Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd & Anor [2021] QSC 92

• [1] In June 2018, the plaintiff (Total) and the first defendant (Aniko) entered into an agreement under which Total was to supply and install aluminium framed windows and doors and internal sliding aluminium doors to an apartment building being constructed in Labrador.
• [2] Total made a claim against Aniko for certain payments for work said to have been done and for expenses incurred. Aniko denied that it was liable and that led to Total making an adjudication application under the Building Industry Fairness (Security of Payment) Act 2017 (the Act). Pursuant to the provisions of the Act, an adjudicator was appointed.
• [3] The three claims considered by the adjudicator were:

(a) for work undertaken on levels 13 and 14 of the building,

(c) for loss or expense incurred because of Aniko's removal of the work from Total pursuant to s 98(3) of the Act.

• [4] The adjudicator found in favour of Aniko on each of the claims and held that there was no payment required to be made by Aniko to Total.
• [5] The issues which arise on this application by Total are whether:

(a) the adjudicator's determination of the claim with respect to retention money was invalidated by jurisdictional error, namely, the adjudicator's consideration of a reason included in Aniko's adjudication response which was not included in its payment schedule,

(b) the adjudicator's determination of the third claim was invalidated by two jurisdictional errors being:

(i) his consideration of a reason included in Aniko's adjudication response which was not included in its payment schedule, and

(ii) his failure to consider a relevant document properly submitted by Total in support of its claim.

• [6] Mr Bond, the second defendant, took no part in these proceedings.

• [7] Section 88 of the Act relevantly provides:

(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

(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.

• [8] Section 82 relevantly provides:

(b) must identify the adjudication application to which it relates; and

(c) may include the submissions relevant to the response the respondent chooses to include.

(4) However, the adjudication response must not include any reasons (new reasons) for withholding payment that were not included in the payment schedule when given to the claimant.

(5) The adjudicator may require the respondent to resubmit the adjudication response without the new reasons." (emphasis added)

• [9] A "payment schedule" is defined in s 69 as:

(a) identifies the payment claim to which it responds; and

(b) states the amount of the payment, if any, that the respondent proposes to make; and

(c) if the amount proposed to be paid is less than the amount stated in the payment claim - states why the amount proposed to be paid is less, including the respondent's reasons for withholding any payment; and

(d) includes the other information prescribed by regulation."

• [10] The following steps will be taken on the route to obtaining an adjudication:

(a) An entity which claims to be entitled to a payment under a construction contract will give a "payment claim" to the respondent.

(b) The respondent will give the claimant a "payment schedule".

(c) The claimant will lodge with the registrar an "adjudication application" and give a copy to the respondent. The claimant is permitted to include the submissions relevant to the application which it chooses to include.

(d) The registrar will refer the application to an adjudicator. If the referral is accepted the adjudicator will be taken to have been appointed to decide the application.

(e) The respondent will give the adjudicator an "adjudication response" to the adjudication application. The respondent is permitted to include the submissions relevant to the response which it chooses to include.

• [11] The Applicant's case for jurisdictional error may be categorised in the following way:

(a) First jurisdictional error: consideration of a new reason concerning the claim for retention money;

(b) Second jurisdictional error: consideration of a new reason concerning the claim for loss or expense for removal of work; and

(c) Third jurisdictional error: failure to consider a relevant document concerning the claim for loss or expense for removal of work.

The power to set aside an adjudicator's decision on the ground of jurisdictional error

• [12] An adjudicator's decision can be reviewed for jurisdictional error and this Court can grant declaratory relief based on the invalidity of the decision.[1]
• [13] In Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd[2] Bond J meticulously analysed the principles which guide review on the basis of jurisdictional error. I respectfully agree with that analysis and will apply it in the consideration of the grounds advanced by Total.

• [14] Total submitted that the adjudicator did not comply with s 88(3) of the Act because he considered, and gave effect to, a reason he was required not to consider. As a result, so far as the claim for retention money is concerned, the adjudicator failed to exercise his jurisdiction within the limits of his authority.
• [15] The adjudicator gave a nil value to Total's claim for retention money for several reasons including that, on its proper construction, cl 18 of the construction contract afforded the right to Aniko (but not Total) to terminate the construction contract. Total contended that that reason was included in the adjudication response, but it had not appeared in the payment schedule.
• [16] First, what did the adjudicator decide? In his reasons, the adjudicator says:

"[60] I have reviewed the submissions from both the parties and agree with the respondent's position that Clause 18 of the Contract afforded the right to the respondent to terminate the Contract and not the claimant.

[61] At paragraph 120 of the Adjudication Application states "these breaches by the respondent justified termination by the claimant.

[62] I concur with the Respondent's position that the Contract was terminated by the Claimant and it follows, that the criteria of clause 18 has not been met to avail the Claimant of the relief it seeks.

[63] I also agree that Clause 16 provides that the parties must agree to alter the Defects Liability Period and has no such agreement has been demonstrated, I conclude that the Defects Liability Period is 52 weeks.

[63] Hence, I concur with the respondent's position that the claim for Release of Retention is premature.

[64] Therefore, I value the Release of Retention as NIL"

• [17] Secondly, was that ground - the application of cl 18 - contained in the payment schedule? I conclude that it was not, for the following reasons.
• [18] Aniko concedes that it did not refer to cl 18 in the payment schedule but says that was because Total had not referred to it in the payment claim. Aniko argues that the first mention of cl 18 is in the adjudication application where Total sought to assert an entitlement to recover the retention money pursuant to cl 18. That may be accepted, but s 69(c) of the Act requires a respondent to include all of its reasons for withholding payment in its payment schedule and not just those that are specifically raised or prompted by the payment claim.
• [19] Another argument advanced by Aniko was that s 82(3)(c) of the Act allowed it to deal with cl 18 in the adjudication response. In these circumstances, the section does not apply as Aniko would wish it to. Section 82(3)(c) provides that an adjudication response may include the submissions relevant to the response the respondent chooses to include. That provision must be read subject to s 82(4) which provides that an adjudication response must not include any reasons for withholding payment that were not included in the payment schedule when given to the claimant.
• [20] It was argued by Aniko that the adjudicator also based his decision on cl 16 of the construction contract. That is so. But s 88(3)(b) prohibits an adjudicator from considering a reason which may not be included in an adjudication response by reason of s 82. This is a very wide restriction. It does not require that such a reason form part of the matters which go to make up the adjudicator's decision. Once an adjudicator considers such a matter, then s 88(3)(b) has been breached, whether or not the consideration leads to a particular decision.

• [23] This part of the claim concerned losses or expenses alleged to have been incurred because Aniko removed work from Total's contract.
• [24] On this subject the adjudicator concluded:

"[78] Again, according to the respondent it follows that on the proper interpretation of the Act together with the relief sought by the Claimant, the Adjudicator must decide what works had been removed from the scope of the Contract by the Respondent prior to 16 May 2019.

[79] In the Adjudication Response, the respondent provides evidence in the forms of Statutory Declarations from the respondent's representatives: Scott McGuren, paragraphs 5-8; Statutory Declaration of Bobbie Walker, paragraphs 4-7; and Statutory Declaration of Nathan Edward McGregor paragraphs 5-1; that state that the respondent did not enter into a Contract with another entity until 20th May 2019.

[80] The respondent in the Adjudication Response states that there was no legal relationship between the respondent and the third party until 20th May 2019, that is capable of satisfying the "removal" of work in the context of section 98(3) of the Act, the word "remove" denotes a positive and successful act of the respondent.

[81] The respondent's position as of 16th May 2019, when the claimant purported to terminate the Contract and thus ending the suspension period, no works had been removed from the Contract by the respondent.

[82] I have reviewed Section 98 of the Act, the respondent and claimant's positions and am satisfied that no work was removed from the claimant's Scope of Works as at 16 May 2019.

[83] the evidence was clear that a Contract was in place from 20 May 2019 with a third party, which was four days after the claimant had terminated the Contract.

[84] I therefore conclude that has no works were taken from the claimant's hands that no right to Statutory Damages under Clause 98 (3) of the Act exists for either the loss of income in the amount of $107,873.48 (excl GST) or the new presented claim for Level 13 works in Adjudication Application as "loss and expense incurred" pursuant to section 98 (3) of the Act in the sum of $53,532.73 (excl GST) and therefore I value this work as NIL."

• [25] With respect to this claim, Aniko relied in its payment schedule on the following matters:

(a) Total sought to include losses that resulted from an alleged repudiation of the construction contract, rather than a loss or expense incurred as a result of the removal of work from the contract during the suspension;

(b) Total had not identified the alleged works that were removed from the contract by Aniko during the suspension;

(c) Aniko could not respond to the quantum claimed for loss and expense as Total had not provided the project budget documentation;

(d) Total's claims for items procured but not installed before the termination of the contract, demobilisation costs following the suspension of works and costs and preliminaries during the suspension period were misguided for several reasons unrelated to the date on which the third party was engaged; and,

(e) Total could not complete the works as the material required for the work on level 14 was being held in China.

• [26] Total submitted that the adjudicator had given a "nil value" to the claim for loss or expense incurred due to Aniko having removed work because the adjudicator found that:

(a) no work had been removed from Total's contract at 16 May 2019, and

(b) four days after Total had terminated the contract, another contract was in place with a third party.

• [27] Aniko argued that the adjudicator was required, in making his decision, to determine:

(a) what works, if any, were removed from Total's scope of works during suspension of the contract, and

(b) what loss or expense had been incurred by Total as a consequence.

• [28] Total must, in order to be successful on this ground, demonstrate that the adjudicator, in reaching his decision on this matter, considered a reason that the Act obliges him not to consider.
• [29] Aniko argues that the issue of there not having been any work removed from Total's scope of works was raised in the payment schedule. It says this was done through the assertion that, despite its claim, Total had not identified the construction work or related goods and services to which the progress claim related, as it had not identified the alleged works that were removed from the contract by Aniko during the suspension.
• [30] Aniko relies on the first reason given by the adjudicator in his decision, namely, that no work was removed from Total's scope of works during the suspension. It follows, Aniko says, that the second reason is irrelevant and cannot support a determination that the adjudicator's decision on this issue should be set aside.
• [31] Once again, the question is whether or not the adjudicator considered a reason he was not entitled to take into account. Aniko says that it referred to the alleged repudiation of the contract in its payment schedule and this was sufficient to alert Total to the scope of the dispute. I do not agree. The reason advanced in the adjudication response was that the issue was: what work had been removed from the contract prior to termination on 16 May and that "it wasn't until 20 May 2019 that [Aniko] entered into a contract with another entity". The payment schedule does not contain a statement to that effect or from which such a reason might be necessarily inferred.
• [32] The adjudicator erred in this part of his decision and, thus, this part of his decision is invalid.

• [33] Total submitted that the adjudicator failed to take into account a document which s 88(2)(c) required him to take into account.
• [34] Section 88(2)(c) provides that an adjudicator is to consider 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.
• [35] The adjudicator made a finding that Aniko did not engage the third party until 20 May 2019. He did not, in his reasons, refer to the statement of Andrew Morrison which relevantly stated:

"On 15 May 2019, I personally contacted the other trade contractor and confirmed that they had already attended site and performed inspections, and provided quotations for completing the entirety of the works at the Project. On 16 May 2019, I received confirmation from Tweed Coast Glass that they had received a Purchase Order to perform the remaining work, and that the quotation they had provided had been accepted by [Aniko] with the instruction to immediately proceed with the remaining works."

• [36] Mr Morrison goes on to say that it was after he became aware of the acceptance by Aniko of the quotation from Tweed Coast Glass that he caused Total to terminate the contract with Aniko.
• [37] Total argues that the adjudicator has disregarded a relevant document, namely the statement of Andrew Morrison, and so has committed a jurisdictional error.
• [38] The adjudicator did, in his reasons, say that he had had regard to "the payment claim to which the Application relates, together with all submissions, including relevant documentation, that has been properly made by the Claimant in support of the claim". He also states that he had reviewed the positions of both parties and was satisfied that no work had been removed from Total's scope of works as at 16 May 2019.
• [39] Aniko relies upon the statement by Applegarth J in John Holland Pty Ltd v TAC Pacific Pty Ltd:[3]

"... in circumstances in which adjudicators are required to determine complex legal issues quickly, the detection of flaws in reasoning or poorly expressed reasons in an adjudication decision do not compel the conclusion that the adjudicator did not attempt to understand and apply the contract. Adjudicators provide their determinations in a "somewhat pressure cooker environment". In some instances the adjudicator "cannot possibly, in the time available and in which the determination is to be brought down, give the type of care and attention to the dispute capable of being provided upon a full curial hearing" stop the Court should be slow to conclude that adjudicators who work under the very tight deadlines imposed by the Act, and who, in seeking to do their best, make a mistake, have not acted in good faith." (citations omitted)

• [40] Adjudicators are under extraordinary pressure when dealing with these matters. They are required to come to grips with sometimes very complex issues and resolve them in a short space of time. Infelicity of expression is not a ground for finding that there has been an omission to comply with the Act. But, in this case, there was a clear division between the parties as to what had occurred with respect to the removal of work. The assertions in Mr Morrison's statement contradicted the case advanced by Aniko and, in deciding that point, reference would be expected to be made to his recollection of events. Merely saying that one has had regard to all relevant documentation is not conclusive on that issue. The omission to refer to a document of considerable importance on this point allows the inference to be drawn that regard was not had to it.
• [41] It is a curious consequence of the provisions of the Act that, had the adjudicator referred to Mr Morrison's statement, and then found to the contrary, it would probably be regarded as an error within jurisdiction and incapable of being remedied. The provisions of the Act, though, are strict in their application.
• [42] The adjudicator erred in this part of his decision and, thus, this part of his decision is invalid.

• [43] It is declared that the decision of the second respondent dated 15 March 2020 in relation to adjudication matter QBCC 733622 is void to the extent of paragraphs 48 to 65, 66 to 84, 85(b), 85(c), 86 and 87 of the decision.
• [44] The applicant's adjudication application dated 15 March 2020 be remitted to the second respondent to be decided according to law.

[1] Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd [2011] QCA 22; [2012] 1 Qd R 525, 550-556 [67]-[80] per White JA (McMurdo P and Chesterman JA agreeing).

[2] (2020) 4 QR 410 at 422-428 [32]-[42].

[3] [2009] QSC 205; [2010] 1 Qd R 302 at 323 [66].