Tomkins Commercial & Industrial Builders Pty Ltd v York Property Holdings Pty Ltd [2025] QSC 261

CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS - ADJUDICATION OF PAYMENT CLAIMS - where the applicant is the head contractor for the construction of a residential apartment tower and the respondent is the principal - where the respondent refused to pay two payment claims submitted by the applicant so the applicant referred both of those disputes to an adjudicator - where the applicant claims in respect of the first adjudication decision that the respondent provided new reasons to the adjudicator which were not included in the payment schedule - whether new reasons were provided, whether the adjudicator considered them, and whether the adjudicator breached s 88(3)(b) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) by considering them - whether jurisdictional error is established

ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - PROCEDURAL FAIRNESS - GENERALLY - where the applicant is the head contractor for the construction of a residential apartment tower and the respondent is the principal - where the respondent refused to pay two payment claims submitted by the applicant so the applicant referred both of those disputes to an adjudicator - where the applicant claims that in respect of both adjudication decisions, the adjudicator failed to consider its submissions including the material referred to and attached to its submissions - whether the adjudicator failed to consider the applicant's submissions and thereby denied it procedural fairness - whether jurisdictional error is established on this ground

ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - RELEVANT CONSIDERATIONS - FAILURE TO CONSIDER - where the applicant is the head contractor for the construction of a residential apartment tower and the respondent is the principal - where the respondent refused to pay two payment claims submitted by the applicant so the applicant referred both of those disputes to an adjudicator - where the applicant claims in respect of both adjudication decisions that the adjudicator failed to consider the provisions of the contract- whether the adjudicator considered the provisions of the contract and whether jurisdictional error is established

CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - DEDUCTIONS - where the applicant is the head contractor for the construction of a residential apartment tower and the respondent is the principal - where the respondent refused to pay a payment claim submitted by the applicant on the basis that the works did not comply with the contract and required rectification to the extent that the deductions for rectification equalled the amount claimed by the applicant for works completed - where the applicant referred this dispute to an adjudicator - where the adjudicator accepted the respondent's submission that the cost of rectification was equal to the amount claimed for works completed by the applicant - where the applicant claims that the adjudicator's decision was illogical, perverse and incoherent because of its method of valuing the rectification works - whether the adjudicator fell into jurisdictional error by valuing the deductions for rectification in the manner that he did

Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 72(1), s 88

Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd (2020) 4 QR 410; [2020] QSC 133, applied

Ceerose Pty Ltd v A-Civil Aust Pty Ltd (2023) 112 NSWLR 225; [2023] NSWCA 215, applied

John Holland Pty Ltd v Roads & Traffic Authority of New South Wales [2007] NSWCA 19, considered

Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, cited

Prime Constructions (Qld) Pty Ltd v HPS (Qld) Pty Ltd [2019] QSC 301, cited

Wiggins Island Coal Terminal Pty Ltd v Monadelphous Engineering Pty Ltd [2015] QSC 307, cited

D S Piggott KC, with J E Menzies, for the applicant

M D Ambrose KC, with T W Ambrose, for the first respondent

No appearances for the second and third respondents

No appearances for the second and third respondents

• [1] The applicant (Tomkins) and the first respondent (York) are parties to a commercial contract for the construction of the 'Midwater' residential apartment tower located at 3496 Main Beach Parade, Main Beach, Queensland. York is the principal of the project. Tomkins is the head contractor.
• [2] In accordance with the contract and the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the BIF Act), York was obliged to make progress payments to Tomkins for completed construction work carried out under the contract. The process for payment of progress claims required Tomkins to first submit to York a payment claim setting out the details of the work carried out and the amount claimed. York would then provide a progress certificate, certifying the amount that it would pay. For the purposes of the BIF Act, the progress certificate doubled as, and formed part of, York's payment schedule in response to Tomkins' payment claims.
• [3] Under the contract, York was obliged to appoint a Superintendent who would act as its agent in respect of the project. The functions to be performed by the Superintendent included giving directions to contractors in relation to work to be carried out on the project, addressing any issues raised by contractors with respect to design documentation and specifications for works to be undertaken, the inspection of completed works to ensure that they complied with contract requirements, and the certification of the amounts payable in respect of progress claims submitted by Tomkins. York appointed Crest Project Management Pty Ltd as its Superintendent.
• [4] Although progress payments were claimed and paid throughout the course of the contract, the parties became embroiled in disputes over two particular progress payment claims submitted by Tomkins. Tomkins claimed it had completed works that entitled it to be paid the amounts set out in its payment claims. York denied Tomkins was entitled to claim the full amounts sought and refused to certify payment. It maintained that Tomkins had either not completed the works in accordance with the contract as claimed, or that the work was defective in certain respects, and that it was therefore entitled to withhold payment of certain amounts. Because the parties were unable to resolve their differences, Tomkins applied for adjudication of the disputes under the provisions of the BIF Act.

• [12] The main purpose of the BIF Act is stated in s 3(1) of the Act as "...to help people working in the building and construction industry in being paid for the work they do." Amongst other things s 3(2)(b) and (c) provide that the main purpose of the Act is to be achieved primarily by granting an entitlement to progress payments, whether or not the relevant contract makes provision for progress payments; and by establishing a procedure for making payment claims, responding to payment claims, the adjudication of disputed payment claims, and the recovery of amounts claimed.
• [13] Chapter 3 of the BIF Act (ss 61 to 102) deals with progress payments. Section 70 provides that from each reference date under a construction contract a person is entitled to a progress payment if the person has carried out construction work under the contract. Section 71 provides that the amount of a progress payment to which a person is entitled is either, if the contract provides for the matter, the amount calculated in accordance with the contract; or, if the contract does not provide for the matter, the amount calculated on the basis of the value of construction work carried out in accordance with the contract. Section 72(1) provides for how the value of construction work carried out under a construction contract is to be valued. If the contract provides for the matter, then under s 72(1)(a), the work is to be valued in accordance with the contract. If it does not provide for the matter, then under s 72(1)(b) the work is to be valued having regard to various matters, including under s 72(1)(b)(iv) "if any of the work is defective, the estimated cost of rectifying the defect".
• [14] Part 3 of Chapter 3 deals with claiming progress payments. Amongst other things, it provides for the making of a progress claim, by a person giving a payment claim to the person who is, or may be, liable under the relevant construction contract to make the payment (s 75); and responding to a payment claim, by the respondent giving the claimant a payment schedule (s 76). Strict time limits apply for a respondent to provide a payment schedule. If a respondent fails to do so within the prescribed time, the respondent is liable to pay the full amount claimed under the payment claim (s 77).
• [15] Part 4 of Chapter 3 deals with adjudication of disputed progress payments. Under s 79(1), a claimant may apply to the Adjudication Registrar for adjudication of a payment claim if the respondent fails to pay the respondent an amount owed to the claimant by the due date for payment; or where the amount stated in a payment schedule given in response to a payment claim is less than the amount stated in the payment claim. Section 79(2) stipulates the form and content requirements of an adjudication application and the time within which it must be made. Where such an application is made and the matter is referred to adjudication by the Adjudication Registrar, an adjudicator is to be appointed in accordance with s 81.

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

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

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

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

(a) the provisions of this chapter and, to the extent they are relevant, the provisions of the Queensland Building and Construction Commission Act 1991, part 4A;

(b) the provisions of the relevant construction contract;

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

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

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

(3) However, the adjudicator must not consider any of the following -

(a) an adjudication response, to which the adjudication application relates, that was not given to the adjudicator within the time required under section 83;

(b) a reason included in an adjudication response to the adjudication application, if the reason is prohibited from being included in the response under section 82.

(4) Also, the adjudicator may disregard an adjudication application or adjudication response to the extent that the submissions or accompanying documents contravene any limitations relating to submissions or accompanying documents prescribed by regulation.

(a) be in writing; and

(b) include the reasons for the decision, unless the claimant and the respondent have both asked the adjudicator not to include the reasons in the decision.

• [19] The BIF Act creates a "parallel regime", separate to any contractual rights available to a party, to ensure prompt payment of progress payments and the speedy resolution, via adjudication, of any disputes about the amounts payable.[2] In that regard, s 101 provides:
  1. Effect of pt 3 on civil proceedings

(1) Subject to section 200, nothing in this chapter affects any right that a party to a construction contract -

(a) may have under the contract; or

(b) may have under part 2 in relation to the contract; or

(c) may have apart from this chapter in relation to anything done or omitted to be done under the contract.

(2) Nothing done under or for this chapter affects any civil proceedings arising under a construction contract, whether under this chapter or otherwise, except as provided by subsection (3).

(3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal -

(a) must allow for any amount paid to a party to the contract under or for this chapter in any order or award it makes in those proceedings; and

(b) may make the orders it considers appropriate for the restitution of any amount so paid, and any other orders it considers appropriate, having regard to its decision in the proceedings.

(4) If, in any proceedings before a court in relation to any matter arising under a construction contract, the court finds that only a part of an adjudicator's decision under this chapter is affected by jurisdictional error, the court may -

(a) identify the part affected by the error; and

(b) allow the part of the decision not affected by the error to remain binding on the parties to the proceeding.

• [20] Section 200 prohibits the contracting out of any provisions of the BIF Act and provides that the provisions of the Act will have effect despite any provision to the contrary in any contract, agreement or arrangement.

• [21] The general principles applicable to an application of the present kind were comprehensively surveyed and summarised by Bond J (as his Honour then was) in Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] QSC 133; (2020) 4 QR 410, at [22] to [42] (Acciona). Subject to what I consider to be the preferred approach to the question of whether an adjudicator failed to "consider" a matter under s 88(2), in accordance with the decision of the New South Wales Court of Appeal in Ceerose Pty Ltd v A-Civil Aust Pty Ltd [2023] NSWCA 215; (2023) 112 NSWLR 225 (Ceerose), I otherwise adopt and apply Bond J's summary of principles in Acciona in determining the present application.
• [22] Because of its relevance to many of the arguments raised in this case, I set out the following matters summarised in Acciona, at [35]:

"...the valid exercise of an adjudicator's jurisdiction is conditioned on the adjudicator having arrived at his or her conclusion by a process which considers the matters set out in s 88(2) of the Payment Act. But as to this, the following important matters must be noted:

(a) The valid exercise of an adjudicator's jurisdiction is not conditioned on the adjudicator reaching what is objectively the correct conclusion on all of the questions of fact or law required by the consideration of the matters set out in s 88(2). Or, to put it another way, there are many errors of fact and law which might be made by an adjudicator which would not be regarded as going to jurisdiction.

(b) On an application to set aside an adjudicator's decision for jurisdictional error, the question is not whether the Court would have come to the same conclusion as the adjudicator. Rather, the question is whether the adjudicator arrived at his or her conclusion by a process which failed to consider the matters set out in s 88(2).

(c) This point was succinctly made in Northbuild Construction Sunshine Coast Pty Ltd v Beyfield Pty Ltd [2014] QSC 80; [2015] 1 Qd R 463, 469-470 [29], where McMurdo J pointed out (footnotes in original):

'To determine an application, an adjudicator must identify the relevant terms of the contract upon which the claim is made and then apply the facts, as he or she finds them to be, to those terms upon their proper interpretation. The identification of the terms and the interpretation of those terms are thereby questions which the adjudicator must answer in the exercise of his jurisdiction. It follows that an error in the identification of the terms or in their interpretation will not be a jurisdictional error: Coordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd; Clyde Bergemann Senior Thermal Pty Ltd v Varley Power Services Pty Ltd; BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd.'

(d) His Honour distinguished between that sort of error - which was not jurisdictional error - and that which was, in the following passage ([2015] 1 Qd R 463, 470 [30]):

'However, where it appears that an adjudicator is not meaning to apply the contract, as he or she interprets it, but is instead allowing the claim upon some other basis, the position is different, because the adjudicator is thereby misunderstanding the scope of the adjudicator's jurisdiction.'

(e) Adjudicators under the Payment Act do not have to get the answer right, but if it is demonstrated that they have not gone about their task by carrying out the active process of intellectual engagement with the issues and the submissions before them that the Payment Act requires, then they will have fallen into jurisdictional error because they will not have done the very thing s 88(2) of the Payment Act required them to do."

• [23] As I will discuss, the phrase "active process of intellectual engagement" appearing in the last subparagraph of the above excerpt is one of the permutations of the statutory language that the Court eschewed in Ceerose.

• [24] On 28 March 2024, Tomkins gave York Payment Claim No. 30, in which it claimed payment for work carried out under the contract in the amount of $13,469,098.11 (excl. GST).
• [25] In response, on 15 April 2024, York gave Tomkins Payment Schedule No. 30, which scheduled the amount of $416,681.40 (excl. GST) for payment to Tomkins. York's covering letter for Payment Schedule No. 30, relevantly stated:

"Defective Works / Work not in accordance with Contract

• We have included deductions as per the appended schedule for completed works which are not in accordance with the Contract.
• We note that SI 170/SI170A and the associated Scott Schedules covers defective works and works not in accordance with the Contract. We further note that this schedule is not a final position, or limitation to works which may reasonably [sic. be] considered as defective or not in accordance with the Contract.
• Mechanical plant rooms have not been constructed as directed. Refer SI85, SI96, SI101 Subducts have also been installed without shop drawings being prepared and/or approved.
• The Principal also considers the works to be defective and not in accordance with the Contract as per its notifications to the Contractor on 5 April 2024 and 8 April 2024.
• The Principal has incurred direct costs in the form of Architectural fees in connection with the Contractor's failure to comply with the requirements of the Architectural Specification. These reasonable costs have been deducted in this assessment."

• [26] By the First Adjudication Decision, the Adjudicator decided that the amount payable in respect of Payment Claim No. 30 was $4,072,889.77 (incl. GST).
• [27] Although Tomkins had maintained that it did not agree at all with Payment Schedule No. 30, it had only applied for adjudication in relation to deductions made by York totalling $542,599.04. Payment Schedule No. 30 noted that these deductions were made for "defective works" or "works not in accordance with the contract" and attached schedules detailing the subject works and the costs it claimed it had incurred, or that it estimated it would incur, as a result of those works. The particular items set out in the "Works Not In Accordance With Contract" schedule attached to, and forming part of, Payment Schedule No. 30, provided the following details of the subject construction work:

Misaligned columns, exposed reinforcement in stairwells, structural floor levels out of level, head height issues in stairs, floor rebate issues, examples of poor workmanship noted in SI170. Provisional Sum Deduction only.

Mechanical plant rooms have not been constructed as directed. Refer SI85, SI96, SI101. Subducts have been installed without shop drawings being prepared and/or approved. Provisional Sum Deduction only.

All works omitted with exception of speedpanel installation. As noted in multiple instructions the requirements of Section 0522 of the Arch Spec have not been complied with. Works are not in accordance with Contract.

• [28] The schedule also provided a breakdown for "Consultant Works", which totalled $72,515.50.
• [29] In its adjudication application, Tomkins claimed that there was no basis for any of these deductions. In particular, it claimed that the only contractual provision identified by York for the deductions in Payment Schedule No. 30 was clause 29.3, which was not applicable as the relevant procedures for notice and rectification had not been followed. It further claimed that the supposedly "defective works" were in fact works that were incomplete and in progress and therefore it was inappropriate or premature for York's Superintendent to determine that they were defective.
• [30] Clause 29.3 of the contract relevantly provides:

If the Superintendent becomes aware of work done (including material provided) by the Contractor which does not comply with the Contract, the Superintendent will as soon as practicable give the Contractor written details thereof, and a timeframe in which the Principal requires rectification (being not less than 10 business days or such longer period as may be appropriate taking into account the nature of and circumstances relating to the defect. If the subject work has not been rectified within the time frame required, the Superintendent may direct the Contractor to do any one or more of the following (including times for commencement and completion):

a) remove the material from the site;

b) demolish the work;

c) reconstruct, replace or correct the work;

1. where the Contractor's design obligations apply, redesign the work and

e) the Contractor fails to comply with such a direction; and

f) that failure has not been made good within 8 days after the Contractor receives written notice from the Superintendent that the Principal intends to have the subject work rectified by others,

the Principal may have that work so rectified and the Superintendent will certify the cost incurred as moneys due from the Contractor to the Principal."

• [31] In its adjudication response, York agreed that clause 29.3 of the contract was not applicable but claimed that it was nevertheless entitled to deduct amounts from Tomkins' claim pursuant to clause 37.7 of the contract for the consultant works amount and pursuant to s 72(1)(b)(iv) of the BIF Act for the defective construction works.
• [32] Clause 37.7 of the contract provides:

The Principal may at any time deduct from, or set off against, any amounts due to the Contractor under this Contract, or otherwise at law in respect of the WUC for amounts, damage, or losses due and payable by the Contractor to the Principal under the Contract and any amount in respect of a bona fide claim which the Superintendent certifies (acting reasonably) against the Contractor under the Contract.

Nothing in this subclause 37.7 limits any other right for the Principal to set off amounts under any other provision of this Contract."

• [33] The Adjudicator decided that York was entitled to deduct the amount of $542,599.04 (excl. GST) from Tomkins' claim. In doing so, the Adjudicator gave the following reasons:

"117. The claimant does not expressly dispute that there are defective works of [sic. or] works not in accordance with the contract. The respondent's Scott Schedules (are voluminous) and clearly identify defective work with photos of the various defects discussed above.

118. The claimant contends it has responded to the site instructions and Scott Schedules but has not provided any substantial evidence of its response.

119. The site instructions and scott schedules [sic. Scott Schedules] prepared by the respondent and provided in the adjudication response clearly demonstrate the extent of the defective work and/or work not in accordance with the contract, including the multiple instructions (provided in the adjudication response) issued for the ceilings and partitions that identified work not in accordance with the contract.

120. Pursuant to section 72(1)(b) of the Act a valuation of construction work is to include the estimated cost to rectify the defects. This provision applies irrespectively of the provisions of clause 29.3 of the general conditions of contract.

121. Accordingly, I consider the respondent has demonstrated the respective works that are defective or not in accordance with the contract and is entitled to deduct the estimated cost of rectifying the defects pursuant to section 72(1)(b) of the Act. The deduction of consultants [sic. consultants'] costs associated with the defects is reasonably a cost associated with rectifying the defects and/or are amounts, damages or losses payable by the claimant pursuant to clause 37.7 of the general conditions of contract.

122. Section 72(1)(b) of the Act requires an estimate of the costs of rectifying a defect to be taken into account. The claimant has not provided an estimate of the cost of rectifying the defects but the respondent has provided estimates which appear to be a reasonable estimate.

123. Accordingly, I value the deductions for defective work or work not in accordance with the contract as follows:

• [34] Tomkins says this aspect of the Adjudicator's decision is affected by the following jurisdictional errors:

(a) The Adjudicator impermissibly considered new reasons for withholding payment that were not included in Payment Schedule No. 30 (Jurisdictional Error 1);

(b) In doing so the Adjudicator denied Tomkins procedural fairness (Jurisdictional Error 2);

(c) The Adjudicator failed to consider Tomkins' submissions, including the material referred to and attached to its submissions (Jurisdictional Error 3); and

(d) The Adjudicator failed to consider the provisions of the contract and Tomkins' submissions about those provisions (Jurisdictional Error 4).

• [35] As to Jurisdictional Error 1, Tomkins says that ss 69, 76 and 82 of the BIF Act make plain that a respondent to a payment claim must state in its payment schedule any reasons for withholding payment; that it may not include in an adjudication response any reasons not included in the payment schedule; and that it does not matter whether the reasons for withholding relate to set-offs, contractual provisions or statutory provisions limiting a right to payment. It says that the only reason identified by York in Payment Schedule No. 30 for making the deductions was an entitlement to do so under clause 29.3 of the contract; and that York was therefore prohibited from relying upon clause 37.7 of the contract or s 72(1)(b) of the BIF Act, as it sought to do by its adjudication response. Tomkins says it was a jurisdictional error for the Adjudicator to consider those new reasons and to base his decisions on those reasons, as he was prohibited from doing so by s 88(3)(b) of the BIF Act.
• [36] Relatedly, with respect to Jurisdictional Error 2, Tomkins says the Adjudicator denied it procedural fairness by relying on the new reasons as the basis for his decision. It says that it would have made submissions about those matters had it known that the Adjudicator was going to consider them and, had it had the opportunity to do so, there is a realistic possibility that the Adjudicator may have been persuaded that:

(a) the operation of clause 29.3 concerning set-off for costs incurred by the principal in rectifying work was such as to engage section 72(1)(a) of the BIF Act, and therefore section 72(1)(b) was not applicable; and

(b) in relation to York's set-off claim for "consultants' fees", given the clear language of clause 37.7, York's entitlement to set-off under that clause was limited to amounts payable by Tomkins under the contract or bona fide claims certified by the Superintendent under the contract, and as the requirements of clause 29.3 had not been met, no amounts could be certified as payable under the Contract.

• [37] As to Jurisdictional Error 3, Tomkins submits that the paucity of the Adjudicator's reasons demonstrate that he failed to consider, or genuinely consider, its submissions, the contract provisions and the relevant material, in the sense of intellectually engaging with its submissions and the basis upon which it disputed York's assertion of defective works, as is required by s 88(2)(c) of the BIF Act. It says the Adjudicator's reasons do not disclose his reasoning process or the basis for his finding that there were defective works.
• [38] Tomkins takes issue with the Adjudicator's statement that it "...did not expressly dispute that there are defective works...". It submits that this was obviously a matter that it did dispute, having made its position clear in its adjudication application that the alleged defective works were in fact works that were incomplete and in progress.
• [39] Tomkins points out that the Scott Schedule prepared by York's building consultant, Mr John Groom, merely expressed opinions about the state of the works without any reference to any contract requirements regarding the works; and that, in any event, Mr Groom's comments show that he had inspected the works at a time when they were in progress.
• [40] Tomkins further says that the Adjudicator's finding that the "multiple instructions...issued for ceilings and partitions" clearly identified work not in accordance with the contract, is baseless. It submits that had the Adjudicator genuinely considered that material it would have been clear that the various Site Instructions issued by the Superintendent (which instructions York relied upon for its set-off claim) related to Tomkins and the Superintendent seeking to resolve design conflicts and issues and did not demonstrate that the partitions works were defective.
• [41] As to Jurisdictional Error 4, Tomkins claims that the Adjudicator's reasons make clear that he did not genuinely consider clauses 29.3 and 37.7 of the contract or its submissions. Had he done so, it submits, he would have seen that the only way that York could be entitled to a set off under clause 37.7 was if the requirements of clause 29.3 had been followed and the Superintendent had certified costs as payable by Tomkins "under the contract" in accordance with that provision. Further, Tomkins submits, the Adjudicator wrongly considered s 72(1)(b) of the BIF Act as the starting point for assessment of the alleged defective works, rather than s 72(1)(a). Thus, it submits, it is evident that the Adjudicator failed to consider s 72(1)(a) and whether the provisions of the contract, particularly clause 29.3, provided for valuing defective works.

• [50] In my view, none of the alleged jurisdictional errors are established.
• [51] To recap, the central premises for each of Tomkins' arguments on this aspect of the First Adjudication Decision were these: none of the work it had performed, and for which it claimed payment, was "defective", rather it was "in progress" or "incomplete"; in any event, even if any work was defective, clause 29.3 of the contract provided the only basis upon which York could deny payments it claimed in Payment Claim No. 30; but because York had not complied with the rectification notice requirements of clause 29.3, and had not incurred any actual costs to rectify any defects, it was not entitled to withhold payment.
• [52] The Adjudicator found that the subject works were defective and/or not in accordance with the contract and that clause 29.3 of the contract did not apply. When assessing this argument, or indeed any of the arguments concerning alleged jurisdictional error, it must be borne in mind that I am not conducting a merits review and I am not concerned with determining whether the Adjudicator's findings were correct. I am only concerned with whether the Adjudicator's decisions were made in accordance with the functions and powers conferred upon him as the appointed adjudicator under the BIF Act. Any questions as to the construction or application of contract provisions or findings of fact to be made on the material adduced by the parties were matters for the Adjudicator to decide within the exercise of his jurisdiction and would not constitute jurisdictional error.
• [53] As to Jurisdictional Error 1, I do not accept the argument that the First Adjudication Decision is vitiated because the Adjudicator considered new reasons for withholding payment that had not been included in Payment Schedule No. 30.
• [54] I do however accept, as York conceded, that the Adjudicator erred by impermissibly considering, and acting upon, clause 37.7 of the contract as a basis for permitting a deduction from the amount payable on account of consultant fees incurred by York. That was a new reason for denying payment that had not been included in Payment Schedule No. 30. Accordingly, pursuant to ss 82(4) and 88(3)(b) of the BIF Act, the Adjudicator was prohibited from considering such a reason when deciding the matter.
• [55] However, an error of this kind will only constitute jurisdictional error if it was material to the decision, in the sense that there is a realistic possibility that the decision could have been different had the error not been made. I am not satisfied that was the case here. Paragraphs 120 and 121 of the Adjudicator's reasons make plain that he was satisfied that the estimated costs of rectifying the defects, and the associated consultants' costs, were matters to be taken into account when valuing the work in accordance with s 72(1)(b) of the Act. According to the factual findings of the Adjudicator, that reason alone justified the deductions. The Adjudicator's reference to clause 37.7 of the contract was a further and additional reason why such costs could be deducted. Therefore, even accepting that he was wrong about that, his error does not invalidate his conclusion that York was entitled to make the deductions it applied to this aspect of the payment claim. Thus, the error is immaterial.

"Pursuant to Clause 29.3, which states if the Superintendent becomes aware of work done...which does not comply with the Contract, the Contractor is directed to address the points raised in the appended Schedule.

We require all items addressed in a timely manner, and as a minimum require a written response with proposed rectification period(s) within 10 business days as set out in Clause 29.3.

• - Remove costs for works which do not comply with the Contract in our progress claim assessment(s);
• - Make alternative arrangements for rectification at the Contractor's cost as set out in Clause 29.3 if this instruction is not complied with."
• [63] The content of SI 170A was identical, save that it referred to "the appended Schedule 1 and Schedule 2."
• [64] The appended schedules referred to in SI 170 and SI 170A were the associated Scott Schedules prepared by York's building consultant, John Groom, dated 21 March 2024 and 5 April 2024 respectively. The Scott Schedules provided an itemised schedule of inspected works, together with Mr Groom's comments as to matters that needed to be addressed and photographs of the problems he had encountered. For example, Item 2 of the 5 April Scott Schedule, which appears to correspond with the "Structural Works" deduction, provided the following comment:

"I did discuss on-site the column and plate connection of the slab shown in the adjacent photos and the connection appears to be in very poor condition. However, nobody could actually confirm with me if this was a connection or a support and why it was in the poor condition it was in. This will need to be reviewed by the structural engineer in my opinion, as it does not appear anybody knows why the connection is in the current state it is in."

• [65] The same Scott Schedules were also provided with the written notifications York gave to Tomkins, dated 5 and 8 April 2024, by which York gave notice of work not in accordance with the contract. The 5 April notification, which referred to Mr Groom's Scott Schedule of the same date, concluded with the following:

"4. The number of defects identified in the Scott Schedule is of significant concern to the Principal.

5. The Principal requests that the Contractor review and address the non-compliant work set out in the Scott Schedule as soon as reasonably practicable, and before works progress to the point that rectification of these defects is no longer possible...

6. The Principal reserves all of its rights in respect of the defects identified in the Scott Schedule.

7. The Principal reserves its rights under the Contract and at law."

• [66] I further note that Tomkins subsequently responded to York about the matters of concern it had raised, including by adding its own comments to an annotated version of its Scott Schedules. For example, with respect to item 2 in the 5 April schedule, Tomkins' response, under the added column headed "Contractor Comments 23.04.24" stated:

"The Contractor confirms these are the puddle pours for the level 2 Mezzanine slab - patching of the soffit is underway. This is considered works in progress."

• [67] In my view, the details and documentation provided by York in Payment Schedule No. 30 complied with the obligation under s 69(c) of the BIF Act of a recipient of a payment claim to state in its payment schedule why the amount proposed to be paid was less than that claimed by the claimant, and to provide the respondent's reasons for withholding payment. As Palmer J stated in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140, at [70], in reference to the analogous provision of the Building and Construction Industry Security of Payment Act 1999 (NSW):

"Section 14(3) requires that reasons for withholding payment of a claim be indicated in the payment schedule with sufficient particularity to enable the claimant to understand, at least in broad outline, what is the issue between it and the respondent. This understanding is necessary so that the claimant may decide whether to pursue the claim and may know what is the nature of the respondent's case which it will have to meet if it decides to pursue the claim by referring it to adjudication."

• [68] Payment Schedule No. 30 provided Tomkins with notice of the reasons why payment was withheld (works supposedly "not in accordance with the contract" or "defective") and enabled it to dispute such suggestions, as it subsequently did, in an application for adjudication of the matter.
• [69] I note that in support of its argument that York was required to expressly state that it relied on s 72(1)(b) of the BIF Act in its payment schedule, Tomkins relied upon John Holland Pty Ltd v Roads & Traffic Authority of New South Wales [2007] NSWCA 19, where Hodgson JA stated, at [33]:[4]

"If a respondent does not propose to pay any amount included in the payment claim for any reasons said to justify non-payment of that amount, then in my opinion that is withholding payment and the reasons are reasons for withholding payment. It does not matter whether the reasons relate to non-performance of work, bad work, set-offs or cross-claims of any kind, contractual provisions limiting the claimant's right to payment or statutory provisions limiting the claimant's right to payment, or indeed any other suggested justification. Any other view would do violence to the language 'withholding payment for any reason', and be contrary to the plain purpose of s 20(2B) to avoid new submissions being introduced late in a process going ahead on a brief and strict timetable."

• [70] In Wiggins Island Coal Terminal Pty Ltd v Monadelphous Engineering Pty Ltd & Ors [2015] QSC 307, McMurdo J (as his Honour then was) relevantly concluded, in respect of the similar statutory language within s 24 of the former Building and Construction Industry Payments Act 2004 (Qld):

"The evident intent of s 24 is to prevent the unfairness to a claimant which could follow from a respondent being allowed to contest its alleged liability for a reason which it had not advanced ahead of the adjudication application. "

• [71] That is not what occurred here. York clearly identified in Payment Schedule No. 30 the basis upon which it contested its alleged liability to make the claimed progress payment. I do not consider its subsequent inclusion of submissions concerning the application of s 72(1)(b) of the BIF Act in its adjudication response constituted the inclusion of new reasons, which would otherwise be prohibited by s 82(4) of the BIF Act. I do not think it was necessary for York to spell out in its payment schedule that, as the contract did not provide for the valuation of the work, the works were to be valued in accordance with s 72(1) of the BIF Act; or that if the subject works were found to be defective at an adjudication, as contended by York, then an adjudicator would be required to value the works under that provision. The Adjudicator here was required to determine if any of the subject work was defective, and, if so, he was then obliged to have regard to the estimated costs of rectifying the defect when valuing the construction work. That task was quite separate to the task of assessing whether York had any contractual right to set-off the deductions. [5]
• [72] Consequently, I reject Tomkins' argument that, by applying s 72(1)(b), the Adjudicator considered "new reasons" in contravention of s 88(3)(b) of the BIF Act. Indeed, under s 88(2)(a), the Adjudicator was required to consider the provisions of Chapter 3 of the BIF Act, which included s 72, when deciding the matters stipulated in s 88(1). The fact that York had not specifically referred to that provision in its Payment Schedule No. 30 could not preclude the Adjudicator from considering it in the discharge of his statutory function. In my view the Adjudicator was entitled to consider York's subsequent submissions about the effect of s 72(1)(b) in its adjudication response as submissions "properly made" in support of Payment Schedule No. 30; and he was therefore obliged to consider them, as required by s 88(2)(d) of the BIF Act.
• [73] It follows from the foregoing that I do not think Tomkins was denied procedural fairness as it contends by Jurisdictional Error 2. Tomkins had the opportunity to make submissions about s 72. It chose not to do so. Whether due to a deliberate choice, mistake or ignorance, its failure to address s 72(1)(b) does not demonstrate that it was denied procedural fairness. It seems to have wrongly assumed that York was relying upon a set-off claim under clause 29.3 of the contract to make the relevant deductions to its payment claim. Consequently, its adjudication application submissions focussed upon the reasons why it said clause 29.3 was not engaged. That appears to be a mistake of its own making. It only seems to have realised its mistake when York provided its adjudication response, in which it pointed out that it did not rely on clause 29.3 and submitted that the adjudicator should find that the relevant works were defective and value the works by deducting the estimated costs for rectifying the defective work in accordance with s 72(1)(b)(iv) of the BIF Act.

"[51] ... the question whether the adjudicator has considered a matter for the purposes of s 22(2) will involve an inquiry into the private processes of decision-making, and even the mental processes of the adjudicator. While those processes may be revealed by the reasons required to be given under s 22(3), those reasons will not necessarily demonstrate a negative proposition, namely a failure to consider a particular matter required to be considered simply because it is not referred to in the reasons.

[62] The attempt to articulate, using other language, what is required by the verb 'consider' will usually be misconceived...In a practical sense, the problem for a party challenging a determination is not to identify whether the mental process undertaken by the adjudicator was 'active', 'intellectual' or 'genuine', but rather to identify a basis on which it could be said that consideration did not occur. The mental processes of the adjudicator will be entirely opaque, except to the extent that they are revealed in his or her reasons. However, as already noted, the failure to identify a particular claim or response in reasons will not of itself demonstrate that the adjudicator failed to consider it. That is so for a number of reasons."

• [77] Payne JA then identified several reasons why an adjudicator's failure to refer to a matter in his or her reasons was not necessarily indicative of a failure to consider a matter as required by the relevant statute, namely that an adjudicator's reasons were not necessarily or even usually a comprehensive statement of all aspects of a decision-maker's thinking; that the reasons will inevitably reflect the practical circumstances under which the adjudicator is operating to decide an adjudication application within the tight timeframes stipulated by the legislation; that it was not unusual for the material supplied to an adjudicator to run into hundreds and even thousands of pages; and that there may be a range of possible explanations for why an adjudicator did not refer to a matter in his or her reasons, amongst which an explanation that the adjudicator did not consider the matter is but one.[6]
• [78] Applying that approach to this case, I am not prepared to conclude that the Adjudicator failed to consider any of the matters required by s 88(2) of the BIF Act.
• [79] Although Tomkins sought to make much of the Adjudicator's statement in his reasons, at paragraph 117, that "[T]he claimant does not expressly dispute that there are defective works of [sic. or] works not in accordance with the contract", I do not consider that statement demonstrates that the Adjudicator failed to consider Tomkins' submissions, thereby constituting jurisdictional error.
• [80] The first point to be made about the Adjudicator's statement is that it was factually accurate. The works the subject of this aspect of the First Adjudication Decision were not the only works in respect of which York had withheld payment on the grounds that the works were defective or not in accordance with the contract. York had withheld payment of Tomkins' claim for $952,934.16 (excl. GST) for work performed on the building façade as its Superintendent had certified that work was defective and had deducted that amount in its Progress Certificate No. 30. Tomkins did not dispute that matter in its adjudication application. Furthermore, by its submissions in support of its adjudication application, where it wrote "... the majority of 'defects' are in fact issues relating to incomplete works / works in progress, and should not be characterised as 'defects' at this stage of the works", Tomkins did not dispute, and implicitly accepted, at least for the purposes of adjudication, that at least some of the works were defective. In any event, even if the Adjudicator was wrong about that, his statement does not demonstrate jurisdictional error.

"118. As Mr Justin Grant confirms in his statutory declaration, and is further supported by the Claimant's response dated 28 May 2024 to a recent Notice to Show Cause issued by the Principal:

(a) the Claimant is actively working with the Superintendent and Principal to resolve any valid concerns regarding the permanent works;

(b) the majority of 'defects' are in fact issues relating to incomplete works / works in progress, and should not be characterised as 'defects' at this stage of the works;

121. The Respondent and Claimant have recently fallen into dispute about alleged defective works carried out on the Project.

122. The Claimant squarely rejects those allegations. As the Claimant has explained in its responses to Site Instructions 170, 171 and 209, the issues raised in the Superintendent's Scotts [sic. Scott] Schedules in large part comprise:

(a) expressions of pure opinion from the Principal's building inspector, Mr John Groom, and which had been made without reference to Australian standards / codes or contract documents;

(b) 'works in progress' or 'incomplete works'; and/or

(c) technical design issues for which the Principal is entirely responsible.

123. This is set out in the Claimant's response dated 28 May 2024 to a Notice to Show Cause issued by York (addressed at Section A of Mr Rodney McKenzie's statutory declaration).

124. In short, and as further detailed below and in the statutory declaration of Mr Justin Grant (Section C):

(a) the Superintendent has in recent weeks issued Scott Schedules to the Claimant;

(b) the Scott Schedules contained lists of alleged defects in the works;

(c) the Claimant has responded to each item in the Scott Schedule and has committed to resolving any valid concerns with the Superintendent and Principal;

(d) the Superintendent has included deductions in the Payment Schedule for alleged defects first notified to the Contractor on that very same day (15 April 2024).

125. On 9 April 2024, the Superintendent issued site instruction SI 170 to the Claimant, which included a Scott Schedule setting out a list of alleged defects in the works (9 April Scott Schedule).

126. On 15 April 2024, the Superintendent issued SI 170A containing an updated version of the Scott Schedule containing further alleged defects (15 April Scott Schedule). On the same date, the Superintendent issued the Payment Schedule, which as set out above, certified a deduction for 'work certified as not being in accordance with the Contract'. (in other words: the deduction was made on the very day the alleged defects in SI 170A were first raised with the Claimant).

127. The Claimant responded to both SI 170 and SI 170A by letter dated 23 April 2024.

128. On 13 May 2024, the Superintendent then issued Site Instruction no. 209 (SI 209). The Claimant responded to SI by its letter dated 24 May 2024.

129. Notably: the Superintendent did not specify any time for any rectification works to occur. Much less allow the Claimant even the minimum period of 10 business days to respond to the 9 April Scott Schedule before applying its deductions in the Payment Schedule."

• [87] Section C of the statutory declaration of Justin Grant, Project Manager, provided as follows:

32. I am aware that the Superintendent included deductions for 'defective' works / 'works not in accordance with Contract' in the March Progress Certificate. Those deductions were based on Site Instruction 170 and Site Instruction 170A, which enclosed 'Scotts Schedules' prepared by the Superintendent.

33. I do not know why the Superintendent certified monies payable to York by reference to these instructions. I can confirm that:

(a) Tomkins has responded to both Site Instruction 170 and Site Instruction 170A. In our responses, we committed to resolving any valid concerns raised by York or the Superintendent and provided a response to all items in the Scotts [sic. Scott] Schedule;

(b) rectification of defects will take place within our usual sequence of works.

(a) York has not engaged any other contractors to rectify any defects in the works;

(b) aside from the contents of the March Progress Certificate, the Superintendent has not provided any breakdown or substantiation of the amounts certified as payable to York for 'defective' works / 'works not in accordance with Contract'.

35. In my experience, it is very unusual for a superintendent to certify deductions for defects when the contractor is actively working with the superintendent and principal to address issues in the works."

• [88] Section G of the affidavit of Rodney McKenzie, Tomkins' project director, noted the following:

"G. HCV 171 - NOD # 94 & EOT #47 Delay in Fit-out Works

219. In preparing for this Adjudication Application, I have (with support from others in Tomkins' project team) carefully reviewed all the RFIs, Site Instructions and other correspondence exchanged between Tomkins and York (and the Superintendent / Yorks' consultants) concerning the technical issues in York's design documentation for ceilings and partitions.

220. Based on my review of those records, I have prepared a chronology of the events / design issues that led Tomkins to raise EOT No. 47 / HCV No. 171. This appears as Annexure A to my statutory declaration. The documents referred to in the chronology are annexed as exhibits to my statutory declaration.

221. As I explain in the chronology at Annexure A, York and its consultants have repeatedly updated the design documentation after our submission of PC 30 and Tomkins continues to receive revised design documentation to this day. However, Tomkins has still not received fully completed design documentation that would allow us to proceed with ceilings and partitions work throughout the building (as opposed to proceeding on a limited, 'prototype' basis)."

• [89] It is true that Tomkins made these various submissions in which it contended that the works were not defective. However, Tomkins did not otherwise identify any evidence or document to be considered by the Adjudicator. In particular, it did not identify where its responses to York's site instructions, Scott Schedules or show cause notice were to be found in the material. In my view, it is not good enough to simply say, as Tomkins now does, that the Adjudicator had a duty to consider its submissions. If there was something that Tomkins wanted the Adjudicator to act on in support of its application, then it should have clearly identified it. Even now, with one possible exception, Tomkins has still not identified with any particularity the documents or evidence that it says the Adjudicator failed to consider.
• [90] The possible exception is the submissions it now makes about Annexure "A" to the statutory declaration of Rodney McKenzie, which was before the Adjudicator. Tomkins says the annexure sets out a chronology of events said to be relevant to design issues affecting the partition works from proceeding and, so it is submitted, makes clear that Tomkins and the Superintendent were working to resolve those issues and that the works were therefore not defective. Whether that be so, is not a matter for me to determine. The question for me is whether the absence of any reference to that matter in the reasons demonstrates that the Adjudicator must not have considered it. I am not persuaded that is the case.
• [91] I have reviewed Mr McKenzie's statutory declaration and his Annexure "A" chronology. The chronology is dense and includes a table or schedule, with various diagrams and text, that appear to summarise exchanges, events and opinions relating to apparent design issues. It is not apparent to me what part of the document provides any further evidence or detail of its submission that it was working with the Superintendent to resolve issues and the work was therefore not defective.
• [92] Tomkins stresses that particular documents that it referred to in its submissions to the Adjudicator were its letter dated 23 April 2024, responding to York's Site Instructions 170 and 170A, and its letter dated 28 May 2024, responding to York's show cause notice. As noted, whilst the adjudication application does refer to those letters, at paragraphs 118, 123 and 127, no reference was made to where the source documents were to be found in the materials before the Adjudicator.

"60. On 17 May 2024, we received a second Notice to Show Cause from York. A copy is attached and marked 'RM-A-##'.

61. Tomkins strongly disagreed with York's allegations. We responded by letter dated 28 May 2024, a copy of which is attached and marked 'RM-A-##'. Our response informed York that Tomkins does not have a design development role on the Project. We also explained that:

(a) Tomkins would unsuspend areas of work as and when York provided 13inimize13 [sic.] design documentation, and

(b) where York had provided further design documentation, Tomkins had commenced installation of limited areas of ceilings and partitions (with some areas completed on a 'prototype' basis to test the latest documentation and help York understand the design issue)."

• [94] It seems that the "RM-A-#" references in this excerpt were perhaps included as placeholders when the statutory declaration was drafted. They do not assist with identifying where the relevant documents are supposedly located. The summary of its content in paragraph 61 provided scant evidence to support Tomkins' case. The issue raised there seems to be with respect to responsibility for design rather than the quality of the work performed.
• [95] After considerable difficulty, I was able to locate the 28 May 2024 letter amongst the material that was before the Adjudicator, contained in an exhibit to Mr Nordang's affidavit. A separate copy of the letter was also tendered at the hearing of this application, most likely for my convenience as the document was difficult to find otherwise. In any event, upon review its contents add little to what was summarised by Mr Grant in his statutory declaration.
• [96] It was in these circumstances that the Adjudicator stated, at paragraph 118 of his reasons, that "[t]he claimant contends it has responded to the site instructions and Scott Schedules but has not provided any substantial evidence of its response." In my opinion that was an entirely apt summation of the submissions and material Tomkins had provided and identified for the Adjudicator's consideration.
• [97] With respect to Jurisdictional Error 4, I am not satisfied the Adjudicator failed to consider any relevant provisions of the contract or any relevant submissions made by Tomkins. Tomkins' argument to the Adjudicator was that because the requirements of clause 29.3 had not been satisfied, York was not permitted to deduct any amounts by way of set-off for defective work. However, as previously explained, that was not the basis upon which York purported to act. The Adjudicator accepted that clause 29.3 did not apply, but irrespective found that s 72(1)(b) of the BIF Act did apply and that York was entitled to deduct the estimated costs of rectifying the defects and the work was to be valued accordingly.
• [98] In this application, beyond again addressing clauses 29.3 and 37.7, Tomkins does not identify any other parts of the contract which it says should have been, but were not, considered by the Adjudicator in deciding this aspect of the adjudication application. The Adjudicator dealt with Tomkins' case about clause 29.3. He erred in an immaterial way in his consideration of clause 37.7. No other provision of the contract was said to be relevant or applicable.

• [103] On 28 May 2024, Tomkins gave York Payment Claim No. 32, in which Tomkins claimed payment for work carried out under the contract in the amount of $22,422,601.15 (excl. GST). Payment Claim No. 32 was a cumulative progress payment claim for contract work and variations completed up to, and including, 28 May 2024.
• [104] On 11 June 2024, York gave Tomkins Payment Schedule No. 32 in response to Payment Claim 32, which scheduled the amount of -$1,209,103.68 (excl. GST) for payment to Tomkins. It provided the following relevant reasons for making deductions to the amount it said was payable:

"Defective Works / Work not in accordance with Contract

• We have included deductions as per the appended schedule for completed works which are not in accordance with the Contract. Full details and particulars have been previously provided in the Scott Schedule / John Groom reports issued to the Contractor by way of SI170, 170A, SI209 and SI223 to date of works which are currently not in accordance with the Contract. The value of the deduction noted in the appended schedule is the value of the works undertaken to date which have not been completed in accordance with the Contract. The total value of works completed as assessed in this schedule are hereby reduced by this sum. In the alternative, the deduction is made pursuant to clause 29.3 and/or 37.7 of the Contract. The reasons stated therein form part of this payment schedule.
• We note that the appended Scott Schedule dated 2.5.24 covers defective works and works not in accordance with the Contract. We further note that this schedule is not a final position, or limitation to works which may [sic. be] reasonably considered as defective or not in accordance with the Contract.
• We note that the Scott Schedules have been instructed through Defective Works instructions SI170, SI170A, SI209, SI223.
• Each of the items referred to in the Scott Schedules attached with and forming part of the payment schedule are WUC for which the Contractor has been overpaid for the value of work actually completed to date in accordance with the terms of the Contract. The Principal is therefore entitled to deduct these amounts from the assessments of WUC above to ensure the assessments accurately reflect the value of the work completed by the Contractor in accordance with the Contract.
• Mechanical plant rooms have not been constructed as directed. Refer SI85, SI96, SI101 Subducts have also been installed without shop drawings being prepared and/or approved.
• The Principal also considers the works to be defective and not in accordance with the Contract as per its notifications to the Contractor including on 9 May 2024, 17 May 2024 (among others).
• The Principal has incurred direct costs in the form of Architectural fees in connection with the Contractor's failure to comply with the requirements of the Architectural Specification. These reasonable costs have been deducted in this assessment.

• [105] Although Tomkins had maintained that it did not agree at all with Payment Schedule No. 32, it had only applied for adjudication in relation to the following disputed items:

(a) deductions made by York's Superintendent for certain "defective works", (Defective works deduction);

(b) deductions to its claim for work carried out in respect of the building façade (Façade deduction);

(c) deductions to its claim for work carried out in respect of pipework for the fire sprinkler system on Level 4 through to Level 39; (Pipework deduction).

• [106] By the Second Adjudication Decision, the Adjudicator decided that the amount payable in respect of Payment Claim No. 32 was $920,892.17 (incl. GST).
• [107] Tomkins challenges the Second Adjudication Decision to the extent that the following deductions were allowed by the Adjudicator:

(a) $200,000 for the Defective works deduction;

(b) $4,764,178.27 for the Façade deduction; and

(c) $150,000 for the Pipework deduction.

• [108] Similar issues arose between the parties in respect of these matters to those dealt with in the First Adjudication Decision concerning defective work. Tomkins once again raised arguments as to why it disputed York's "set-off" claims for the allegedly "defective works". It rejected any suggestion that the works were defective and submitted that the matters raised by the Superintendent comprised nothing more than expressions of "pure opinion" by York's building inspector, Mr John Groom; it maintained the subject works were simply "incomplete" or "in progress", rather than defective; it asserted the problems encountered involved design issues for which York was solely responsible; it claimed it had responded to the issues raised in York's Scott Schedules and was working with the Superintendent to resolve any valid concerns; and further argued that, in any event, the Superintendent's Site Instructions did not specify any timeframe within which any rectification of the supposedly "defective works" was to occur. As with the first adjudication application, Tomkins maintained that the deductions were not authorised under either clause 29.3 or 37.7 of the contract.
• [109] In its adjudication response, York reiterated its position from the first adjudication application, that it had not purported to make any deductions under clause 29.3 of the contract and that provision did not apply; that its Superintendent was otherwise entitled to make deductions for what it considered were defective works or works not in accordance with the contract when providing its opinion as to amounts payable in respect of Tomkins' progress claim, in accordance with clause 37.2 of the contract; that as the contract did not provide for the matter, the value of the construction work was to be determined in accordance with s 72(1)(b) of the BIF Act, by deducting the estimated costs of rectifying the defective work; and that, pursuant to clause 37.7 of the contract, it was entitled to make deductions for consultants' fees it had incurred in respect of the defective works.

• [110] This deduction concerns certain discrete categories of works, including for internal fire rated sealing between the window subframe and the façade and door assemblies, fixing of mineral fibre and jointing of plasterboard.
• [111] In its "Work Not in Accordance With Contract" schedule accompanying, and said to form part of, Payment Schedule No. 32, York provided the following comments:

"Full details and particulars have been previously provided in the Scott Schedule/ John Groom reports issued to the Contractor by way of SI170, 170A, SI209 and 51223 to date of works which are currently not in accordance with the Contract. The value of the deduction noted herein is the value of the works undertaken to date which have not been completed in accordance with the Contract. The total value of these works completed as assessed earlier in this schedule are hereby reduced by this sum. In the alternative, the deduction is made pursuant to clause 29.3 and/or 37.7 of the Contract. Defective works and/or works not in accordance with the Contract as per appended Scott Schedule dated 2.5.24, works include sealing around window openings, fixing of mineral fibre, jointing of plasterboard, among others"

• [112] The Adjudicator gave the following reasons for this aspect of the Second Adjudication Decision:

"91. In the payment schedule, the respondent contends:

1. Details of the defective works have been provided in the Scott Schedule/John Groom reports, defective work including sealing around window openings, fixing of mineral fibre and joining of plasterboard.
2. The deduction is against the value of work carried out (not in accordance with the contract) alternatively pursuant to clause 29.3/37.7 of the contract.

1. In the adjudication application, the claimant contends:
   1. It 'is actively working with the Superintendent and Principal to resolve any valid concerns regarding the permanent works;
   2. ... the majority of 'defects' are in fact issues relating to incomplete works / works in progress, and should not be characterised as 'defects' at this stage of the works.'
   3. ... (a) the Superintendent purported to issue a Defect Direction without first issuing a Defect Notice or providing the Claimant at least the minimum time period (10 business days) to rectify the alleged defects;

(b) the Superintendent never gave the required Final Notice under Clause 29.3(f) notifying the Claimant that the Principal intends to have the subject works rectified by others; and

(c) the Principal has taken no steps to have the alleged 'defective works' rectified by others, much less has it incurred any costs on rectification costs.'

1. In the adjudication response, the respondent contends:
   1. '... pursuant to section 72(1)(b) of the Act, a valuation of construction work is to include the estimated costs to rectify the defect ...'
   2. '... on 5 May 2024, Mr Groom undertook a further inspection of the site, resulting in a Scott Schedule detailing the non-compliant and/or defective works ... which was provided to the Claimant ... on 10 May 2024 ...'
   3. The Scott Schedule relevantly provided:
      1. Internal fire rated sealing between the window subframe and the façade and door assemblies are defective - $60,000.00.
      2. Mineral fibre/Rockwool not fixed to flashing - $60,000.00.
      3. Sliding glass doors need to be removed and reinstalled due to no waterproofing to window openings - $50,000.00.
      4. Leaking basement D wall - $30,000.00.
2. The claimant does not expressly respond to the above 'defects'. The respondent has provided copies of its site instruction and Scott Schedule with extracts from Mr Groom's reports including photos of the defects.
3. Pursuant to section 72(1)(b) of the Act a valuation of construction work is to include the estimated cost to rectify the defects. This provision applies irrespective of the provisions of clause 29.3 of the general conditions of contract.
4. I consider the respondent has demonstrated the works listed above are defective or not in accordance with the contract and is entitled to deduct the estimated cost of rectifying the defects pursuant to section 72(1)(b) of the Act.
5. Section 72(1)(b) of the Act requires an estimate of the costs of rectifying a defect(s) to be taken into account. The claimant has not provided an estimate of the cost of rectifying the defects above but the respondent has provided estimates.
6. Accordingly, I value the deduction for 'Defective Work' or work not in accordance with the contract at $200,000.00 excl. GST as estimated by the respondent."

• [113] Tomkins claims that this aspect of the Second Adjudication Decision is affected by the following jurisdictional errors:

(a) the Adjudicator failed to consider its submissions and the material to which it referred and attached to its submissions (Jurisdictional Error 1);

(b) the Adjudicator failed to consider the provisions of the contract (Jurisdictional Error 2);

(c) the Adjudicator failed to perform the task of valuing the work or the estimated costs of rectification (Jurisdictional Error 3).

• [114] As to Jurisdictional Error 1, Tomkins says that the Adjudicator incorrectly decided that it had not directly responded to York's Scott Schedule list of defects. It points out that it had contested the issue of defective work altogether, that it had made submissions to that effect and had further submitted that the work was "incomplete" or "in progress" and not defective. It says the Adjudicator's reasons show that he did not genuinely consider its submissions and intellectually engage with them and the material before him; and that they do not disclose his reasoning process and the basis upon which he was satisfied that the works were defective, in particular, the reasons do not disclose how he found that the work was defective rather than merely incomplete. It submits that the inadequacy of the Adjudicator's reasons show that he failed to intellectually engage with, and genuinely consider, its submissions, material and the provisions of the contract.
• [115] As to Jurisdictional Error 2, Tomkins repeats that the Adjudicator was simply wrong to conclude that s 72(1)(b) of the BIF Act applied to the valuation of the relevant work irrespective of clause 29.3 of the contract. It submits that clause 29.3 did provide for the valuing of defective work and that York's supposed entitlement to the deduction could only have been determined under that provision of the contract. It says it was a jurisdictional error for the Adjudicator to determine the amount payable not in accordance with the contract, pursuant to s 72(1)(a) of the BIF Act.
• [116] As to Jurisdictional Error 3, Tomkins says that even if s 72(1)(b) of the BIF Act did apply, the Adjudicator did not engage in any intellectual process of reasoning and erred by simply adopting York's valuation. It points out that, contrary to the Adjudicator's statement at paragraph 93(c) of his reasons, Mr Groom's 2 May 2024 Scott Schedule did not provide any estimate of costs to rectify the alleged defects.
• [117] Tomkins submits that the impugned paragraphs of the Adjudicator's decision dealing with York's claim to set off $200,000 for defective works should be declared void and the amount payable to it by York should be adjusted accordingly.
• [118] York submits that none of the alleged jurisdictional errors are made out.
• [119] With respect to Jurisdictional Error 1, York says that the Adjudicator expressly noted in his reasons Tomkins' submission about the supposedly defective work and there is no basis to conclude that he failed to consider it. It repeats the submissions it made in respect of the First Adjudication Decision, that Tomkins did not refer the Adjudicator to the specific evidence that it apparently relied upon to demonstrate that the work was simply "incomplete" or "in progress". Whilst it accepts that Tomkins disputed that the work was defective, York points out that Tomkins did not make any specific submissions about each alleged defect. It submits that this was an important factual issue for the Adjudicator to decide and that Tomkins' blanket denial of defective work did not substantiate its position. In those circumstances, it further submits, the Adjudicator was correct to conclude that Tomkins did not expressly respond to the allegations of defective work that had been the subject of deductions applied by York.

• [122] For reasons similar to those I have already stated in respect of the First Adjudication Decision, none of the alleged jurisdictional errors are established.
• [123] With respect to Jurisdictional Error 1, I reject Tomkins' arguments that the Adjudicator did not consider its submissions, material or provisions of the contract. I again apply the approach from Ceerose to my consideration of the Adjudicator's duty to "consider" matters under s 88(2) of the BIF Act. On that basis, it cannot be said that the Adjudicator failed to consider Tomkins' submissions. He clearly set out the essence of Tomkins' case at paragraph 92 of his reasons. As for the alleged failure to consider Tomkins' material, I repeat my earlier observations about the responsibility of a party to an adjudication application to clearly identify the material it relies upon; and that an adjudicator is not obliged to trawl through the material unaided to find evidence that a party has not bothered to identify.
• [124] Whilst Tomkins claims that it did clearly identify the material that it relied upon in its adjudication application submissions, once more it is my assessment that what it did in that respect was wholly inadequate. When scrutinised, the material that it cited cannot support the argument that the Adjudicator failed to consider its case.
• [125] The extent of the relevant submissions made by Tomkins in its adjudication application on this aspect of its claim was as follows:

"P Invalid deductions for 'defective works' / 'works not in accordance with contract' (Clause 29.3)

1. In the Payment Schedule, the Superintendent certified a deduction of $5,632,552.88. The so-called deductions for amounts allegedly due to York. The reasons for withholding payment in the Payment Schedule are stated to be:

'Less work certified, as not being in accordance with the Contract'

1. $5,632,552.88 was withheld from the Claimant on the basis of alleged 'defective works' / 'works not in accordance with contract'.
2. As Mr Justin Grant confirms in his statutory declaration, and is further supported by the Claimant's response dated 28 May 2024 to a recent Notice to Show Cause issued by the Principal:

(a) the Claimant is actively working with the Superintendent and Principal to resolve any valid concerns regarding the permanent works; and

(b) the majority of 'defects' are in fact issues relating to incomplete works / works in progress and should not be characterised as 'defects' at this stage of the works.

1. Further, as a matter of Contract, the Superintendent had no basis for withholding payments by way of these deductions.
2. The Adjudicator ought to find that the decide that the [sic.] following deductions are valued at $nil (the balance of alleged 'defective works' not being disputed by the Claimant at this particular juncture):

1. The Respondent and Claimant have recently fallen into dispute about alleged defective works carried out on the Project. This now extends to the entire value of the Façade System and Pipework claimed in the Payment Claim.
2. The Claimant squarely rejects those allegations. As the Claimant has explained in its responses to Site Instructions 170, 170A, 209 and 223, the issues raised in the Superintendent's Scotts Schedules in large part comprise:

(a) expressions of pure opinion from the Principal's building inspector, Mr John Groom, and which had been made without reference to Australian standards / codes or contract documents;

(b) 'works in progress' or 'incomplete works'; and/or

(c) technical design issues for which the Principal is entirely responsible.

1. This is set out in the Claimant's response dated 28 May 2024 to a Notice to Show Cause issued by York (addressed at Section A of Mr Rodney McKenzie's First Statutory Declaration).
2. In short, and as further detailed below and in the First Statutory Declaration (Section C) and Second Declaration of Mr Justin Grant (Section D):

(a) the Superintendent has in recent weeks issued Scott Schedules to the Claimant;

(b) the Scott Schedules contained lists of alleged defects in the works;

(c) the Claimant has responded to each item in the Scott Schedule and has committed to resolving any valid concerns with the Superintendent and Principal; and

(d) the Superintendent has included deductions in the Payment Schedule for alleged defects first notified to the Contractor on that very same day (15 April 2024).

1. On 9 April 2024, the Superintendent issued site instruction SI 170 to the Claimant, which included a Scott Schedule setting out a list of alleged defects in the works (9 April Scott Schedule).
2. On 15 April, the Superintendent issued SI 170A containing an updated version of the Scott Schedule containing further alleged defects (15 April Scott Schedule). On the same date, the Superintendent issued the Payment Schedule, which as set out above, certified a deduction for 'work certified as not being in accordance with the Contract'. In other words: the deduction was made on the very day the alleged defects in SI 170A were first raised with the Claimant.
3. The Claimant responded to both SI 170 and SI 170A by letter dated 23 April 2024.
4. On 13 May 2024, the Superintendent then issued Site Instruction no. 209 (SI 209). The Claimant responded to SI by its letter dated 24 May 2024.
5. Notably: the Superintendent did not specify any time for any rectification works to occur. Much less allow the Claimant even the minimum period of 10 business days to respond to the 9 April Scott Schedule before applying its deductions in the Payment Schedule.
6. As confirmed in the Second Grant Declaration and Second McKenzie Declaration, no remedial works have been performed by York (whether to the value of the deductions made in the Payment Schedule, or at all)."

• [126] Mr Grant's second statutory declaration contained the following relevant statements:

"87. I am aware that the Superintendent included deductions for 'defective' works / 'works not in accordance with Contract' in the May Progress Certificate. Those deductions were based on Site Instruction 170, Site Instruction 170A, Site Instruction 209 and Site Instruction 223 (Site Instructions) which enclosed 'Scotts Schedules' prepared by the Superintendent.

1. I do not know why the Superintendent certified monies payable to York by reference to these instructions. I can confirm that:

(a) Tomkins responded to the Site Instructions. In our responses, we committed to resolving any valid concerns raised by York or the Superintendent and provided a response to all items in the Scotts Schedule (Scotts Schedule Response). Collated, attached and marked 'JG(2)-10' are copies of the Scotts Schedule Response; and

(b) rectification of defects have either already taken place or will take place within our usual sequence of works.

(a) York has not engaged any other contractors to rectify any defects in the works; and

(b) aside from the contents of the May Progress Certificate, the Superintendent has not provided any breakdown or substantiation of the amounts certified as payable to York for 'defective' works / 'works not in accordance with Contract'. It is not clear to me that the figures deducted by the Superintendent have any relation to actual remedial works / actual costs. From my perspective, these deductions are arbitrary and seem intended to penalise Tomkins by minimizing cash flow on the Project.

1. In my experience, it is very unusual for a superintendent to certify deductions for defects when the contractor is actively working with the superintendent and principal to address issues in the works."

• [127] Attachment JG(2)-10 to Mr Grant's second statutory declaration is a bundle of about 100 pages of material. The statutory declaration provides no further identification or description of what the material is, or which parts of it relate to the subject work. The bundle does however contain copies of Tomkins' letters responding to York's various Site Instructions 170, 170A, 209 and 223, together with copies of Mr Groom's various Scott Schedules, which have in each instance been amended to include an additional "Contractors Response" column.
• [128] I note that, consistent with its case in support of the second adjudication application, Tomkins provided the response letter to York, dated 24 May 2024, in respect of Site Instruction 209, which relevantly stated:

"1. As noted in the Contractors previous response to SI170 & 170A, the Contractor sees the issuance of the Scotts Schedule as a tool for the Principal and Contractor to work collaboratively and ensure the project remains at the highest possible standard and is completed with minimal defects and compliance issues. The Contractor requested the Superintendent ensure that any subsequent issuance of the Scott Schedule included a factual basis for non-compliance for each of the items raised i.e referencing specific Australian Standards and codes as a minimum. This is to avoid items being raised that are based on pure opinion / observation. It appears with the issuance of the latest Scotts schedule that items are still being raised with little to no factual basis and some are still pure opinion based.

2. The Contractor notes that a high percentage of the concerns raised are still simply 'works in progress' (WIP) or 'incomplete works.' These concerns/items raised will naturally be resolved as the works progress and are completed on-site and in line with the relevant standards and codes. Works in progress and incomplete works do not constitute 'defective work' for the purposes of Clause 29.3 of the Contract. Whilst these items are still able to be included within the Schedule, and the Contractor is willing to work with the Superintendent and Principal to resolve any issues relating to those items, they should be denoted as 'WIP' rather than being grouped together as 'defective works' as they were in Site Instruction 209 titled 'Defective Works'.

3. The Superintendent within instruction 209 has requested a written response within 10 business days of its notice. The Contractor has within this response included a copy of the revised schedule that now includes a Contractor response column to each of the items raised.

4. The Contractor again requests confirmation that the Principal has issued revised schedule out to their relevant consultant team. This is due to the fact that many issues raised are inherently related to the design of the project and therefore should be responded to by the Principal, through comments provided by their consultant team. Relevantly, Clause 29.3(c1) of the Contract states that the Contractor's obligation to redesign works to address defects identified by the Superintendent is limited to the 'Contractor's design obligations' as defined in the Contract (i.e. limited to the retention works). The Contractor therefore requests to see the consultant team responses in relation to the design related concerns raised within the schedules.

5. The Superintendent has reserved its right to 'remove costs for works which do not comply with the Contract in our progress claim assessment' and to 'make alternative arrangements for rectification at the contractors cost as set out in clause 29.3'. The Contractor notes that as per items 1 and 2 above, the majority of the concerns raised are in relation to works in progress and works that are not yet complete. These items are therefore not Defective Works, are not bound by Clause 29.3 as referenced and the Superintendent is not entitled to certify any moneys due from the Contractor to the Principal in respect of those works.

6. Similarly, for the Principal to make arrangements to rectify works not yet complete is also not contemplated by clause 29.3 as these works are not considered 'defective works'.

7. The Contractor looks forward to receiving from the Superintendent:

1. An updated version of the Scotts Schedule which:
   1. identifies the factual basis for the alleged 'defective work', including e.g. the relevant code, standard or Contract requirement that the Superintendent considers has not been complied with; and
   2. appropriately annotates 'works in progress' and 'incomplete works' as WIP and therefore not subject to Clause 29.3 of the Contract.
2. Confirmation that the Principal or Superintendent have provided the Scott Schedule to the Principal's consultants for their review and comment. If this has already occurred, the Contractor requests that the Superintendent provide a copy of the Principal's consultants' response to the Scott Schedule.

8. The Contractor otherwise reserves its rights under the Contract and at law."

• [129] The Contractors Response comments in the various annotated Scott Schedules within Attachment JG(2)-10 are far from clear. Unfortunately, the submissions made by Tomkins in support of the second adjudication application, and in support of the present application, provided very little assistance in identifying the relevant parts of any of these documents that are said to relate to the subject work and which it is said the Adjudicator failed to consider. As best as I can tell, it does seem that some responses were provided by Tomkins in respect of the subject defective works. There appear to be general responses consistent with its case, such as "these works are not yet complete" or "this is works in progress and will be completed as the works progress". There are also some more specific responses, but without direction and assistance I am largely left to guess at whether the commentary relates to the specific works the subject of this aspect of the claim.
• [130] Ultimately, I am not persuaded that the Adjudicator's statement, at paragraph 94 of his reasons, referring to the list of defects catalogued in preceding paragraph 93(c), that "the claimant does not expressly respond to the above 'defects'", shows that he failed to consider Tomkins' submissions or material. In the circumstances, I do not think the Adjudicator's observation was inaccurate. Tomkins made a blanket denial of defective work but did not descend into any specific reasons or arguments in its submissions, apart from citing the material that it claimed supported its case, which, as I have noted, beyond the body of Mr Grant's second statutory declaration is very difficult to follow and comprehend.
• [131] I do not consider the Adjudicator's reasons fail to disclose his reasoning process. It is obvious from his reasons that he found the subject work was defective and that he did so on the basis of the Site Instructions and Mr Groom's Scott Schedules. I once more stress that I am not presently concerned with whether the Adjudicator's factual finding was correct. Rather, my focus is to determine whether such a finding was arrived at by the Adjudicator lawfully exercising his jurisdiction and the statutory functions and powers conferred upon him by the BIF Act. I am not satisfied that Tomkins' criticisms of the Adjudicator's reasons demonstrate that he failed to consider its submissions or supporting material, such that jurisdictional error is established.

• [135] This aspect of the adjudication application concerned disputes about the design responsibility for, and quality of, the building façade, which is to include an extensive glass curtain structure.
• [136] In its claim summary accompanying Payment Claim No. 32, Tomkins provided the following details in respect of the façade works it had carried out:

• [137] As the summary noted, at the time of Payment Claim No. 32 Tomkins had already been paid an amount of $4,764,178.27 for façade works it had previously completed.
• [138] In its Payment Schedule No. 32 covering letter, York relevantly noted in respect of "Curtain Walling":

" • With reference to the following Superintendent Instructions, we note that the installed façade installation is not in accordance with the Contract...[and the letter then set out the relevant SIs in which this had been noted]

• As noted in previous Certificates 31 and 32 we reserved the right to omit any and all façade claims in future assessments until the requirements of the Contract, including but not limited to the façade specification and our multiple instructions on this matter, are complied with...
• At this time the façade system still does not comply with the requirements of the Façade Specification and is not in accordance with the Contract (Clause 29.3), including but not limited to: -
  • Design and Construct responsibilities of the Contractor for the façade component as set out in various instructions;
  • Form 15;
  • FP1.4 Report

• Consequently, and as previously advised, we have omitted the gross claim for the façade which: -
  • Has not been completed in accordance with the Contract;
  • Is currently 'not approved' by the Certifier;
  • Is the source of serious and valid Health and Safety concerns."

• [139] In its "Work Not in Accordance With Contract" schedule accompanying, and said to form part of, Payment Schedule No. 32, York provided the following further comments in respect of the façade deduction:

"Full details and particulars have been previously provided in the Scott Schedule/ John deduction noted herein is the value of the works undertaken to date which have not been completed in accordance with the Contract. The total value of the façade works completed as assessed earlier in this schedule are hereby reduced by this sum. In the alternative, the deduction is made pursuant to clause 29.3 and/or 37.7 of the Contract. Notice has been issued in S1168 that façade works are not in accordance with the Contract under Clause 29.3 and/or not currently in accordance with the Contract. Claim for façade rejected because the entirety of the work installed by the Contractor is currently non-compliant with the Contract. We further note deficiencies in relation to the waterproofing around installed windows (including openings not being waterproofed and a lack of waterproofing behind sliding doors in accordance with AS 4654.2), leaking façade, rusting façade members, noted in Schedule issued in S1170, S170A and SI209 including smoke seals clashing with pelmets among other things. Significant glazing removal and replacement may be required. Contractor was required to comply with the Form 15 and FPI.4 performance requirements for the Façade in accordance with the Contract and/or Superintendent's direction under the Contract dated 4 April 2022 in response to RFI 08 which the Contractor did not respond with any objections to. Subsequently on 11 September 2023, the Superintendent issued SI 26 in relation to the glazing and requiring a Form 15 to be provided. Contractor is also required to pass on any Form 15s from relevant subcontractors as per clause 9.6 of the Contract which it has failed to do for the façade as contractually required and directed; refer to letter from Principal to Contractor dated 22/11/23."

• [140] In its adjudication response, York made detailed submissions to support its contention that the façade works were not in accordance with the contract, concluding with the following statement:

"In summary, considering the persistent non-conformance issues and the Claimant's failure to comply with critical contract requirements within reasonable time frames, the Respondent is justified in withholding payment for the façade works completed to date...Withholding payment is a prudent measure (permitted under the Contract) to ensure that the façade works meet all contractual obligations and safety standards before any further payments are made..."

• [141] In his reasons, at paragraphs [66] to [79] the Adjudicator noted Tomkins claimed the works were 46.03% complete, whereas York contended that they were 29% complete, equating to the amount of $4,764,178.23 (excl. GST) that had previously been paid to Tomkins; that York also contended that the works were defective and estimated the value of the defective work was $4,764,178.23 (excl. GST); that later in its adjudication application Tomkins' reduced its claimed amount to $6,802,706.65 (excl. GST) to account for "unfixed materials"; that Tomkins had provided supporting material for its claim for the percentage of works completed, whereas York had not; and that as a result the value of the façade works completed was $6,802,706.65 (excl. GST), less the amount of $4,764,178.23 (excl. GST) previously certified, giving an adjudicated amount of $2,038,528.65 (excl. GST).
• [142] Later on, after setting out the respective submissions of the parties, including what each contended the contract provided in respect of design responsibilities, the Adjudicator returned to the issue of York's assertion of "defective" works and gave the following reasons for this aspect of his Second Adjudication Decision:

"102. The claimant's contention is that as the contract is an AS4000-1997 is a construct only contract and the claimant does not have any design responsibility, with the exception of retention works. This is perhaps a too general contention as the contract is an amended form of AS4000-1997 and includes the following clauses in respect of design responsibility and particularly submissions of Form 15s:

1. Clause 1 of the general conditions 'Contractor's design obligations - means all tasks necessary to design and specify the retention works ..., including preparation of the design documents and developing the preliminary design.'
2. Clause 9.6 of the general conditions requiring the claimant to procure from subcontractors a form 15.
3. Annexure Part G, which includes the façade specification (and above provisions regarding design).
4. Annexure Part H which includes outlines of the responsibility assignments for amongst other things design preparation and certification.

1. Whilst clauses 1 and 9.6 are in the same document, the 2 clauses can be considered separately on the face of their wording and each has a specific meaning, clause 1 defining the claimant's responsibility for the design of the retention works and clause 9.6 imposing a responsibility on the claimant to obtain form 15 from its subcontractors, of which the façade subcontractor is one such subcontractor.
2. As listed above, the façade specification includes a number of express requirements for design and certification, which would include provision of a form 15 where appropriate.
3. Annexure Part H does also assign design and certification responsibilities, mainly to the respondent. However, in the order of precedence of contract documents, the amended general conditions is higher in precedence to Annexure Part G, which itself is higher in precedence to Annexure Part H.
4. Accordingly, I consider that the claimant is required to provide a form 15 for the façade works.
5. The respondent is concerned that the entirety of the façade may be defective in particular weatherproofing and structural integrity. These issues are supported by the reports and photos provided in the adjudication response. The respondent has requested the claimant to provide a form 15 which would address these issues.
6. In the absence of a form 15, which as discussed above I find the claimant is required to provide, the respondent's concerns over the façade are not addressed by the claimant. Accordingly, as contended by the respondent, the entire façade may require removal and replacement.
7. The respondent has estimated the costs of rectifying the defects at the previously assessed value of the work completed (prior to the payment claim) of $4,764,178.27 excl. GST. The claimant has not provided any alternate estimate of the cost of rectifying the defects in the façade.
8. Accordingly, I value the estimated cost of rectifying the facade at $4,764,178.27 excl. GST pursuant to section 72(1)(b)(iv) of the Act."

• [143] I note that the "Form 15" referred to in the above excerpt is a compliance certificate for building design or specification under the Building Act 1975 (Qld) and the Building Regulation 2021 (Qld). It is used to certify that particular building work, when performed in accordance with the provided design or specification, will comply with relevant building codes or standards. It is needed where certain works to be undertaken on a project require expert design to ensure compliance with proper building standards.
• [144] Tomkins claims that this aspect of the Second Adjudication Decision is affected by the following jurisdictional errors:

(a) The Adjudicator's decision is illogical or perverse (Jurisdictional Error 4);

(b) The Adjudicator's decision is incoherent (Jurisdictional Error 5);

(c) The Adjudicator failed to consider its submissions and the material to which it referred and attached to its submissions (Jurisdictional Error 6); and

(d) The Adjudicator failed to consider its submissions and the provisions of the contract (Jurisdictional Error 7).

• [145] With respect to Jurisdictional Error 4, Tomkins says it was illogical and perverse for the Adjudicator to have decided that the value of the façade works carried out thus far by Tomkins was $6,802,706.65, on the basis that they were 48.03% complete, leaving an amount payable of $2,038,528.65, but to then separately decide that York was entitled to set-off $4,764,178.27 (being the precise amount previously paid to Tomkins for work to date) on the basis that this amount represented the reasonable costs of rectification works. Tomkins points out that in valuing the works at $6,802,706.25, the Adjudicator did not allow any deduction for defective works, and it was therefore illogical or perverse for him to subsequently allow the deduction of $4,764,178.27 for defective works.
• [146] Tomkins further says in respect of Jurisdictional Error 5 that in deciding that the sum of $4,764,178.27 was the reasonable value of rectification works, the Adjudicator merely accepted York's submission that "in the absence of a Form 15" the costs of rectification of the work said to be defective should be estimated by reference to the amount which York had already paid Tomkins for the completed façade works, namely $4,764,178.27. Tomkins contends that such reasoning is incoherent and that there is no rational connection between the absence of a Form 15 and the estimated rectification costs arrived at by the Adjudicator. Tomkins says the irrationality of the Adjudicator's reasoning is underscored by the fact that York acknowledged in its adjudication response that it had received a Form 15 certificate for the façade from Tomkins.
• [147] With respect to Jurisdictional Error 6, Tomkins again submits that the Adjudicator's reasons show that he did not intellectually engage with its submission that it was not responsible for the design of the façade and that it was York's consultant, BG&E, that designed the system and who was therefore responsible for providing certification of its design.
• [148] Finally, with respect to Jurisdictional Error 7, Tomkins once more argues that it is evident from his reasons that the Adjudicator did not intellectually engage with its submissions that York was not entitled to claim a deduction because it had not complied with the requirements of clause 29.3 of the contract. Thus, it submits, the Adjudicator failed to consider its submissions and the provisions of the contract, and incorrectly decided that s 72(1)(b) of the BIF Act was applicable without first considering s 72(1)(a), which would have required him to value the works in accordance with the contract, viz. clause 29.3.

• [156] I accept York's argument that the subsequent provision of a Form 15 by Tomkins is irrelevant. The Adjudicator was required to decide the matters under s 88(1) of the BIF Act according to his assessment of whether the respondent had failed to pay any amount owed to the claimant by the date due for payment. Irrespective of whether the Form 15 was inadequate because of unaddressed "non-conformances", it was provided after that date.
• [157] I reject Tomkins' argument in respect of Jurisdictional Error 6 that the Adjudicator failed to consider its submissions concerning who bore responsibility for the design of the façade, as required by s 88(2) of the BIF Act. The Adjudicator expressly referred to Tomkins' argument on this point in his reasons, considered relevant provisions of the contract, and made a factual finding contrary to Tomkins' position that it was not responsible. There is no basis to conclude that he failed to consider Tomkins' argument.
• [158] With respect to Jurisdictional Error 7, I again conclude that it is obvious that the Adjudicator considered clause 29.3 of the contract did not apply and that s 72(1)(b) of the BIF Act did. It was on that basis that he proceeded to decide the value of the work in accordance with that provision.
• [159] Nevertheless, I find the Adjudicator's ultimate resolution of this issue and his assessment of the value of the work to be problematic and demonstrative of jurisdictional error.
• [160] The first concern I have with the Adjudicator's approach is that he did not actually make a finding that any of the work was defective. Rather, he accepted that the entire façade "may" require removal and replacement. He reached that conclusion on the basis of his earlier findings that Tomkins was required to provide a Form 15 and that in the absence of doing so the "concerns" raised by York about the work performed had not been addressed. Although it seems that the Adjudicator accepted York's argument that the work was not in accordance with the contract, that was not a finding that the work was defective, such that it had to be removed and replaced. At its highest, it was a conditional finding that those things might need to be done.
• [161] The second concern I have is that irrespective of the absence of an actual finding that the work was defective, the Adjudicator purported to value the work under s 72(1)(b) of the BIF Act without there being any evidence before him of the estimated costs of rectifying the defect. The Adjudicator assessed the estimated costs as $4,764,178.27, which was simply the amount that had previously been paid by York to Tomkins for the work done before Payment Claim No. 32 and which York claimed it was entitled to withhold under the contract. Irrespective of whether that was so, the amount identified was not an estimate of the costs of rectifying the work. Unlike other instances in the First and Second Adjudication Decisions, where the Adjudicator had assessed the value of defective work according to the evidence before him, on this occasion there was no such evidence and thus no foundation for his decision.

• [164] This aspect of the adjudication application concerned a dispute about the pipework material used by Tomkins in some of the works carried out under the contract.
• [165] In its "Work Not in Accordance With Contract" schedule accompanying, and said to form part of, Payment Schedule No. 32, York provided the following comments in respect of the pipeworks:

"Full details and particulars have been previously provided in the Scott Schedule / John Groom reports issued to the Contractor by way of SI1 70, 170A, SI209 and SI223 to date of works which are currently not in accordance with the Contract. The value of the deduction noted herein is the value of the works undertaken to date which have not been completed in accordance with the Contract. The total value of the pipework installation works completed as assessed earlier in this schedule are hereby reduced by this sum. In the alternative, the deduction is made pursuant to clause 29.3 and/or 37.7 of the Contract. CPVC pipework not approved and/or is not in accordance with the Contract. Has been approved in balcony areas only. All other CPVC pipework to be removed. Refer SI172, SI197, SI206, SI237."

• [166] Tomkins claimed that it was permitted to use the CPVC pipe it had installed, as it had already done so in accordance with shop drawings and without objection, and the CPVC pipe material was entirely suitable. York claimed that such pipework was not approved and not in accordance with the contract. It noted that the relevant specification for the pipework expressly stated that it, "...shall be at least equivalent to medium grade black steel tubing complying with AS 1074...". It submitted that the installed CPVC pipe did not meet that specification.
• [167] After noting that Tomkins relied upon expert opinions as to the suitability of CPVC for the fire sprinkler system from SJM Hydraulics, Solis Fire Engineers and Auscoast Fire Services; that York relied upon the expert opinion from Hitech Materials; and then setting out the respective submissions of the parties as to what each said about the specification and what type of material was permitted for the pipework; the Adjudicator gave the following reasons for this aspect of the Second Adjudication Decision:

"114. Both parties agree that the relevant contract specification requires 'Pipework above ground on the system side of the alarm valve shall be at least equivalent to medium grade black steel tubing complying with AS 1074'.

1. The claimant contends that CPVC is 'equivalent' to black steel tubing and/or the variation to CPVC was approved within the approval of shop drawings.
2. The claimant's reports from Johnson (SJM Hydraulics P/L) and Mackie (Director of Auscoast Fire Services) state CPVC is at least equivalent to medium grade black steel pipe but only when installed, tested and commissioned in accordance with the manufactures [sic. manufacturer's] requirements and CPVC pipe system clearly meets the intended performance criteria of our standards in relation to material quality and performance (respectively). I have not been able to locate a copy of the Shelley (Director of Solis Fire Engineers) report in the adjudication application.
3. The respondent's report from Walls (Hitech Materials P/L) states that CPVC pipes for a fire sprinkler distribution system can be adversely affected by certain mastics or sealants. Additionally a medium grade black steel tube complying with AS 1074 is less likely to be impacted by these substances compared to CPVC pipes. This report does not expressly state that CPVC is not equivalent to black steel tubing.
4. Accordingly, CPCV pipework may be utilised for fire sprinkler systems but only in accordance with manufacturers requirements. The claimant has not evidenced the installation of the CPVC pipe has been done in accordance with the manufacturer's requirements.
5. The Walls report finds that black steel tube is less likely to be impacted by mastics or sealants. In the circumstances, the parties disagree whether CPVC pipe is equivalent to black steel tube.
6. The claimant contends that the change to CPVC pipe was authorised when working drawings were approved.
7. Any change to the piping would be a variation of the contract, and in this case it appears that CPVC is less expensive and would therefore be a variation for the convenience of the claimant.
8. Clause 36.3 of the contract relevantly provides that 'lf the Contractor requests the Superintendent to direct a variation for the convenience of the Contractor the Superintendent may do so.'
9. The claimant has not provided any details of a request to the superintendent for the variation of the contract for the use of CPVC pipe.
10. It cannot be considered that the depiction of CPVC pipe on working drawings is sufficient to be considered a request for a variation pursuant to clause 36.3 of the contract.

• [168] Tomkins claims that this aspect of the Second Adjudication Decision is affected by the following jurisdictional errors:

(a) The Adjudicator denied it procedural fairness (Jurisdictional Error 8); and

(b) The Adjudicator failed to consider its submissions and the provisions of the contract (Jurisdictional Error 9).

• [169] For Jurisdictional Error 8, Tomkins says the Adjudicator denied it procedural fairness by determining this aspect of the adjudication application on a basis not contended for by the parties. In that respect, it points to the Adjudicator's reasons, at paragraph 118, where he determined that CPCV pipework could be used for the fire sprinkler systems, but only "in accordance with manufacturers' requirements"; and found that the claimant had not provided evidence that the installation of the CPVC pipe had been done in accordance with the manufacturer's requirements.
• [170] Tomkins says the "manufacturer's requirement" point was not raised by York as the reason why the work was said to be defective. Rather, its sole argument was that the CVPC pipework was not "equivalent to medium grade black steel tube pipe". It submits that the Adjudicator did not notify the parties that he intended to decide the matter on a basis which had not been addressed by either party. It says he ought to have done so, if that was his intention, and that he should have sought further submissions from the parties on the point. Had he done so, Tomkins submits, it could have addressed whether the installation complied with the manufacturer's requirements. In the circumstances it says it was denied procedural fairness, amounting to jurisdictional error.
• [171] As to Jurisdictional Error 9, Tomkins again submits that the Adjudicator's reasons reveal that he failed to genuinely consider and intellectually engage with its submissions that York was not entitled to claim a deduction for the pipework because it had not complied with clause 29.3 of the contract. It again says that the Adjudicator failed to consider the contract provision and incorrectly decided that s 72(1)(b) of the BIF Act applied, without considering whether s 72(1)(a) of the BIF Act applied.
• [172] Tomkins submits that the Adjudicator's decision in respect of York's set-off claim should be declared void, with the result that the adjudicated amount for the pipework should be increased by an amount of $150,000.
• [173] York submits that neither of the alleged jurisdictional errors is established.
• [174] With respect to Jurisdictional Error 8, York says the Adjudicator did not deny Tomkins procedural fairness as it alleges. It submits that the basis for the Adjudicator's decision arose on Tomkins own evidence, pointing out that the expert report of Mr Johnson and Mr Mackie each qualified their opinions as to the suitability of the CPVC piping, by noting that it would be equivalent to medium grade black steel when installed, tested and commissioned "in accordance with the manufacturers [sic. manufacturer's] requirements". That being so, York submits, the Adjudicator's conclusion was rational and obvious and did not deny Tomkins procedural fairness as it always had the opportunity to make submissions about its own expert opinion evidence or to lead other evidence.

• [176] In my view, the Adjudicator did deny Tomkins procedural fairness. The "manufacturer's requirements" point was one that neither had raised and was not the basis of their dispute. I do not accept York's argument that Tomkins could have, and should have, anticipated that it would need to address whether the pipework had been installed in accordance with the manufacturer's requirements. Whilst it is true that this point arose from Tomkins' own expert evidence, that does not provide an answer to the complaint of a denial of procedural fairness in my opinion. Where York had not identified the point as the basis for its deduction for defective work, the Adjudicator should not have determined the matter on this basis without raising it with the parties and affording them the opportunity to provide further submissions to address it.
• [177] Nevertheless, I accept that the error was not material for the reasons submitted by York.
• [178] It is apparent from the Adjudicator's reasons that he ultimately decided this aspect of the second adjudication application on the basis that the use of the CPVC pipe was not authorised, irrespective of whether it was equivalent to black medium grade steel tubing. At paragraphs 121 to 126 of his reasons the Adjudicator determined that any change to the piping would be a variation of the contract, for the convenience of Tomkins; that clause 36.3 of the contract provided that such a variation could be granted if the Superintendent so directed upon request made by the contractor; that there was no evidence of any such request or approval; that it could not be considered that the depiction of CPVC pipe on working drawings was sufficient to be considered as such a request; and that accordingly the CPVC pipe installed was not an approved variation and not in accordance with the contract.
• [179] I note the latter part of the reasons given by the Adjudicator dealt with Tomkins' claim that the use of CPVC pipe was shown on shop drawings which had been approved for use and in respect of which there had been no previous objection by York. In short, the Adjudicator decided that any tacit approval that may have been given, or perceived, could not displace the express approval required under the contract. Those findings dictated the Adjudicator's decision on this issue. It would have made no difference to the outcome if Tomkins had been given the opportunity to address the "manufacturer's requirements" point.

• [181] I am not satisfied that the First Adjudication Decision was affected by jurisdictional error in any of the ways suggested by Tomkins. That aspect of the application must be dismissed.
• [182] As for the Second Adjudication Decision, I accept that the Adjudicator's decision regarding the façade deduction was affected by jurisdictional error in a particular respect and the application must be allowed to that extent. I otherwise find the balance of Tomkins' complaints of jurisdictional error are not established.
• [183] In accordance with my conclusions, the Second Adjudication Decision should be varied to the extent that the Adjudicator's decision to value the amount payable by York to Tomkins in respect of the works that were the subject of the façade deduction is increased by $4,764,178.27.

1. I declare paragraphs [99] to [110] of the adjudication decision of the second respondent dated 22 September 2024 and numbered 2602454 (Second Adjudication Decision) in respect of the estimated cost of rectifying purportedly defective work in respect of the building façade carried out under the construction contract between the applicant and the first respondent executed 12 August 2021 are affected by jurisdictional error and are void.
2. Pursuant to s 101(4) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld):
   1. paragraphs [99] to [110] of the Second Adjudication Decision are severed from the decision;
   2. the value of the deduction for the alleged defective façade works referred to in those paragraphs is reduced to $nil;
   3. the adjusted amount payable by the First Respondent to the Applicant under the Second Adjudication Decision of the Second Respondent is increased by $4,764,178.27 (incl. GST) to $6,161,488.27 (incl. GST) (this is the adjudicated amount plus the $4,764,178.27 incl GST).
3. The balance of the application filed 18 October 2024 is dismissed.
4. I will hear the parties on the question of costs.

[2] Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd [2016] HCA 52; (2016) 260 CLR 340, [3]-[4]; All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289, [8]-[9].

[3] MZAPC v Minister for Immigration and Border Protection (2021) 273 CLR 506, [1]-[3] (Kiefel CJ, Gageler, Keane and Gleeson JJ); [101] (Gordon and Steward JJ), endorsing Minister for Immigration and Border Protection v SZMTA [2019] HCA 3; (2019) 264 CLR 421.

[4] Cited with approval in Wiggins Island Coal Terminal Pty Ltd v Monadelphous Engineering Pty Ltd & Ors [2015] QSC 307, [51]-[52] (McMurdo J, as his Honour then was).

[5] SHA Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd [2020] QSC 307, [83] (Bond J, as his Honour then was).

[7] Prime Constructions (Qld) Pty Ltd v HPS (Qld) Pty Ltd & Ors [2019] QSC 301, [50] (Flanagan J, as his Honour then was), citing Avopiling (NSW) Pty Ltd v Menard Bachy Pty Ltd [2012] NSWSC 1466, [35] (Sackar J).