Maxstra NSW Pty Ltd v Blacklabel Services Pty Ltd

of Australia [2013] HCA 5; (2013) 87 ALJR 410 Watpac Constructions v Austin Corp [2010] NSWSC 168 Category: Principal judgment Parties: Maxstra NSW Pty Ltd (Plaintiff) Blacklabel Services Pty Ltd (First Defendant) Doron Rivlin (Second Defendant) Adjudicate Today Pty Ltd (Third Defendant) Representation: Counsel: B DeBuse (Plaintiff) A Joseph (First Defendant) Submitting appearance (Second Defendant/Third Defendant) Solicitors: Moores Legal (Plaintiff) Priest McCarron Lawyers & Conveyancers (First Defendant) Submitting appearance (Second Defendant/Third Defendant) File Number(s): 2012/325777 Publication restriction: None

Judgment 1The defendant, Blacklabel Services Pty Ltd (hereinafter, "Blacklabel") undertook electrical work and electrical design work for the plaintiff, Maxstra NSW Pty Ltd (hereinafter, "Maxstra"). 2Blacklabel claimed payment for design work, which was not paid and for which adjudication was sought under the Building and Construction Industry Security of Payment Act 1999 (hereinafter "the Act"). 3The application for adjudication was made to Adjudicate Today Pty Ltd (the third defendant) who referred the matter to the Adjudicator, the second defendant, Doron Rivlin (hereinafter "the Adjudicator"). The Adjudicator determined, purportedly pursuant to s 22 of the Act, that Maxstra owed Blacklabel money. Maxstra challenges the Adjudicator's Determination (hereinafter "the Determination") in the Court. It seeks declaration that the Determination is void, orders in the nature of certiorari and orders, although otherwise described, in the nature of prohibition restraining reliance upon the Determination. Maxstra also seeks repayment of the amount already paid pursuant to the Determination.

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. ... 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."

Factual summary, claims and responses 15It is unnecessary for the Court to set out a number of facts, said, by the parties, to be "background". It is sufficient to summarise the background to the proceedings and the documentation that forms the basis of the Determination. 16Maxstra was the head contractor for the construction of the Kempsey Service Station. Construction commenced on 15 March 2012. Blacklabel was the electrical sub-contractor to Maxstra. The Adjudicator determined that a contract was entered into, being a contract that was amended by Blacklabel, and which contract dealt with the works therein described. The Court will return to the terms of the contract. 17Disputes arose between Maxstra and Blacklabel and the electrical work came to an end in late July 2012. 18On or about 8 August 2012, Blacklabel served on Maxstra a payment claim for the sum of $47,173.29, being a claim under the Act. 19On 20 August 2012, Maxstra issued a payment schedule in response certifying an amount payable to Blacklabel as nil. 20On or about 3 September 2012, Blacklabel made an adjudication application to the third defendant, Adjudicate Today Pty Ltd, which submits to any order of the Court, save as to an order for costs. 21On or about 6 September 2012, Adjudicate Today Pty Ltd appointed the Adjudicator, the second defendant, Mr Rivlin, who also submits to any order of the Court, save as to an order for costs. 22On 16 September 2012, following the requisite procedures under the Act, the Adjudicator ordered that Maxstra pay Blacklabel $47,173.29, plus adjudication fees and expenses. 23On 29 October 2012, pursuant to a garnishee notice dated 24 October 2012 from Port Macquarie Local Court, $52,854.35 was withdrawn from Maxstra's bank account (less fees), which has been held in trust by Blacklabel's solicitors. 24The disputed work relates to design work, as earlier stated, which the parties agree occurred prior to the execution of any written contract. There was, as earlier stated, a dispute before the Adjudicator as to the terms of the written contract. Maxstra sent a form of contract to Blacklabel, which document was amended and returned. 25The Adjudicator found, as a matter of fact, that the amended document was the document to which the parties had agreed. Nothing relevantly turns on the difference between the forms of the contract. 26As is clear from the terms of the Act recited above, the terms of the payment claim, payment schedule, adjudication application and adjudication response are matters that the Adjudicator must consider in determining the adjudication application: see s 22(2) of the Act above. It is necessary to extract some parts of those documents. 27Blacklabel claimed a progress payment on or about 8 May 2012, a second progress payment on or about 12 June 2012, a third progress payment on or about 30 June 2012 and a fourth progress payment on or about 14 July 2012. Until the claim for the fourth progress payment, there had been a consistent amount claimed as the project contract sum, being an amount of $73,644. 28In the fourth progress payment that amount was varied to credit for canopy lights by an amount of $9,100.84 bringing the "revised contract sum" to $64,543.16. To that was added variations (already paid) of $5,479.60, variations pending for claim number 3 of $7,370 and variations from claim number four of $4,123.30. 29As at 14 July 2012, the claim (being the fourth progress payment) was an amount of $25,371.91, plus the variation from claim number four and a 10 per cent mark up pursuant to the contract, bringing the total claim to $32,444.73. At that stage, payments of $23,774.15 had been received and a further $32,370 was pending from previous claims. 30On 8 August 2012, a final invoice was sent being an invoice for contract sum plus variations and design, minus equipment removed from the site, minus remaining work, being for a total of $47,173.29. The foregoing amount was comprised of the contract sum minus canopy lights ($65,453.16), variations ($17,799.60), bringing it to a sub-total of $83,252.76, to which GST was added, making a total contract sum of $91,578.04, of which $26,151.67 had been paid. To that amount was added the following work described in the following way: "Design work Compile information and re-design car wash DB Compile information and re-design shop DB Compile information and re-design main switchboard Compile information and re-design sub-mains for car wash distribution board Compile information and re-design sub-mains for shop distribution board Compile information and re-design consumer mains for service station Compile information, calculate maximum demand and submit application for connection Liaise with essential energy for infrastructure upgrade Prepare loading calculations and supply information to Essential Energy for infrastructure upgrade Set-up, prepare and submit application for CT metering and customer account Sub-Total Design work $13,754.00 Contract, Variations and design Sub-Total: $79,180.48"

31The foregoing design work, added to the sub-total for the contract value, gave a sub-total of $79,180.48 from which were deducted items for the CCTV, PA, remaining DB terminations, consumer main install and MSB connections, remaining light pole install, canopy light install, test and commission, minor work, main switchboard, pole lights, down lights and circuit breakers to shop DB, which reduction was in the order of $32,007.19, making the claim for an amount of $47,173.29 including GST. 32On 26 July 2012 Maxstra filed a payment schedule described as "Response to progress claim 4" asserting that nothing was owed. This was a response to the claim for $32,444.73, to which reference has already been made. On 20 August 2012, Maxstra served a payment schedule described as "Response to final progress claim (invoice 1578)". That invoice was the invoice summarised at length above. In relation to the claim of $47,173.29 Maxstra asserted that it owed nothing and expressed its reason for withholding payment or rejecting payment as: "Amount claimed exceeds value of works performed. Contractor is not entitled to claim for equipment removed from site by contractor on or about 21/7/12 Contractor caused damage to existing work during removal of fixed equipment Costs incurred in determining incomplete work due to manner in which work was performed (eg. power points fitted off but not connected) Extra over cost of completing work following termination of contract, the total amount required to complete the works upon termination of the contract exceeds the total amount claimed Delay damages due to Maxstra by reason of Blacklabel removing equipment due to subsequent lead times to replace." 33The payment claim, in the form of a tax invoice, of 8 August 2012 recited (as did the other progress payment claims) that the document was "a claim for payment under the [Act]" and the response, and each of them, recited that the "payment schedule is issued in response to payment claims issued under the [Act]". 34As earlier stated, on 30 August 2012, Blacklabel applied for adjudication under the Act and enclosed a submission in support of the adjudication application dated 31 August 2012. It should be pointed out that the final invoice of 8 August 2012 included rates for the various kinds of labour utilised. 35The submission in support of the adjudication application asserts that Blacklabel was required to "redesign the entire electrical system. As a result of the uncertainty and the need to re-design the project the parties had lengthy negotiations prior to executing the sub-contract ... Because of the uncertainty, when the contract was signed the parties agreed that the contract price would reflect the tender submitted by Blacklabel with any additions or alterations to be treated as variations for the purpose of the contract." 36The Adjudicator dealt with the matter in a background where Maxstra had not paid for certain prime cost items that were due, under the contract, within five working days, which included significant electrical equipment. Further, on 20 July 2012, Maxstra terminated the contract with Blacklabel at which point Blacklabel removed the main switchboard and lights from the project site. The electrical sub-contract did not specify a completion date or a construction timetable. 37It is, by way of comparison, instructive to compare Maxstra's Response to the final progress claim (invoice 1578) with the Response to progress claim 4. Relevantly the first two reasons for withholding payment or rejecting payment expressed by Maxstra in response to progress claim 4 were: "Claim exceeds total contract value including variations Value of works to be completed as of 14/7/12 exceeds the claimed value" 38Neither of those reasons was cited as the basis for non-payment or withholding payment in relation to the final invoice. It is relevant to note, particularly, that the response to the final progress claim did not suggest that the design work claimed, over and above the contract sum, was an amount included in the contract amount or that the claim exceeded the total value of the contract, including variations. Nor does it suggest that the itemised design work was not undertaken or performed. Further, the response does not suggest that Maxstra did not require the work to be done. 39Relevant to that which is in issue between the parties in these proceedings, the response to the final progress claim gave as a reason for withholding the payment or rejecting the payment claimed for design works only the reason that the amount claimed exceeds the value of the works performed. 40Nevertheless, in these proceedings, Maxstra raises two fundamental issues as the issues upon which it relied before the Adjudicator. The first, and primary, point was that the design work for which a claim was made was work contained within the contract and could not be charged over and above the contract sum. The second aspect was that the Adjudicator was required to value the work claimed and did not. 41Maxstra submits that the foregoing issues are relevant because, in relation to the first issue, there was jurisdictional error in that the claim did not relate to a contract for construction work; secondly, also in relation to the first ground, there was error of law in the Determination of the Adjudicator, in that the Adjudicator misunderstood the contractual relationship between the parties. Further, Maxstra submits that Blacklabel did not seek to support its claim for payment of the design work by any basis upon which the Adjudicator could value the work and the Adjudicator failed to value it.

The Contract 42It is necessary to make some comments about the contract between the parties. Obviously the parties are described relevantly as Maxstra and Blacklabel and are each referred to as Maxstra or the sub-contractor, and in some cases the contractor. There are not unusual definitions of the term "completion" and "contract sum". The definition of "contract sum" refers to item 3 of the "Sub-Contract Particulars" which is the schedule to the Contract. The Contract also defines the word "design" as meaning "the drawings and specifications referred to in item 6 of the Sub-Contract Particulars or as may otherwise be provided by Maxstra to the Sub-Contractor". 43By clause 2.5 the sub-contractor represents and warrants to Maxstra, inter alia, that it has "carefully examined and considered the Design and informed itself fully and clarified any error, ambiguity or other discrepancy in the Design. The Sub-contractor must examine the documentation and point out any discrepancy, lack of coordination of drawings and specifications pertaining to other disciplines which interface with its trade." 44By clause 2.8 the sub-contractor undertakes to present to Maxstra "its working programme which will encase [sic] within Maxstra's construction programme. The Sub-contractor's programme must be approved by Maxstra's Site Management before proceeding." The provisions of clause 2.8 of the contract also require that the aforesaid programme be current at all times and reflect changes. 45The payment schedule is defined in clause 3 and, by clause 3.1(b), the contract requires that the sub-contractor provide a copy of any payment claim to Maxstra's office by no later than 4pm on the day nominated in item 14 of the Particulars in order "to enable its evaluation and substantiation by Maxstra, and inclusion in Maxstra's progress claim under the Head Contract. ... Payment of the claim will be made at the end of the following month." 46Not unusually variations require written approval and authorisation. The pricing of variations is governed by clause 5.3 of the contract, which requires agreement, or, in the absence of agreement, additional work requires pricing on an actual cost basis, there defined as the actual costs of materials and labour involved in the variation plus a percentage prescribed by item 11 of the Particulars to cover administration, overheads and profit. 47The Particulars to the contract contain a number of relevant aspects. Item 4 of the Particulars recites: "Prior to commencement, the sub-contractor will comply with sub-clause 2.8 of the sub-contract agreement." Item 6 of the Particulars is in the following terms: Works: Additional Notes: Description of the scope of the works. Drawings & Specification, all works to comply with Workcover, OHS Act & Regulations and any relevant Australian Standards applicable to your trade. (Description of Works including drawings and specification numbers if applicable). The following works are deemed included but not limited to the following: The Works - The complete installation of electrical wiring and accessories of the electrical services including but not limited to: - Consumer Mains ... - Switchboards ... as per electrical drawings and supply and install distribution board in store as per drawings. - Reticulation ... as per reticulation drawing. - Sub-Main; Supply and install sub-main ... - Power and Lighting; ... Supply, install and commission lights and power points; Supply and install dedicated circuits servicing air conditioning units, cool room, chef oven, coffee machine, impulse fridge, frozen beverage machine, hot water unit, surveillance system. - Communications; Supply and install communication system complete with comms outlets cabling and MDF as per floor and finishes plan; - Security/Surveillance; Supply and install CCTV cameras and monitor for surveillance system. The contractor [sic - read as sub-contractor] has acknowledged that the full set of drawings has been perused and that all works associated with this contract have been included.

Judicial Review 48At times it was unclear as to how Maxstra put its claim. The significant inconsistency between its primary ground (that the design work was included in the written contract behind which the parties and the Adjudicator were not entitled to go) and its second ground (that Blacklabel did not justify the claim and the Adjudicator did not value the Design work) led to a degree of confusion. 49Further, insufficient regard was had to the distinction between a merits review on appeal and judicial review, which was sought, in these proceedings, by Maxstra. 50It is necessary, notwithstanding that confusion, to explain the manner in which the Adjudicator dealt with the issues before him.

The Determination 51Before dealing with the Determination, it is necessary to make some comment about the amended summons, filed 26 November 2012. The amended summons does not comply with the Uniform Civil Procedure Rules 2005 (hereinafter, "UCPR"). Nor did the original summons. 52Pursuant to UCPR r 6.4, these being proceedings, inter alia, under s 69 of the Supreme Court Act 1970, proceedings are commenced by summons. That summons must comply with the provisions of UCPR r 6.12A. 53Inter alia, the summons commencing proceedings must contain a statement as to whether the relief claimed is against the whole or part only of the decision below, and if as to part only, to which part. Further, and far more importantly, it must state what decision the plaintiff seeks in place of the decision below. Even more importantly again, it must contain a statement setting out briefly, and specifically, the grounds relied upon for the relief. No grounds are specified in the summons or amended summons. 54Lastly, the summons must annex a copy of the decision below. Again, that aspect of r 6.12A of the UCPR has not been the subject of compliance. 55The foregoing comment as to the failure to comply with the rules is not mere pedantry. The rules were specifically amended (in 2009) in order to ensure that the party seeking relief focuses attention on the difference between judicial review by way of prerogative relief (or orders in the nature thereof) and a merit appeal. It also requires the party to focus on the jurisdictional error or error of law that is said to give rise to the issue of the writ (or the making of the order). There has been a failure by the plaintiff to focus on those issues. 56Even in the outline of submissions filed, pursuant to direction of the Court, on 26 February 2013, Maxstra, while stating a number of bases upon which it was said the Adjudicator was involved in jurisdictional error, does not specify, with the requisite particularity, the manner in which each of the alleged errors has been committed. 57In its adjudication response, Maxstra submitted to the Adjudicator that the design work occurred prior to the renegotiated sub-contract price and "there was no additional design work and there is no basis to claim additional design work". This submission does not arise from the terms of the payment schedule of 20 August 2012. The payment schedule, as previously stated, responds to the claim for design work by stating that the "Amount claimed exceeds value of works performed". 58The foregoing response necessarily involves the following propositions: that work was performed; that the work had a value; and that the value of the work is less than the amount claimed. As earlier stated, the payment schedule does not suggest that the work was not required; that the work was not done; that the work was defective; nor that the work was included in the price of the contract, to which reference has been made. 59It is significant that the response to the claim for design work does not give as a reason for withholding payment that the works performed were contained within the contract price, or any similar reason. Yet Maxstra, in the adjudication response, submitted that the design work was included in the sub-contract price. Further, the Adjudication Response argues that it is only in relation to Maxstra's alternative proposition, namely, that the additional design work was carried out after the parties agreed to the revised contract price, that there is insufficient detail to enable any "proper response". 60The Adjudicator, in his reasons for Determination, set out the summary of the amounts claimed and noted that the payment schedule was for nil dollars. The Adjudicator sets out the precise terms of the payment schedule and the background facts. Those facts are not (and probably cannot be) in issue in these proceedings. The Adjudicator determined which of the contracts was in fact the contract to which the parties had agreed. It is unnecessary to detail all of the matters with which the Adjudicator dealt, but it is necessary to recite two passages dealing with the design work. 61At paragraph 17 of the Determination, the Adjudicator said: "(a) 'Amount claimed exceeds the value of works performed.' (i) the Claimant does not accept that the amount claimed exceeds the value of the works performed and effectively argues that the Respondent has not supported this position in the Payment Schedule; (ii) the Respondent makes no reference to any of the contract terms or valuation in support of this allegation in the Payment Schedule; (iii) the Respondent has not identified in the Adjudication Response any valuation to support this allegation either. Even if the Respondent somehow purports to do so, such valuation would constitute new material which was not included in the Payment Schedule; and (iv) the Respondent cannot include in the Adjudication Response any reasons for withholding payment unless those reasons have already been included in the Payment Schedule as per section 20(2B) of the Act. I am precluded from considering this new material accordingly." 62Later in the Determination, the Adjudicator under the heading "Adjudicated Amount", at paragraph 19, included, in a table relating to each of the amounts claimed, the following entry: "Design work $13,754.00 The Respondent does not dispute this amount in the Payment Schedule. The Respondent has made submissions in relation to this claim at paragraphs 52 to 56 of the Adjudication Response. None of those reasons are included in the Payment Schedule. The Respondent is precluded from relying on new reasons for withholding this payment under section 20(2B) of the Act. I accept the amount as claimed accordingly."

63The Adjudicator's Determination awarded the amount of $47,173.29 as a consequence of that and other findings.

The construction of the Act 64As contained in the submissions before the Court, Maxstra challenges the determination on the basis that "the Adjudicator found there was no reference to those arguments in the reasons" and "many of the submissions ... were ignored". Essentially, Maxstra submits that the finding that an alternative valuation for the work was not a matter on which Maxstra could make submission was an error that infected the Determination and involved the Adjudicator misconstruing the Act; misapprehending the nature of or limits on his functions and powers; failing to undertake a task required to be undertaken in the manner required by the Act; failing to accord procedural fairness; and failing to comply with the provisions of s 22(2)(d) of the Act; each of which amounts to jurisdictional error that renders the Determination void. 65At the heart of the foregoing is the relationship between s 20(2B) and s 22 of the Act. Each is recited above. Section 20(2B) of the Act precludes inclusion in the adjudication response any reasons that have not already been included in the payment schedule. Section 22 of the Act requires the Adjudicator to consider, inter alia, the payment claim, the payment schedule and all submissions that have been duly made in support of each. 66Notwithstanding Maxstra's submission, or that which seems to flow from it, there is no inconsistency between the requirements on the Adjudicator contained in s 22(2) of the Act and the limitation imposed by s 20(2B) of the Act. The submissions to which the Adjudicator must have regard by operation of paragraphs 22(2)(c) and (d) of the Act are "submissions ... duly made ... in support of the claim [or schedule]". Submissions duly made are those submissions allowed under the Act and exclude submissions or an adjudication response outside the reasons for withholding payment included in the payment schedule. 67The foregoing construction is the ordinary and grammatical meaning of the terms, gives the provisions of the Act a consistency and achieves, for the Act, harmonious goals: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355. 68In taking the view that the Adjudicator was not permitted to consider submissions made in the adjudication response, or otherwise, that are not included in the payment schedule, the Adjudicator was correct. No error of law is disclosed in that finding. Nor does it involve an error of jurisdiction, or a denial of procedural fairness. 69It seems therefore that the nature of Maxstra's complaint becomes not the interpretation of the Act, but the application of the Act to the particular submissions made by Maxstra. In other words, Maxstra submits, it seems, that the failure of the Adjudicator to have regard to its submissions, or to accept them, is jurisdictional error.

Distinction between error of law and fact 70The High Court of Australia in Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389 adopted the taxonomy summarised by the Full Court of the Federal Court in Collector of Customs v Pozzolanic Enterprises Pty Ltd; Collector of Customs v Pressure Tankers Pty Ltd [1993] FCA 322; (1993) 43 FCR 280 as to the distinction between error of law and error of fact. The taxonomy in Pozzolanic is to the following effect: "1. The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law. 2. The ordinary meaning of a word or its non-legal technical meaning is a question of fact. 3. The meaning of a technical legal term is a question of law. 4. The effect or construction of a term whose meaning or interpretation is established is a question of law. 5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law." (Pozzolanic at 287, cited with approved by the High Court in Agfa-Gevaert at 395.) 71The foregoing taxonomy or general propositions equate with the classifications used by Sir Frederick Jordan in Australian Gas Light Company v Valuer-General (1940) 40 SR (NSW) 126 at 137-138, in which the Chief Justice remarked: "In cases in which an appellate tribunal has jurisdiction to determine only questions of law, the following rules appear to be established by the authorities: (1) The question what is the meaning of an ordinary English word or phrase as used in the Statute is one of fact, not of law. This question is to be resolved by the relevant tribunal itself, by considering the word in its context with the assistance of dictionaries and other books, and not by expert evidence; although evidence is receivable as to the meaning of technical terms; and the meaning of a technical legal term is a question of law: Commissioners for Special Purposes of Income Tax v Pemsel. (2) The question whether a particular set of facts comes within the description of such a word or phrase is one of fact. (3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences. (4) Such a finding can be disturbed only (a) if there is no evidence to support its inferences, or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences. Thus, if the facts inferred by the tribunal from the evidence before it are necessarily within the description of a word or phrase in a statute or necessarily outside that description, a contrary decision is wrong in law. If, however, the facts so inferred are capable of being regarded as either within or without the description, according to the relative significance attached to them, a decision either way by a tribunal of fact cannot be disturbed by a superior Court which can determine only questions of law." (Citations omitted.) 72Notwithstanding the conclusion already reached that the construction of the statute applied by the Adjudicator was correct and no error of law is disclosed by that construction, an error of jurisdiction may arise otherwise than by an error of law. At paragraph [16] of its Outline of Submissions, Maxstra submits that the Adjudicator erred in that he: "(a) misconstrued the Act, leading to a misconception of his functions, which was a jurisdictional error; (b) misapprehended the nature of or limits on his functions and powers, which was a jurisdictional error; (c) failed to carry out the task that the Act required to be carried out in the manner the Act required it to be carried out and thus failed to exercise the jurisdiction given to him by the Act; (d) failed to accord procedural fairness to the plaintiff due to the adjudicator's failure to consider the Plaintiff's submissions and documents in the Adjudication Response and therefore the Adjudication Determination is void; and (e) failed to comply with section 22(2)(d) of the Act." 73Maxstra submits that each of the foregoing gives rise to jurisdictional error. As already stated, the Adjudicator has not misconstrued the Act nor misapprehended the nature or limits of its functions and powers. In that regard the submissions of Maxstra fail in relation to the jurisdictional error described in paragraphs (a) and (b) of [16] of its Outline of Submissions. 74The other jurisdictional errors that are alleged relate to the process undertaken by the Adjudicator in implementing his construction of the Act in a manner, which did not pay appropriate regard to Maxstra's submissions. In other words, Maxstra submits that the jurisdictional error arises because, having correctly construed the Act, the Adjudicator wrongly construed the payment schedule and, as a consequence thereof, considered that certain submissions were not open.

Approach to Payment Schedule 75The provisions of s 14(3) of the Act require a party against whom a claim is made to indicate its reasons for withholding payment. Full particulars for those reasons are unnecessary. As the Court of Appeal has expressed it (citing Palmer J in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140), the use of the term "indicate" allows "some want of precision and particularity", provided that "the essence of 'the reason' for withholding payment is made known sufficiently to enable the claimant to make a decision whether or not to pursue the claim and to understand the nature of the case it will have to meet in an adjudication": Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391; (2005) 64 NSWLR 448 at 455, [27], per Mason P with whom Giles and Santow JJA agreed. See also Owner Strata Plan 61172 v Stratabuild Ltd [2011] NSWSC 1000 at [36]. 76As has been made known on a number of occasions, the process is intended to be a practical one. The adjudication is not consensual (compare TCL Air Conditioner (Zhongshan) Company Ltd v The Judge of the Federal Court of Australia [2013] HCA 5; (2013) 87 ALJR 410). Rather, it is an alternative form of dispute resolution established by statute of which a claimant may make use. Nevertheless, the process is intended to be significantly less formal than a curial process and one that the parties and the Adjudicator (who will have special expertise) can understand, perhaps better than the legal profession. 77At the very least the approach long adopted in relation to constitutional writs that the Court will not comb through the words of a decision maker with a fine appellate tooth comb looking for a slip that would warrant the intervention of the Court is appropriate: see Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 271-272, per Brennan CJ, Toohey, McHugh and Gummow JJ, and at 291, per Kirby J. The approach to be taken to the reasons of the decision maker is not to be concerned with looseness in language, or with unhappy phraseology. The reasons are not to be construed minutely and finely with an eye keenly attuned to the perception of error: See Pozzolanic at 287. In the words of Kirby J: "It is erroneous to adopt a narrow approach, combing through the words of the decision-maker with a fine appellate tooth-comb (sic), against the prospect that a verbal slip will be found warranting the interference for an error of law": Wu Shan Liang at 291. 78Notwithstanding that the authority of an adjudicator is not consensual (see above) in large measure the role of an adjudicator is analogous to that of an expert by whose determination the parties have agreed to be bound: see Brodyn Pty Ltd trading as Time Cost and Quality v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421 at [51]. 79As a consequence of the foregoing, the approach of the Court should be not to apply an overzealous analysis to the determination of an adjudicator, but rather to take a practical approach, concentrating on the effect of the determination and the reasons of the adjudicator. There must, of course, be a bona fide attempt by the adjudicator to exercise the relevant power and no substantial denial of natural justice of the kind required by the Act. Otherwise, non-jurisdictional error of law would not ordinarily be a basis upon which orders would issue from this Court by way of judicial review. Such error would have to be determinative of the outcome.

The Determination 80Bearing that approach in mind, the Court must address what, in substance, is the effect of the Determination. Maxstra submits that the approach of the Adjudicator to exclude consideration of its submission as to the value of the work, was a substantial denial of natural justice. 81In substance, the approach of the Adjudicator was not quite so stark. Read in its entirety, the Determination concludes that no support for Maxstra's assertion that the value of the work was nil was tendered, and, if it were tendered, it would be excluded from consideration. The "denial of procedural fairness" is the exclusion from consideration of material that was never tendered by Maxstra. Essentially, Maxstra's submission is, in substance, a submission that the Adjudicator erred by misunderstanding the burden or onus of proof. 82In essence, Maxstra submits that Blacklabel, having claimed payment for work done, was required to justify the amount claimed and the Adjudicator, in assessing the appropriateness of that claim, was required to value the work. 83However, such a submission essentially seeks to have the Court determine that jurisdictional error occurred because the Adjudicator, instead of independently assessing the work, relied upon the assessment of Blacklabel in the absence of any counter-assessment. 84As already stated, Maxstra's attitude, as described in the payment schedule, was that work had been done and no objection was taken to the fact that the work was required. Further, the only attitude expressed by Maxstra was that the work undertaken was of less value than the claim submitted. In those circumstances, it seems incumbent upon Maxstra to submit a reason for the lower value and particularly where it is suggested that the value of the work is nothing. 85The Adjudicator had material that established that the work was done (or it was not otherwise in issue) and was required (again not a matter put in issue) and also had the basis upon which the work had been assessed (namely, the hourly rates provided by Blacklabel for the work performed). 86In circumstances where Maxstra has not contested the requirement to perform the work nor the completion of the work in question, nor the basis upon which Blacklabel assessed its charges (i.e. the hourly rates), the Adjudicator was faced with the proposition that there was a claim for work valued on a particular basis to which the response was confined to the assertion that the value of the work was less than that claimed and had a value of nil. 87In those circumstance, the Adjudicator was not, for the purposes of ensuring natural justice or procedural fairness, required independently to assess the value of the work. There was either an entitlement to be paid or there was not. The entitlement to be paid was not seriously put in issue in the payment schedule and was unavailable as a submission in the adjudication response. 88Properly construed, the Determination at [17] makes clear that the Adjudicator has taken into account the submissions and the failure by Maxstra to identify any other basis for the valuation of the work. The "new material" that the Adjudicator decided he could not take into account was any alternative basis for the valuation of the work. 89In fact, whether or not it would have been "new material", Maxstra suggested (in submissions or otherwise) no such alternative basis. As a consequence, the Adjudicator's conclusion that any such basis would not be allowed had no practical effect. 90In those circumstances, the Adjudicator has not failed to take into account a relevant consideration; has not failed to carry out the task that the Act requires of him in a manner required by the Act; has not failed to accord procedural fairness to Maxstra; and has not failed to comply with s 22(2)(d) of the Act.

Procedural Fairness and Discretion 91Even if, contrary to the findings above, there was a denial of procedural fairness required by the Act, that denial was confined to the issue of the payment for the design work. The claim for the design work was an amount of $13,754 within a context of a contract for electrical work of approximately $100,000 (contract sum minus canopy lights, plus variations of just over $91,000 of which just over $26,000 had been paid and from which approximately $33,000 of uncompleted works was to be deducted). 92The amount awarded by the Adjudicator was for $47,173.29 of which $13,754 was for the design work. It is only the design work that suffers from the allegation or complaint of Maxstra to which these proceedings relate. 93Procedural fairness requires that a party be granted an adequate opportunity to prepare and to present its case: Sullivan v Department of Transport (1978) 20 ALR 323 at 343, per Deane J, cited with approval by the High Court in Minister for Immigration and Citizenship v SZGUR [2011] HCA 1; (2011) 241 CLR 594; Griffith University v Tang [2005] HCA 7; (2005) 221 CLR 99; NAFF v Minister for Immigration and Multicultural and Indigenous Affairs [2004] HCA 62; (2004) 221 CLR 1; Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597; Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323; Re Australian Bank Employees' Union; Ex parte Citicorp Australia Ltd [1989] HCA 41; (1989) 167 CLR 513; Pantorno v The Queen [1989] HCA 18; (1989) 166 CLR 466, amongst others. 94Maxstra has had that opportunity. That which was "excluded" by the Adjudicator was a non-existent valuation by Maxstra. The exclusion had no practical impact. Procedural fairness is not an abstract concept. Rather, it is "essentially practical" and concerned with avoiding "practical injustice": Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 at [37]-[38], per Gleeson CJ. 95If there were a denial of procedural fairness, it was not substantive and had little or no effect on the outcome of the proceedings: see John Goss Projects v Leighton Contractors [2006] NSWSC 798; (2006) 66 NSWLR 707; Watpac Constructions v Austin Corp [2010] NSWSC 168. With great respect to McDougall J, I adopt his approach and do not, in this instance, accept that the denial of procedural fairness is "material": see Brodyn at [55] per Hodgson JA, even though, as did McDougall J, I take the view that the Court should only in exceptional cases regard a denial of procedural fairness as immaterial. 96For the foregoing reasons the summons should be dismissed. 97The Court makes the following orders: (1)Judgment for the defendants; (2)The plaintiff, Maxstra NSW Pty Ltd, pay the first defendant's costs of and incidental to the proceedings, as agreed or assessed; (3)The Court grants leave or liberty to the parties to apply in relation to any special or different order as to costs. Such application should be made within seven days of today and should be accompanied by short written submissions. The other party, if such an application be made, may respond also in writing within a further seven days; (4)Proceedings otherwise dismissed.

Amendments 07 May 2013 - Typographical error Amended paragraphs: 70 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 May 2013