Legislation
4The object of the Act is to ensure any person who undertakes non-residential construction (or related services) under a construction contract is entitled to receive and able to recover progress payments in relation to that work or those services: s 3 of the Act. The Act grants a statutory entitlement to progress payments, whether or not the contract contains a provision for progress payments.
5The Act applies to construction work (defined by s 5 of the Act) and there is no issue before the Court that the work for which payment was claimed is construction work within that meaning. The term "construction contract" is defined to mean "a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party". As a consequence of the inclusion of the term "other arrangement", the defined term "construction contract" seems to cover the undertaking of work of the relevant kind even where there is no contract for the work to be carried out.
6It is difficult to envisage a situation in which work would be carried out otherwise than under a contract of some kind to which the Act would otherwise apply. Nevertheless the term "other arrangement" must be given a meaning. Ordinarily, "arrangement" is a term that includes a contract but extends well beyond it. The term "arrangement" imports "a meeting of the minds of those said to be parties to the arrangement": Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 17; (2000) 169 ALR 344 per Sackville J at [75], in which the Court said:
"[75] An arrangement or understanding for the purposes of s 45(2) of the TP Act is apt to describe something less than a binding contract or agreement: Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 24 FLR 286 (Aust Ind Ct, FC), at 290-291, per Smithers J. However, in order for there to be an arrangement or understanding for the purposes of s 45(2), there must be a meeting of the minds of those said to be parties to the arrangement or understanding. There must be a consensus as to what is to be done and not merely a hope as to what might be done or happen: Trade Practices Commission v Email Ltd [1980] FCA 86; (1980) 43 FLR 383 (Lockhart J), at 385; Ira Berk at 291 per Smithers J. Ordinarily, an arrangement or understanding involves communication between the parties arousing expectations in each that the other will act in a particular way: Email, at 395. There is no necessity for an element of mutual commitment between the parties to an arrangement or understanding, although in practice such an arrangement or understanding would ordinarily involve reciprocity of obligation: Trade Practices Commission v Service Station Association Ltd [1993] FCA 405; (1993) 44 FCR 206 at 230-231, per Lockhart J."
7As earlier stated, the Act grants an entitlement to a progress payment to any person who has undertaken to carry out construction work under a construction contract: s 8 of the Act. The amount of the progress payment is to be calculated in accordance with the terms of the contract or, relevantly, if there be no express provision, an amount "calculated on the basis of the value of construction work carried out or undertaken to be carried out" by the person claiming the payment: s 9 of the Act.
8By operation of s 10 of the Act, construction work is to be valued either in accordance with the terms of the contract or, where there be no express provision, having regard to the contract price; any other rates or prices set out in the contract; any variation agreed to, or any other rate or price set out in the contract and the manner of its adjustment; and, the estimated or prescribed cost of rectifying work, were work to be found to be defective: s 10(1) of the Act.
9Section 13 of the Act permits a person who claims to be entitled to a payment to serve "a payment claim" on the person alleged to be liable to make the payment. The payment claim must identify the construction work to which the payment relates, indicate the amount of the progress payment claimed, and state that it is a payment claim under the Act. There are time limits for the serving of such a claim.
10A person from whom payment is claimed and on whom a payment claim is served may reply by providing "a payment schedule": s 14 of the Act. The provisions of s 14 of the Act require a payment schedule to identify the payment claim to which it relates and indicate the amount of the payment (if any) that the suggested respondent to the claim proposes to make.
11To the extent that the scheduled amount (being the amount proposed to be paid, if any, by the respondent) is less than the amount claimed, the respondent to the claim is required to indicate why the amount is less than that claimed. Failure to provide a payment schedule within the prescribed time renders the respondent liable to pay the amount claimed in the payment claim under s 13 of the Act: see s 14(4) of the Act. Such amount is recoverable as a debt due in any court of competent jurisdiction or, otherwise, may be sought by an "adjudication application" under the Act: see s 15 of the Act.
12Similarly, pursuant to the terms of s 16(2) of the Act, the claimant may recover any portion of the scheduled amount in any court of competent jurisdiction or make application for adjudication under s 17 of the Act: see s 16(2) of the Act. There are provisions limiting cross-claims under the described process.
13An adjudication application is dealt with by s 17 of the Act. It is in the following terms:
"17 Adjudication applications
(1) A claimant may apply for adjudication of a payment claim (an adjudication application) if:
(a) the respondent provides a payment schedule under Division 1 but:
(i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or
(ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or
(b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount.
(2) An adjudication application to which subsection (1) (b) applies cannot be made unless:
(a) the claimant has notified the respondent, within the period of 20 business days immediately following the due date for payment, of the claimant's intention to apply for adjudication of the payment claim, and
(b) the respondent has been given an opportunity to provide a payment schedule to the claimant within 5 business days after receiving the claimant's notice.
(3) An adjudication application:
(a) must be in writing, and
(b) must be made to an authorised nominating authority chosen by the claimant, and
(c) in the case of an application under subsection (1) (a) (i)-must be made within 10 business days after the claimant receives the payment schedule, and
(d) in the case of an application under subsection (1) (a) (ii)-must be made within 20 business days after the due date for payment, and
(e) in the case of an application under subsection (1) (b)-must be made within 10 business days after the end of the 5-day period referred to in subsection (2) (b), and
(f) must identify the payment claim and the payment schedule (if any) to which it relates, and
(g) must be accompanied by such application fee (if any) as may be determined by the authorised nominating authority, and
(h) may contain such submissions relevant to the application as the claimant chooses to include.
(4) The amount of any such application fee must not exceed the amount (if any) determined by the Minister.
(5) A copy of an adjudication application must be served on the respondent concerned.
(6) It is the duty of the authorised nominating authority to which an adjudication application is made to refer the application to an adjudicator (being a person who is eligible to be an adjudicator as referred to in section 18) as soon as practicable."
14Particularly relevant to the present proceedings before the Court are the provisions of ss 20, 21, 22 and 25 of the Act, which are in the following terms:
"20 Adjudication responses
(1) Subject to subsection (2A), the respondent may lodge with the adjudicator a response to the claimant's adjudication application (the adjudication response) at any time within:
(a) 5 business days after receiving a copy of the application, or
(b) 2 business days after receiving notice of an adjudicator's acceptance of the application,
whichever time expires later.
(2) The adjudication response:
(a) must be in writing, and
(b) must identify the adjudication application to which it relates, and
(c) may contain such submissions relevant to the response as the respondent chooses to include.
(2A) The respondent may lodge an adjudication response only if the respondent has provided a payment schedule to the claimant within the time specified in section 14 (4) or 17 (2) (b).
(2B) The respondent cannot include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule provided to the claimant.
(3) A copy of the adjudication response must be served on the claimant.
21 Adjudication procedures
(1) An adjudicator is not to determine an adjudication application until after the end of the period within which the respondent may lodge an adjudication response.
(2) An adjudicator is not to consider an adjudication response unless it was made before the end of the period within which the respondent may lodge such a response.
(3) Subject to subsections (1) and (2), an adjudicator is to determine an adjudication application as expeditiously as possible and, in any case:
(a) within 10 business days after the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the application, or
(b) within such further time as the claimant and the respondent may agree.
(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, and
(b) may set deadlines for further submissions and comments by the parties, and
(c) may call a conference of the parties, and
(d) may carry out an inspection of any matter to which the claim relates.
(4A) If any such conference is called, it is to be conducted informally and the parties are not entitled to any legal representation.
(5) The adjudicator's power to determine an adjudication application is not affected by the failure of either or both of the parties to make a submission or comment within time or to comply with the adjudicator's call for a conference of the parties.
22 Adjudicator's determination
(1) An adjudicator is to determine:
(a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount), and
(b) the date on which any such amount became or becomes payable, and
(c) the rate of interest payable on any such amount.
(2) In determining an adjudication application, the adjudicator is to consider the following matters only:
(a) the provisions of this Act,
(b) the provisions of the construction contract from which the application arose,
(c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim,
(d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule,
(e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates.
(3) The adjudicator's determination must:
(a) be in writing, and
(b) include the reasons for the determination (unless the claimant and the respondent have both requested the adjudicator not to include those reasons in the determination).
(4) If, in determining an adjudication application, an adjudicator has, in accordance with section 10, determined:
(a) the value of any construction work carried out under a construction contract, or
(b) the value of any related goods and services supplied under a construction contract,
the adjudicator (or any other adjudicator) is, in any subsequent adjudication application that involves the determination of the value of that work or of those goods and services, to give the work (or the goods and services) the same value as that previously determined unless the claimant or respondent satisfies the adjudicator concerned that the value of the work (or the goods and services) has changed since the previous determination.
(5) If the adjudicator's determination contains:
(a) a clerical mistake, or
(b) an error arising from an accidental slip or omission, or
(c) a material miscalculation of figures or a material mistake in the description of any person, thing or matter referred to in the determination, or
(d) a defect of form,
the adjudicator may, on the adjudicator's own initiative or on the application of the claimant or the respondent, correct the determination.
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25 Filing of adjudication certificate as judgment debt
(1) An adjudication certificate may be filed as a judgment for a debt in any court of competent jurisdiction and is enforceable accordingly.
(2) An adjudication certificate cannot be filed under this section unless it is accompanied by an affidavit by the claimant stating that the whole or any part of the adjudicated amount has not been paid at the time the certificate is filed.
(3) If the affidavit indicates that part of the adjudicated amount has been paid, the judgment is for the unpaid part of that amount only.
(4) If the respondent commences proceedings to have the judgment set aside, the respondent:
(a) is not, in those proceedings, entitled:
(i) to bring any cross-claim against the claimant, or
(ii) to raise any defence in relation to matters arising under the construction contract, or
(iii) to challenge the adjudicator's determination, and
(b) is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final determination of those proceedings."