Lipman Pty Ltd v A-Civil Aust Pty Ltd

Catchwords: BUILDING AND CONSTRUCTION – Building and Construction Industry Security of Payment Act 1999 (NSW) – Adjudication – Whether adjudication was affected by jurisdictional error – Whether the adjudicator determined the claim made by the payment claim – Whether the adjudicator failed to consider submissions duly made – Whether there was a denial of natural justice – Whether there was jurisdictional error on the basis of legal unreasonableness

Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW) ss 3, 8, 13, 14, 17, 21, 22, 32A

Cases Cited: AM Darlinghurst Investment Pty Ltd v Growthbuilt Pty Ltd [2024] NSWSC 825
Ayoub v Minister for Immigration and Border Protection [2015] FCAFC 83
Ceerose Pty Ltd v A-Civil Aust Pty Ltd (2023) NSWLR 225; [2023] NSWCA 215
Cockram Construction Ltd v Fulton Hogan Construction Pty Ltd (2018) 97 NSWLR 773; [2018] NSWCA 107
Creative Building Services Pty Ltd v TIO Air Conditioning Pty Ltd [2016] ACTSC 367
Demex Pty Ltd v McNab Building Services Pty Ltd (2023) 113 NSWLR 282; [2023] NSWCA 261
Downer Construction (Aust) Pty Ltd v Energy Australia (2007) 69 NSWLR 72; [2007] NSWCA 49
Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd [2005] NSWSC 1129
Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2018] NSWCA 339
Iris Broadbeach Business Pty Ltd v Descon Group Australia Pty Ltd [2024] QSC 16
John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (RTA) [2007] NSWCA 19
King v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] FCAFC 152
Leighton v Arogen [2012] NSWSC 1323
Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49
Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16
Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd [2009] NSWCA 157
Pinnacle Construction Group Pty Ltd v Dimension Joinery & Interiors Pty Ltd [2018] NSWSC 894
Plaintiff M19A-2024 v Minister for Immigration and Multicultural Affairs [2025] HCA 17
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4
State Water Corporation v Civil Team Engineering Pty Ltd [2013] NSWSC 1879

Category: Principal judgment

Parties: Lipman Pty Ltd (Plaintiff)
A-Civil Aust Pty Ltd (First Defendant)
Jonathan Sive (Second Defendant)
Australian Building & Construction Dispute Resolution Service Pty Ltd (Third Defendant)

Representation: Counsel:
M Christie SC w D Hume (Plaintiff)
FP Hicks SC w J Courtenay (First Defendant)
Solicitors:
Vincent Young Lawyers (Plaintiff)
Shaba & Thomas Lawyers (First Defendant)

File Number(s): 2025/210848

JUDGMENT

1. By Summons filed on 2 June 2025, the Plaintiff, Lipman Pty Ltd, seeks an order setting aside, in whole or in part, an adjudication determination that was made in favour of the First Defendant, A-Civil Aust Pty Ltd, by the Second Defendant (the Adjudicator), pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act).

2. The Third Defendant is the nominating authority which appointed the Adjudicator. Neither the Adjudicator nor the Third Defendant played any active part in the proceeding.

3. Lipman contends that the adjudication determination should be set aside for jurisdictional error. The List Statement filed on 2 June 2025 asserted jurisdictional error on four grounds, together with a claim for misleading conduct pursuant to s 18 of the Australian Consumer Law. On 27 June 2025, Lipman confirmed that it did not advance its claim for misleading conduct in this proceeding and, on this basis, the matter was set down for hearing on 3 July 2025. On 30 June 2025, Lipman served its written submissions, together with a proposed Amended List Statement which removed its claim for misleading conduct and added a fifth ground for challenging the Adjudicator’s determination (namely, legal unreasonableness).

4. At the commencement of the hearing on 3 July 2025, A-Civil opposed the grant of leave to amend, on the basis that A-Civil had not had sufficient time to consider or address this proposed fifth ground. I indicated that I would hear Lipman’s submissions on the issue of legal unreasonableness, in order to understand the scope of the issues raised by this ground, before ruling on whether the amendment should be allowed. Subsequently, after the morning adjournment, A-Civil proposed “a way forward”. This involved Lipman advancing submissions on the fifth ground “without having leave or otherwise to deal with the matter”, and A-Civil addressing only on the first to fourth grounds at the hearing, and providing written submissions on the fifth ground after the hearing. Lipman did not object to this proposal. I was satisfied that A-Civil’s proposal would ensure both that the hearing would proceed on 3 July 2025 and that all grounds of challenge to the adjudication determination would be addressed, and would therefore promote the just, quick and cheap resolution of the real issues in this proceeding. The hearing proceeded on this basis.

5. A-Civil subsequently provided written submissions which addressed the issue of legal unreasonableness on 11 July 2025, and Lipman provided written submissions in reply on 18 July 2025. A-Civil did not advance, in its supplementary written submissions, any contention that it was prejudiced as a result of the fifth ground being raised by Lipman, or that it was unable to deal with that ground.

6. In those circumstances, I have determined that the amendment should be allowed, so that all of the issues raised by Lipman in respect of the Adjudicator’s determination can be addressed. Accordingly, I will make an order to this effect.

Factual background

7. On 8 February 2023, Lipman and A-Civil entered into a construction contract entitled “Minor Works Subcontract Agreement” (the Subc****ontract) for the carrying out of works by A-Civil in respect of the Eugowra Emergency Housing Project (the Eugowra Project). The Eugowra Project was a NSW Government initiative to provide temporary housing for residents of Eugowra who were affected by a devastating flood in November 2022.

8. Schedule 2 to the Subcontract was entitled “Trade Specific Scope of Works”. It stated, relevantly, as follows:

“[A-Civil] shall supply everything necessary for the proper execution and completion of the Demolition and associated works, including (without limitation) supply of all tools, supervision, manufacturing plant, including craneage, equipment, cartage, labour, materials, design, testing, necessary to facilitate the Works, including commissioning, certification, warranties as necessary and in order to complete the Works, as detailed throughout this Subcontract. All works are to be in compliance with Subcontract documents, Design Brief, Specifications & Drawings, the Australian Standards, National Code for Construction (NCC, previously known as BCA) requirements, SafeWork, Codes of Practice, WHS act, DA conditions, Green Building Council of Australia and all relevant Authorities requirements including but not limited to the following:

1. The Demolition all works including but not limited to the following specific areas and locations on the project (which are provided for assistance purposes only);

a. Existing buildings generally

b. All footings and other concrete structures;

c. All asphalt, kerb, gutters, subgrade and the like;

d. External retaining walls;

e. External fences, light poles and all other structures;

f. Underground tanks;

g. Removal and disposal of all loose fixtures and fittings;

h. Removal of any HAZMAT identified;

i. All trees and shrubs, excluding those documented to remain.

…”

9. Clause 1 of the General Conditions of the Subcontract relevantly provided as follows:

“1. Works

(a) [A-Civil] shall furnish all supervision, labour, materials, equipment, facilities, supplies, tools, services and each and every item of expense necessary for the proper execution of the Works, together with any incidental works which may not necessarily be described or detailed, but would generally form part of the Work, be good trade practice or necessary to complete this Agreement.

(b) The Subcontract price is a schedule of rates and approved rates are not subject to rise and fall for the duration of the Agreement.”

10. Schedule 15 to the Subcontract was headed “Approved Schedule of Rates” and set out hourly and daily rates for the use of various types of equipment, as well as “standown” (sic) rates. The items of equipment in Schedule 15 included a “CRUSHER r3 Kestrack”. Schedule 15 also included hourly rates for various personnel.

11. Clause 2 of the General Conditions of the Subcontract was headed “Payment” and provided as follows:

“2. Payment

(a) Lipman shall pay to [A-Civil] for the completion of the Works a sum assessed in accordance with this Agreement.

(b) [A-Civil’s] monthly progress claims must be submitted with compliance documents inclusive of signed day labour dockets for all labour, supervision, plant hire etc. Only claims that can be cross checked and verified with day dockets signed by Lipman shall be deemed as valid. Material purchases must be submitted with the inclusion of supplier invoices attached to the claim for them to be valid. This information will be submitted through the electronic payment system ‘Payapps’ as a compliance document.

(c) Lipman will pay [A-Civil] in instalments as [A-Civil] completed parts of the Works. Each payment will be based on the value of the Works completed by [A-Civil] and will only be assessed as payable if:

(i) [A-Civil] submits the claim on the date set out in this Agreement:

(ii) [A-Civil] provides supporting information for the claim required by Lipman;

(iii) [A-Civil] is not in breach of a term of this Agreement;

(iv) [A-Civil] has provided Lipman with satisfactory evidence that [A-Civil] has paid every person employed or engaged in any way by [A-Civil] on the Works all amounts [A-Civil] is legally required to pay in respect of those persons, their employees or associates. If [A-Civil] fails to provide Lipman with satisfactory evidence of payment as required in this subclause (c) Lipman may reduce the amount payable to [A-Civil], proportional to the labour component of the Fixed Lump Sum;

(v) the part of the Works for which the payment is made complies with the Agreement.

(d) Any instalment paid by Lipman shall be deemed to be an account only and shall not imply the Works or any part of the Works are approved by Lipman.

(e) [A-Civil] agrees:

i) Lipman can issue tax invoices in respect of the supplies or agreed costs by emails or quotation.

ii) [A-Civil] will not issue tax invoices in respect of the supplies.

iii) [A-Civil] acknowledges that it is registered for GST when it enters into this Agreement. [A-Civil] will notify Lipman if it ceases to be registered.

iv) Lipman acknowledges that it is registered for GST when it enters into this agreement and that it will notify [A-Civil] if it ceases to be registered or if it ceases to satisfy any of the requirements of GST ruling GSTR200/10 relating to RCTI’s [Recipient Created Tax Invoices].”

12. Clause 5 of the General Conditions of the Subcontract was headed “Variations” and relevantly provided as follows:

“5. Variations

(a) Lipman may vary the scope or the extent of the Works. [A-Civil] must not commence a variation until it receives a written notice from Lipman. [A-Civil] must comply with that notice.

(b) If [A-Civil] deems that additional works not previously part of [A-Civil’s] scope are not covered under the existing approved schedule of rates [A-Civil] must notify Lipman prior to commencing works to which they believe are not part of the approved rates and such promptly provide additional rates for assessment and approval prior to proceeding.

(c) The price for the variation shall be agreed wherever possible prior to the execution of the variation. In the absence of agreement, the price for a variation shall be a reasonable price determined by Lipman.”

Payment Claim

13. On 20 March 2025, A-Civil served a payment claim on Lipman in respect of the Eugowra Project in the sum of $13,050,937.97 (excl GST) (Payment Claim).

14. The Payment Claim was arranged by reference to three “Line Items”, as follows:

15. “Original Contract Works”, described as “Demolition” with a contract price of $1.00, in respect of which no claim was made;

16. “Approved Variations”, relating to “Demolition and Asbestos Removal”, in respect of which a claim was made in the amount of $7,995,639.59; and

17. “Unapproved Variations”, in respect of which a claim was made in the amount of $5,055,298.38.

18. The “Approved Variations” related to work which had been the subject of eighteen previous payment claims. Some of those previous payment claims had been approved by Lipman and paid in full; others had been approved, but not paid in full (by reason of, for example, an asserted set-off); and others had been disputed by Lipman. The claim advanced by the Payment Claim in respect of “Approved Variations” was a claim for unpaid amounts said to be owing in respect of those previous payment claims.

19. The “Unapproved Variations” represented amounts which had not been the subject of any prior payment claim. The list of “Unapproved Variations” included a line item with the description “Crusher Hire Cost at Cowra Tip to Process Eugowra waste”, in the amount of $4,183,140.00 (the Crusher Claim).

20. As outlined below, the Crusher Claim was a claim for the costs of A-Civil having provided a crusher, other equipment and personnel at a waste management site in Cowra, NSW (the Cowra Tip).

Payment Schedule

18. On 3 April 2025, Lipman served a payment schedule on A-Civil (Payment Schedule). The Payment Schedule stated that no amount was owing to A-Civil, and asserted that a sum of $9,002,971.79 (incl GST) was owed by A-Civil to Lipman.

19. In respect of the Approved Variations, Lipman contended, inter alia, that A-Civil had charged incorrect rates for various items of equipment and had charged for various personnel in the absence of any verified basis for doing so. On this basis, Lipman asserted that it did not owe A-Civil any amount in respect of the unpaid balance of these Approved Variations, and that A-Civil was obliged to return to Lipman the amounts which it had been overpaid.

20. In respect of each of the Unapproved Variations (including the Crusher Claim), Lipman disputed any obligation to pay A-Civil on the basis that A-Civil had failed to comply with the requirements under clause 5 of the Subcontract, submitting as follows:

“Unapproved Variations

5.103 Clause 5 of the Subcontract provides that:

(a) [A-Civil] must not commence a variation until it receives a written notice from Lipman;

(b) if [A-Civil] deems that there are additional works not part of its scope under the existing schedule of rates, [A-Civil] must notify Lipman prior to commencing works and provide additional rates for assessment and approval prior to proceeding; and

(c) if the additional rates are not approved/agreed upon, the price of the variation shall be a reasonable price determined by Lipman.

5.104 [A-Civil] has failed to comply with the requirements of the Subcontract for a variation.”

21. Further, Lipman stated, in respect of the Crusher Claim, that it “had no knowledge of this claim and is unable to comprehend what this claim is for”, adding that it “understands that this was an agreement between Cowra Council and [A-Civil] for the hire of the crusher, excavator and personnel (and is not part of the works under the Subcontract)” (Payment Schedule, [5.113], [5.115]). Lipman contended as follows:

“5.114 Lipman denies any liability for this claim as:

(a) [A-Civil] has failed to establish that amounts paid and actual costs incurred are reasonable or have been properly incurred and can be substantiated pursuant to clause 2 of the Subcontract;

(b) there was no written notice from Lipman in accordance with clause 5(a);

(c) in the alternative, no variation notice as required by clause 5(b) of the Subcontract was provided by [A-Civil]; and

(d) further again in the alternative; the amount claimed is excessive and unreasonable in any event.”

Adjudication Application

22. On 17 April 2025, A-Civil made an adjudication application pursuant to s 17(1) of the Act (Adjudication Application).

Adjudication Application - Approved Variations

23. In respect of Lipman’s claim that A-Civil was obliged to return the amounts which it had been overpaid (described by A-Civil as a “claw back” claim), A-Civil noted that, between February 2023 and April/May 2024, A-Civil had issued 15 payment claims to Lipman in respect of the Works; Lipman had issued payment schedules and recipient created tax invoices (RCTIs) in respect of those payment claims; and Lipman had made payments to A-Civil in accordance with the RCTIs (Adjudication Application, [6.1]). A-Civil stated that, in respect of this period, the difference between the amounts claimed by A-Civil ($27,966,125.79) and the amounts scheduled and paid by Lipman ($27,895,094.66), was approximately $70,000 (Adjudication Application, [6.2]-[6.3]). A-Civil attached a copy of the payment claims, payment schedules and RCTIs as Tab 50 the Adjudication Application.

24. A-Civil further stated that it had provided to Lipman, with each payment claim, day dockets which were signed by both A-Civil’s representative and Lipman’s representative, identifying the Works carried out each day, the type of labour supplied and the number of hours worked, and the type of equipment supplied and the number of hours for which it was supplied (Adjudication Application, [6.4]-[6.5]). A-Civil submitted that, in those circumstances, Lipman had no entitlement to “claw back” any amount (Adjudication Application, [6.7]):

“A-Civil notes that clause 2(d) of the Subcontract refer to instalment payments being deemed to be on account only and that they shall not imply the Works or any part of the Works are approved by Lipman. The ‘payment on account’ provision can only refer to the quality of the works (i.e. that the payment does not imply that the Works are ‘free from defects’ or ‘complete’). It cannot, and does not, apply to payments that have been verified and certified (by way of signed day dockets) and paid to a contractor. Lipman has not raised any issues about the quality or standard of the Works carried out by A-Civil. Accordingly, Lipman cannot now (more than 24 months after the Works commenced at the Project) seek to claw back payments that it has previously approved and made to Lipman.”

Adjudication Application - Unapproved Variations (Crusher Claim)

25. In respect of the Crusher Claim, A-Civil submitted, relevantly, as follows (Adjudication Application, [25.1]-[25.8]):

“25.1 A-Civil refers to the statutory declaration of Nasser Matta of A-Civil (which is at Tab 53) in relation to, amongst other things, the agreement secured by Nasser in relation to the use of the Cowra waste management/tipping facility (see paragraphs 11 to 20 of the statutory declaration).

25.2 It cannot be denied or disputed by Lipman that the agreement achieved by A-Civil with the Cowra waste management/tipping facility resulted in significantly reduced tipping rates. It also secured a nearby tipping facility which, as a consequence, significantly reduced costs to Lipman. Had A-Civil not done so, A-Civil would have had to transport the waste [sic] to Canberra, which would have resulted in significant costs and delays.

25.3 As it can be seen from Annexure C to the statutory declaration of Nasser Matta, both Lipman and NSW Public Works have acknowledged the significant benefit that the agreement achieved by A-Civil has had for the Project and the broader community.

25.4 The crushing works were carried out between April 2023 and June 2024. They involved transporting the waste material to the facility, stockpiling the waste material at the facility, sorting the waste material, feeding the waste material through the crusher and assisting with moving the waste material around the facility as directed by the facility.

…

25.6 A-Civil refers to paragraph 5.113 of the Payment Schedule. It is entirely unclear how Lipman can contend that it has no knowledge of this claim or what the claim is for. A-Civil refers to and relies upon paragraphs 11 to 20 of the statutory declaration of Nasser Matta.

25.7 A-Civil refers to paragraph 5.114 of the Payment Schedule. A-Civil responds as follows:

a. A-Civil refers to and relies upon paragraph 25.4 above.

b. It is entirely unclear what the relevance of clause 5 of the Subcontract is to the claim. Given that there was no fixed scope of works and the works were done on a day-rate basis, clause 5 did not apply to the Works.

c. the amount claimed is not excessive and unreasonable.

25.8 A-Civil refers to paragraphs 5.115 and 5.119 of the Payment Schedule. A-Civil refers to and relies upon paragraphs 11 to 20 of the statutory declaration of Nasser Matta. A-Civil denies that the works were not part of the Works under the Subcontract. The works were part of the Works given that they were done in connection with the demolition and remediation works. The Subcontract states that A-Civil ‘shall supply everything necessary for the proper execution and completion of the Demolition and associated works’.”

26. The Adjudication Application attached a statutory declaration of Mr Nasser Matta, the General Manager of A-Civil, in which Mr Matta relevantly deposed to the arrangement which had been reached with Cowra Council regarding the crushing works at the Cowra Tip and the reasons why A-Civil entered into this arrangement in respect of the crushing and disposal of waste, including waste from the Eugowra Project and waste from another project which A-Civil was performing for Lipman in respect of Cowra Hospital (the Cowra Hospital Project). Mr Matta stated as follows:

“Crushing Works at Cowra Tip Facility

11 The waste management/tipping facility in Eugowra did not agree to have demolition waste, brick and concrete demolition waste, green waste, and household waste tipped at the facility. It was important to find a waste management/tipping facility (and one that was as close to the Project as possible) because there was a significant amount of waste and asbestos that needed to be tipped. Due to this, I approached the waste management/tipping facility in Cowra (which was about a 1 hour drive away from Eugowra) and negotiated with them the following arrangement in respect of the waste disposal for both the Project and another project that A-Civil was working on for Lipman at the time (being the Cowra Hospital):

a. A-Civil would transport the above waste to the waste management/tipping facility;

b. once the waste was transported to the facility, A-Civil would use its plant and equipment (namely – crusher, stacker, excavator, screener) to crush, process and sort through the waste (which could then be recycled, reused or disposed as appropriate);

c. in exchange for the above, the tipping facility would accept the waste and would charge reduced tipping rates, including (amongst other things) free tipping of general solid waste and 50% discount on brick and concrete waste.

12 If the above agreement was not reached with the Cowra waste management/tipping facility, then the waste needed to be transported to the next closest facility (which was in Canberra and about a 3 hour drive away). This would have been a significant cost to Lipman and there would have been significant delays in the Project as there would have been significant resources allocated to transporting the waste to Canberra. Accordingly, the above agreement represented a significant cost saving to Lipman.”

Adjudication Response

27. On 29 April 2025, Lipman served its Adjudication Response.

Approved Variations

28. In respect of the Approved Variations, Lipman disputed A-Civil’s interpretation of clause 2 of the Subcontract. Lipman submitted that “progress payments are always ‘payments on account’ in the construction industry”, and that this was reflected in clause 2(d) of the Subcontract (Adjudication Response, [2.4]-[2.6]). In particular, Lipman submitted as follows (Adjudication Response, [2.7]-[2.12]):

“2.7 With the greatest of respect to [A-Civil] and what is said at paragraph 6.7 of the Adjudication Application submissions (that clause 2(d) only relates to quality of work):

(a) legally: Lipman says this is simply wrong and no proper and businesslike interpretation of clause 2(d) (particularly from an industry perspective) would be that it covers works only; and

(b) morally: Lipman says it’s a little unfair for [A-Civil] to take the benefit of the ‘lets get going and work it out later’ regime (that is the absence of a fixed lump sum price (risk)) but then seek to avoid the burden of a subsequent review and adjustment process as Lipman has had to endure upstream.

2.8 Further on the interpretation point:

(a) if [A-Civil] were right and the intention was that only quality of works could be reviewed why wasn’t the clause drafted omitting the on account words, like this:

‘Any instalment paid by Lipman shall be deemed to be on account only and shall not imply the Works or any part of the Works are approved by Lipman.’

(b) and the obvious question is what work the words ‘shall be deemed to be on account only and’ were intended to do? why were they included at all?

2.9 The use of the word ‘Instalment’ is also telling and goes to the root of the intention of the parties (the Adjudicator will note ‘instalment payments’ is the term used for progress payments under this Subcontract (see the start of clause 2(c)).

…

2.11 A copy of … the Court of Appeal case of Brewarrina Shire Council v Beckhaus Civil Pty Ltd & 1 Or [2005] NSWCA 248 is set out at Folder A TAB 3. No doubt the Adjudicator is aware of this case. It is useful because it covers both payments under contracts and payments under the Act. Both are on account in the Court of Appeal’s opinion and a progress claim regime [is] a running account for cashflow purposes until a final accounting takes place.

2.12 Lipman suggests its interpretation of clause 2(d) of the Subcontract is more in line with an interpretation most industry participants would arrive at and (respectfully submits) it should be the one preferred by the Adjudicator.”

Crusher Claim

29. In paragraph [1.5] of the Adjudication Response, Lipman noted that the Crusher Claim represented “60-70% of [A-Civil’s] pressed claim”, and stated that this claim:

“…raises some issues of a jurisdictional kind Lipman wishes to draw to the Adjudicator’s attention, namely it is work undertaken under a separate agreement with Cowra Tip in relation to the Lipman’s Cowra Hospital project works/contract on which [A-Civil] was also engaged…”

30. Lipman elaborated on this “fundamental jurisdictional issue” at paragraphs [3.15] to [3.19] of the Adjudication Response, submitting that it was necessary for the Adjudicator to determine whether this is “actually a claim arising under a[n] agreement separate from the Subcontract”. In particular, Lipman stated as follows:

“3.17 [A-Civil] says in various places that it entered into an agreement with Cowra Tip – an agreement that is separate from the Subcontract and that does not include Lipman as a party…

3.18 Lipman’s submission is:

(a) [A-Civil] had a contract with the Cowra Tip (and noting the definition of ‘construction contract’ under the Act permits ‘other arrangements’ it would appear that [A-Civil] has a separate construction contract with Cowra Tip and it is under that contract that [A-Civil] could make this claim if it believes it was not a ‘no cost’ offering);

(b) alternatively, if there is any ‘crusher claim’ to be made against Lipman it is under the Cowra Hospital contract, not the Subcontract (or further in the alternative, it has a contract with and a claim against the NSW Government for some ‘benefit’ to the Cowra community).

3.19 The fact is [A-Civil] has done nothing to establish that the crusher claim is one that is referrable to the Subcontract. Another matter, dealt with immediately below, is just what is this claim being made by [A-Civil] in any event. It appears to be a kind of restitution type damages claim premised on someone getting a benefit – is it in fact the Cowra community that has obtained a benefit and how does that sound in money?”

31. Under the cover of raising this jurisdictional issue, Lipman again asserted as its “primary position” and as “a complete answer” to the Crusher Claim that A-Civil had failed to comply with the requirements for approval of variations pursuant to clause 5 of the Subcontract (Adjudication Response, [3.4]). In particular, Lipman contended as follows:

“(a) Lipman provided a general reason for withholding in its Payment Schedule at 5.103 in relation to all unapproved variations: a written variation instruction is required for all variations; and/or notification must be given if [A-Civil] considers it has been asked to do something that is not in scope before starting works (this is a normal industry provision and Lipman is entitled to rely upon it):

[cl 5(a)-(b) was quoted]

(b) Lipman relies on the terms of clause 5 for their full force and effect; and

(c) Lipman notes:

(i) there has been no attempt to grapple with clause 5 by [A-Civil], in any manner, no explanation of what is the ‘variation instruction’ or when notice of a potential variation claim was given prior to commencing the purported variation works (or indeed when at any time prior to finishing the claimed variation works did if [sic] issue any notice at all); and

(ii) no submission is made by [A-Civil] on waiver and/or estoppel (but then the Subcontract is otherwise relied upon).”

32. Further, Lipman disputed that the Crusher Claim was “even referrable to the ‘scope’ under the Subcontract” (Adjudication Response, [3.5]), submitting that:

“Cowra Tip is not part of any ‘site’ under the Subcontract, [A-Civil] is to drop off waste at a tip, it is not to perform work at a tip – that has nothing to do with the Subcontract scope.”

Appointment of Adjudicator and Request for further submissions

33. On 23 April 2025, the Adjudicator was appointed by the Third Defendant.

34. On 2 May 2025, the Adjudicator requested an extension of time to determine the Adjudication Application. In addition, the Adjudicator referred to the “fundamental jurisdictional issue” which had been raised by Lipman in respect of the Crusher Claim, and invited A-Civil to provide, by 6 May 2025, “a response to the concern that subject matter jurisdiction cannot exist based on the material presented by [Lipman] at Section 3 of the Adjudication Response submission”, with Lipman having an opportunity to respond to A-Civil’s further submissions the following day.

35. On 6 May 2025, A-Civil provided further submissions in response to this request. In particular, A-Civil stated as follows:

“2.2 A-Civil’s position is clear and simple. The works carried out by A-Civil at the Cowra tipping/waste management facility (Crushing Works) were Works under the Subcontract. In that regard, A-Civil refers to and repeats paragraph 25.8 of the Adjudication Application.

2.3 As it can be seen from Section 3 and paragraph 4.7 of the Adjudication Application, the Works under the Subcontract were broad and extensive. Schedule 2 of the Subcontract stated that A-Civil ‘shall supply everything necessary for the proper execution and completion of the demolition and associated works…’ (emphasis added). The Crushing Works were necessary for the proper execution and completion of the demolition and associated works, particularly given that the waste and asbestos generated or removed from the various sites in the Project needed to be transported to a waste management tipping facility. A-Civil managed to reach an agreement with the Cowra tipping/waste management facility to allow A-Civil to tip the waste and asbestos at reduced rates. Had A-Civil not done so, A-Civil would have needed to transport the waste to the next closest facility (being in Canberra – 3 hours away), which would have resulted in significant costs and delays. The transportation of waste to a facility 3 hours away would not have been the ‘proper execution and completion of the demolition and associated works’.”

36. On 7 May 2025, Lipman provided a response to A-Civil’s further submissions, including the following response in respect of paragraphs [2.2] to [2.3] of those submissions:

| “Para Ref | Lipman response | | 2.2 | • There is no item in the scope document that identifies crushing work at the Cowra Tip as part of the Subcontract Works. There simply isn’t. [A-Civil] cannot even point to an item in the scope and say crushing works are incidental or ancillary to that item. • The highest para 25.8 of the Adjudication Application submissions puts the Cowra Tip works is that they were ‘in connection’ with the Subcontract. In connection does not mean ‘under’. Lipman’s position is the crushing works are not even remotely in connection with the Subcontract Works. • A-Civil refers to paragraph 25.8 of the Adjudication Application and specifically the reference to Schedule 2 of the Subcontract ‘shall supply everything necessary for the proper execution and completion of the Demolition and associated works’. The scope is further detailed in paragraph 1. ‘The Demolition all works including…’ which details the extent of the works. Crushing materials for Council and other projects is not included in the scope. | | 2.3 | • ‘Shall supply everything necessary…’ is found in Schedule 2. For good reason. Such wording is directly referrable to the scope of works. It cannot on any sensible analysis be interpreted to stretch to anything that is not part of the scope but [A-Civil] considers (retrospectively) it would like to do. For a start the variation clause (clause 5) would prohibit such a reading. • Interestingly [A-Civil] admits: ‘A-Civil managed to reach an agreement with the Cowra tipping/waste management facility…’ • That admission should be taken for what it is: the truth, and • To the extent that [A-Civil] suggests it is as if it were Lipman entering into this agreement (its not sure that is what is being suggested but it must be) where in the Subcontract is [A-Civil] authorised to enter into agreements on Lipman’s behalf? Where is the agency agreement? • Further- why was [A-Civil] concerned about Canberra. It would have been paid if it had had to tip in Canberra. Cowra tip was a convenient location for A-Civil in the context of the Cowra Hospital project, which was a fixed lump sum. The point/claim being made here is very problematic in the Security for Payment context and is an irrelevant point. • A-Civil contend that the Crusher was ‘necessary for the proper execution and completion of the demolition’. This is clearly not the case, particularly when approximately 30% of the material could be crushed. Asbestos, demolition waste and green waste could not be crushed.” |

Adjudicator’s determination and Commencement of proceeding

37. On 26 May 2025, the Adjudicator issued his determination (the Determination).

38. The adjudicated amount of the Payment Claim was $6,882,264.97 (incl GST). The Adjudicator found that Lipman was not entitled to “claw back” any amount in respect of previous payment claims which had been scheduled and paid. The Adjudicator allowed A-Civil’s claim for the amounts outstanding in respect of previous payment claims, and also allowed the full amount of the Crusher Claim.

39. Specific aspects of the Adjudicator’s reasoning are outlined below when dealing with the five grounds advanced by Lipman for challenging the Determination.

40. On 2 June 2025, Lipman commenced this proceeding and sought interlocutory relief, restraining A-Civil from taking steps to obtain an adjudication certificate, or to file such certificate as a judgment, or otherwise to enforce the Determination.

41. This relief was granted on conditions that Lipman give the usual undertaking as to damages and pay into Court the amount of $6,256,604.52 (excl GST). On 6 June 2025, an order was made varying the amount to be paid into Court to $7,073,806.93. This payment has been made.

Statutory Framework

42. The object of the Act is to “ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services”: s 3(1).

43. Section 3(3) provides that:

The means by which this Act ensures that a person is able to recover a progress payment is by establishing a procedure that involves –

(a) the making of a payment claim by the person claiming payment, and

(b) the provision of a payment schedule by the person by whom the payment is payable, and

(c) the referral of any disputed claim to an adjudicator for determination, and

(d) the payment of the progress payment so determined.

44. Section 8 provides that a person who, under a construction contract, has undertaken to carry out construction work or to supply related goods and services is entitled to receive a progress payment.

45. Section 13 deals with the making of a payment claim. It relevantly provides as follows:

13 Payment claims

(1) A person referred to in section 8 who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.

…

(2) A payment claim –

(a) must identify the construction work (or related goods and services) to which the progress payment relates, and

(b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and

(c) must state that it is made under this Act.

46. Section 14(1) provides that a person on whom a payment claim is served may reply to the claim by providing a payment schedule to the claimant. Section 14(2)-(3) provides as follows:

(2) A payment schedule

(a) must identify the payment claim to which it relates, and

(b) must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount).

(3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent’s reasons for withholding payment.

47. Section 17(1) provides that a claimant may apply for adjudication of a payment claim if the respondent provides a payment schedule, and the scheduled amount is less than the amount claimed. In the present case, this provision was triggered, as Lipman’s Payment Schedule specified a nil amount in response to A-Civil’s Payment Claim, on the basis that A-Civil owed Lipman the sum of $9,002,971.79 (see paragraph [18] above).

48. Section 21(2) provides that an adjudicator is to determine an application “as expeditiously as possible”. Underpinning the statutory entitlement to progress payments is an understanding that cash flow is the lifeblood of the construction industry: Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [40]. Accordingly, the Act imposes “brutally fast” deadlines on the claimant, respondent and adjudicator in order to ensure the prompt resolution of payment disputes: ibid.

49. Section 22 sets out what the adjudicator is to determine, and what matters the adjudicator is to consider in making that determination. It provides as follows:

22 Adjudication procedures

(1) An adjudicator is to determine –

(a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount), and

(b) the date on which any such amount became or becomes payable, and

(c) the rate of interest payable on any such amount.

(2) In determining an adjudication application, the adjudicator is to consider the following matters only –

(a) the provisions of this Act,

(b) the provisions of the construction contract from which the application arose,

(c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim,

(d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule,

(e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates.

50. In the event that jurisdictional error is established, section 32A provides as follows:

**32A Finding of jurisdictional error in adjudicator’**s determination

(1) If, in any proceedings before the Supreme Court relating to any matter arising under a construction contract, the Court makes a finding that a jurisdictional error has occurred in relation to an adjudicator’s determination under this Part, the Court may make an order setting aside the whole or any part of the determination.

(2) Without limiting subsection (1), the Supreme Court may identify the part of the adjudicator’s determination affected by jurisdictional error and set aside that part only, while confirming the part of the determination that is not affected by jurisdictional error.

Grounds for Challenging the Determination

51. At the hearing, Lipman advanced five grounds for setting aside the Determination, as follows:

“1. Did the Adjudicator commit a jurisdictional error by awarding a claim other than that advanced in the Payment Claim?

2. Did the Adjudicator commit a jurisdictional error by receiving and considering submissions which transformed, or purportedly transformed, a submission into a ‘duly made’ submission?

3. Did the Adjudicator commit a jurisdictional error by failing to consider submissions of Lipman?

4. Was there a denial of natural justice?

5. Did the Adjudicator infringe the principles of legal unreasonableness?”

Ground 1: the Determination was not a determination of the Payment Claim

52. Lipman contended that the Adjudicator awarded the amount claimed by A-Civil in respect of the Crusher “on a fundamentally different basis to that advanced” by A-Civil in the Payment Claim, and that this constituted a jurisdictional error.

53. Lipman’s pleading of ground 1 (Amended List Statement, [33]-[34]) identified two respects in which the Adjudicator was alleged to have “made a determination which did not relate to the claims in the Payment Claim”:

“33 The Determination was affected by jurisdictional error because:

(a) the Adjudicator allowed $4,183,140 in respect of Crusher Hire Costs at Cowra Tip, and did so on the basis that that amount was owing for scope work under the Contract;

(b) in respect of Crusher Hire Costs, the Payment Claim advanced only a claim that the alleged works were variation works;

(c) the Adjudicator thus determined a claim other than the claim in the Payment Claim;

(d) the Adjudicator also thus made a determination which did not relate to the claims in the Payment Claim.

34 The Determination was also affected by jurisdictional error because:

(a) the Adjudicator allowed $4,183,140 in respect of Crusher Hire Costs and Cowra Tip;

(b) the Crusher Hire Costs at Cowra Tip Claim included (and included in substantial part) the alleged cost for the use or availability of the crusher to process any waste, not just Project waste;

(c) in respect of Crusher Hire Costs, the Payment Claim only advanced a claim for the use or availability of the crusher to process Project Waste;

(d) the Adjudicator thus determined a claim other than the claim in the Payment Claim;

(e) the Adjudicator also thus made a determination which did not relate to the claims in the Payment Claim.”

Relevant Principles

54. An adjudication application pursuant to s 17(1) of the Act is an application “for adjudication of a payment claim”, being the particular “payment claim” which was served under s 13(1) of the Act. The adjudicator’s function is to determine the adjudication application which is referred to him or her (ss 17(6), 22(2)).

55. Lipman submitted that it followed that an adjudicator commits a jurisdictional error where he or she awards a progress payment on a basis different to that advanced in the payment claim.

56. Lipman referred, by way of example, to the decision of McDougall J in Leighton v Arogen [2012] NSWSC 1323. In that case, the payment claim had sought payment for variations on the basis that they were for “delay and disruption due to Cooks River Heritage Issues” (at [28]). In the adjudication application, the same claims were said to be for delay and disruption “due to (ongoing and atypical) inclement weather which was not foreseeable” (at [39]). McDougall J found that the claimant had thereby changed “the basis of its claim, in a significant way” (at [81]). His Honour held that it followed that the submissions made in the adjudication application, in support of the variations in question, could not be regarded as having been “duly made” in support of this aspect of its payment claim; that the adjudicator, by considering those submissions, failed to comply with the mandatory requirements of s 22(2)(c) of the Act; and that the adjudicator therefore did not make his determination in respect of the relevant variations “in accordance with a condition of, or within the limits of, the jurisdiction given by the Act” (at [86]-[87]).

57. Lipman submitted that the decision in Leighton v Arogen is consistent with other decisions which have held that there is jurisdictional error where an adjudicator awards an amount not claimed by the claimant in the payment claim, or an amount exceeding that claimed in the payment claim (referring, in particular, to AM Darlinghurst Investment Pty Ltd v Growthbuilt Pty Ltd [2024] NSWSC 825 at [23] (Ball J); Iris Broadbeach B**usiness Pty Ltd v Descon Group Australia Pty Ltd [2024] QSC 16 at [96] (Wilson J); and Creative Building Services Pty Ltd v TIO Air Conditioning Pty Ltd [2016] ACTSC 367 at [48] per Mossop AJ).

58. A-Civil did not dispute these principles, but did dispute that they had been infringed in this case.

The Variation/Scope Issue (Amended List Statement, [33])

59. Lipman submitted that:

60. in the Payment Claim, A-Civil advanced the Crusher Claim as a claim for variation works, not for scope works;

61. in response to this claim, Lipman stated, in the Payment Schedule, that the preconditions to an entitlement to variations, which were set out in cl 5 of the Subcontract, had not been satisfied;

62. in the Adjudication Application, A-Civil asserted, “[f]or the first time”, that the works in respect of the Crusher were scope works;

63. in the Determination, the Adjudicator allowed the Crusher Claim in full, accepting that it was within A-Civil’s scope under Schedule 2 to the Subcontract;

64. by reason of those matters, the Adjudicator “determined a claim for scope works, whereas the [Crusher Claim in the Payment Claim] was for variation works”; and

65. by allowing the Crusher Claim on a basis fundamentally different to that advanced by A-Civil in the Payment Claim, the Adjudicator committed a jurisdictional error.

66. As outlined above, the Payment Claim was divided into three parts, namely:

67. “Original Contract Works”, which were assigned a “Subcontract Value” of $1.00;

68. “Approved Variations”, which comprised items that had been the subject of previous payment claims; and

69. “Unapproved Variations”, which included the Crusher Claim in an amount of $4,183,140.

70. There was evidence that the form in which this Payment Claim was submitted was largely dictated by Lipman. In particular:

71. Schedules 2 and 3 to the Subcontract required A-Civil to submit its payment claims via a software application known as “Payapps”;

72. the template for payment claims on Payapps in respect of the Eugowra Project was configured by Lipman and could not be changed by A-Civil; and

73. in this template, Lipman had inserted only one line item under the heading “Original Contract Works”. This line item was called “Demolition” and the amount that could be claimed was $1.00. A-Civil was unable to add any other line items under this heading and could not insert an amount greater than $1.00 in respect of the “Demolition” line item.

74. In the first payment claim which was submitted by A-Civil in respect of works for the Eugowra Project in February 2023, the only part of the Payapps template in which A-Civil was able to insert the percentage and amounts claimed by A-Civil for those works was under the heading “Unapproved Variations”.

75. In the second payment claim which was submitted by A-Civil, the amounts approved in respect of the first payment claim had been moved under the heading “Approved Variations” and the only part of the Payapps template in which A-Civil was able to insert a claim for work done in March 2023 was under the heading “Unapproved Variations” heading.

76. This pattern continued for subsequent payment claims.

77. Accordingly, the Crusher Claim, which was advanced for the first time in the Payment Claim, was included under the heading “Unapproved Variations”.

78. In contending that A-Civil had, in the Adjudication Application, changed the basis for the Crusher Claim from a claim for variation works to a claim for scope works, Lipman focused on paragraph [25.8] of that document, which stated as follows:

“A-Civil refers to paragraphs 5.115 and 5.119 of the Payment Schedule. A-Civil refers to and relies upon paragraphs 11 to 20 of the statutory declaration of Nasser Matta. A-Civil denies that the works were not part of the Works under the Subcontract. The works were part of the Works given that they were done in connection with the demolition and remediation works. The Subcontract states that A-Civil ‘shall supply everything necessary for the proper execution and completion of the Demolition and associated works’.”

67. As the opening clause of paragraph [25.8] makes clear, A-Civil was here responding to the contention advanced by Lipman in paragraphs [5.115] and [5.119] of the Payment Schedule. Those paragraphs stated as follows:

“5.115 Lipman understands that this was an agreement between Cowra Council and the Subcontractor for the hire of the crusher, excavator and personnel (and is not part of the works under the Subcontract).

…

5.119 This claim is disingenuous.”

68. In short, Lipman contended, in the Payment Schedule, that the hire and use of the Crusher was “not part of the works under the Subcontract”, and that those works were instead performed pursuant to some other arrangement between A-Civil and a third party (namely, Cowra Council).

69. In paragraph [25.8] of the Adjudication Application, A-Civil disputed this allegation, and asserted that the Crusher works “were part of the Works” under the Subcontract “given that they were done in connection with the demolition and remediation works”.

70. A-Civil’s contention, in response to the issues raised by Lipman, that the relevant works were done “in connection with the demolition and remediation works” (emphasis added) did not amount to an assertion that the Crusher works were “scope” works rather than “variation” works, and did not amount to a change in the basis on which the Crusher Claim was put.

71. Similarly, there was no change in the basis upon which the Crusher Claim was put in the further submissions provided by A-Civil on 6 May 2025. Those submissions were provided in response to the Adjudicator’s request for submissions on the “fundamental jurisdictional issue” which Lipman had raised in respect of the Crusher Claim (namely, “that subject matter jurisdiction cannot exist based on the material presented by [Lipman] at Section 3 of the Adjudication Response”).

72. In Section 3 of its Adjudication Response, Lipman had submitted that: “The fact is [A-Civil] has done nothing to establish that the [Crusher Claim] is one that is referrable to the Subcontract” (emphasis added).

73. In paragraph [2.2] of its supplementary submissions in response to this jurisdictional issue, A-Civil repeated the position in paragraph [25.8] of the Adjudication Application, stating as follows:

“A-Civil’s position is clear and simple. The works carried out by A-Civil at the Cowra tipping/waste management facility (Crushing Works) were Works under the Subcontract. In that regard, A-Civil refers to and repeats paragraph 25.8 of the Adjudication Application.”

74. Paragraph [2.3] of A-Civil’s supplementary submissions developed this contention, stating that:

“The Crushing Works were necessary for the proper execution and completion of the demolition and associated works, particularly given that the waste and asbestos generated or removed from the various sites in the Project needed to be transported to a waste management tipping facility.”

75. A-Civil was not, by advancing these submissions, making any change to the basis upon which the Crusher Claim was advanced in the Payment Claim. Instead, it was explaining why the Crusher works were, in fact, “referrable to”, or performed “in connection with”, the proper execution of the demolition works under the Subcontract.

76. The Adjudicator rejected the jurisdictional issue which had been raised by Lipman, accepting that the Crusher works were performed in connection with the proper execution of the demolition works under the Subcontract (Determination, [25]):

“In answering [Lipman’s] question of whether the ‘unapproved’ claim for the Crusher Hire Costs at Cowra Tip is actually a claim under the subcontract or arising under an agreement separate from the subcontract, I say that the first paragraph in Schedule 2 of the subcontract answers [Lipman’s] question and says that the Crusher Hire Costs at Cowra Tip are costs that represent ‘The Extent of the Works’ because [A-Civil] shall supply everything necessary for the proper execution and completion of the Demolition and associated Works.”

77. It does not follow that the Adjudicator determined the Crusher Claim on the basis that it was a claim for “scope” works rather than “variation” works.

78. In determining to allow the Crusher Claim, the Adjudicator stated as follows at paragraphs [527]-[532] of the Determination (emphasis added):

79. the Crusher Claim was a claim “for extra work beyond that required by the contract, but otherwise contemplated under ‘The Extent of the Works’ provision that says ‘The Subcontractor shall supply everything necessary for the proper execution of the Demolition and associated works’”;

80. Lipman had “unreasonably refuse[d] to acknowledge and accept the variation” in respect of the Crusher works;

81. A-Civil sought “additional compensation for this unapproved variation”;

82. A-Civil had complied with the requirements under Schedule 2 concerning “the occurrence of a changed circumstance”;

83. A-Civil “had the consent of [Lipman]” for this “variation”; and

84. accordingly, A-Civil was entitled to the full amount of the Crusher Claim “as stated in the payment claim”.

85. In submitting that the Adjudicator determined that “the [Crusher] work came within … scope works and was not a variation”, Senior Counsel for Lipman relied on the fact that the Adjudicator “made no reference to cl 5 [of the Subcontract] in allowing the claim except in two respects, which indicate that as far as he was concerned this was not a claim for a variation”. The two relevant parts of the Determination were paragraphs [571] and [587]. When those two paragraphs are read in context it is apparent that the Adjudicator accepted A-Civil’s submission that clause 5 of the Subcontract did not apply to the relevant works:

“571. In addition to the conclusions I reached under the heading ‘No Further Discussion Needed’, I note [A-Civil’s] concern made known at paragraph 23.5 b. of the adjudication application submissions – ‘It is entirely unclear what the relevance of clause 5 of the Subcontract is to the claim. Given that there was no fixed scope of works and the works were done on a day-rate basis, clause 5 did not apply to the Works.’

572. For the preceding reasons, I am satisfied that [A-Civil] is entitled to claim for the ‘Amount claimed in payment claim 18’ and is entitled to the full amount claimed by [A-Civil] in the payment claim.

…

587. This is not a lump sum contract. In fact, [A-Civil] has pointed out in its own claims that it has not needed to provide variations under clause 5 because of that very fact. In the claim discussed immediately above, [A-Civil] states in response to [Lipman’s] withholding reason that [A-Civil] did not provide notice of variation to the scope of works under clause 5: ‘Given that there was no fixed scope of works and the works were done on a day-rate basis, clause 5 did not apply to the Works.’”

80. The finding that clause 5 of the Subcontract did not apply to the Crusher works did not entail a finding that the Crusher works were scope works rather than variation works. In any event, the Adjudicator found that Lipman had in fact given “consent” to this “variation” (Determination, [531]). Any error in respect of those matters was not (and was not asserted to be) a jurisdictional error.

81. For those reasons, I am not satisfied that the Adjudicator determined the Crusher Claim on the basis that it was a claim for scope works, or that he thereby allowed the claim on a basis fundamentally different to that advanced in the Payment Claim.

The Eugowra Waste Issue (Amended List Statement, [34])

82. In the Payment Claim, the Crusher Claim was described as follows: “Crusher Hire Cost at Cowra Tip to Process Eugowra Waste”.

83. Lipman contended that the Adjudicator allowed the claim as a claim for the costs of crushing both “Eugowra Waste” and non-Eugowra waste, and therefore allowed a claim beyond that made by the Payment Claim, which constituted jurisdictional error.

84. This submission depends on the proposition that A-Civil’s claim for “Crusher Hire Cost at Cowra Tip to Process Eugowra Waste”, properly understood, was a claim for the costs of crushing “Eugowra Waste” and nothing else. This was acknowledged in oral address:

“HIS HONOUR: … Crusher hire costs at Cowra tip to process Eugowra waste. It could be read as the cost of hiring a crusher which was used to process Eugowra waste. Are you saying implicitly you'd read that as saying ‘and not anything else’?

[SENIOR COUNSEL FOR LIPMAN]: Yes, we are saying that, your Honour. The focus is the processing of Eugowra waste. The contract involved demolition and disposal of properties in Eugowra. [A-Civil] is here saying, ‘We are claiming the crusher hire costs at Cowra to process that waste’. That's the natural reading, in our respectful submission.

HIS HONOUR: There's no dispute that a crusher was hired?

[SENIOR COUNSEL FOR LIPMAN]: Correct.

HIS HONOUR: There's no dispute that it did process Eugowra waste‑‑

[SENIOR COUNSEL FOR LIPMAN]: Sorry, no dispute for the purposes of these proceedings.

HIS HONOUR: , for the purpose of this proceeding, that it did process Eugowra waste.

[SENIOR COUNSEL FOR LIPMAN]: Yes.

HIS HONOUR: It's really reading the ‘to process’ as meaning that was the sole purpose, is it?

[SENIOR COUNSEL FOR LIPMAN]: That's the natural reading in the context of a claim under a specific contract.”

85. I do not accept this submission regarding the proper interpretation of the Payment Claim.

86. As a matter of ordinary language, the words “Crusher Hire Cost at Cowra Tip to Process Eugowra Waste” did not advance, expressly or impliedly, any assertion that the crusher was used exclusively to process Eugowra waste or was supplied for the sole purpose of processing Eugowra waste. Instead, those words conveyed that a crusher was used at Cowra tip to process Eugowra waste and that the costs of this crusher hire were claimed by A-Civil.

87. The statutory declaration of Mr Matta, which was attached to the Adjudication Application, explained the circumstances in which the Crusher works were undertaken (see paragraph [26] above). Mr Matta stated that “there was a significant amount of waste and asbestos [from the Eugowra Project] that needed to be tipped”; that the tipping facility in Eugowra would not accept this waste; and that it was therefore important to find a tipping facility which “was as close to the Project as possible”. It was for this reason that Mr Matta approached the Cowra Tip, which was a one-hour drive from Eugowra, and “negotiated with them the following arrangement in respect of the waste disposal for both the [Eugowra] Project and another project that A-Civil was working on for Lipman at the time (being the Cowra Hospital)”:

88. A-Civil would transport the above waste to the Cowra Tip;

89. once the waste was transported to the Cowra Tip, A-Civil would use its plant and equipment (namely, crusher, stacker, excavator, screener) to crush, process and sort through the waste (which could then be recycled, reused or disposed as appropriate); and

90. in exchange for the above, Cowra Tip would accept the waste and would charge reduced tipping rates, including (amongst other things) free tipping of general solid waste and 50% discount on brick and concrete waste.

91. Lipman did not, in its Adjudication Response, advance any submission to the effect that the Crusher Claim, properly construed, was a claim only for the costs of crushing Eugowra waste, and not any other waste.

92. Lipman understood that the amount claimed by A-Civil in the Payment Claim was a claim for the use of a crusher and equipment to process both “Eugowra Waste” and non-Eugowra waste (and, in particular, waste from the Cowra Hospital Project). It was on this basis that Lipman advanced the “jurisdictional issue” that the Crusher Claim was “actually a claim arising under a[n] agreement separate from the Subcontract” (see paragraphs [3.15] to [3.19] of Lipman’s Adjudication Response, quoted at [30] above).

93. The Adjudicator allowed the Crusher Claim on the basis that the arrangement with Cowra Council was entered in pursuit of A-Civil’s obligation to process Eugowra waste. In particular, the Adjudicator:

94. noted that it was “not in dispute that the waste material from Eugowra had to go to a tip and that delivery of the material and the fees to the tip were costs that [A-Civil] would be entitled to claim from [Lipman] under the subcontract” (Determination, paragraph [182]);

95. stated that one “real alternative option to [A-Civil] was to take the material to the Cowra tip where [A-Civil] was already dumping waste from the hospital project”, and found that, “[t]o that end”, A-Civil “entered into an agreement with the council” (Determination, paragraph [183]);

96. found that the agreement between A-Civil and the Council was that A-Civil “would provide its crusher free of charge to crush all the agreed materials” (including from the Cowra Hospital Project) “in exchange for reduced tipping fees for the waste material from Eugowra” (Determination, paragraph [184]);

97. found that the Crusher Claim represented a claim for “equipment and work used by [A-Civil] in pursuit of its contractual obligation to dispose of all demolition material in a safe and compliant manner” (Determination, [187]); and

98. determined that “[s]ince all of this material had to be crushed in order for [Lipman] to receive the benefit of no transport fees and reduced tipping fees, [Lipman] must therefore be liable for the costs of the crusher in crushing all of the material under the agreement, not just the material tipped from Eugowra” (Determination, paragraph [190]).

99. Having regard to those matters, I am not satisfied that the Adjudicator’s determination to award $4,183,140.00 in respect of the Crusher Claim was outside the scope of the Payment Claim.

100. Further, even if Lipman had established that the Payment Claim was, properly construed, a claim for the costs of processing only Eugowra Waste (and not any other waste), it would not necessarily have followed that jurisdictional error was established.

101. In Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2018] NSWCA 339 at [16], Basten JA (with whom Meagher and Leeming JJA agreed) observed that it is implicit in the requirement for the adjudicator to consider “the payment claim” that the adjudicator “is to act upon his or her understanding … of the content of the payment claim”. That is, “the Act implicitly confers on the adjudicator the power to form an opinion” as to “the scope of the payment claim” for the purposes of the adjudication, and the adjudication cannot be set aside because an error of law as to the scope of the payment claim appears on the face of the record, including in the reasons of the adjudicator: ibid. His Honour said (at [19]):

“It follows that it was no part of the primary judge’s function to examine the payment claim to determine whether he considered that the approach adopted by the adjudicator was erroneous. Even if it were erroneous, it would not constitute jurisdictional error to act upon such an erroneous view. …”

94. At [32], his Honour held that:

“The statute requires that the adjudicator ‘is to consider’ … the payment claim. However, an error … in understanding the payment claim does not constitute jurisdictional error and therefore cannot form a basis upon which the adjudication can be quashed.”

95. For those reasons, ground 1 has not been established.

Ground 2: misuse of section 21(4)

96. Lipman’s pleading in respect of ground 2 was as follows (Amended List Statement, [35]-[38]):

97. on a proper construction of the Act:

(a) the power under s 21(4)(a) to request further written submissions cannot be exercised in a manner which transforms a party’s submissions which were not “duly made” into submissions which were “duly made”; and (b) a submission by a claimant in response to a s 21(4)(a) request is not permitted if and to the extent that it purports to advance a claim different to that identified in the payment claim;

2. the Adjudicator did not form any opinion that the further submissions made by A-Civil on 6 May 2025 were “duly made” and, to the extent that the Adjudicator formed any such opinion, the Adjudicator failed to proceed on a correct construction of the Act (including as set out in paragraph (1) above); and
3. by reason of those matters, the Adjudicator committed a jurisdictional error.

Relevant Principles

97. Section 21(4)(a) of the Act provides as follows:

(4) For the purposes of any proceedings conducted to determine an adjudication application, an adjudicator—

(a) may request further written submissions from either party and must give the other party an opportunity to comment on those submissions…

98. I accept Lipman’s submission that the introductory words in s 21(4) indicate that this provision “is intended to facilitate the determination of an existing dispute, as it appears from the adjudication application”.

99. In State Water Corporation v Civil Team Engineering Pty Ltd [2013] NSWSC 1879 at [44], Sackar J observed as follows:

“… The provision permitting an adjudicator to request further submissions from the parties (s 21(4)(a)) cannot simply be exercised by an adjudicator to transform a party's submissions which were not duly made (by reason of s 20(2B)) to submissions duly made and capable of being considered by the adjudicator. That would empower adjudicators to defeat the underlying purpose of s 20(2B). There is authority supporting this view (John Holland Pty Ltd v Cardno MBK (NSW) Pty Limited & Ors [2004] NSWSC 258 at [26] per Einstein J).”

Is ground 2 established?

100. Lipman contended that the principles set out above were “infringed in this case”, submitting as follows:

“The Adjudicator called for further submissions on 2 May 2025.

In response to that call, A-Civil advanced a new basis for its crusher claim.

The Adjudicator then allowed the claim on that basis.

If ground 1 is unsuccessful, the effect of these events was to transform a claim which was not properly made into one which was properly made. That is not a permissible use of s 21(4).”

101. In oral address, Senior Counsel for Lipman accepted that the further submissions made by A-Civil on 6 May 2025 essentially repeated what had been said in the Adjudication Application, and that therefore ground 2 did not add anything of substance to ground 1:

“HIS HONOUR: I understand the argument you've just put to me [in respect of ground 1], that there's a change, you say, between the payment claim and the adjudication application between variation and scope. I'll determine that; that's right or wrong. But then here [in respect of ground 2], are you saying there's a further change?

[SENIOR COUNSEL FOR THE PLAINTIFF]: No, your Honour. To be frank, the second ground doesn't add much to the first. I acknowledge that, your Honour.

HIS HONOUR: Because this [i.e. A-Civil’s further submission] is just repeating what had been said in the adjudication application.

[SENIOR COUNSEL FOR THE PLAINTIFF]: Yes, I acknowledge that, your Honour.

HIS HONOUR: Expanding in it, but‑‑

[SENIOR COUNSEL FOR THE PLAINTIFF]: He is, your Honour. That's correct.

HIS HONOUR: ‑‑not changing the basis of the adjudication application.

[SENIOR COUNSEL FOR THE PLAINTIFF]: That's correct, your Honour. I acknowledge the second ground does not really add much for the first ground.”

102. For the reasons given above, I have determined that ground 1 has not been established. In particular, I have concluded that A-Civil did not, in either the Adjudication Application or its response to the Adjudicator’s request for further submissions on the “fundamental jurisdictional issue” raised by Lipman, advance a new basis for the Crusher Claim, which was different from that advanced in the Payment Claim.

103. Further, there was no “misuse” of s 21(4)(a) of the Act by the Adjudicator.

104. In State Water Corporation, the respondent to a payment claim had made submissions in its adjudication response which went beyond the terms of its payment schedule as to various matters (and which were therefore prohibited by s 20(2B) of the Act); the adjudicator then purported to request submissions under s 21(4) of the Act on those very same matters; and the respondent contended that the adjudicator was therefore able to take these submissions into account. Sackar J rejected this submission (at [43]-[44]).

105. That is far removed from the circumstances of the present case. Lipman had, in its Adjudication Response, raised a jurisdictional issue in respect of the Adjudication Application, and the Adjudicator sought submissions from A-Civil in respect of that specific issue, which A-Civil then provided (see paragraphs [34], [71]-[75] above). It follows that those submissions were requested for the purposes of determining the issues raised by the Adjudication Application and the Adjudication Response.

106. Finally, while s 22(2) of the Act requires that the adjudicator only consider submissions “that have been duly made by the claimant in support of the claim”, it is a matter for the adjudicator to determine whether or not submissions have been “duly” made. In this regard, Payne JA said in Ceerose Pty Ltd v A-Civil Aust Pty Ltd (2023) NSWLR 225; [2023] NSWCA 215 at [31] that it is “now well settled that whether a submission referred to in s 22(2)(c) or (d) has been ‘duly made’ is a matter within the jurisdiction of an adjudicator and error in identifying a submission as having been ‘duly made’ is not jurisdictional”.

107. In the present case, it can be inferred that the Adjudicator formed the view that the submissions made by A-Civil and Lipman in response to the Adjudicator’s request for further submissions were “duly made”, as he expressly referred to those submissions in his Determination. In any case, Lipman has not established that, in forming this view, the Adjudicator proceeded upon an incorrect construction of the Act.

108. For those reasons, ground 2 has not been established.

Ground 3: Failure to consider various matters

109. Lipman pleaded (Amended List Statement, [21], [39]-[42]) that the Adjudicator committed jurisdictional error by failing to consider the submissions which Lipman had advanced in its Adjudication Response in respect of various issues referred to as:

110. Wet hire charges;

111. 8 Wheeler Hire;

112. OZ Mist discrepancy;

113. Off-Site General Manager (Nasser Matta);

114. On-Site General Manager (Tony Panetta);

115. On-Site Construction Manager; and

116. Bin Hire.

117. As outlined below, Lipman subsequently indicated, at the hearing, that it did not press this complaint in respect of the Bin Hire issue. The remaining issues are described below as the “Miscellaneous Issues”.

Relevant Principles

111. Section 22(2)(d) of the Act provides that an adjudicator “is to consider … the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule”.

112. Section 22(2) identifies mandatory considerations: Holmwood Holdings Pty Ltd v Halkat Electrical Contractors Pty Ltd [2005] NSWSC 1129 at [35] (Brereton J); Cockram Construction Ltd v Fulton Hogan Construction Pty Ltd (2018) 97 NSWLR 773; [2018] NSWCA 107 at [11] (Basten JA).

113. In Ceerose, the Court of Appeal identified the difficulties faced by those asserting a failure to comply with s 22(2) of the Act. In particular, Payne JA (with whom Ward ACJ and Basten JA agreed) observed that:

114. “reasons are not necessarily, or even usually, a comprehensive statement of all aspects of a decision-maker’s thinking” (at [63]);

115. “the scope of the reasons will inevitably reflect the practical circumstances under which the adjudicator is operating” (at [64]);

116. “it is not unusual for the material supplied to an adjudicator to run into hundreds and even thousands of pages” (as was the case here) and it is “inevitable that … an adjudicator will spend more time on some items within a claim than on others” (at [65]); and

117. the absence of reference to a submission in the adjudicator’s determination may reflect a view that the claim is unfounded or that there is an unreviewable error explaining the absence of reference (at [66]).

118. Nonetheless, Payne JA (at [69]) acknowledged that “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”, and therefore may constitute a “breach of the duty to consider the matters set out in s 22(2)”.

119. Lipman acknowledged that it bore the burden of establishing that the proper inference in the circumstances is that there was a failure by the Adjudicator to consider the Miscellaneous Issues.

Lipman’s argument on ground 3

116. Lipman advanced, both in its Payment Schedule and its Adjudication Response, submissions in respect of each of the Miscellaneous Issues, as follows:

117. Wet hire charges – Payment Schedule, [5.19] to [5.27]; Adjudication Response, [7.1] to [7.5];

118. 8 Wheeler Hire – Payment Schedule, [5.28] to [5.39]; Adjudication Response, [8.1] to [8.5];

119. OZ Mist Hire – Payment Schedule, [5.46] to [5.50]; Adjudication Response, [10.1] to [10.6];

120. Off-Site General Manager (Nasser Matta) – Payment Schedule, [5.62] to [5.71]; Adjudication Response, [12.1] to [12.6];

121. On-Site General Manager (Tony Panetta) – Payment Schedule, [5.72] to [5.81]; Adjudication Response, [13.1] to [13.5]; and

122. On-Site Construction Manager – Payment Schedule, [5.82] to [5.92]; Adjudication Response, [14.1] to [14.5].

123. In paragraphs [498]-[500] of the Determination, the Adjudicator stated as follows in relation to the Miscellaneous Issues:

“No Further Discussion Needed

498. These matters in dispute have been discussed previously and do not need any further explanation.

499. It is not necessary for me to provide any additional context to understand the significance of the particular points raised in the disputed matters. I have addressed the arguments raised by the parties, and the decision rendered under section 22(2) of the Act is explained with clarity to ensure that the parties understand the reasoning leading to the decision.

500. To this end, the following matters do not require any further discussion:

• Wet Hire Charges19

• 8 Wheeler Hire20

• Motto Fog Water Cannon

• OZ Mist Hire

• Off Site General Manager (Nasser Matta)

• On Site General Manager (Tony Panetta)

• On Site Construction Manager

• Bin Hire Claim21

…

[Footnotes]

19. I am satisfied that the subcontract terms presented in the version of the subcontract tendered by [A-Civil] and accepted by [Lipman] at Tab 1 were clear enough that the parties could understand what each was required to do and the cost associated with the performance under Schedule 15. An essential element of any contract is consent. Here [Lipman] made it known that it consented to the version of the subcontract tendered by [A-Civil]. Consent is mutual because the parties have agreed upon the same thing in the same sense. The existence of mutual consent is determined by objective rather than subjective criteria, and [Lipman’s] statement in the adjudication response submissions is an outward manifestation of consent that would lead a reasonable adjudicator to believe the parties mutually agree.

20. I add the following to the previous footnote: (1) in the approved schedule of rates mutually agreed to by the parties, there is no stand down rate for the 8 wheeler hire; and (2) the use of the plant and equipment was recorded in day dockets signed by an authorised person of [Lipman].

21. I add the following to footnote 19: (1) clause 24 of the subcontract general conditions says that the bins are to be provided by [Lipman] on a daily basis; (2) [Lipman] provides no evidence that it complied with this requirement; (2) Schedule 2 of the subcontract says that “[A-Civil] shall supply everything necessary for the proper execution and completion of the Demolition and associated Works.”

118. In oral address, Senior Counsel for Lipman accepted that the material in footnote 21 in respect of the “Bin Hire” issue amounted to consideration by the Adjudicator of the submissions made in respect of that issue. (This item is therefore not considered further below.) However, Lipman maintained that none of the remaining Miscellaneous Issues was the subject of any “further discussion” in the Determination.

119. Lipman’s argument on ground 3 was, in essence, as follows:

120. in the above passage, the Adjudicator proceeded on the basis that the Miscellaneous Issues “have been discussed previously”, and therefore that no “further explanation” or “further discussion” is “needed”;

121. the Adjudicator had not in fact previously “discussed” any of the Miscellaneous Issues in his Determination; and

122. it follows that the Adjudicator did not give any consideration in his Determination to Lipman’s submissions in respect of any of the Miscellaneous Issues, and thereby failed to comply with s 22(2)(d) of the Act.

Relevance of Miscellaneous Issues to Payment Claim

120. In order to address Lipman’s submissions, it is necessary to explain the relevance of the Miscellaneous Issues to the Payment Claim.

121. None of these items was an “Unapproved Variation” which was first raised by A-Civil in the Payment Claim. (There had been a claim in the “Unapproved Variations” section of the Payment Claim for “General Manager and Construction Manager Hours”, but A-Civil indicated in its Adjudication Application at paragraph [27.1] that it did not press its claim in respect of this item for the purposes of the adjudication.)

122. Instead, the Miscellaneous Issues were advanced by Lipman in response to A-Civil’s claim in respect of “Approved Variations”.

123. The items listed under “Approved Variations” in the Payment Claim were eighteen previous payment claims which had been issued by A-Civil.

124. These eighteen previous payment claims were, somewhat confusingly, numbered 1-4 and 6-19 in the Adjudication Application, and fell into two categories.

125. First, in respect of the fifteen payment claims numbered 1-4 and 6-16, which concerned works in the period from around February 2023 to April 2024, Lipman had issued payment schedules in amounts either equalling, or close to, the amount claimed by A-Civil, and had paid the scheduled amounts. The difference between the total amount claimed by A-Civil ($27,966,125.79) and the total amount scheduled and paid by Lipman ($27,895,094.66) was around $70,000: see Adjudication Application, [6.1]-[6.3].

126. Secondly, in respect of the three payment claims numbered 17-19, which concerned works in the period from May to July 2024, Lipman had not paid any amount.

127. In the Adjudication Application, A-Civil identified that, in respect of the claim concerning the “Approved Variations”, it sought the amount of those three previous payment claims which had not been paid, namely:

128. the amount claimed in payment claim number 17 ($1,263,461.32), which was not approved by Lipman;

129. the amount claimed in payment claim number 18 ($578,451.16), which was not approved by Lipman; and

130. for payment claim number 19, the amount which was approved by Lipman but had not been paid ($20,793.66).

131. In the Payment Schedule and Adjudication Response, Lipman scheduled a nil amount on the basis that there was a net amount of around $9m owing to Lipman in respect of the works under the Subcontract. As outlined below, this was, in part, due to Lipman’s contentions in relation to the Miscellaneous Issues.

132. In an introductory section of the Payment Schedule headed “Nature of Dispute” (paragraphs [2.1]-[2.4]), Lipman stated that:

133. it had been retained under a head contract with the NSW Government as a “Managing Contractor”;

134. “transparency” in respect of costs and claims was “paramount”;

135. it was required under the Head Contract to establish that amounts and actual costs incurred are substantiated and reasonable;

136. it had been seeking, and A-Civil had failed to provide, “evidence of actual costs being properly incurred and substantiated”; and

137. this had led to a “dispute between Lipman and [the NSW Government] upstream in respect of [A-Civil’s] invoices”; and

138. Lipman had commenced proceedings against A-Civil in respect of “amounts that were overpaid to [A-Civil]”.

139. Lipman continued as follows in a section of the Payment Schedule headed “Cross-check and verification”:

“4.1 Clauses 2(b) and 2(c) of the Subcontract require [A-Civil] to provide documents and supporting information which enables Lipman to cross-check and verify with day dockets that had been signed by Lipman.

4.2 [A-Civil] has:

(a) not provided Lipman with the documents and supporting information required/requested for Lipman to cross-check and verify the signed day dockets; and

(b) (in some instances) not provided Lipman with day dockets that are signed by Lipman.

4.3 As a result (and to the extent possible) Lipman has assessed the Payment Claim based on the documents/evidence and knowledge it has in relation to the Subcontract Works performed.”

129. In section 5 of the Payment Schedule, Lipman dealt with A-Civil’s claim in respect of “Approved Variations” and, under this heading, set out submissions in respect of each of the Miscellaneous Issues.

130. For example, in respect of “Machinery Wet Hire Issues”, Lipman:

131. noted that A-Civil had claimed for wet hire rates on all plant and equipment (that is, “the rate includes for the cost of an operator under each and every item of plant and equipment”) (at [5.19]);

132. contended that A-Civil “should have charged for all plant and equipment at standdown rates only, with the exception of claims where there were sufficient personnel to operate the plant and equipment for the full day”, in order to reflect that “the item of plant was not being used” (at [5.20]);

133. contended that A-Civil had incorrectly charged for operators on all plant and equipment when, in fact, those personnel have already been charged elsewhere under other rates (at [5.21]-[5.23]);

134. noted that Lipman has sought, and A-Civil had not provided, particulars relating to the justification of the amounts claimed (at [5.24]);

135. repeated Lipman’s submissions regarding clauses 2(b) and (c) of the Subcontract, being the submissions which are set out in paragraph [128] above (at 5.27]); and

136. by reason of those matters, stated that, with certain exceptions, “Lipman had adjusted the wet hire rates back to standdown rates which is the agreed rate in the Subcontract” (at [5.25]-[5.26]).

137. Similar submissions were made in respect of the “8 Wheeler Discrepancy” (Payment Schedule, [5.28]-[5.39]), with Lipman again relying on its submissions regarding clauses 2(b) and 2(c) of the Subcontract, complaining that A-Civil had failed to provide justification for the rates claimed in respect of the 8 Wheeler hire, and contending that the wet hire rates should be adjusted “to dry hire rates by deducting the cost of an operator in each instance”.

138. In respect of the “OZ Mist Discrepancy”, Lipman submitted that the rates claimed for this industrial fog cannon were “grossly overpriced” and that A-Civil had “failed to establish that these amounts (if incurred) are reasonable, have been properly incurred and can be substantiated” (Payment Schedule, [5.46]-[5.50]). Lipman asserted that the rates which had been charged had not been agreed and referred, inter alia, to clause 2 of the Subcontract. Lipman stated that this item was “therefore … assessed as NIL”.

139. As regards the claims for an Off-Site General Manager, On-Site General Manager and On-Site Construction Manager (Payment Schedule, [5.62]-[5.92]), Lipman noted that it had requested particulars to justify these claims, which A-Civil had not provided; relied on clauses 2(b) and 2(c) of the Subcontract; and asserted that A-Civil had “failed to establish that these amounts (if incurred) are reasonable, have been properly incurred and can be substantiated”. Lipman stated that, in the absence of any verification records, it had adjusted the claimed hours and rates to “zero” for each claim.

140. The adjustments which Lipman contended should be made to the previous payment claims were set out in Annexure 2 to the Payment Schedule, which was headed “Breakdown” and which ran to several hundred pages. In respect of each of the payment claims which had been issued (whether it was a payment claim which had been approved and paid, or not), Lipman proposed that adjustments be made by reason of, inter alia, the Miscellaneous Issues.

141. For example, by payment claim number 13, A-Civil had claimed the amount of $1,161,641.57 (incl GST), which Lipman had approved and paid in full. However, in Annexure 2 to the Payment Schedule, Lipman contended that there should be an adjustment of $435,055.87 (incl GST) in respect of the amounts claimed in this payment claim. This adjustment included the following reductions in respect of the Miscellaneous Issues (all figures excluding GST):

142. Machinery Wet Hire Issue: $92,950.00;

143. 8 Wheeler Discrepancy: $30,800.00;

144. OZ Mist Discrepancy: $25,000.00;

145. Off-Site General Manager: $36,000.00;

146. On-Site General Manager: $47,475.00;

147. On-Site Construction Manager: $22,500.00.

148. Likewise, in respect of payment claim number 17 (which had not been approved, and in respect of which Lipman had not paid any amount), Lipman contended that there should be a reduction of $477,494.27 applied to the amount claimed by A-Civil (namely, $1,263,461.32). This adjustment included the following reductions in respect of the Miscellaneous Issues (all figures excluding GST):

149. Machinery Wet Hire Issue: $43,325.00;

150. 8 Wheeler Discrepancy: $50,820.00;

151. OZ Mist Discrepancy: $47,500.00;

152. Off-site General Manager: $68,400.00;

153. On-Site General Manager: $0.00;

154. On-Site Construction Manager: $42,750.00.

155. As I have explained at paragraph [124] above, A-Civil did not, in its Adjudication Application, seek any payment in respect of any of its previous payment claims up to and including payment claim numbered 16 (which had, in many cases, been paid in full), but did seek payment in respect of payment claims numbered 17-19 (in respect of which no amount had been paid).

156. In respect of A-Civil’s claim for payment of the amounts that had been claimed in payment claims numbered 17-19, Lipman did not contend that payment should be made in respect of those particular payment claims in a reduced amount, in order to take account of the adjustments which Lipman had proposed to each of those payment claims in Annexure 2 to the Payment Schedule (including by reason of the Miscellaneous Issues). Instead, Lipman contended that a nil amount should be allowed because, once the Adjudicator took into account all of the adjustments which Lipman submitted should be made to payment claims numbered 1-19, as set out in Annexure 2 to the Payment Schedule, a sum of around $9m was owing by A-Civil to Lipman.

Adjudication Application and Adjudication Response – “Approved Variations”

139. A-Civil dealt with “Previous Payment Claims and Payment Schedules” in section 6 of its Adjudication Application. A-Civil disputed that Lipman was entitled to “claw back” payments which Lipman had previously scheduled and had made to A-Civil.

140. In particular, A-Civil submitted as follows in respect of Lipman’s reliance on clause 2 of the Subcontract (see paragraph [128] above):

“6.5 The day dockets set out the following for the Works carried out each day:

a. the address at which the Works were carried out;

b. an outline of the Works carried out (for example, asbestos removal, soil removal, demolition etc);

c. the type of labour supplied and the number of hours that they were supplied (for example, 1 x Project Manager for 10 hours); and

d. the type and quantity of machinery and equipment supplied and the number of hours that they were supplied (for example, 1 x 38T truck for 9 hours).

…

6.7 A-Civil notes that clause 2(d) of the Subcontract refer[s] to instalment payments being deemed to be on account only and that they shall not imply the Works or any part of the Works are approved by Lipman. The ‘payment on account’ provision can only refer to the quality of the works (i.e. that the payment does not imply that the Works are ‘free from defects’ or ‘complete’). It cannot, and does not, apply to payments that have been verified and certified (by way of signed day dockets) and paid to a contractor. Lipman has not raised any issues about the quality or standard of the Works carried out by A-Civil. Accordingly, Lipman cannot now (more than 24 months after the Works commenced at the Project) seek to claw back payments that it has previously approved and made to Lipman.”

141. In addition, A-Civil responded, in its Adjudication Application, to Lipman’s submissions in respect of each of the Miscellaneous Issues: see paragraphs [13.1]-[13.7] (“Wet hire charges”), [14.1]-[14.10] (“8 Wheeler Hire”), [16.1]-[16.10] (“OZ Mist Hire”), [18.1]-[18.13] (“Off Site General Manager (Nasser Matta)”), [19.1]-[19.13] (“On Site General Manager (Tony Panetta)”), and [20.1]-[20.15] (“On Site Construction Manager”).

142. In the Adjudication Response at paragraphs [2.3]-[2.16], Lipman responded to A-Civil’s submissions regarding Lipman’s “claw back” claim in a section headed “Schedule of rates/payments on account”. Lipman submitted that:

143. irrespective of whether a contract provides for a fixed lump sum or a schedule of rates, “progress payments are always ‘payments on account’ in the construction industry” (at [2.4]-[2.5]);

144. clause 2(d) of the Subcontract reflected that standard regime (at [2.6]);

145. it was unfair for A-Civil “to take the benefit of the ‘lets get going and work it out later’ regime (that is, the absence of a fixed lump sum price (risk)) but then seek to avoid the burden of a subsequent review and adjustment process as Lipman has had to endure upstream” (at [2.7]); and

146. the Adjudicator should reject A-Civil’s contention that the “payment on account” provision in clause 2(d) can only refer to the quality of work, because Lipman’s interpretation was “more in line with an interpretation most industry participants would arrive at” (at [2.8]-[2.12]).

147. In addition, Lipman responded to the submissions advanced by A-Civil in respect of each of the Miscellaneous Issues: see paragraphs [7.1]-[7.5] (Wet hire charges), [8.1]-[8.5] (8 Wheeler Hire), [10.1]-[10.6] (OZ Mist Discrepancy), [12.1]-[12.6] (Off-Site General Manager), [13.1]-[13.5] (On-Site General Manager), and [14.1]-[14.5] (On-Site Construction Manager).

Findings in Determination

144. The Adjudicator determined that Lipman was not entitled to “claw back” any amount in respect of previous payment claims that had been approved and paid by Lipman.

145. First, the Adjudicator found that Lipman could not pass on to A-Civil any markdowns imposed by the NSW Government on Lipman, and thereby revoke Lipman’s “previous acceptance of [A-Civil’s] tendered performance”. The Adjudicator observed that the Act “does not allow or otherwise prohibits [Lipman] from making downstream claims and has no mechanism for enforcement of a determination in which an adjudicator determines a negative amount or that the claimant owes the respondent an amount of money” (Determination, [113]-[117]).

146. Secondly, the Adjudicator accepted A-Civil’s submissions regarding the proper interpretation of clause 2 of the Subcontract. The Adjudicator found that clause 2(d) relates to the quality of the work performed by A-Civil, and “has nothing to do with [A-Civil’s] perfection of rights under clause 2(b) and [(c)] of the subcontract entitling [A-Civil] to payment” (Determination, [144]). It followed that the “payment on account immunity asserted by [Lipman] does not operate at all here in this payment dispute” (Determination, [158]).

147. Thirdly, the Adjudicator found that the day dockets which were issued by A-Civil under clause 2(b), and signed by Lipman, amounted to a “written acknowledgment made by an authorised person of [Lipman]” which “accepted [A-Civil’s] tendered performance and did so without protest or with the reservation of any rights being made by [Lipman]” (Determination, [160]).

148. Fourthly, the Adjudicator stated that the “day dockets represent the maximum amount [A-Civil] could claim as they are factual confirmation of the work that was done”, but they do not represent that the work was done in accordance with the contractual terms (Determination, [165]), adding that:

“It is when [A-Civil] issues a payment claim that [Lipman] assesses what has been done in relation to the terms of the [Subcontract]. If [Lipman] disputes any element of what has been claimed, that is reflected in the payment schedule. It is then open to the parties to negotiate any disputed amounts.”

149. In respect of this issue, the Adjudicator found (Determination [382]) that a review of the payment schedules issued by Lipman shows that Lipman did not reserve any rights under clause 2(b) or clause 2(c) of the Contract.

150. Fifthly, the Adjudicator found that the RCTIs issued by Lipman in accordance with clause 2(e) of the Subcontract represented “final acceptance” by Lipman (Determination, [170]). (I will return to this finding when addressing ground 4 below).

151. In the section of the Determination dealing with the topic of “Payments Made” by Lipman under subclause 2 of the Subcontract (paragraphs [322]-[429]), the Adjudicator concluded as follows:

“427. For the reasons outlined and discussed in the preceding paragraphs, I am unable to agree with [Lipman]’s suggestion that the payment on account provision (clause 2(d)) operates and has effect as proposed.

428. The evidence before me shows that [A-Civil] perfected all rights of entitlement under clause 2(b) of the subcontract. This perfected right under clause 2(b) of the subcontract entitled [A-Civil] to payment and obligated [Lipman] under clause 2(c) to make payment, which occurred.

429. As outlined and discussed in the preceding paragraphs, [Lipman] did not protest payment and, for this reason, perfected no rights under clause 2 subclauses (c) and (d) of the subcontract. The failure to register a timely protest when making payment under clause 2(c) of the subcontract means that [Lipman] has not established any of the requirements to show that it can justifiably revoke the previous acceptance (payment schedule) and payment (RCTI) as being suggested or at all.”

152. In short, the Adjudicator determined that, in the absence of any protest by Lipman at the relevant time, A-Civil’s entitlement to payment in respect of items claimed in earlier payment claims had been “perfected”, such that Lipman had no entitlement to revoke any such acceptance or to claw back any amount previously paid.

Is ground 3 established?

153. Having regard to the matters set out above, I accept A-Civil’s submission that the likely reason why the Adjudicator stated at paragraphs [498]-[500] that there was no need for any “further explanation” in respect of the Miscellaneous Issues which had “been discussed previously”, was that the Adjudicator understood that he had dealt with Lipman’s contentions in respect of all of the Miscellaneous Issues by the findings he had made in rejecting Lipman’s “claw back” claim.

154. In short, the Adjudicator rejected Lipman’s contention that an amount of $9m was owed by A-Civil to Lipman, such that no amount should be allowed in respect of payment claims numbered 17-19. The Adjudicator allowed, in his Determination, the full amount of each of payment claims numbered 17-19 (which are, in paragraph [630] of the Determination, referred to as payment claims 16-18, being the sixteenth to eighteenth payment claims issued by A-Civil).

155. Lipman contended that, even if the Adjudicator’s rejection of the “claw back” claim explains why the Adjudicator did not refer to any “particular points” made by Lipman in respect of the Miscellaneous Issues, there was a jurisdictional error because:

156. there was a substantial denial of procedural fairness in respect of the Adjudicator’s determination of the “claw back” issue (which is the subject of ground 4, considered below); and

157. further, there was no consideration by the Adjudicator of Lipman’s contention that, by reason of the submissions which it advanced in respect of the Miscellaneous Issues, there should be a reduction in the amount allowed in respect of each of payment claims numbered 17-19.

158. I am not satisfied that the proper inference in the circumstances is that there was a failure to consider Lipman’s submissions in respect of the Miscellaneous Issues, having regard to the following matters.

159. Senior Counsel for Lipman accepted, in oral address, that there was nothing in the Payment Schedule which alerted the Adjudicator to the fact that Lipman was advancing submissions in relation to the Miscellaneous Issues both:

160. for the purpose of supporting a claim that A-Civil owed moneys to Lipman (and therefore a nil amount should be determined in respect of the Payment Claim); and

161. if the argument in subparagraph (1) was rejected, for the purpose of supporting a reduction in the amount awarded in respect of those payment claims (numbered 17-19) which had not been previously approved.

162. In considering Lipman’s claim that adjustments should be made to the previous payment claims (including by reason of the Miscellaneous Issues), the Adjudicator plainly regarded the evidence of the day dockets as a significant matter.

163. According to the Adjudication Application (at [6.3]-[6.4]), those day dockets were provided with each of the payment claims (including, relevantly, payment claims numbered 17-19), and set out the following matters for each day: the address at which the works were carried out; an outline of the works carried out; “the type of labour supplied and the number of hours that they were supplied (for example, 1 x Project Manager for 10 hours)”; and “the type and quantity of machinery and equipment supplied and the number of hours that they were supplied”.

164. A-Civil relied on these day dockets in its submissions in response to the Miscellaneous Issues raised by Lipman. For example, A-Civil submitted as follows in response to the “Wet hire charges” issue (Adjudication Application, [13.3]):

“The use of the plant and equipment was recorded in day dockets that were signed by Lipman’s representatives. At no time did Lipman raise an issue regarding the manner in which the plant and equipment was being used.”

161. In the Determination (at [160]-[161]), the Adjudicator noted that:

162. these documents were Lipman’s “proforma day dockets, not [A-Civil’s]”;

163. they were signed by Lipman’s authorised representative;

164. there was “nothing stated by the authorised person for [Lipman] signing the docket to show that this authorised person conditioned or qualified [Lipman’s] acceptance”; and

165. “this written acknowledgement made by an authorised person of [Lipman] accepted [A-Civil’s] tendered performance and did so without protest or with the reservation of any rights being made by [Lipman] under the subcontract”.

166. The Adjudicator was plainly aware of the “particular points” made by Lipman in respect of the Miscellaneous Issues, since he referred to them in his Determination at [498]-[500].

167. It is unlikely that the Adjudicator failed to consider those submissions, as this would be inconsistent both with the Adjudicator’s acknowledgement that those submissions had been made by Lipman, and with his statements at paragraphs [498]-[500] of the Determination to the effect that he regarded those matters as sufficiently addressed by his previous findings.

168. The more likely inference is the Adjudicator considered that it was unnecessary to consider the “particular points” made in respect of the Miscellaneous Issues – including disputes about the lack of approval for certain equipment or personnel, the hours worked, the applicable rates, or the lack of particulars – having regard to his finding that Lipman had, by signing the day dockets tendered by A-Civil, “accepted [A-Civil’s] tendered performance and did so without protest or with the reservation of any rights being made by [Lipman] under the subcontract” (Determination, [160]).

169. This inference is supported by footnote 20 which is added to the reference to the “8 Wheeler Hire” in paragraph [500] of the Determination (which is set out at paragraph [117] above). In this footnote, the Adjudicator refers to the fact that “the use of the plant and equipment was recorded in day dockets signed by an authorised person of [Lipman]”. The Adjudicator plainly had in mind his previous findings regarding the significance of the day dockets and of their acceptance by Lipman.

170. It is also apparent from the text of this footnote that the Adjudicator did consider Lipman’s submissions in respect of the 8 Wheeler Hire, including Lipman’s submission that A-Civil has charged “wet hire rates”, when “it should have charged … at standdown rates only” (Payment Schedule, [5.30]-[5.31]). In the footnote, the Adjudicator stated that: “in the approved schedule of rates mutually agreed by the parties, there is no stand down rate for the 8 wheeler hire”.

171. For those reasons, I am not satisfied that the Adjudicator failed to consider Lipman’s submissions in respect of the Miscellaneous Issues, and thereby failed to comply with s 22(2) of the Act. It follows that ground 3 has not been established.

Ground 4: Denial of Natural Justice

168. The fourth ground pleaded by Lipman is that the Adjudicator “denied natural justice” and thereby committed jurisdictional error (Amended List Statement, [43]-[45]). The particulars of this pleading are as follows:

“The conclusions at Determination 167-170 were conclusions not sought by either party, were not fairly in play and were not obviously … open on the known material. The parties were denied a reasonable opportunity of being heard on those conclusions”.

169. The relevant passage of the Determination reads as follows:

“167. The note on the top left corner of each payment schedule issued by [Lipman] provides the following cautionary statement:

Payment Schedule

The following Payment Schedule has been created by Lipman Pty Ltd

PLEASE NOTE: This Payment Schedule does not constitute an invoice approval. A tax invoice is required to be provided separately, together with any outstanding documentation required in support of your Payment Schedule, for approval and payment in accordance with the terms of the contract.

168. According to the note as presented above, it is the issuing of tax invoices by [Lipman] that marks the point at which the claimed and paid amount is deemed accepted. This note on the payment schedule provides further clarity on the phrase ‘on account’ in the subcontract.

169. While the contractual phrase ‘on account’ could suggest that any payment made is open to review indefinitely up to the point of termination, the inclusion of the note on the payment schedule represents a right reserved by [Lipman] to query any amount, paid or claimed, only until the point at which the tax invoice is issued.

170. I find that the issuance of the RCTI by [Lipman] in accordance with clause 2(e) of the subcontract represents final acceptance by [Lipman].”

Relevant Principles

170. An adjudicator must afford parties procedural fairness and in doing so must not decide an application on a basis not raised by the parties, and which could not reasonably have been anticipated by the parties, without first inviting submissions on that basis: AM Darlinghurst Investment at [25] (Ball J).

171. There will be jurisdictional error under the Act “only if there has been a substantial denial of procedural fairness by an adjudicator in determining an adjudication application”: Demex Pty Ltd v McNab Building Services Pty Ltd (2023) 113 NSWLR 282; [2023] NSWCA 261 at [32] per Kirk JA (Mitchelmore and Adamson JJA agreeing). His Honour observed that:

“What this means in practice will turn on the particular circumstances of cases. But generally a conclusion of invalidity would only be reached if there was a significant departure from what would ordinarily be the requirements of procedural fairness for a person exercising a statutory power, and where that departure could be characterised as leading to substantial practical injustice in all the circumstances. This approach reflects the fact that the Act provides for a ‘rough and ready’ process (Chase Oyster Bar at [208]), not intended readily to be held invalid on judicial review.”

172. Further, his Honour cautioned that “to accept too readily that an adjudicator’s reasoning process goes beyond what was reasonably regarded as in play is to encourage litigation seeking to identify such errors, at the cost of the quick, interim decision-making that the Act seeks to achieve” (Demex at [98]).

173. In order for an adjudication to be set aside for a substantial departure from the standard of procedural fairness, it must be established that this departure was material. In Demex at [34], Kirk JA observed that (citations omitted):

“…there is a difference between considering whether there has been a departure (substantial or otherwise) from the standard of procedural fairness required and whether or not any such departure is material in the sense recently emphasised by the High Court. Whilst both involve issues of relative significance, which may overlap, conceptually the former looks to whether or not there has been a departure from the type of fairness that the Act requires. The latter involves asking a (hypothetical) factual question, looking to what would have occurred but for that departure in the sense of asking whether it deprived the challenger of a realistic possibility of a different outcome …”

174. For example, where an adjudicator was not required to address an issue in order to resolve the dispute, going further than required to confirm the position created no realistic possibility of a different outcome: Demex at [97].

Parties’ contentions

175. Lipman submitted that the Adjudicator had substantially departed from the standard of procedural fairness, and that this was material, for the following reasons:

176. the gist of the Adjudicator’s reasoning at paragraphs [167]-[170] of the Determination was that if a RCTI was issued following a payment schedule, then Lipman should be taken to have “finally accepted” the works the subject of the invoice, such that Lipman could not thereafter contend that payment was on account and liable to be revisited;

177. this reasoning “came out of the blue”, with no submission to that effect having been advanced by A-Civil or Lipman;

178. no reasonable person in Lipman’s position would have foreseen that the Adjudicator would take such an approach, particularly since it was “plainly wrong to suggest that the issuing of an invoice following the scheduling of an on account interim payment has the effect that, despite the reservation of right in the payment schedule, the claim is nevertheless finally accepted and cannot be revisited”;

179. if (as I have found) the Adjudicator determined, in respect of the Miscellaneous Issues, that Lipman had no entitlement to “claw back” any amount in respect of payment claims which had already been scheduled and paid, then the reasoning at paragraphs [166]-[170] in respect of the RCTIs was material to this conclusion; and

180. the Adjudicator made repeated references to the significance of the RCTIs in subsequent parts of his Determination, in particular, at paragraphs [365], [376]-[377], [384], [390]-[395], [401], [429], [448] and [472]. (It should be noted that there was no submission that Lipman was denied procedural fairness in respect of the findings made in any paragraphs other than paragraphs [167]-[170], and that reference was made to these further paragraphs solely for the purpose of establishing the materiality of the findings made in paragraphs [167]-[170]).

181. In oral address, Senior Counsel for A-Civil accepted that his client did not advance any submission to the effect of the findings made at [167]-[170], but submitted that there was no substantial and material denial of natural justice in the circumstances of this case (emphasis added below):

“[SENIOR COUNSEL FOR A-CIVIL]: What then appears at [paragraphs] 166 to 170 is, in our submission, merely additional, extraneous, quite frankly unnecessary, because the adjudicator had already disposed of the issue by reference to his contractual construction of those particular provisions under cl 2.

Now, when we come to the particular submissions concerning each of the grounds, we rely upon the observations of Kirk J in a case called Demex v McNab, where he deals with this very point. We say that there was no denial of natural justice at all, simply because the adjudicator, perhaps unnecessarily, added material or added commentary which the parties had not sought or addressed, because in the circumstances he had already decided the point. He didn't need to go there, to use a phrase that has common currency.

HIS HONOUR: Just to be clear, I think in saying that, you accept that this was a submission that you did not address?

[SENIOR COUNSEL FOR A-CIVIL]: I can't claim that we said anything about tax invoices in any of the material. What we say simply is that it, on its face, might look an issue, but when one [sic] actually [has] regard to what he dealt with and how he dealt with it, and the fact that he concluded, prior to any reference to the machinery around tax invoices or anything else ‑ had decided that the only circumstance in which moneys could be recovered, having regard to the provisions of cl 2(d) of the subcontract, was if it was then said that that work was somehow defective or inadequate. That was the issue that was joined, and that was the issue that was presented. That was the issue that was argued, and that was the issue that was decided.

What he then went on to do and to talk about, well, there are tax invoices which have notations on them, et cetera, et cetera. I have to concede no‑one made comment about, but we would say it's really an unnecessary and a distracting passage that certainly you would not conclude, on the authorities, gives rise to any form of natural justice, because the issue had already been determined. It had already been decided, and it had been decided on the matter of contractual construction that the parties had their contest about.”

Is ground 4 established?

177. In paragraph [170] of the Determination, the Adjudicator made a finding that “the issuance of the RCTI by [Lipman] in accordance with clause 2(e) of the [Contract] represents final acceptance by [Lipman]”. That was not a finding which was sought by A-Civil, and Lipman did not have any opportunity to make submissions in respect of that particular finding.

178. However, I am not satisfied that, in the circumstances of this case, any such departure from the standards of procedural fairness was substantial or material, having regard to the “rough and ready” process for which the Act provides, the submissions made by the parties, and the Determination as a whole.

179. In the adjudication, the parties advanced competing constructions of clause 2 of the Subcontract (of which clause 2(e) is a part). In particular, Lipman placed reliance, in the Payment Schedule, on clause 2 in asserting its entitlement to adjust various amounts which A-Civil had claimed in prior payment claims, and which Lipman had paid, in respect of the Miscellaneous Issues.

180. A-Civil addressed Lipman’s “claw back” claim in Section 6 of the Adjudication Application (headed “Previous Payment Claims and Payment Schedules”). In that section, A-Civil made a number of submissions regarding the proper interpretation and application of clause 2 of the Subcontract.

181. This section of the Adjudication Application commenced with the following paragraph, which referred to the RCTIs issued by Lipman:

“[6.1] Between February 2023 and April / May 2024:

(a) A-Civil issued 15 payment claims to Lipman in respect of the Works;

(b) Lipman issued payment schedules and RCTIs to A-Civil in respect of the payment claims; and

(c) Lipman made payments to A-Civil in accordance with the RCTIs.”

182. A-Civil attached copies of the previous payment claims, payment schedules and RCTIs at tab 50 to the Adjudication Application. The Adjudicator confirmed in the Determination that he had reviewed these documents, in considering the dispute outlined above. For example, he stated as follows at paragraph [366]:

“This sequence of conduct concerns the previous transactions between the parties that started after [A-Civil’s] commencement of performance under the subcontract on 9 February 2023. I am satisfied, after carefully reviewing Tab 50 of the adjudication application, that these transactions are fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.”

183. Accordingly, the Adjudicator’s finding regarding the significance of the RCTIs for clause 2(e) of the Subcontract, while not the subject of any specific submissions, was made in a context where the Adjudicator was required to determine the proper construction of clause 2 and its application to the process which had been adopted by A-Civil and Lipman (including the issuing of RCTIs by Lipman), and was provided both with submissions regarding the course of conduct between the parties and with the relevant documents, including the RCTIs (which he reviewed).

184. As I have set out at paragraphs [144]-[153] above, the Adjudicator rejected Lipman’s assertion that it was entitled to “claw back” amounts which had been the subject of previous payment claims for a number of reasons. These included that:

185. Lipman did not have an entitlement to make “downstream” claims by reason of any markdowns imposed by the NSW Government or otherwise;

186. clause 2(d) of the Subcontract, upon which Lipman relied, relates only to the quality of work performed by A-Civil, and has nothing to do with the perfection of rights under clauses 2(b) and 2(c); and

187. A-Civil’s rights to payment under clauses 2(b) and 2(c) had been perfected in circumstances where:

(a) day dockets in respect of the works had been issued by A-Civil and signed by Lipman’s representative, without any reservation of rights; and (b) payment claims had been issued by A-Civil attaching these day dockets, in respect of which Lipman issued payment schedules without any reservation of rights.

185. In addition, the Adjudicator found that the issuing of the RCTIs by Lipman constituted “final acceptance” by Lipman of the claimed and paid amount (Determination, [170]).

186. The question of whether an RCTI issued under clause 2(e) of the Subcontract was “deemed” to constitute a “final” acceptance by Lipman was not a question which the Adjudicator was required to address in order to resolve the dispute between the parties regarding Lipman’s entitlement to “claw back” any amount from A-Civil, and the Adjudicator’s determination of this dispute was not dependent on his finding on this question.

187. This dispute was, in substance, determined by the Adjudicator’s rejection of Lipman’s contention that the effect of clause 2(d) of the Subcontract was that all payments made were “on account”, and by the Adjudicator’s finding that there had been no protest or reservation of rights by Lipman when it signed the day dockets on which the payment claims were based, or when Lipman provided its assessment of the payment claims in the payment schedules.

188. In paragraphs [427]-[429] of the Determination (quoted in paragraph [151] above), the Adjudicator summarised his conclusions in respect of this dispute. His key findings were that he did not accept Lipman’s interpretation of clause 2 of the Subcontract; that A-Civil’s entitlement to payment in respect of previous payment claims was “perfected” under that clause when Lipman issued the corresponding payment schedules which amounted to “acceptance” of the claim made; that Lipman was thereby “obligated … to make payment”; and that Lipman could not now revoke its acceptance (the payment schedules) or the payment made in accordance with the RCTIs issued consequent upon the payment schedules.

189. The various other paragraphs of the Determination on which Lipman relied (see paragraph [175] above) do not establish that the finding in paragraph [170] was key to the Adjudicator’s reasoning.

190. Paragraph [365] records that Lipman provided A-Civil “with a payment schedule on 28 February 2023 and made a payment to [A-Civil] in accordance with the payment schedule under a RCTI issued by [Lipman]”. The Adjudicator described these actions by Lipman as actions taken under clause 2(a) of the Subcontract which required Lipman to “assess” the payment claims made by A-Civil. It appears that, from the Adjudicator’s perspective, the key document setting out Lipman’s assessment of A-Civil’s claims was the payment schedule, with the payment subsequently being made under the RCTI being a payment “in accordance with the payment schedule”.

191. In paragraphs [376]-[377], the Adjudicator stated that, “in issuing payment schedules and RCTIs”, Lipman made an assessment of A-Civil’s payment claims in accordance with clause 2(a) of the Subcontract. However, the Adjudicator again identified the issuing of an RCTI as an administrative step taken in order to effect payment of the amount which has been assessed in the payment schedule, stating that: “The tax invoices issued by [Lipman], also known as Recipient Created Tax Invoices, are issued under the payment schedule and are the only documents under which [Lipman] makes payment under the [Contract]”.

192. In paragraphs [381]-[384], the Adjudicator found that Lipman did not reserve any rights under clause 2(b) or 2(c) of the Subcontract when issuing the payment schedules and, in addition (“moreover”), did not state that any rights were reserved when making a payment under the corresponding RCTIs. The Adjudicator placed reliance on the absence of any indication in the payment schedules or the RCTIs that Lipman “intend[ed] to preserve its right to maintain the contractual assessment process under clause 2(a) of the subcontract by protesting the entitlement created by [A-Civil] under clause 2 subclauses (b) and (c) of the subcontract”. This reasoning did not involve, or depend on, any finding that the RCTI issued under clause 2(e) was “deemed” to be a “final” acceptance.

193. Paragraphs [390]-[395] repeat the Adjudicator’s view that each of the RCTIs indicated that Lipman had made an assessment and had approved the amount set out in the corresponding payment schedule. These paragraphs otherwise refer to the tax implications of the RCTIs.

194. Paragraph [401] repeats that, in “providing the payment schedules to [Lipman]” and in issuing RCTIs “thereunder”, Lipman set out its “assessment” of A-Civil’s payment claims.

195. Paragraph [448] refers to the information available to Lipman “before issuing the payment schedule and the resulting RCTI leading to payment by [Lipman]”. This again characterises the RCTI as a document which is consequent upon the payment schedule in which Lipman sets out its response to the payment claim. Likewise, paragraph [472] refers to Lipman “issuing the payment schedules and the resulting RCTIs” as “the contractual mechanism for payment by [Lipman] under clause 2(c) of the subcontract”.

196. Having regard to those paragraphs, and the Determination as a whole, it is apparent that the Adjudicator regarded the payment schedules as the documents which set out Lipman’s substantive assessment of the corresponding payment claims, with the “resulting” RCTIs which were issued “under” those payment schedules being a necessary administrative step in order for payment to be made to A-Civil in accordance with the assessment made in the payment schedules. The Adjudicator regarded the absence of protest in either the payment schedules or the “resulting” RCTIs as establishing that A-Civil’s claim had been accepted and its right to payment had been perfected. This reasoning was not reliant on any finding at paragraphs [167]-[170] to the effect that the RCTI was “deemed” under the Subcontract to constitute a “final” acceptance.

197. For those reasons, I am not satisfied that there was any substantial and material denial of natural justice. It follows that the fourth ground has not been established.

Ground 5: Legal Unreasonableness

192. The fifth ground pleaded by Lipman is that the Adjudicator “infringed the principles of legal unreasonableness in determining the Crusher Hire Costs claim” (Amended List Statement, [46]).

Relevant Principles

193. In Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49 at [79]-[80], Payne JA (with whom Gleeson JA and Griffiths AJA agreed) observed that:

194. considerable care is warranted in addressing a complaint of judicial review on the ground of legal unreasonableness, lest the review for jurisdictional error slide impermissibly into merits review;

195. there is usually a high threshold for a conclusion that a power has been unreasonably exercised as a matter of law; and

196. these principles of judicial restraint in finding jurisdictional error on the basis of legal unreasonableness apply even more stringently in addressing an adjudicator’s decision made under the Act.

197. In Pinnacle Construction Group Pty Ltd v Dimension Joinery & Interiors Pty Ltd [2018] NSWSC 894 at [90], Stevenson J observed that “it would require a most extraordinary case for a court to find an adjudicator’s decision to be unlawful because it is irrational or fails to disclose a logical connection between the findings made and the evidence”.

198. Situations in which a decision may be found to be legally unreasonable include:

199. if it is not “open to the [decision-maker] to engage in the process of reasoning in which it did engage and to make the findings it did on the material before it”: Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16 at [133] per Crennan and Bell JJ;

200. “if it is shown ‘to be arbitrary or capricious or to abandon common sense’, or if it ‘lacks an evident and intelligible justification”: King v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] FCAFC 152 at [54] (Anderson, Feutrill and Raper JJ);

201. if there is no “logical pathway” from the material before a decision-maker to the conclusion reached: Ayoub v Minister for Immigration and Border Protection [2015] FCAFC 83 at [52] (Flick, Griffiths and Perry JJ); or

202. if the decision-maker gives weight to a consideration to which no weight ought reasonably have been given: Plaintiff M19A-2024 v Minister for Immigration and Multicultural Affairs [2025] HCA 17 at [2]-[3], [10]-[11] (Gageler CJ, Steward, Gleeson, Jagot and Beech-Jones JJ).

Is ground 5 established?

196. In its written submissions, Lipman contended that the legal unreasonableness in this case “arises in multiple ways”, namely:

“(a) There was no evident intelligible justification for the conclusion that Lipman was obliged to pay A-Civil under the Eugowra Contract for costs incurred in crushing Cowra Hospital waste. There was no logical pathway to such a conclusion.

(b) The conclusion that Lipman was obliged to pay A-Civil for all alleged costs incurred in respect of crushing at Cowra Tip, including cost of crushing Cowra Hospital material, was a conclusion to which no reasonable decision-maker could have come. There is no rational commercial world in which the payment bargain between Lipman and A-Civil under the Eugowra Contract would be that Lipman should pay the cost incurred by A-Civil in discharging its lump sum scope under a distinct contract for a distinct project. The Adjudicator’s conclusion abandons common sense.

(c) It was not open to conclude that there was a ‘cost benefit’ to Lipman: cf [184]. There was no logical pathway allowing that conclusion to be reached, absent identification and pricing of a counterfactual.”

197. These contentions depended on a number of anterior propositions.

198. First, Lipman submitted that the Payment Claim identified the claim as being for “Crusher Hire Cost at Cowra Tip to Process Eugowra Waste”, and the claim “was thus put as a claim for costs ‘to Process Eugowra Waste’, not a claim to crush other waste” (emphasis added). I have already considered, and rejected, a similar submission at paragraphs [82]-[95] above. In any event, it was a matter for the Adjudicator to determine the scope of the Payment Claim and the Payment Schedule, including the scope and content of the dispute between the parties (Martin**us at [80]).

199. Secondly, Lipman referred to Mr Matta’s evidence that the arrangement which was negotiated with Cowra Council was an “arrangement in respect of the waste disposal for both the Project and another Project that A-Civil was working on for Lipman at the time (being the Cowra Hospital)”, and submitted that “there was no rational or reasonable conclusion” from this evidence that A-Civil entered into the Crusher arrangement “for the sole purpose of discharging its scope of the [Subcontract]” (emphasis added), as distinct from “the mixed purpose of discharging its scope of the [Subcontract] and its scope in respect of the Cowra Hospital project”.

200. Lipman did not identify any paragraph of the Determination in which the Adjudicator had made a finding that the arrangement was entered for the “sole purpose” of crushing Eugowra waste.

201. A-Civil did not make any submission to the Adjudicator, based on Mr Matta’s evidence, to the effect that the Crusher arrangement was entered for this “sole purpose”.

202. Instead, A-Civil relied on Mr Matta’s evidence as establishing that the Crusher works “were part of the Works [under the Subcontract] given that they were done in connection with demolition and remediation works” (see Adjudication Application, paragraph [25.8], which is quoted in paragraph [66] above). Similarly, in the further submissions made by A-Civil on 6 May 2025 on the “jurisdictional issue”, A-Civil submitted that the Crusher works “were necessary for the proper execution and completion of the demolition and associated works, particularly given that the waste and asbestos generated or removed from various sites in the Project needed to be transported to a waste management tipping facility”. The Adjudicator accepted these submissions and determined that the Crusher Claim represented a claim for “equipment and work used by [A-Civil] in pursuit of its contractual obligation to dispose of all demolition material in a safe and compliant manner” (Determination, [187]).

203. Thirdly, Lipman submitted that it was “commercially absurd” for the Adjudicator to find that Lipman was obliged, under the Subcontract, to pay costs incurred by A-Civil in discharging its obligations under “a distinct lump sum contract for a distinct project” (namely, the Cowra Hospital Project). Lipman submitted there was no rational or reasonable interpretation of the Subcontract which would support this outcome.

204. This submission depends on two propositions, namely:

205. the costs of crushing and disposing of waste from the Cowra Hospital Project at the Cowra Tip were included in the scope of works for the Cowra Hospital Project; and

206. the Adjudicator was informed that this was the case.

207. Neither proposition is established on the evidence. In its written submissions in respect of ground 5, A-Civil noted that:

208. the contract for the Cowra Hospital Project was not before the Adjudicator (and therefore the actual scope of works or “lump sum” price of that contract was not before the Adjudicator);

209. Mr Matta did not state, in his Statutory Declaration, that the disposal of waste from the Cowra Hospital Project was within the scope of work for that project, but only that there was a need for waste disposal in respect of the Cowra Hospital Project; and

210. although A-Civil’s tender for the Cowra Hospital Project was before the Adjudicator, it did not describe any part of the works or identify any allowance for the crushing or disposal of waste. The tender did state that crushing works to “produce product” for “use for the next stage of the [Cowra Hospital Project]”, such as “Compound Areas, parking, access ways, etc”, were “INCLUDED”. Plainly, any material crushed for this purpose would be retained at the site, rather than disposed of at any waste facility.

211. Lipman did not, in its written submissions in reply on ground 5, dispute any of the matters set out in the previous paragraph.

212. Instead, the focus of Lipman’s submissions was that it was legally unreasonable for the Adjudicator to conclude that the Crusher arrangement with the Cowra Tip led to “great savings benefits” for Lipman, without identifying what the approximate costs would otherwise have been. In particular, Lipman submitted as follows:

“The term ‘cost saving’ is a mere conclusion. In theory, in any given case there may or may not be a cost saving – one needs to know what the alternative costs (i.e. the counterfactual cost) is in order to conclude whether or not there is a cost saving. The Adjudicator did not undertake that fundamentally important task.

… The Adjudicator did not conclude what the approximate alternative cost (i.e. the counterfactual cost) would have been, and thus did not conclude that such alternative cost (i.e. the counterfactual cost) would have been more expensive than the actual cost including the $4.183 million claimed by A-Civil [in respect of the Crusher Claim]. Absent a finding on what the approximate alternative cost (i.e. the counterfactual cost) would have been, it was logically impossible and legally unreasonable for the Adjudicator to have concluded that there had been a ‘cost saving’.

… Put simply, it is legally unreasonable to conclude that a party is better off or worse off, by comparison to a counterfactual, without concluding what the relevant approximate amount would have been on the counterfactual.”

208. I do not accept this submission.

209. First, as a general matter, I do not accept that it is necessary to make a finding regarding the approximate cost of each of two alternative options, in order to conclude that one option would be significantly more expensive than the other. Judges in this Court regularly determine that one case management option would better promote the cost effective resolution of the proceedings than another, without having first made any finding regarding the approximate cost of each option.

210. Secondly, the likely reason that the Adjudicator did not determine the “approximate cost” of the counterfactual was that he formed the view that it was a practically impossible method of performance. In particular, the Adjudicator stated as follows in paragraph [182] of the Determination (emphasis added):

“The suggestion that the Canberra tip was a very real possibility does not stack up with me and, in my opinion, was nothing more than an abstract and generalised way of expressing a highly uncertain, if not impossible, method of performance that would be riddled with performance problems if such a task had been undertaken under Schedule 2 of the Contract.”

211. Similarly, the Adjudicator stated as follows in paragraph [187] of the Determination (emphasis added):

“The transport costs, the tipping fee, and the time cost factor and delays and extra work required are factors that would make the Canberra tip impossible as an expected method of performance under Schedule 2.”

212. Given those findings, there was no logical requirement for the Adjudicator to price this practically impossible option before reaching the view that the arrangement at the Cowra Tip achieved significant benefits for Lipman.

213. Insofar as the Adjudicator drew on his own experience and expertise in forming his opinion that the Canberra alternative was practically “impossible”, he was entitled to do so. In Demex at [23]-[24], Kirk JA made the following observations:

“… the nature of the decision-maker is relevant. Section 18 of the Act addresses the eligibility of adjudicators, indicating they should have ‘such qualifications, expertise and experience as may be prescribed by the regulations for the purposes of this section’. The provision does not require that they be lawyers. The reference to ‘expertise and experience’ contemplates that eligibility may be set by reference to adjudicators having practical industry experience and/or qualifications in disciplines relevant to building disputes. Illustrating that potentiality, cl 19 of the current Building and Construction Industry Security of Payment Regulation 2020 (NSW) makes just such provision.

Adjudicators may be expected to bring their experience and expertise to bear in making their determinations. That is the point of setting such eligibility requirements. Thus, for example, this Court has held that there is good reason for leaving determination of the scope and nature of the payment claim to the adjudicator, because ‘[t]he scope and nature of the payment claim will often be … open to be elucidated and evaluated with the benefit of the adjudicator’s specialised knowledge’: Downer Construction (Aust) Pty Ltd v Energy Australia (2007) 69 NSWLR 72; [2007] NSWCA 49 at [88] . This characteristic of the scheme is liable to mean that adjudicators may invoke reasons based upon their experience and expertise. That is not to suggest that there are no procedural fairness limits on them doing so. Rather, it illustrates that this is a decision-making process far removed from, say, the exercise of judicial power, and courts should be wary of restricting the use of such expertise and experience.”

214. Thirdly, the Adjudicator’s conclusion that the arrangement achieved benefits for Lipman, in terms of saving costs and time, was supported by the Statutory Declaration of Mr Matta, upon which the Adjudicator relied.

215. Lipman contends that it was legally unreasonable to accept Mr Matta’s “assertion” to this effect. However, this characterisation of Mr Matta’s evidence does not take account of the following matters with respect to his statutory declaration:

216. Mr Matta gave evidence that he had been “working in the demolition and earthworks industry for over 20 years”, including working on over twenty projects for Lipman, and that representatives from Lipman had indicated at a site meeting prior to the commencement of the Eugowra Project that they wanted Mr Matta “to help in overseeing and managing the works at the Project (both on-site and off-site) given [his] knowledge, experience and expertise”;

217. Mr Matta gave evidence of his role and responsibilities in respect of the Eugowra Project, including overseeing and supervising the works, allocating resources, coordinating site teams, and assisting in developing procedures and methodologies to ensure the works were done in a safe, controlled and efficient manner; and

218. Mr Matta explained the basis for his conclusion that there was a cost saving to Lipman in entering into the Cowra Tip arrangement:

“If the above agreement was not reached with the Cowra waste management/tipping facility, then the waste needed to be transported to the next closest facility (which was in Canberra and about a 3 hour drive away). This would have been a significant cost to Lipman and there would have been significant delays in the Project as there would have been significant resources allocated to transporting the waste to Canberra. Accordingly, the above agreement represented a significant cost saving to Lipman.”

216. I am not satisfied that, in circumstances where Mr Matta identified his experience and identified the basis of his opinion, it was legally unreasonable for the Adjudicator to take this opinion into account in reaching his conclusions in respect of the Crusher Claim (see, for example, Determination at [530]).

217. Finally, in concluding that there were significant benefits and savings for Lipman from A-Civil’s entry into the Cowra Tip arrangement, the Adjudicator took into account views to that effect expressed in contemporaneous documentary evidence (Determination, [528]):

“[A-Civil] says that it should be compensated, but [Lipman] unreasonably refuses to acknowledge and accept the variation even though [Lipman] has achieved great savings benefits as a result of the arrangement procured by [A-Civil] with the Cowra Tip. Adam Monaghan, a Public Works person on the ground, made it known to an authorised person of [Lipman] that he was pleased with the ‘outcome of Lipman’s Cowra hospital project negotiation with Cowra Council to achieve a win-win for both council and our waste disposal on both Cowra Hospital and PPP Eugowra projects’.”

218. Having regard to those matters, I reject Lipman’s submission that it was “logically impossible and legally unreasonable” for the Adjudicator to conclude that there were savings benefits for Lipman as a result of the Cowra Tip arrangement.

219. It follows that ground 5 has not been established.

Orders

220. For the reasons given above, Lipman has not established jurisdictional error in respect of the Adjudicator’s Determination.

221. Accordingly, I make the following orders:

222. Grant leave to file an Amended Technology and Construction List Statement in the form set out in pages 22-35 of the Court Book.

223. The Summons filed 2 June 2025 be dismissed.

224. The Plaintiff pay the First Defendant’s costs of the proceeding, as agreed or assessed.

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Amendments

07 August 2025

Correction to representation