The Queensland Supreme Court, Court Of Appeal handed down its decision today in the Heavy Plant Leasing Pty Ltd v McConnell Dowell, Security Of Payment Act, BCIPA 2004, matter.

A certain genius argued that a “Payment Certificate” was a Payment Schedule for the purposes of the Building & Construction Industry Payments Act 2004. Four Supreme Court Judges have now said that self proclaimed genius was wrong. I hate to say it you genius,you, but I told you so ! When I argued with the so called genius about which document should in fact be regarded as the Payment Schedule he dismissed me and suggested that 2 genius’ aren’t necessary to deal with this matter and suggested that I should leave him to it – well look where that genius got HPL. This is strike three against the Reed empire.

In the Supreme Court Of New South Wales, in the matter of Martinez v Heavy Machinery Pty Ltd [2013] NSWSC 340 (16 April 2013) Geoff Reed was ordered to pay HWL Ebsworth Lawyers $608,429.62

Read the judgement here. This was strike two against the Reed empire.

In the Supreme Court Of New South Wales, in the Matter of Reed Constructions Australia Pty Ltd [2012] NSWSC 1045

Brereton j made the order: My orders are: Order that Reed Constructions Australia Pty Limited ACN 003 340 878 be wound up in insolvency. Read the judgement here. Strike one against the Reed empire.

After the failure of REED Constructions Australia PTY LTD in 2012, Geoff Reed’s failure to escape liability to HWL Ebsworth, and now the demise of HEAVY PLANT LEASING PTY LTD I wonder if Geoff Reed, the quintessential eternal optimist, is……………… as optimistic ??

Geoff’s valiant promise to do everything he can to bring justice to his subcontractors is fading rapidly. Some of Geoff’s subbies might say: “what goes around comes around!”

 

Below is the QLD Supreme Court, Court Of Appeal judgement handed down today, 17 December 2013.

 

SUPREME COURT OF QUEENSLAND

CITATION: Heavy Plant Leasing Pty Ltd v McConnell DowellConstructors (Aust) Pty Ltd & Ors [2013] QCA 386

PARTIES: HEAVY PLANT LEASING PTY LTD(RECEIVERS AND MANAGERS APPOINTED)

ACN 151 786 677

(appellant)

vMcCONNELL DOWELL CONSTRUCTORS (AUST)PTY LTD

ACN 002 929 017

(first respondent)

ABLE ADJUDICATION PTY LTD

ACN 134 663 933

(second respondent)

PAUL HICK

(third respondent)

FILE NO/S: Appeal No 8506 of 2013

SC No 3702 of 2013

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING

COURT: Supreme Court at Brisbane

DELIVERED ON: 17 December 2013

DELIVERED AT: Brisbane

HEARING DATE: 5 November 2013

JUDGES: Muir, Gotterson and Morrison JJA

Separate reasons for judgment of each member of the Court,

each concurring as to the order made

ORDER: Appeal dismissed with costs.

CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND

RELATED CONTRACTS – REMUNERATION –

STATUTORY REGULATION OF ENTITLEMENT TO

AND RECOVERY OF PROGRESS PAYMENTS –

ADJUDICATION OF PAYMENT CLAIMS – where the first

respondent was a sub-contractor for the provision of

earthworks and the appellant was a sub-contractor to the first

respondent – where the first respondent sent two documents,

dated 6 and 8 March, to the appellant in response to the

appellant‘s payment claim – where, despite failing to provide

a statement as to ―why the scheduled amount [was] less‖ in

respect of ―variations‖, there was no suggestion in the

6 March document that it was provisional – where the

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adjudicator concluded that the 6 March document was the

payment schedule for the purposes of the adjudication and

disregarded the 8 March document – where the primary judge

found that there was no proper basis for the adjudicator to

find that the 6 March document constituted a payment

schedule and that, in refusing to consider the contents of the

8 March document, the adjudicator committed a jurisdictional

error – where the appellant contends that the 6 March

document constituted a payment schedule as it met the

requirements of s 18 of the Building and ConstructionIndustry Payments Act 2004 (Qld) (the Act) – where the

appellant submits that it was irrelevant that the 6 March

document was not described internally as a ―payment

schedule‖ and that the subsequent provision of more detailed

reasons did not invalidate the 6 March document as

a payment schedule – where the appellant contends that the

primary judge erred in considering ―all of the circumstances

of the case‖, including the content of the 8 March document

and the first respondent‘s subjective intention, in determining

whether the 6 March document was a payment schedule –

whether the primary judge erred in failing to analyse whether

the 6 March document was a ―payment schedule‖ by

reference to the statutory requirements in s 18 of the Act and

not otherwise – whether the primary judge erred in

considering the subjective intention of the first respondent

and whether the 6 March document ―purported‖ to be a

payment schedule – whether the primary judge erred in

finding that the 6 March document was not a payment

schedule for the purposes of the Act – whether any deficiency

in the 6 March document was remedied by incorporating

parts of the 8 March document – whether, if the 6 March

document did not constitute a valid payment schedule, the

adjudicator committed a jurisdictional error rendering his

determination ineffective – whether the matter should be

remitted to the adjudicator for determination according to law

CONTRACTS – BUILDING, ENGINEERING AND

RELATED CONTRACTS – REMUNERATION –

STATUTORY REGULATION OF ENTITLEMENT TO

AND RECOVERY OF PROGRESS PAYMENTS –

SUBCONTRACTORS‘ CHARGES ACT (QLD) – where the

appellant served the first respondent with three notices of

claim of charge – where the first respondent demanded that

the notices be withdrawn on the basis of non-compliance with

the Subcontractors’ Charges Act 1974 (Qld) (the Charges

Act) – where the appellant wrote to the first respondent on

20 February 2013 accepting that its notices of claim of charge

were invalid and of no effect – where the letter of

20 February 2013 was not in the approved Form 5 – where

the primary judge found that the failure to give notice of

withdrawal of a notice of claim of charge in the approved

form did not render a clear and unequivocal statement that

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a notice of claim of charge was invalid ineffective – where

the primary judge held that, if a notice in the approved form

was a necessary prerequisite to withdrawal, there had been

sufficient compliance with s 11(8) of the Charges Act –

where the first respondent submits that the failure to use

Form 5 meant that there could not have been substantial

compliance with s 11(8) of the Charges Act – where the first

respondent contends that the adjudication decision was void

as, at the time the payment claim was served by the appellant,

there was a valid and subsisting charge pursuant to the

Charges Act and s 4 of the Act prohibits the service of a

payment claim in such circumstances – whether the letter of

20 February constituted an effective withdrawal of the notices

of claim of charge

Acts Interpretation Act 1954 (Qld), s 48A(2), s 49(2)

Building and Construction Industry Payments Act 2004 (Qld),

s 4, s 17, s 18, s 21, s 24, s 25, s 26, s 32

Subcontractors’ Charges Act 1974 (Qld), s 11(8)

Cardinal Project Services Pty Ltd v Hanave Pty Ltd (2011)

81 NSWLR 716; [2011] NSWCA 399, cited

Craig v South Australia (1995) 184 CLR 163; [1995] HCA 58,

considered

Hansen Yuncken Pty Ltd v Ian James Ericson trading asFlea’s Concreting & Anor [2011] QSC 327

Kirk v Industrial Court (NSW) (2010) 239 CLR 531;

[2010] HCA 1, considered

McConnell Dowell Constructors (Aust) Pty Ltd v Heavy PlantLeasing Pty Ltd (Administrators appointed) (Receivers andManagers appointed) & Ors [2013] QSC 223, related

Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering(WA Pty Ltd) & Ors [2007] QSC 333, considered

Minister for Immigration and Multicultural Affairs v Bhardwaj

(2002) 209 CLR 597; [2002] HCA 11, cited

Minister for Immigration and Multicultural and IndigenousAffairs v SGLB (2004) 78 ALJR 992; [2004] HCA 32, cited

Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476;

[2003] HCA 2, cited

SZFDE v Minister for Immigration and Citizenship (2007)

232 CLR 189; [2007] HCA 35, cited

State of Queensland v Epoca Constructions Pty Ltd & Anor

[2006] QSC 324, considered

COUNSEL: P J Dunning QC, with M J Smith, for the appellant

D A Savage QC, with D P O‘Brien, for the first respondent

No appearance for the second respondent

No appearance for the third respondent

SOLICITORS: Ashurst Australia for the appellant

Norton Rose Fullbright for the first respondent

No appearance for the second respondent

No appearance for the third respondent

4

[1] MUIR JA: Introduction The central issues for determination in this appeal are:

(a) whether the three documents, or any one or more of them, sent by the first

respondent to the appellant on 6 March 2013 (the 6 March document) in

response to a payment claim made by the appellant pursuant to s 17 of the

Building and Construction Industry Payments Act 2004 (Qld) (the Act) was

a ―payment schedule‖ for the purposes of s 18 of the Act;

(b) if the answer to (a) is no, whether a document sent by the first respondent to

the appellant on 8 March 2013 (the 8 March document) was a payment

schedule; and

(c) whether, if the adjudicator‘s finding that the 6 March document was the

payment schedule for the purposes of his determination was wrong in law, the

adjudicator committed a jurisdictional error which rendered his determination

ineffective.

[2] The first respondent is a sub-contractor to a head contractor, Fluor Australia Pty Ltd

(Fluor), in relation to construction works undertaken in the vicinity of Roma. The

appellant is a sub-contractor to the first respondent. The second respondent is an

authorised nominating authority under the Act. The third respondent is an

adjudicator under the Act.

[3] On 25 February 2013, the appellant served on the first respondent a payment claim

under a sub-contract, dated 30 November 2011, between the appellant and the first

respondent (the sub-contract). On 6 March 2013, the first respondent sent the

6 March document to the appellant electronically. The 6 March document was

comprised of a brief email, a one page payment certificate and a two page letter

which explained some adjustments to the payment claim made in the payment

certificate. On 8 March 2013, within the time allowed for a response to the

payment claim, the first respondent served on the appellant a brief email attaching

an 11 page letter headed ―Payment Schedule for Payment Claim No. 16‖

accompanied by 40 pages of supporting documentation. The letter included detailed

explanations of why the monies claimed in the payment claim were not owed.

[4] On 18 March 2013, the appellant lodged an application with the second respondent

under s 21 of the Act for adjudication of its payment claim.

[5] The first respondent lodged and served an adjudication response under the Act on

22 March 2013 which repeated and relied on the 8 March document. It called for

the third respondent to have regard to the 8 March document which was attached to

the adjudication response.

[6] The adjudicator decided that the 6 March document and not the 8 March document

was the payment schedule for the purposes of the adjudication. He disregarded the

contents of the 8 March document and allowed the payment claim in full.

Notwithstanding that the 6 March document certified that the appellant owed the

first respondent in excess of $17,000,000, the adjudicator awarded the appellant

$26,698,654.79.

[7] The appellant applied, by originating application, to set the adjudication decision

aside for jurisdictional error. On 9 September 2013, the primary judge declared that

5

the adjudication decision was void and ordered that it be set aside. The appellant

appealed against the primary judge‘s declaration and orders. The first respondent

filed a notice of contention seeking to uphold the primary judge‘s decision on

grounds other than those relied on by the primary judge.

[8] It is now convenient to address the grounds of appeal.

Ground 1 – the primary judge erred in failing to analyse whether the 6 Marchdocument was a “payment schedule” by reference to the statutoryrequirements in s 18 of the Act and not otherwiseThe appellant’s submissions

[9] The appellant‘s arguments may be summarised as follows. The primary judge erred

in considering ―all of the circumstances of the case‖1 in determining whether the

6 March document was a payment schedule rather than basing his decision on the

construction of the document. In particular, the primary judge erred in having

regard to the content of the 8 March document in order to determine whether the

6 March document was a payment schedule.

[10] The 6 March document fulfilled the three criteria in s 18 of the Act, as discussed in

Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA Pty Ltd) &Ors,2 in that it:

(a) states that it relates to payment claim 16;

(b) states the amount proposed to be paid as negative $17,124,956.84; and

(c) provides certain reasoning for the scheduled amount being less than the

amount claimed.

[11] Despite reference to ―supporting documentation‖, the 6 March document was an

efficacious payment schedule on its face. It is irrelevant that the document was not

described internally as a ―payment schedule‖. The Act has no requirement in that

regard. It is relevant that the parties agreed in cl 10.10(b)(i) of Schedule B of the

sub-contract that a ―payment certificate‖ would be treated as a payment schedule.

[12] The mere fact that the first respondent later provided more detailed reasons could

not have the effect of invalidating the 6 March document as a payment schedule or

cause it to fail to meet the Act‘s requirements.

[13] If, contrary to the appellant‘s contentions, it was permissible to look at ―all the

relevant circumstances‖, the 6 March document should still be accepted as the

payment schedule as the document was issued:

(a) by the managing director of the first respondent;

(b) in the context of a serious contractual dispute between the parties involving

disputed sums in excess of $20,000,000 and in respect of which the first

respondent had sought legal advice;

1 McConnell Dowell Constructors (Aust) Pty Ltd v Heavy Plant Leasing Pty Ltd (Administratorsappointed) (Receivers and Managers appointed) & Ors [2013] QSC 223 at [48].

2 [2007] QSC 333 at [20].

6

(c) in the form agreed by the parties in the sub-contract to be used for a payment

schedule;

(d) in terms in response to the payment claim, asserting a different amount to be

paid, with some reasoning; and

(e) in the manner in which the payment schedules had been delivered previously.

[14] Proposition (e) had no evidentiary support and was not accepted by the first

respondent. The first respondent also contended that proposition (a) was incorrect

as the 6 March document was served by a commercial manager, not the managing

director.

[15] It is now desirable to set out the relevant parts of the 6 March and 8 March

documents

The 6 March document

[16] One of the documents comprising the 6 March document was a letter dated 6 March

2013 from the first respondent to the appellant which provided:

―ROMA HUB AND PIPELINES CONTRACTSUB-CONTRACT: SC1458 012RE: PAYMENT CLAIM No. 16

Dear Sirs,

Further to the Sub-Contractor‘s Payment Claim No. 16 submitted to [the

first respondent,] MacDow‘s site team on 25 February 2013 for Work

completed from the 1 February 2013 to 25 February 2013, MacDowprovides under attachment hereto Payment Certificate No 16 togetherwith supporting documentation and below provides advice to themajor adjustments made to the claimed amount;

Kl29 & 125 WB Foundations – MacDow have corrected the claimed

quantities for foundation works based on actual

progress. Please refer to attached progress schedule.

The agreed rate for extra over reinforcement over and

above the specified contract allowance has not been

applied, and accordingly these rates have been

corrected.

The calculation of the additional excavation depth has

been calculated incorrectly and accordingly corrected.

Type 2 Pile – Claimed in error and removed from the

assessment.

Pond Liner Materials – Further to the failure of the

Sub-Contractor to make payment to Sub Tier

Contractor and with further reference our letter LTRMACD-

HPL-K129-147 dated 13 February 2013,

MacDow accordingly corrects the over claim.

7

Embankment – MacDow has corrected the

embankment quantity to be in accordance with the

survey data submitted.

Extra over Compaction – Further to the above the

compaction quantity has been corrected to be inline

with the survey submitted.

Rippable Rock – Macdow give notice that the total

monthly quantity of rippable rock is in dispute due to

ambiguities within the Subcontractors re-survey that

occurred after the completion of the works for both the

100ml and 135ml ponds.

MacDow have passed the survey to Fluor for review.

MacDow request the Sub-Contractor to provide a fully

supported claim with additional data to support the

survey and evidence of MacDow‘s acceptance i.e. duly

authorities instructions and acceptance etc.

Extra Over Compaction – MacDow is unable to reach

commercial settlement with under the Head Contract

as a direct result of the Sub-Contractors interference

with the Client. The Subcontractor put valid claims

under the Head Contract in jeopardy and accordingly

MacDow is forced to retract all previous payments in

accordance with Sub-Contract Agreement Clause 3.6.

Preliminaries MacDow have adjusted the total claimed to date based

upon the cumulative months completed since the

commencement of the Works.

Variations Further to discussion please refer to variation register.

Back Charges Please refer to Damages schedule D – MacDow has

reconciled from the commencement of the Works all

cost incurred which relates to plant and materials

provided to the Sub-Contractor in the performance of

the Works, which forms part of the Sub-Contractor

Agreement responsibility to provided and accordingly

back chargeable under the Contract.

The Sub-Contractor is referred to the Sub-Contractor Agreement Article 15

and is instructed to submit all variation in accordance with Article 15 of the

Sub-Contractor Agreement. MacDow advise that any variation included

within the Sub-Contractor Claim without prior submission in accordance

with Clause 15 will be rejected.

MacDow requests that Sub-Contractor to provide its Tax Invoice as per the

attached Payment Certificate No 16.

Yours faithfully,

[signed]

Rob Harris

McConnell Dowell Constructors (Aust.) Pty Ltd

8

Project Manager

Encl. Payment Certificate No 16 and supporting documentation‖

(emphasis added)

[17] The email from an officer of the first respondent to an officer of the appellant to

which the other components of the 6 March document were attached provided:

―[Subject:] GLNG Project – HPL Payment claim no. 16

…

Geoff,

Pls find attached MacDow‘s letter in reply (including accompanying

payment certificate) to your payment claim number 16.

Notwithstanding the attached payment certificate certifying that HPL

owes MacDow $17,124,956.84, MacDow advises the following:-

1. it is preparing to pursue its various claims against Fluor and

2. it is prepared to pay HPL‘s various creditors as requested by

HPL

Please contact us with respect to item 2 above.

Regards,

Andrew‖

[18] The remaining document, described in the email as a payment certificate, was as

follows:

MACDOW ASSESSMENT OF CLAIM NO. 16

Date: 25-Feb-13

Project Name: G2NG-40-K129-Roma General Contract Civil & Earthworks

Subcontract No.: SC1458012

Period: For contract works to 25th February 2013

Adjusted Sub-Contract SumClaimed to Date Previously Certified This Claim

Contract – Schedule A $82,903,133.73 $30,279,504.24 $41,968,365.24 <$11,688,861.00>

Variations – Schedule B $24,375,244.91 $3,985,877.53 $5,941,003.30 <$1,955,125.77>

Retention – Schedule C $0.00 $0.00 $0.00 $0.00

Contra charges-Schedule D <$189,222.10> <$6,158,595.43> <$4,688,985.06> <$1,469,610.37>

Sub Total $107,089,156.54 $28,106,786.35 $43,220,383.48 <$15,113,597.13>

Cost of Surety (Bank

Guarantee)

$0.00

Net Total (excluding GST) $107,089,156.54 $28,106,786.35 $43,220,383.48 <$15,113,597.13>

GST (10%) $10,708,915.65 $2,810,678.63 $4,322,038.35 <$1,511,359.71>

Advanced Payment $5,000,000.00 $5,000,000.00 $5,000,000.00 $0.00

Pay back <$5,000,000.00> <$2,250,000.00> <$1,750,000.00> <$500,000.00>

Total (Including GST) $117,798,072.20 $33,667,464.98 $50,792,421.82 <$17,124,956.84>TOTAL THIS CLAIM INCLUDING GST <$17,124,956.84>

9

HPL CLAIM NO. 16Adjusted Sub-Contract SumClaimed to Date Previously Certified This Claim

Contract – Schedule A $92,496,605.87 $48,000,252.29 $41,968,365.24 $6,031,887.05

Variations – Schedule B $31,922,965.40 $24,642,172.42 $5,941,003.30 $18,701,169.12

Retention – Schedule C $0.00 $0.00 $0.00 $0.00

Contra charges-Schedule D <$3,891,901.59> <$4,060,120.05> <$4,448,613.21> $388,493.16

Sub Total $120,527,669.68 $68,582,304.66 $43,460,755.33 $25,121,549.32

Costs of Surety (Bank

Guarantee)

$0.00

Net Total (excluding GST) $120,527,669.68 $68,582,304.66 $43,460,755.33 $25,121,549.32

GST (10%) $12,052,766.97 $6,858,230.47 $4,346,075.53 $2,512,154.93

Advanced Payment $5,000,000.00 $5,000,000.00 $5,000,000.00 $0.00

Pay back <$5,000,000.00> <$2,250,000.00> <$1,750,000.00> <$500,000.00>

Total (including GST) $132,580,436.65 $78,190,535.12 $51,056,830.86 $27,133,704.26TOTAL THIS CLAIM INCLUDING GST $27,133,704.26DEDUCTION FROM CLAIMED AND ASSESSED VALUEK129 & K125 WORKBOOK

Incorrect agreed rate applied for the additional rebar over and above the specified

contract allowance

– 91,534.67 25,030,014.66

Calculation used to calculate the additional depth incorrect 0.08m not 0.8m, also

progress of works adjusted as per schedule and HPL daily progress chart

– 34,075.24 24,995,939.42

Foundations – Progress of Quantity adjusted as per drawings and schedule / HPL

daily progress chart

– 337,703.12 24,658,236.29

Type 2 Piles removed from scope excluding paid amount by HPL – 24,692.50 24,633,543.79

Compaction Test – over claimed amount based on embankment / fill completed – 29,117.70 24,604,426.09

Pond Liner Materials on account payment removed due to failure to provide proof of

payment

– 1,976,843.84 22,627,582.25

Rippable rock quantity in dispute pending review. Quantity excavated in dispute

included in general excavation

– 6,884,230.30 15,743,351.95

Extra over compaction requirement in dispute pending review – 6,129,232.10 7,614,119.85

Embankment quantity corrected as per survey and summery – 146,685.06 7,457,461.79

VARIATIONS

Refer to Variation Register – 20,656,294.88 – 13,188,833.09

PRELIMINARIES

Over claimed based on months completed – 66,660.51 – 13,255,493.61

BACK CHARGES

Refer to Back Charges Register -$1,858,103.52 – 15,113,597.13

The 8 March document

[19] The 8 March document was comprised of a letter of that date from the first

respondent to the appellant and supporting documents. The letter was headed:

―ROMA HUB AND PIPELINES CONTRACT

SUB-CONTRACT: SC1458 012

RE: PAYMENT SCHEDULE FOR PAYMENT CLAIM No. 16‖

[20] The letter stated:

―MacDow refers to its letter dated 6 March 2013 provided under the

Sub-Contract with respect to Payment Claim No. 16.

Further to MacDow‘s letter, MacDow provides this payment

schedule under section 18(1) of the Building and ConstructionIndustry Payments Act 2004 (Qld) (Act) with respect to the Sub10

Contractor‘s Payment Claim No. 16 seeking payment for

$27,133,704.26 (inclusive of GST) submitted to MacDow‘s site team

on 25 February 2013 for Work claimed to have been completed up to

and including 25 February 2013 (Payment Claim)

A reference to the Payment Claim as a ‗payment claim‘ is not an

admission by MacDow that the claim is a valid payment claim under

the Act.

The scheduled amount for the Payment Claim is $Nil, as the

Payment Claim has been assessed as a negative amount of

$20,987,233.91 (inclusive of GST), being the amount stated on the

enclosed payment certificate of negative $17,124,956.84 (inclusive

of GST) and negative $3,862,277.07 (inclusive of GST) for amounts

claimed by the Sub-Contractor‘s subcontractors and suppliers as

detailed below.

Below are the reasons why the scheduled amount is less than the

claimed amount and, where relevant, if that amount is less because

MacDow is withholding payment, MacDow‘s reasons for

withholding payment.‖

[21] There then followed nine or so pages of claims, assertions and explanatory

observations and some 40 pages of supporting documents.

The relevant provisions of the Building and Construction Industry Payments

Act 2004 (Qld)

[22] Sections 17, 18, 21 and 24 of the Act relevantly provide:

―17 Payment claims

(1) A person mentioned in section 12 who is or who claims to be

entitled to a progress payment (the claimant) may serve a

payment claim on the person who, under the construction

contract concerned, is or may be liable to make the payment

(the respondent).

(2) A payment claim—

(a) must identify the construction work or related goods and

services to which the progress payment relates; and

(b) must state the amount of the progress payment that the

claimant claims to be payable (the claimed amount); and

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

…

(5) A claimant can not serve more than 1 payment claim in relation

to each reference date under the construction contract.

11

(6) However, subsection (5) does not prevent the claimant from

including in a payment claim an amount that has been the

subject of a previous claim.

18 Payment schedules

(1) A respondent served with a payment claim may reply to the

claim by serving a payment schedule on the claimant.

(2) A payment schedule—

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

(b) must state the amount of the payment, if any, that the

respondent proposes to make (the scheduled amount).

(3) If the scheduled amount is less than the claimed amount, the

schedule must state why the scheduled amount is less and, if it

is less because the respondent is withholding payment for any

reason, the respondent‘s reasons for withholding payment.

(4) Subsection (5) applies if—

(a) a claimant serves a payment claim on a respondent; and

(b) the respondent does not serve a payment schedule on the

claimant within the earlier of—

(i) the time required by the relevant construction

contract; or

(ii) 10 business days after the payment claim is served.

(5) The respondent becomes liable to pay the claimed amount to

the claimant on the due date for the progress payment to which

the payment claim relates.

…

21 Adjudication application

(1) A claimant may apply for adjudication of a payment claim (an

adjudication application) if—

(a) the respondent serves a payment schedule under

division 1 but—

(i) the scheduled amount stated in the payment

schedule is less than the claimed amount stated in

the payment claim; or

(ii) the respondent fails to pay the whole or any part of

the scheduled amount to the claimant by the due

date for payment of the amount; or

12

(b) the respondent fails to serve a payment schedule on the

claimant under division 1 and fails to pay the whole or

any part of the claimed amount by the due date for

payment of the amount.

…

(3) An adjudication application—

(a) must be in writing; and

(b) must be made to an authorised nominating authority

chosen by the claimant; and

(c) must be made within the following times—

(i) for an application under subsection (1)(a)(i)—

within 10 business days after the claimant receives

the payment schedule;

(ii) for an application under subsection (1)(a)(ii)—

within 20 business days after the due date for

payment;

(iii) for an application under subsection (1)(b)—within

10 business days after the end of the 5 day period

referred to in subsection (2)(b); and

(d) must identify the payment claim and the payment

schedule, if any, to which it relates; and

(e) must be accompanied by the application fee, if any,

decided by the authorised nominating authority; and

(f) may contain the submissions relevant to the application

the claimant chooses to include.

…

24 Adjudication responses

(1) Subject to subsection (3), the respondent may give the

adjudicator a response to the claimant‘s adjudication

application (the adjudication response) at any time within the

later of the following to end—

(a) 5 business days after receiving a copy of the application;

(b) 2 business days after receiving notice of an adjudicator‘s

acceptance of the application.

(2) The adjudication response—

(a) must be in writing; and

13

(b) must identify the adjudication application to which it

relates; and

(c) may contain the submissions relevant to the response the

respondent chooses to include.

(3) The respondent may give the adjudication response to the

adjudicator only if the respondent has served a payment

schedule on the claimant within the time specified in section

18(4)(b) or 21(2)(b).

(4) The respondent can not include in the adjudication response

any reasons for withholding payment unless those reasons have

already been included in the payment schedule served on the

claimant.

(5) A copy of the adjudication response must be served on the

claimant.‖

Ground 1 – consideration

[23] If, as the parties accepted, only one payment schedule may be served in response to

a payment claim, as a general proposition, whether a document is a payment

schedule is to be determined by reference to the contents of the document and, in

some circumstances, any accompanying or supplementary document. The fact that,

as is the case here, a later document is described as a payment schedule and the

earlier one is not would not normally bear on whether the earlier document is

a payment schedule. The above proposition is qualified because it may be possible

that the later document has some evidentiary value. Take, for example,

circumstances in which there has been a course of dealing between the parties in

which documents such as payment claims and payment schedules have been clearly

identified in a particular way and the document alleged by the recipient to be

a payment schedule lacks such identification. It may well be that the later document

provided and described as a payment schedule would constitute some evidence of

adherence to and continuance of the previous course of conduct.

[24] It follows from the foregoing discussion that I do not accept as correct the

unqualified proposition that a document which meets the requirements of s 18 of the

Act is necessarily a payment schedule. Section 18 does not so provide. It merely

stipulates the matters which must be incorporated in a payment schedule. If the

6 March document had stated clearly to the effect that it was being provided in order

to notify the first respondent of some disputed matters in advance of the preparation

and delivery of a payment schedule, the 6 March document would not have

constituted a payment schedule. It would not have been put forward as a payment

schedule and the appellant would have been aware that it was not proffered by the

first respondent as such. A document such as a payment schedule does not

necessarily take its character only from its own form and content.

[25] The parties‘ arguments focussed, understandably, on whether the requirements of

s 18 of the Act had been satisfied by the 6 March document. But, as the above

discussion shows, compliance with such requirements was not the only relevant

consideration. There was a challenge by the first respondent to the appellant‘s

reliance on all three of the documents which comprised the 6 March document. It is

not implicit in s 18 that a payment schedule must consist of only one document. It

14

would be surprising if the parliament had so intended. In substantial construction

disputes, it is common place for documents disputing the validity of payment claims

to contain schedules or appendices. Where more than one document is alleged to

constitute a payment schedule, the validity or otherwise of the allegation must be

tested by an analysis of the documents in question. It may be that one such

document, although not part of a payment schedule, will be relevant to the

assessment of whether the other documents constitute a payment schedule. Here,

there was no suggestion that there were other extraneous circumstances that needed

to be taken into account.

[26] I now turn to an analysis of the 6 March document. It is common ground that on

25 February 2013 the appellant served a payment claim on the first respondent. The

following appeared at the foot of the first page of that document: ―This is a Payment

Claim made under the Building and Construction Industry Payments Act 2004

(Qld)‖.

[27] The two page letter of 6 March stated, as part of its heading, ―RE: PAYMENT

CLAIM No. 16‖. It acknowledged the provision of the payment claim on

25 February, stated that ―Payment Certificate No 16 together with supporting

documentation‖ were attached and that ―advice [as] to the major adjustments made

to the claimed amount‖ was provided below.

[28] The payment certificate identified the payment claim to which it related. It stated,

in effect, ―the amount of the payment, if any, that the [first respondent] propose[d]

to make‖3 was nil by identifying a credit balance in favour of the first respondent of

$17,124,956.84.

[29] The ―scheduled amount [was] less than the claimed amount‖.4 The payment

certificate, under the heading ―DEDUCTION FROM CLAIMED AND ASSESSED

VALUE‖ explained why the scheduled amount was less than the claimed amount in

respect of all grounds of deduction, with the possible exception of ―variations‖ and

―back charges‖. In that regard, the payment certificate stated:

―VARIATIONS

Refer to Variation Register – 20,656,294.88 – 13,188,833.09

…

BACK CHARGES

Refer to Back Charges Register -$1,858,103.52 – 15,113,597.13‖

[30] The 6 March letter relevantly stated:

―Variations Further to discussion please refer to variation

register.

Back Charges Please refer to Damages schedule D – MacDow has

reconciled from the commencement of the Works all

cost incurred which relates to plant and materials

provided to the Sub-Contractor in the performance of

the Works, which forms part of the Sub-Contractor

3 Building and Construction Industry Payments Act 2004 (Qld), s 18(2)(b).

4 Building and Construction Industry Payments Act 2004 (Qld), s 18(3).

15

Agreement responsibility to provided and

accordingly back chargeable under the Contract.‖

[31] It may well be that there is a sufficient statement of ―why the scheduled amount is

less‖5 in the case of back charges and it is unnecessary to consider it in any detail.

There was no reliance on the ―Back Charges‖ item in submissions.

[32] The appellant criticised the primary judge‘s reasons insofar as it was held that the

6 March payment certificate did not ―purport‖ to be a ―payment schedule‖ under the

Act.6 It was submitted that there was no scope under the Act for determining

whether a document is a payment schedule by reference to the author‘s subjective

intention. It was further submitted that even if the author‘s subjective intention was

relevant, the primary judge‘s finding was contrary to the express terms of

cl 10.10(b)(i) of Schedule B of the sub-contract which provided, ―A ‗payment

schedule‘ for the purposes of the Act is a Payment Certificate‖. It was said that,

where parties have agreed to use their own terminology to define a ―payment

certificate‖ as a ―payment schedule‖, it cannot be said that a document which

purports to be a ―payment certificate‖ does not purport to be a ―payment schedule‖.

[33] The criticism of the primary judge‘s reasons for taking into account what the

6 March document did or did not purport to be was ill-founded for the reasons

discussed above.

[34] The first respondent pointed out that, although the sub-contract provides that ―[a]

‗payment schedule‘ for the purposes of the Act is a Payment Certificate or a Final

Certificate as the case may be‖, it is silent as to the reverse position; it says nothing

about payment certificates. The point has some substance but, in my view,

cl 10.10(b)(i) which provides: ―A ‗payment schedule‘ for the purposes of the Act is

a Payment Certificate or a Final Certificate as the case may be‖ and cl 10.10(a)(iii),

which provides: ―A ‗payment claim‘ for the purposes of the Act is a Sub-

Contractor‘s Payment Claim pursuant to clause 10.1 and 10.6‖, are indicative of an

intention to harmonise the traditional means of payment with the requirements of

the Act. Although the wording of the sub-contract is insufficient to fulfil this

objective, the approach taken in the sub-contract suggests that the appellant‘s failure

to use the description ―payment schedule‖ on the payment certificate is of less

significance than may otherwise have been the case.

[35] Whatever may have been the position if the payment certificate had omitted to state

―why the scheduled amount [was] less‖7 than the claimed amount in respect of some

relatively minor item, the failure to provide such a statement in respect of

―variations‖, which constituted the major part of the appellant‘s deductions from the

claimed amounts, made the payment certificate, taken alone or together with the

letter and email of 6 March, unrecognisable as a payment schedule under the Act.

The 6 March document was, on its face, patently incomplete in one critical respect.

[36] The identification of a deduction of $20,656,294.88 on account of variations

accompanied by a direction to ―Refer to Variation Register‖ does not amount to

a statement of ―why the scheduled amount is less‖8 than the claimed amount. What

5 Building and Construction Industry Payments Act 2004 (Qld), s 18(3).

6 McConnell Dowell Constructors (Aust) Pty Ltd v Heavy Plant Leasing Pty Ltd (Administratorsappointed) (Receivers and Managers appointed) & Ors [2013] QSC 223 at [50]–[52].

7 Building and Construction Industry Payments Act 2004 (Qld), s 18(3).

8 Building and Construction Industry Payments Act 2004 (Qld), s 18(3).

16

was done merely notifies the fact that a certain sum was deducted in respect of

―variations‖, not why it was deducted. As Chesterman J observed in Minimax:9

―… The whole purpose of [a payment schedule] is to identify what

amounts are in dispute and why. The delivery of a payment claim

and a payment schedule is meant to identify, at an early stage, the

parameters of a dispute about payment for the quick and informal

adjudication process for which the Act provides. If a builder wishes

to take advantage of the Act to dispute the claim it must comply with

its provisions and must, relevantly, take the trouble to respond to a

payment claim in the manner required by the Act. The process is not

difficult. The applicant was required to identify those parts of the

claim which it objected to paying and to say what the grounds of its

objections were.‖

[37] Were it not for this deficiency, it seems to me that the 6 March document may well

have constituted a payment schedule. It was provided as a considered and detailed

response to the payment claim. There was no suggestion in the 6 March document,

putting aside the deficiency in relation to variations, that it was provisional in any

way or that a further and more detailed response to the payment claim would be

forthcoming.

[38] The question whether the deficiency in the 6 March document was remedied by

incorporating parts of the 8 March document remains. The first respondent

submitted, and I accept, that there can be no objection in principle to an obviously

incomplete purported payment schedule being completed, within time, by the

provision of the omitted material. In this case, however, the missing material is the

―variation register‖. The evidence does not disclose whether any variation register

existed at relevant times. Even if it existed, its content remains unknown. The

information contained in the 8 March document cannot assist. Everything in or

provided with the 8 March document was provided as part of a separate document

intended to take effect as a payment schedule and not as part of or as a means of

rectifying deficiencies in the 6 March document. Nor does the evidence show that

Schedule B to the 8 March document, which is headed ―Subcontractor‘s Payment

Claim – SCHEDULE B (Variations)‖, is the ―variation register‖ referred to in the

6 March letter. A claimant cannot be expected on its own initiative to compose a

payment schedule for a respondent by assembling miscellaneous documents

received from the respondent until the assembled materials satisfy the requirements

of s 18 of the Act.

[39] This ground of appeal was not made out.

Ground 2 – the primary judge erred in taking into account considerations as towhat the first respondent “purported” the 6 March document to be indetermining whether that document was a “payment schedule” for thepurposes of s 18 of the Act

[40] This ground has been dealt with above. The primary judge was correct in

considering it relevant that the 6 March document did not purport to be a payment

schedule. The subjective intention of the first respondent may not be relevant;

9 Minimax Fire Fighting Systems Pty Ltd v Bremore Engineering (WA Pty Ltd) & Ors [2007] QSC 333

at [27].

17

however, the manner in which the 6 March document was described by the first

respondent in that document or in any accompanying document was relevant for the

reasons discussed earlier.

Ground 3 – the primary judge erred in finding that the 6 March document wasnot a payment schedule for the purposes of s 18 of the Act

[41] The arguments in relation to this ground have already been discussed. The primary

judge did not err in this regard.

[42] The grounds raised in the first respondent‘s notice of contention are now addressed.

The adjudication decision was void because:(a) at the time the payment claim the subject of the decision was served bythe appellant there was a valid and subsisting charge pursuant to theSubcontractors’ Charges Act 1974 (Qld) (the Charges Act) relating toconstruction work the subject of the construction contract pursuant towhich the payment claim was made; and(b) Section 4 of the Act prohibits the service of a payment claim in suchcircumstances

[43] The primary judge found against the first respondent on this argument. He found

that there was nothing in the language of s 11(8) of the Charges Act, or the contents

of the approved form, which required the conclusion that ―a failure to give notice of

withdrawal in the approved form renders a clear and unequivocal statement that the

notice of claim of charge is invalid ineffective to constitute a withdrawal of the

requisite notice in accordance with s 11(8) of the Charges Act‖.10 The primary

judge found that if, contrary to his view, a notice in the approved form was a

necessary prerequisite to the withdrawal of a notice of claim of charge, there had

been sufficient compliance with the requirements of s 11(8). His Honour held that

as s 11(8) merely required notice to be given ―in the approved form‖, substantial

compliance was sufficient by virtue of s 49(2) of the Acts Interpretation Act 1954

(Qld).11

[44] The first respondent submitted that there could not have been ―substantial

compliance‖ with s 11(8) as the appropriate form, Form 5, was not used. Moreover,

what was done did not meet the requirements of the form by:

(a) identifiying the contract between the employer and the contractor;

(b) stating the amount claimed;

(c) giving particulars of the claim;

(d) stating the date of the notice of claim of charge;

(e) stating the dates between which the work was carried out;

(f) stating whether the claim was wholly or partially withdrawn (and, if partially,

the amount being withdrawn); and

(g) being executed by an officer of the claimant and witnessed.

10 McConnell Dowell Constructors (Aust) Pty Ltd v Heavy Plant Leasing Pty Ltd (Administratorsappointed) (Receivers and Managers appointed) & Ors [2013] QSC 223 at [37].

11 Now Acts Interpretation Act 1954 (Qld), s 48A(2).

18

Consideration

[45] The appellant served on Fluor and the first respondent three notices of claim of

charge, two of which were dated 8 February 2013 and the third of which was dated

11 February 2013, each for a different amount. On 15 February 2013, the first

respondent wrote to the appellant demanding that the notices be withdrawn. It was

asserted that they did not comply with the Charges Act and that they were made

without grounds. Fluor wrote to the first respondent on 19 February 2013 advising

that it had received the three notices of claim of charge.

[46] On 20 February 2013, the appellant wrote to the first respondent, forwarding a copy

to Fluor, acknowledging receipt of the first respondent‘s 15 February 2013 letter.

The appellant quoted the reference on the first respondent‘s letter. In its letter, the

appellant accepted that its notices of claim of charge were invalid and of no effect.

[47] Form 5 contains provision for the information described in paragraph [44] above.

The letter of 20 February 2013 was not in the approved Form 5 but there was,

nevertheless, substantial compliance with the form in the circumstances. The plain

import of the letter was that the three notices were accepted to be invalid and were

effectively being withdrawn. The notices were clearly identified in the first

respondent‘s 15 February letter, which was incorporated in the 20 February letter by

reference. The 15 February letter also identified the head contract and the subcontract.

The two letters, between them, provided the respective addresses of the

claimant and contractor. The amounts claimed in each notice of claim of charge

were stated in the 15 February letter. The particulars of claim were not provided,

but part of the reason for the agreed invalidity of the notices of claim of charge was

that they had failed to provide any such particulars. The 20 February letter was

signed by the appellant‘s managing director. His signature was not witnessed but,

as the primary judge pointed out, in effect, the witnessing of the signature was

something of a formality. No declaration was required and the witness was not

required to have any particular qualification or to be a member of any particular

class of persons. The fact that the 20 February letter was on the appellant‘s

letterhead and addressed to an officer of the first respondent with whom the

appellant had been dealing is a further circumstance suggesting that the failure to

obtain a witness to the managing director‘s signature was inconsequential.

[48] Although it is unnecessary to decide the point, there is merit in the primary judge‘s

view that a failure to give notice of withdrawal of a notice of claim of charge in the

approved form does not render a clear and unequivocal statement to the superior

contractor and the contractor to whom the money is payable ineffective. There is an

even stronger argument that the reference to a notice of claim of charge being

―withdrawn‖ in s 4(6) of the Act is a reference to the withdrawal of a notice of claim

of charge in such a way that is effective in respect of all relevant parties regardless

of whether it is in the approved form. Yet another difficulty confronting the first

respondent is that s 4 of the Act applies only if a person gives a notice of claim of

charge under the Charges Act.12 On the face of it, it is implicit in those words that

the notice must be valid. The parties proceeded at relevant times on an assumption

or acceptance of invalidity.

[49] Accordingly, this ground was not made out.

12 Building and Construction Industry Payments Act 2004 (Qld), s 4(1).

19

The decision was void and of no effect because if the 6 March document wasthe payment schedule, the third respondent was required by s 26(2)(d) of theAct to consider submissions, including relevant documentation, properly madein support of that payment schedule but failed to do so

[50] In view of the conclusion that the 6 March document was not the payment schedule,

this ground does not require any further consideration.

The decision was void because the third respondent determined the question ofentitlement to the variations claimed by the appellant in the payment claim:(a) on a basis for which neither party contended;(b) on the incorrect assumption that the first respondent implicitlyaccepted the claimed variations;(c) without reference to the material before him;(d) without assessing and determining for himself the merits of thevariations claimed or value of the variations claimed.In acting as he did, the third respondent failed to discharge his statutoryfunction as an adjudicator, an essential pre-condition to the existence of a validdetermination under the Act.

[51] It is also unnecessary to deal with this contention in any more detail in view of the

finding that the adjudicator based his determination on a document which was not

the payment schedule.

Conclusion

[52] The appellant argued that the fact that, pursuant to s 21 of the Act, the adjudication

process can be enlivened where there has been no payment schedule is consistent

with the ascertainment of whether a payment schedule exists not being a

jurisdictional fact. That being so, the determination of what is the payment

schedule for the purposes of s 26(2)(d) of the Act is something reserved exclusively

for the adjudicator. This argument cannot be accepted.

[53] The nature of a ―jurisdictional error‖ was the subject of the following discussion by

Brennan, Deane, Toohey, Gaudron and McHugh JJ in Craig v South Australia:13

―An inferior court falls into jurisdictional error if it mistakenly

asserts or denies the existence of jurisdiction or if it misapprehends

or disregards the nature or limits of its functions or powers in a case

where it correctly recognises that jurisdiction does exist. Such

jurisdictional error can infect either a positive act or a refusal or

failure to act. Since certiorari goes only to quash a decision or order,

an inferior court will fall into jurisdictional error for the purposes of

the writ where it makes an order or decision (including an order or

decision to the effect that it lacks, or refuses to exercise, jurisdiction)

which is based upon a mistaken assumption or denial of jurisdiction

or a misconception or disregard of the nature or limits of jurisdiction.

13 (1995) 184 CLR 163 at 177–178.

20

Jurisdictional error is at its most obvious where the inferior court

purports to act wholly or partly outside the general area of its

jurisdiction in the sense of entertaining a matter or making a decision

or order of a kind which wholly or partly lies outside the theoretical

limits of its functions and powers … [A]n inferior court can, whileacting wholly within the general area of its jurisdiction, fall intojurisdictional error by doing something which it lacks authority todo. If, for example, it is an essential condition of the existence ofjurisdiction with respect to a particular matter that a certain event orrequirement has in fact occurred or been satisfied, as distinct fromthe inferior court’s own conclusion that it has, there will bejurisdictional error if the court or tribunal purports to act incircumstances where that event has not in fact occurred or thatrequirement has not in fact been satisfied even though the matter isthe kind of matter which the court has jurisdiction to entertain.Similarly, jurisdictional error will occur where an inferior courtdisregards or takes account of some matter in circumstances wherethe statute or other instrument establishing it and conferring itsjurisdiction requires that that particular matter be taken into accountor ignored as a pre-condition of the existence of any authority tomake an order or decision in the circumstances of the particularcase. Again, an inferior court will exceed its authority and fall into

jurisdictional error if it misconstrues that statute or other instrument

and thereby misconceives the nature of the function which it is

performing or the extent of its powers in the circumstances of the

particular case. In the last-mentioned category of case, the line

between jurisdictional error and mere error in the exercise of

jurisdiction may be particularly difficult to discern.‖ (citations

omitted and emphasis added)

[54] Later in their reasons, their Honours contrasted the position of an inferior court in

relation to jurisdictional error with that of an administrative tribunal:14

―The position is, of course, a fortiori in this country where

constitutional limitations arising from the doctrine of the separation

of judicial and executive powers may preclude legislative

competence to confer judicial power upon an administrative tribunal.

If such an administrative tribunal falls into an error of law which

causes it to identify a wrong issue, to ask itself a wrong question, to

ignore relevant material, to rely on irrelevant material or, at least in

some circumstances, to make an erroneous finding or to reach a

mistaken conclusion, and the tribunal‘s exercise or purported

exercise of power is thereby affected, it exceeds its authority or

powers. Such an error of law is [a] jurisdictional error which will

invalidate any order or decision of the tribunal which reflects it.

In contrast, the ordinary jurisdiction of a court of law encompasses

authority to decide questions of law, as well as questions of fact,

involved in matters which it has jurisdiction to determine. The

identification of relevant issues, the formulation of relevant questions

14 Craig v South Australia (1995) 184 CLR 163 at 179–180.

21

and the determination of what is and what is not relevant evidence

are all routine steps in the discharge of that ordinary jurisdiction.

Demonstrable mistake in the identification of such issues or the

formulation of such questions will commonly involve error of law

which may, if an appeal is available and is pursued, be corrected by

an appellate court and, depending on the circumstances, found an

order setting aside the order or decision of the inferior court. Such a

mistake on the part of an inferior court entrusted with authority to

identify, formulate and determine such issues and questions will not,

however, ordinarily constitute jurisdictional error. Similarly, a failure

by an inferior court to take into account some matter which it was, as

a matter of law, required to take into account in determining a

question within jurisdiction or reliance by such a court upon some

irrelevant matter upon which it was, as a matter of law, not entitled

to rely in determining such a question will not ordinarily involve

jurisdictional error.‖

[55] In Kirk v Industrial Court (NSW),15 the majority summarised the discussion of

jurisdictional error by the Court in Craig,16 as follows:

―The Court in Craig explained the ambit of jurisdictional error in the

case of an inferior court in reasoning that it is convenient to

summarise as follows.

First, the Court stated, as a general description of what is

jurisdictional error by an inferior court, that an inferior court falls

into jurisdictional error ‗if it mistakenly asserts or denies the

existence of jurisdiction or if it misapprehends or disregards the

nature or limits of its functions or powers in a case where it correctly

recognises that jurisdiction does exist‘ (emphasis added). Secondly,

the Court pointed out that jurisdictional error ‗is at its most obvious

where the inferior court purports to act wholly or partly outside the

general area of its jurisdiction in the sense of entertaining a matter ormaking a decision or order of a kind which wholly or partly lies