded, at the very least, as per incuriam. It was submitted that Epoca was wrongly decided and ought not to be followed on this issue.
[310] Further, Lendlease submitted that caution needed to be used in understanding the context of a number of the other decisions. Birdon was given as the prime example. It was pointed out that the issue in Birdon was ultimately whether the registration of the decision pursuant to the particular statutory scheme present in that case gave rise to a Kable problem in respect of the New South Wales Supreme Court. In particular, it was submitted that the comments of Keane CJ (as his Honour then was) were required to be read within that context. I understood that submission to mean that it was contended that Keane CJ was merely speaking of the pre-registration process as being administrative, and should not be taken as rejecting (implicitly) the proposition that the subsequent registration of the decision converted the administrative process into a judicial one.
[311] It was pointed out that the only member in Birdon which mentioned was Rares J in his dissenting judgment, where his Honour concluded that the registration of the adjudication certificate did convert what was otherwise the exercise of administrative powers into the exercise of judicial powers by the adjudicator.
[426]
[312] I have concluded that an adjudicator does not exercise judicial power under the BIF Act. Consequently, this issue is answered in the negative and, as a result, s 4(1) of the CPAL Act has the effect of applying the BIF Act to the contract between the parties in accordance with its terms. It would equally apply the SOP Act to the contract to operate in accordance with its terms. My reason for these conclusions are as follows.
[313] First, the question of whether a particular Act invests judicial power into a particular individual carrying out tasks under that Act will not be answered by the simple identification of certain fixed criteria. The question needs to be answered by an
[427]
examination of the totality of the Act as it affects the decision-maker's process and how the decision is then dealt with.
[428]
[314] Secondly, putting to one side the registration of the ultimate adjudication decision, the authorities are uniform in pointing to the nature of the process being undertaken by an adjudicator as being one administrative in nature, as opposed to one which involves the exercise of judicial power.
[315] Thirdly, and related to this last point, the process under the BIF Act can be readily distinguished from the process undertaken by the Commission in Brandy. The Commission in that case held an inquiry and ultimately made a determination of contravening conduct, accompanied by an assessment of damages. The ability to assess damages is a strong indicator of a decision-maker exercising judicial power. In many respects, the Commission in Brandy undertook a process which had features strongly pointing to the exercise of judicial power. It was only the presence of the express section which provided that the Commission's determination was not final and binding which pointed against such a conclusion.
[316] The reasoning of the High Court in Brandy was that the effect of the particular section that provided that the decision was not final and binding was then overturned by the subsequent sections which required the decision to be registered with the Federal Court. The decision was then an order of that Federal Court. Those subsequent sections had the effect of making the decision of the Commission in respect of the declaration of contravening conduct and the assessed damages final and binding in an authoritative sense.
[317] Fourthly, while I accept that Philippides J did not apparently have Brandy brought to her attention, her Honour nonetheless undertook an analysis of the relevant statutory process which then existed under the predecessor to the BIF Act. Her Honour recognised that a hallmark of a judicial function was that it terminated in a determination that had a conclusive effect. Her Honour found that the decision of an adjudicator on a progress payment did not do this, as it was not a final and authoritative decision. In my view, her Honour was correct in respect of the Act she was considering and her reasoning remains correct for the BIF Act.
[318] Fifthly, I note that in Allianz Australia Insurance Limited v Probuild Constructions (Aust) Pty Ltd , Leeming JA noted potential limitations in Keane CJ and Buchanan J's reasoning in on this issue. This was because of Buchanan J observing that it was common ground between the parties that the functions performed by an adjudicator do not involve the exercise of judicial power. Despite noting this, his Honour clearly approved of the reasoning and conclusion of Philippides J in that an adjudicator71 does not exercise judicial power, including because the adjudicator's decision is not final and authoritative.
[429]
See Allianz Australia Insurance Limited v Probuild Constructions (Aust) Pty Ltd[2023] NSWCA 56 at [7].
[430]
"...But it is extremely difficult to see how the streamlined regime, with no oral hearing, and a determination by an adjudicator who need not be legally qualified and which does not resolve the parties' dispute could constitute an exercise of judicial power, especially in light of the views expressed in Birdon Pty Ltd v Houben Marine Pty Ltd and State of Queensland v Epoca Constructions Pty Ltd." (emphasis is that of Leeming JA)
[431]
[320] The view expressed by Leeming JA in paragraph [7] should not be considered a mere comment. His Honour, in my view, was expressing clear agreement with Philippides J's reasoning and adopting a view that Keane CJ's reasoning was consistent with that of Philippides J. Whilst there is some room for uncertainty as to how far Keane CJ's observations can be taken, it is relevant to note that his Honour likely made his observations with knowledge of Rares J's dissenting reasons, which referred directly to Brandy.
[321] In Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd[2022] 183 ACTLR 245, Lee J as part of the Full Court of the Australian Capital Territory, was dealing with issues concerning the Australian Capital Territory equivalent to the BIF Act. In the context of addressing an argument that an adjudication decision was "final" because it was "immediately enforceable" as a judgment under their s 2772 as a result of its filing, he expressed the view that this argument was "unsustainable".
[322] His Honour observed that to read s 27 as conferring adjudication certificates with the colour of judicial power once filed and enforced as a judgment was to overlook the force of s 38: see Birdon (at [53] per Keane CJ).
[323] These authorities are consistent with a recognition that merely because there is a binding determination, that does not automatically render the determination as final and authoritative. The adjudicator has the authority to determine the:
[432]
(a) amount of the progress payment (if any) to be paid by the respondent to the claimant;
(b) date on which any such amount became or becomes payable; and
(c) rate of interest payable on any such amount.73
[433]
[324] However, s 101 in clear terms makes clear that the decision is not final and authoritative and is subject to challenge in later curial proceedings.
[325] To paraphrase Buchanan J, s 93 confines the operation of an adjudication certificate as a judgment (when filed) to the unpaid portion of the adjudicated amount. Section 101(3) directs that in any civil proceeding in relation to any matter arising under a construction contract, any amount paid must be allowed for and permits restitution of any such amount if appropriate. In this way, the statutory scheme seems to confine its intended operation to the establishment of an administrative procedure concentrated upon the time and recovery of a claimed, upheld and unpaid "progress payment", without any payment made in response to a claim or an adjudication becoming legislatively fixed, unreviewable or irrecoverable in due course. The
scheme bears all the hallmarks of an administrative arrangement for a speedy adjudication which will operate without prejudice to ultimate legal rights and, to the extent necessary, on an interim basis.74
[436]
[326] I do not accept Lendlease's submission that the adjudication decision is not only binding but it is authoritative and determinative of a unique statutory entitlement in itself.
[327] That submission was advanced on the basis that a unique statutory entitlement is created under the BIF Act regime. Lendlease described it as the statutory entitlement identified in s 3(2)(b) and s 70 of the BIF Act to a progress payment. The argument is that the adjudication decision is not only binding but it is also final and determinative of the existence and content of that unique statutory entitlement.
[328] I reject that submission. An adjudication decision cannot be divorced from the underlying contract and its performance between the parties. Whilst it can be accepted that the BIF Act provides a statutory right to claim for a progress payment beyond the contract (eg by statutory based reference dates), it does not alter the fundamental basis of the statutory process being founded on the existence and performance of a construction contract. The adjudication decision, even when registered as a judgment in no way determines underlying rights derived from the existence and performance by the parties of the construction contract. The certificate registered as a judgment in no way creates a final or authoritative determination of the things which substantially underpin the adjudication decision. Section 101 of the BIF Act ensures that the underlying substance of an adjudication decision will remain subject to challenge in later curial proceedings, and interim in nature.
[329] As a result of my answer to this issue, I have not had to deal with the detailed submissions which were made as to whether s 4(5) of the CPAL Act would have resulted in only certain sections being disapplied, or alternatively the whole of the BIF Act being disapplied.
[437]
[330] In conclusion, as a result of the reasons set out above, Lendlease has not succeeded in its application to set aside the adjudication application. Lendlease is not entitled to the injunction which it seeks.
[331] There had been submissions made on the potential to sever parts of the adjudication decision pursuant to s 101(4) of the BIF Act. It has been unnecessary to consider such submissions in light of my conclusions to the various issues.
[332] Accordingly, the application ought to be dismissed.
[333] On the issue of costs, I will hear the parties further on what is the appropriate costs order. In addition, it is my understanding that there has been monies previously paid into Court. I will hear the parties in relation to any consequential orders which flow from these reasons.
Parties
Applicant/Plaintiff:
Lendlease Building Pty Ltd
Respondent/Defendant:
BCS Airport Systems Pty Ltd & Ors [2024] QSC 164
Legislation Cited (10)
Industry Fairness (Security of Payment) Act 2017
Places (Application of Laws) Act 1970
Compensation Act 1985
Interpretation Act 1954
Construction Industry Security of Payment Act 1999
Building and Construction Industry Payments Act 2004
Building and Construction Commission Act 1991
Construction Industry Payments Act 2004
Commission Act 1991
Discrimination Act 1975
Cases Cited (29)
(2020) 4 Qd R 410
(2015) 297 FLR 203
(2008) 233 CLR 542
(2006) 226 FLR 62
(2019) 96 NSWLR 478
(2011) 197 FCR 25
(1995) 183 CLR 245
(2022) 108 NSWLR 350
(2023) 112 NSWLR 225
(1992) 176 CLR 1
(2022) 96 ALJR 476
(2018) 97 NSWLR 773
(2005) 63 NSWLR 385
(2003) 197 ALR 389
(2018) 98 NSWLR 712
(2007) 231 CLR 350
(2002) 210 CLR 333
(2016) 257 CLR 402
(2021) 95 ALJR 441
(2022) 96 ALJR 497
(1991) 173 CLR 167
(2017) 95 NSWLR 82
(2018) 264 CLR 1
(1998) 194 CLR 355
(2012) 249 CLR 398
(1970) 123 CLR 361
(1981) 147 CLR 617
(2016) 260 CLR 340
(1999) 197 CLR 83
[7] Secondly, does the BIF Act require a payment claim in a cross-border project to purport in a reasonable way to identify the location of the construction work? If so, did the payment claim in issue here purport in a reasonable way to identify the location of the work the subject of VPR23?
[8] Thirdly, does a component claim known as VPR23 fall outside the operation of the BIF Act by reason of s 61(4)? VPR23 formed the large part of the sum awarded in the adjudication decision in favour of BCS. Broadly speaking, VPR23 is a delay damages claim made pursuant to cl 19 of the contract.
[9] Fourthly, did the adjudicator in the present case fail to consider Lendlease's submissions on the operation of s 4 of the CPAL Act and s 61(4) of the BIF Act? If so, was any such failure material, including, if relevant, in light of the findings of the Court on the previous issues? This particular issue was couched as a failure to provide Lendlease with natural justice in the decision-making process.
[10] Fifthly, in determining the application, was the adjudicator exercising "judicial power" within the meaning of the CPAL Act? On this issue only, the Solicitor-
[56] On 23 November 2022, Lendlease provided further submissions addressing the CPAL Act. Those submissions were to the effect that both the Queensland and New South Wales Acts applied, but on the proper construction of s 61(4) of the BIF Act and its
[76] Lendlease initially submitted in writing that this dis-application had the following consequences:
wholly
[86] In support of that proposition, BCS pointed to the decision in Casey v DePuy International Ltd[2023] FCA 254 where Perram J was considering whether the phrase "outside Victoria" as it appeared in s 85 of the Accident Compensation Act 1985 (Vic) ought to be interpreted as "wholly", as opposed to the insertion of the words, "outside to some extent". Reference was also made to the Queensland Court of Appeal decision of Carnation Australia Pty Ltd v Commissioner of Stamp Duties[1994] 2 Qd R 366 particularly at page 386, where Davies JA was considering whether the phrase "outside Queensland" in the relevant revenue statute there in issue, might possibly mean "wholly outside" Queensland.
[87] The statutes in those cases were unrelated to the BIF Act. The authorities were only relied upon as examples of where courts had cause to consider such construction questions, particularly in the light of ambiguity.
[88] BCS submitted that reading s 61(4) as if "wholly" were present satisfied the purpose of the relevant section. That purpose was identified as being to exclude work which had no relevant association with Queensland. It was submitted by BCS that construction work on a building, structure or work partly within and partly outside of Queensland would have the necessary association with Queensland.
[89] In support of this submission, reference was made to Wiggins Island Coal Export Terminal Pty Ltd v Monadelphous Engineering Pty Ltd & Ors[2015] QSC 307, particularly at [37] in the judgment of McMurdo J as his Honour then was. His Honour, in commenting on the former s 3(4) of the now-repealed Building and Construction Industry Payments Act 2004 (Qld) (being the equivalent of the current s 61(4) of the BIF Act) identified a purpose of that sub-section as being to "confine the operation of the Act to circumstances which have a relevant association with Queensland".
[90] I pause to note that Wiggins dealt with the construction of a pre-fabricated carriage and tipping system manufactured in Malaysia which was ultimately to be delivered to Queensland and installed as part of a coal export terminal wharf situated in Queensland. That case was decided solely on the basis that the pre-fabrication work carried out in Malaysia, which was the work the subject of the payment claim, was construction work only as a result of the operation of s 65(1)(e) of the BIF Act. That is, the pre-fabrication work was only construction work because it formed an integral part of the work of a kind referred to in one of the previous sub-paragraphs (a)-(c), namely a thing (the wharf in that case) which was to be situated exclusively on Queensland land. The relevant connection was that the pre-fabricated items were to form part of the Queensland wharf.
[91] BCS further submitted that the concept of "construction work" as defined in sub- paragraphs (a)-(c) of s 65(1) of the BIF Act comprised:
[113] When s 61(4) talks of construction work carried out outside of Queensland, in my view, it must be talking about the carrying out of an activity as it applies to a building,
[116] Fifthly, I conclude s 61(4) of the BIF Act ought to be construed as meaning that Chapter 3 does not apply to a construction contract to the extent it deals with construction work carried out "wholly" outside Queensland. In coming to this conclusion, I am satisfied that there is ambiguity in how s 61(4) of the BIF Act ought to be interpreted in respect of the words "outside Queensland" when it is understood that a relevant building, structure or work may straddle the border.
[117] If it were otherwise , then s 61(4) would necessarily involve a bolt-by-bolt analysis of work and materials for a building, structure or work which straddles the border. It would require an analysis of minute detail and be prone to dispute as to the
[135] Here, in my view, s 68(1)(a) of the BIF Act read with s 61(4) does not impose the obligation articulated in Lendlease's submissions. The claimant in this case, BCS, has identified what it says is claimable construction work in its payment claim. It has done so in a way where Lendlease has an understanding of what is the construction work which BCS "claims to be" entitled to as a progress payment under the contract.
[147] In effect, Lendlease submitted that the BIF Act was dis-applied to the VPR23 delay claim because it was based on a provision which recognised that New South Wales work (necessarily work carried out in respect of a structure wholly within New South Wales) was a permissible foundation for the quantification of a delay claim.
[148] Lendlease relied upon the decision of Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd & Ors[2005] NSWCA 228; (2005) 63 NSWLR 385, particularly the reasons of Hodgson JA (with whom Ipp JA agreed on the relevant issue). In that decision, the construction contract by cl 34.9 allowed a claim for delay damages where extensions of time had been granted by reason of a compensable cause. The construction contract also allowed the contractual progress claim to include claims for other amounts
[181] Subsequent delay reports recorded a re-design of both of the Out of Gauge Line 1 (international) and Out of Gauge Line 2 (domestic) systems to modify the height of both systems.
[182] None of those reports disclose that any part of the electrician and fitting sub- contractors' work which was claimed in VPR23 was specifically attributable to the Out of Gauge Line 1 (international) construction, as opposed to the other three structures. I note that the areas for the Out of Gauge Line 2 (domestic) and Reclaim Carousel 4 structures remained unavailable into March 2022 and April 2022, respectively.
[183] Lendlease has not discharged its onus of proof to show that the disruption costs component in the form identified above is made up in part of an increase of the cost of construction work for a structure wholly within New South Wales, namely the Out of Gauge Line 1 (international).
[184] That failure to disclosure the onus is the same for each of the component parts of VPR23, including the prolongation portion.
[185] Accordingly, on the facts as I have found them in this case, I am unable to conclude that VPR23 is in respect of a part of the construction contract which is excluded by the operation of s 61(4) of the BIF Act.
[209] It further accepted that a denial of procedural fairness will be material if there was a realistic possibility of the decision-maker's decision being different if the breach had not occurred.34
[210] BCS submitted that the adjudicator expressly referred to Lendlease's 23 and 24 November 2022 submissions. This was by a reference to the adjudicator having called for further submissions by 23 November 2022 and reply submissions by 24 November 2022 as recorded in paragraph [120] of the adjudication decision.
[211] BCS says that in light of the adjudicator having expressly referred to those submissions, it should be inferred that he considered them. It was submitted that Lendlease's case should more accurately have been characterised as an allegation of a failure to give adequate reasons under s 88(5)(b) of the BIF Act.
[232] Secondly, it is not clear whether an ad hoc jurisdictional submission made only after a payment schedule has been delivered will be a submission governed by the operation of s 88(2)(c), particularly given the constraints within s 82(4) of the BIF Act.
[233] Ultimately, this point is not necessary to decide. I concluded that whether by s 84(2)(a)(i) read with s 84(2)(b), or alternatively by way of s 88(2)(c), there will be an obligation on an adjudicator to consider submissions made on jurisdiction.
[234] Thirdly, in relation to the submissions which were made concerning s 61(4) of the BIF Act and s 4 of the CPAL Act, I am satisfied that the submissions on those issues were considered. There are a number of indicators which support this conclusion.
[235] In the adjudication decision immediately above paragraph [39], there was a heading "Response not delivered by 31 October 2022 and other jurisdictional challenges". This section of the adjudication decision runs from paragraphs [39]-[61].
[236] Relevantly, at paragraphs [51] and [52], the decision-maker stated:
[247] Having taken the step of asking for those further submissions and replies, he then records that they were received from both parties on 23 and 24 November 2022 and the next day he asked the parties to grant him a further extension to 6 December 2022.
[248] The obvious inference is that he considered those further submissions which he had requested and which he expressly acknowledged he had received.
[249] Lendlease's submission only focuses on the statement in the later paragraph [120] which relevantly provides, "...I called for further submissions and replies by 23 and 24 November 2022, respectively." Paragraph [120] has to be read in the context of those earlier paragraphs and the emphasis on how the issue developed, how the adjudicator on two occasions called for further submissions, and how the adjudicator on the second occasion called for submissions specifically in relation to the Commonwealth Places (Application of Laws) Act 1970, which represented his then preliminary answer to the s 61(4) issue.
[250] In its proper context, the reference to having requested those submissions to be delivered by 23 and 24 November 2022 should not be seen as a mere assertion, or boilerplate statement, of having considered them.
[251] The identified process, in my view, supports an inference that the adjudicator would have considered all of the submissions, including those made on 23 and 24 November 2022.
[252] Further, I do not conclude that the failure to refer to s 61(4) of the BIF Act or s 4(5) of the CPAL Act in the adjudication decision supports in the circumstances of this case an inference that at least the 23 and 24 November 2022 further submissions and reply of Lendlease were not considered by the adjudicator. Equally, I do not consider the absence of a discussion about the content of Lendlease's jurisdictional argument based on s 61(4) of the BIF Act and s 4(5) of the CPAL Act in the adjudication decision as founding an inference that there was a failure to consider Lendlease's further submissions and reply from 23 and 24 November 2022.
[253] As recognised in Ceerose,52 there is a range of possible explanations for why a particular submission or contention was not referred to within the reasons. Only one of that range of possible explanations is that the submission or contention was not considered.
[254] In this case, in respect of the s 61(4) issue, a readily available inference is that the adjudicator had not been persuaded by any of the further submissions that his preliminary view as articulated in his letter of 21 November 2022 was incorrect. That preliminary view, at least to the adjudicator, answered the jurisdictional challenge that had been made by way of the s 61(4) issue. Merely because he did not mention the underlying reasoning contained in the 23 and 24 November 2022 Lendlease submission and reply on the s 61(4) issue did not automatically equate to the adjudicator having failed to take them into consideration. It was evident that the adjudicator thought that s 4(1) of the CPAL Act provided an absolute answer to the s 61(4) issue.
[255] I turn then to s 4(5) CPAL Act issue. There were contextual features which supported that this was not a case where the inference should be drawn that there was a failure to consider a submission of essential importance, clearly articulated and based on uncontested facts, because the adjudicator's decision did not expressly refer to s 4(5) of the CPAL Act or the reasoning relating to that section as found in Lendlease's reply submissions. The contextual circumstances of the making of the s 4(5) submission needs to be understood.
[256] The primary submissions which Lendlease made on 23 November 2022 as a result of the invitation of the adjudicator on 21 November 2022, in fact, positively submitted that the effect of s 4(1) of the CPAL Act was to make applicable both the BIF Act and the SOP Act to the contract and its construction work. At paragraph [1.8] of those primary submissions, Lendlease submitted:
[279] Lendlease relies upon the statements in the joint judgments of Deane, Dawson,
[287] Lendlease pointed to the fact that an adjudication decision necessarily becomes incorporated into an adjudication certificate by operation of s 91(1) of the BIF Act.
[305] SQ also emphasised that Philippides J recognised that a function may be characterised as judicial where it is an exercise in accordance with judicial process. SQ submitted that her Honour's descriptions of the process in that case as merely being administrative was accurate. There was little scope for a factual inquiry and a consequential finding of fact in a judicial sense by the adjudicator, and little in the way of judicial trappings or other indicia associated with the exercise of judicial power. SQ referred to observations by the High Court in Probuild at [40] and [44] to the effect the adjudication process was informal, summary and quick, with brutally fast timeframes. SQ highlighted Philippides J's observation that legal qualifications were no pre-requisite for the appointment to be an adjudicator.
[306] In respect of the Brandy decision itself, SQ submitted that quite apart from the registration of the judgment there had been other indicia of the Human and Rights and Equal Opportunity Commission acting judicially in that case. It could declare that an individual had engaged in unlawful conduct and, it could require a respondent to take certain actions, including the payment of damages assessed by the Commission. Critically, SQ pointed to s 25Z(2) of the Act in question in Brandy which provided that determinations of the Commission were not "binding or conclusive". That position was reversed by other sections within the Act. Section 25ZAA made registration of the determination compulsory and s 257AB provided that once registered the determination "had effect as if it were an order made by the Federal Court". It was those provisions, alongside s 25ZAC (providing for review
[319] Whilst Lendlease referred to the statement of Leeming JA in paragraph [7] as mere passing comment, I note his Honour returned to the subject matter again when dealing with Ground 1 of the appeal. At paragraph [12], his Honour further observed: