The document provides a summary and review of recent cases related to the Construction Contracts Act 2004 (WA). It discusses key topics and outcomes from several cases, including: - Adjudicators must provide adequate reasons for their decisions and cannot merely state they found one party more persuasive. - Adjudicators have jurisdiction to err in contractual interpretation but must consider merits of set-offs raised in response to a payment claim. - The scope of a payment dispute is limited to the scope of the payment claim that triggered it. - Prior adjudication determinations are not binding but adjudicators should not overturn factual findings without reason.

1. Resolution Institute:
Construction Contracts Act 2004 (WA)
– recent case review
Greg Nairn
Partner, Construction & Infrastructure
21 June 2017

2. INTRODUCTION AND CONTEXT
2

3. Period covered: from 15 August 2016 to June 2017
Amendments to the CCA yet to fully filter through
Case law continues to develop – and continues to offer up
surprises
3

4. CASE REVIEW
4

5. CH2M Hill Australia v ABB Australia
[2016] NTSC 42 (15 August 2016)
KEY TOPICS: REPEAT APPLICATIONS
(s25 CCA) + ABUSE OF PROCESS +
COMPLEXITY + REASONS FOR
DECISION

6. Overview
– Defendant agreed to supply equipment to plaintiff for power plant at
Ichthys
– Payment claim #1 lodged by defendant – plaintiff’s certificate for a
substantially lower amount – became subject of Adjudication #1
– Payment claim #2 lodged by defendant – became subject of
Adjudication #2
– Adjudication #1 was dismissed for being out of time
– Adjudication #2 was allowed in defendant’s favour
– Plaintiff sought to set aside Adjudication #2
6

7. Duplicate application point
– Under CCA (WA s25), a party cannot adjudicate where an application
has previously been made
– Plaintiff argued that the second claim (in Adjudication #2) was a
“repeat” of the claim in Adjudication #1
– Plaintiff’s argument was that s25(a) operated where the subject
matter was repeated across two applications – ie not just where the
very same payment claim was agitated
– Rejected – found that to offend s25(a), the applicant has to be
adjudicating the very same payment dispute as a dispute the
subject of another application (at [30])
7

8. Abuse of process point
– Plaintiff further argued that there was such a substantial overlap
between the claims the subject of Adjudication #1 and #2, that #2
amounted to an abuse of process.
– It was accepted that the principles of abuse of process and related
principles such as issue estoppel could apply to CCA matters
– However, the two applications were not the same, and gave rise to
different issues – hence no relevant abuse/issue estoppel (at [36])
despite extensive overlap of issues (particularly on the question of
whether the defendant was entitled to an EOT) (at [37])
– Also in Adjudication #1 there was no determination on the merits
anyway (at [38])
8

9. Complexity point
– Plaintiff argued that adjudicator should have dismissed on complexity
grounds
– Rejected (at [49]-[51]):
– Although there were more than 12 lever arch files, “I do not think
that the volume of the material is a necessary indicator …”
– The legal issues were not particularly complex and did not
necessarily require a lawyer to resolve them
– There were at least as many factual issues as legal
9

10. Reasons for decision point
– Reasons found to be “fundamentally inadequate” (at [88])
– Decision was set aside on that basis (at [117])
– Adjudicator must show he/she has turned mind to the issues raised by
the parties in support and opposition to the claim (at [92])
– The determination failed to give reasons to support the finding that the
defendant was entitled to an EOT (which was a critical point) (at [96])
10

11. – Not sufficient for the adjudicator to say:
– that he has “considered everything” (at [99]);
– merely that he was satisfied why the relevant contractual notice
provisions (time bars) had been satisfied (at [97])
– merely that he found the defendant’s case more persuasive than
the plaintiff’s case (at [98])
– merely that he found the defendant’s expert delay analysis
preferable or more persuasive than the plaintiff’s expert delay
analysis (at [100])
– The adjudicator must give the reasons why
11

12. M+W Singapore Pte Ltd -v- Anstee-Brook
[2016] WASC 310 (27 September 2016)
KEY TOPICS: PAYMENT DISPUTE
ARISES ON INFORMAL DISPUTING +
INABILITY TO SEVER DETERMINATION
INFECTED BY JURISDICTIONAL
ERROR

13. Overview
– Unusual case – by consent
– Pritchard J was satisfied that, for 2 of the 3 payment claims captured
in the determination, the application was brought out of time and that
adjudicator’s failure to dismiss on that basis was jurisdictional error (at
[39])
– This was on the basis of clear evidence of informal disputation of
those payment claims, which triggered the 28 day time limit earlier
than the adjudicator thought
– 3rd payment claim may have been in time, but given there is no ability
to sever that portion of the determination, the determination was
wholly set aside (at [43]-[44])
13

14. MRCN Pty Ltd and Pindan Contracting Pty
Ltd [2016] WASAT 114 (20 September
2016)
KEY TOPICS: PAY WHEN PAID
CLAUSES + RELEVANCE OF PRIOR
ADJUDICATIONS

15. Pay when paid clause
– SAT not satisfied that a clause in a subcontract that made the return
of retention by head contractor (Pindan) contingent upon a
Superintendent certifying completion of broader works (head contract)
offended “pay when paid” prohibition in s9 CCA (at [24]-[28])
– Evidence didn’t establish that return of retention to Pindan was
contingent on Pindan getting its retentions back from the
Owner/Principal
15

16. Relevance of prior adjudication
– There was an earlier determination of another adjudicator in which the
a finding had been made as to when PC was achieved, which led to
the release of a tranche of the retention
– MRCN argued in effect that:
– earlier determination meant that second tranche of retention was
now due for release
– the current adjudicator could not overturn the earlier determination
finding on this point
– Rejected by SAT - current adjudicator was not bound by previous
determination, and was entitled to take a different approach as to
when final tranche was due for release, and in any event no actual
inconsistency (at [63]-[67]) 16

17. Samsung C&T Corporation -v- Loots
[2016] WASC 330 (24 October 2016)
KEY TOPICS: JURISDICTIONAL
ERROR + SCOPE OF PAYMENT
DISPUTES + DEALING WITH SET-OFFS
+ MINING EXCEPTION

18. 18
Errors in contractual construction
– Found: it could not amount to jurisdictional error for the adjudicators
in that case to make a finding that, as a matter of contractual
construction, certain contractual milestones (related to Samsung’s
asserted right to LDs) were not applicable
– “There is no doubt … that an adjudicator has jurisdiction to err in the
construction of a contract” (at [137])

19. 19
Whether an amount certified but not
claimed is part of a payment dispute
– One of the payment disputes (and adjudications) arose out of Duro’s
December 2015 payment claim for some $64m
– In the prior month’s certificate (November 2015 certificate), Samsung
had set off $32.4m for defective works
– In assessing Duro’s December 2015 claim, Samsung reversed that
set off of $32.4m in “good faith”
– This was in effect happening independently of what Duro was
claiming in its December claim (it arising out of what had happened
the month prior)
– By time of adjudication application, Duro made a $49m claim, which
included (in effect) the $32.4m which was the subject of Samsung’s
reversal – adjudicator in effect granted that in favour of Duro

20. 20
– An argument arose before Beech J as to whether it was open for the
adjudicator handling the payment dispute arising out of Duro’s
December 2015 claim to make any finding about whether this $32.4m
was due
– Samsung argued in effect that the adjudicator could NOT make any
determination on the $32.4m because:
– That $32.4m was not part of Duro’s December 2015 claim (it
arose out of a reversal of Samsung’s earlier position);
– Alternatively, Duro was out of time to adjudicate on the $32.4m,
since any dispute arose out of the November 2015 certificate

21. 21
– Beech J agreed with Samsung’s arguments and set aside the
determination on basis of jurisdictional error
– Duro’s December 2015 claim did not include the $32.4m and that was
the only payment claim that could give rise to the dispute (at [210])
– The $32.4m was in substance unrelated to that claim (at [212])
– Adjudicator misunderstood his role, which was to adjudicate solely on
the payment dispute arising out of the December claim (at [215])
– Adjudicator also failed to engage/respond to Samsung’s arguments
on the $32.4m and that amounted to a denial of procedural fairness
(at [226])

22. 22
Considering merits of a set-off
– Samsung also alleged that in one of the adjudications (#2), the
adjudicator erred in failing to give credit for a $7m payment it had
made to Duro “on account” for variations (still $6.6m in credit as at
relevant date)
– In effect, adjudicator #2 denied it on the basis that Samsung had (in
an earlier payment certificate) applied illegitimate set-offs which in
substance captured/exceeded the $6.6m (at [273])
– Beech J found that this was a jurisdictional error (at [274])
– The adjudicator’s function is not to determine amounts payable at
large, but is confined by the payment claim that gave rise to the
payment dispute (at [276]) – adjudicator is to determine what is owing
in respect of that payment claim only (at [277])

23. 23
– That involves consideration of merits of an asserted set-off – here the
adjudicator found that it was (on its face) valid set-off in response to
Duro’s payment claim
– It was wrong for the adjudicator to go beyond that, and examine
earlier payment claims/certificates and determine the amounts
otherwise owing between the parties
– “It is not open to an adjudicator to find that the amount payable by a
party in relation to the payment claim before the adjudicator is to be
increased (or decreased) on the ground that the adjudicator considers
that a party wrongfully denied liability (or wrongfully made a claim) in
relation to an earlier, different payment claim” (at [281])

24. 24
Effect if no payment claim or dispute
– In obiter remarks, Beech J expressed the view ([at [295]) that a finding
by an adjudicator that there was no payment dispute because there
was no payment claim does not enliven the dismissal power in
s31(2)(a) (regarding preparation and service in accordance with s26)
– At [303], Beech J expressed view that lack of a claim/dispute was
relevant only to the merits part of the adjudication (s31(2)(b))
– This is potentially significant as query whether a disappointed
applicant in a case where adjudicator found no claim/dispute could
access a SAT review under s46 (review right restricted to decisions to
dismiss under s31(2)(a))

25. 25
Effect if payment claim is made for
work outside CCA scope
– Beech J found (at [309], [311]-[318]) that:
– the scope of a payment dispute is limited by the scope of a
payment claim;
– it is only a claim for payment of an amount in relation to the
performance of obligations within paragraphs (a) to (d) of the
definition of 'construction contract' in s 3 that gives rise to a
payment claim under the CCA;
– only that component of the claim that related to construction
obligations could be adjudicated

26. 26
– Beech J (at [315]-[316]):
– A construction contract need not be wholly or primarily for
performance of the relevant construction obligations to be a
construction contract under the CCA;
– However, many parts of the Act only operates on a construction
contract to the extent it relates to the relevant construction
obligations (and not other types of obligations)
– Some aspects of CCA do apply generally
– Beech J rejected (at [319]-[347]) Samsung argument that a payment
claim must be confined to a claim for payment of an amount in relation
to the performance of construction work or related obligations, and
that if it was not so confined lost its ability to be adjudicated

27. 27
– Beech J found (at [336]) that each of the adjudicators honoured this
approach, restricting their adjudications to claims for relevant
construction work – this was evidenced by the exclusion of works that
were the subject of the s4(3) exception

28. 28
Mining/processing plant exception
– Obiter comments of Beech J (at [349]-[412])
– In determining application of the exception, it is necessary to view
the works in the contractual context, including whether it forms
part of a broader package or works (at [354])
– The character and purpose of the works packages may reveal the
character and purpose of the component item of work in question
– Duro’s provision of a “Data Centre” to mine processing plant was
excluded work – “the Data Centre is one of many elements of the
integrated mine process plant” (at [363])
– Duro’s provision of electrical switch-rooms (even those not
connected directly to the mine processing equipment) were also
“properly seen as a component of the mine process plant, and are
constructed for the purpose of processing iron ore” (at [370])

29. 29
– So were certain “belt feeders” that transported ore from bins to
crushers (at [374])
– So was work done by Duro to commission the control systems at
the mine process plant (at [383])
– So too were a mine pit laboratory and a mine process plant
laboratory – formed an element of integrated processing plant (at
[392])
– So too was work done in relation to certain stackers and reclaims
at the site of the mine process plant, but not stackers and
reclaimers and loaders at the port (remote from the processing
plant) (at [401])
– Note: s4(3)(c) CCA has since been amended

30. 30
Inability to sever erroneous portions
of adjudication
– Beech J confirmed (at [414]) that as soon as a determination is found
to be infected with jurisdictional error, it is not possible to “sever” the
erroneous part, leaving the balance to stand – thus the error infects
and voids the entire determination

31. Cooper & Oxley Builders Pty Ltd v
Steensma [2016] WASC 386 (30 November
2016)
KEY TOPICS: SET-OFFS + NATURE OF
LIABILITY BEING DETERMINED + CCA
IMPLIED TERMS

32. Overview
– Subcontractor made progress claims against C&O
– In assessing each claim, C&O applied set-offs for liquidated damages
and rectification work (defective works)
– Adjudication #1: adjudicator declined to have regard to C&O’s set-
offs on the basis the set-off was separate and outside his jurisdiction
– Adjudication #2: set-off not available and adjudicator found implied
terms (when and how to respond to payment claim) applied
– C&O sought judicial review of both adjudications on basis of
jurisdictional errors
32

33. Nature of liability being determined
– Le Miere J (at [33]) accepted that adjudicator’s function was to
determine current contractual liability, not whether, at some time in
past, the contractor was entitled to be paid
– Accordingly, an adjudicator cannot ignore events which occur after the
payment dispute arose and before date of determination, such as:
– payment of whole or part of claim;
– compromise of the claim;
– the accrual of a claim for liquidated damages
33

34. Set-off point (Adjudication #1)
– Le Miere J found adjudicator was wrong to exclude consideration of
C&O’s set-off – while a set-off may itself give rise to a separate
payment claim and dispute (as per Alliance Contracting [2014] WASC
212), this does meant that the adjudicator can overlook the merits of
the claim against which the set-off is raised (at [22])
– “The adjudicator is required to take into account the respondent’s
response, including the merits or any counterclaim or set off, in
reaching his determination …” (at [22])
– Adjudication #1 was set aside
34

35. Implied terms point (Adjudication #2)
– Le Miere J found adjudicator was wrong to imply Sch 1 Div 5 implied
terms (when and how to respond) – basis of reasoning:
– Adjudicator needs to form a view whether the contract has a written provision about
when and how to respond to a payment claim
– That is a simple inquiry – it is wrong to instead consider (as the adjudicator did)
whether the contract has a “written provision about each element of the provisions in
div 5 about when and how a party is to respond to claim for payment. That is not
what s 17 … says or means” (at [38])
– The only “matter” about which the contract needs a written provision to avoid the
implied terms implication is “when and how a party is to respond to a claim for
payment” (at [39])
– What is sufficient in that regard may be informed by Sch 1 Div 5 implied terms, but
s17 does not require the adjudicator to perform an elaborate comparison between the
contract and the implied terms, and imply the implied terms to the extent the contract
does not replicate the implied terms (at [39])
35

36. Southern Han Breakfast Point Pty Ltd v
Lewence Construction Pty Ltd [2016] HCA
52 (21 December 2016)
KEY TOPICS: EFFECT OF A “TAKING
OUT” + EFFECT OF TERMINATION

37. 37
Scope of valid payment claims
– In essence, High Court found that requirements of NSW Act that
claims for payment be for work carried out under a construction
contract meant that adjudication has a limited purpose – covers
claims for contractual entitlements only (at [66])
– [Note wording differs to CCA]
– High Court stated (at [66])
the Act is concerned to provide a statutory mechanism for securing payment of an amount claimed to
be payable in partial or total discharge of an obligation to pay for work (or for goods and services
supplied) imposed by the contractual force of a construction contract. The Act is not concerned to
provide security for payment of an amount claimed by way of damages for breach of a construction
contract. Nor is the Act concerned to provide security for payment of an amount which … might be
claimed as an alternative to damages by way of restitution for work carried out (or goods and services
supplied) in the event of the construction contract terminating on acceptance of repudiation.

38. 38
Effect of taking out/termination
– Relevant facts - parties’ contract had:
– standard monthly progress claim provisions (clause 37.1)
– right (in event of substantial breach) to take work out of hands and
“suspend payment” in interim, or terminate (clause 39.4)
– On 27 October 2014, Southern Han purported to take all of remaining
work out of Lewence’s hands
– Lewence treated that action as a repudiation and on 28 October 2014
purported to terminate
– On 4 December 2014, Lewence submitted payment claim for work up
to 27 October 2014 – became the subject of an adjudication

39. 39
Taking out/payment suspension
– If Southern Han had validly taken work out of the builder’s hands, then:
– Lewence’s rights to payment for all work was suspended until the works
(and take out process) were completed (clause 39.4)
– The suspension of payment was a form of “security” in favour of Southern
Han
– That being so, payment suspension applied not just for work taken out of
hands, but all work, otherwise that security would be undermined (at [76])
– “The suspension of payment was a suspension of the totality of the rights
conferred and obligations imposed in relation to payment by cl 37”,
including the right to make the November progress claim for work done up
to point of take out (at [78])
– In other words, the builder’s November progress claim was contractually
invalid as the right to submit it was suspended

40. 40
– Query whether same approach would be taken under cl 44 AS2124
which is more particular refers to suspension of “further” payment in
respect of work taken out of hands – has been held as not suspending
contractor’s rights to be done for work done up to (and therefore not
included in) take out: see Queensland University of Technology v
Project Constructions (Aust) P/L (In Liq) & Anor [2002] QCA 224
– However it pays to read the payment suspension carefully as if as
broad as in Southern Han it is likely to prejudice right to claim (and
adjudicate)

41. 41
Termination
– If on the other hand Lewence had validly terminated, then:
– Both parties were discharged from further performance of the contract;
– Lewence’s rights were restricted to rights which had already accrued;
– Lewence’s rights to submit progress claim had not yet accrued (claims
were to be made 8th day of each month and Lewence’s claim was 4 days
early) (at [79])
– Further, no sufficient basis to conclude that cl 37 (progress claim right)
survived termination – contract indicated that parties would be left to
common law damages remedies (at [80])
– Claims for common law damages are outside scope of legislation (ie
Lewence has no adjudication right)

42. Bocol Constructions v Keslake [2017]
WASAT 15 (17 January 2017)
KEY TOPICS: NAMING OF PARTIES +
TYPES OF PAYMENT CLAIMS THAT
CAN BE MADE “UNDER” A CONTRACT
+ COMPLEXITY

43. 43
Overview
– Bocol (as main contractor) engaged Keslake as a subcontractor to do
some works in relation to a road construction project
– Bocol alleged Keslake performed those works defectively (in breach
of implied workmanship term) and sought recovery of damages for
breach
– Bocol submitted a payment claim for those damages, relying on the
implied terms
– That payment claim became the subject of an adjudication, which was
dismissed on the basis that (1) Keslake had been incorrectly named;
(2) claim for damages was not able to be adjudicated under CCA
– Bocol sought a SAT review (hearing de novo)

44. 44
Naming issue
– Bocol had in effect referred to Keslake as:
– Bitumen Surfacing (which was Keslake’s trading name)
– “The Trustee for the Complete Road Services trust”
– Hadn’t used the formal legal name “Keslake Group Pty Ltd”
– SAT found it didn’t matter:
– “the meaning of 'name' is the nomenclature used to accurately describe a
person or entity” (at [60])
– Reg 5 of CC Regs is not to be read narrowly – not the case that any error
or misdescription is fatal
– No relevant misdescription in any event – it was clear who the respondent
was
– At any rate s74 of Interpretation Act allows SAT to overlook immaterial
non-compliances with statutory forms and that could be applied here

45. 45
Damages claim issue
– SAT rejected Bocol’s arguments that CCA, both on its express terms
and via the implied terms, permitted a “principal” in the shoes of Bocol
to make a contractual claim for damages against a “contractor” in the
shoes of Keslake
– A claim for damages is not a claim “under” a construction contract –
“there has to be a term in the construction contract that provides the
right to make the claim not that the claim is 'referable to' or 'a genus of
claim provided for by that contract' or 'by reason of the existence of
the contract'.” (at [114])
– Here there was no such right (there was no contractual right to claim
damages for breach)
– What about the implied terms? SAT found they applied but it made
no difference …

46. 46
Complexity issue
– SAT found the matter was too complex (at [137])
– There was competing expert evidence
– Liability was not factually or legally clear
– Quantum of damages not straightforward
– Contrast approach in NT in ABB v CH2M (August 2016 decision
addressed above)

47. ABB Australia v CH2M Hill Australia (No
1) [2017] NTSC 1 (13 January 2017)
KEY TOPIC: CONTRACTUALLY NON-
CONFORMING PAYMENT CLAIMS

48. Overview
– Subcontractor submitted a payment claim (Claim #1) to main contractor,
purporting it to be under the contract
– However, payment claim did not comply with contractual requirements for
making of the claim (subcontractor had not provided security which was a
condition precedent to valid payment claim)
– Main contractor asked subcontractor to re-submit after relevant security
given
– Subcontractor did so, and lodged Claim #2 and main contractor issued
payment certificate in response for less than amount claimed
– Subcontractor took claim to adjudication – adjudicator dismissed on basis
that rejection of Claim #1 had triggered time limit
– HELD: Claim #1 did not trigger time limit as it was not contractually valid
48

49. Reasoning
– Kelly J applied K & J Burns Electrical Pty Ltd v GRD Group (NT) Pty
Ltd & Anor [2011] NTCA 1
– In order to determine whether there is a payment dispute, the
adjudicator must determine whether the contractor has made a claim
for payment under the contract
– “This necessarily entails the adjudicator going to the terms of the
contract and asking whether what purports to be a payment claim is
capable of giving rise to a liability on the part of the principal to pay. If
not, then there is no “payment dispute” [and the application must be
dismissed]” (at [30])
– The payment claim must be capable of giving rise to a liability to pay
under the contract (at [32])
49

50. Reasoning (cont’d)
– A dispute about the contractual validity of a payment claim is not in
itself a payment dispute (at [33]), but is a matter which the adjudicator
must making a finding on when the adjudicator makes the initial
decision whether or not to dismiss (at [34])
– Given the above, on facts of this case, Claim #1 was contractually
non-conforming, and its rejection could not trigger a payment dispute
within the meaning of the CCA
50

51. ABB Australia v CH2M Hill Australia (No
2) [2017] NTSC 11 (14 Feb 2017)
KEY TOPIC: CONTRACTUALLY NON-
CONFORMING PAYMENT CLAIMS

52. 52
Overview
– Applicant submitted a “non-conforming” payment claim. Respondent
issued a payment certificate. Payment claim was adjudicated.
– Respondent claimed that fact that the payment claim did not comply
with contract meant a “payment dispute” could not arise under NT
CCA.
– HELD: fact that payment claim was contractually defective was not
fatal to creation of payment dispute, since on the facts the recipient
didn’t reject the payment claim on that basis.

53. 53
Reasoning in ABB v CH2M
– In determining whether a payment dispute exists, adjudicator must
first determine whether contractor has made a payment claim under
the contract
– This requires consideration of the purported payment claim and
whether it is “capable of giving rise to a liability on the part of the
principal to pay” (at [38]).
– Here the respondent failed to reject the claim, but instead issued a
payment certificate. Under the terms of the parties’ contract, this
certificate itself triggered an obligation to pay (at [39]).
– Didn’t matter contractually that claim was non-conforming, therefore it
didn’t matter to the adjudication

54. 54
Implications …
– Fact that a payment claim may be contractually non-compliant will not
necessarily be fatal
– Look at contract – if contract on its terms permits certification of non-
conforming claims, and attaches a liability to pay to such certification,
a non-conforming claim
– Query where ABB decisions leave the “broader” approach, found in
earlier SAT decisions such as Blackadder Scaffolding v Mirvac
Homes (WA) [2009] WASAT 133, at [68] – suggested, particularly
when read in conjunction with SAT not adopting the majority view in
K&J Burns (see Georgiou Group and MCC Mining [2011] WASAT
120, at [64]) that, so long as payment claim could in a general sense
be described as a payment claim under the contract, it didn’t matter it
if did not strictly comply

55. Total Eden Pty Ltd -v- ECA Systems Pty
Ltd [2017] WASC 58 (9 February 2017)
KEY TOPICS: SET-OFFS +
DETERMINATION OF CURRENT
LIABILITY + IMPLIED TERMS + COSTS

56. 56
Context
– Total Eden sought an order (under Civil Judgments Enforcement Act)
suspending enforcement of judgment pending the outcome of judicial
review of a determination – resolution of that application required
Pritchard J to express preliminary views on merits of the judicial
review application
– Total Eden was granted a suspension order including on basis that
the judicial review application had reasonable prospects of success

57. 57
Observations made – set-offs,
implied terms
– Determination reasons did not make it clear that the adjudicator had
considered a set-off raised by Total Eden against ECA – against that
background it was fairly arguable that adjudicator had made an error
in making a determination of Total Eden’s liability as at the date the
payment to ECA was due, rather than the date of the determination
(at [20])
– It was also reasonably arguable that the implied terms (cl 7, Sch 1) re
responding to a payment claim did not exclude Total Eden’s common
law rights to set-off (at [21]) – this on the basis that court would be
slow to infer that established common law rights are excluded

58. 58
Observations made - costs
– Pritchard J also indicated she felt it was arguable that there was a
reviewable error in the adjudicator awarding costs against Total Eden,
on the basis that Total Eden had not acted frivolously or vexatiously
(at [23])

59. Parkview Construction v Total Lifestyle
[2017] NSWSC 194 (7 March 2017)
KEY TOPIC: SERVICE OF ELECTRONIC
DOCUMENTS

60. 60
Overview
– FACTS:
– Adjudication application was uploaded to nominating authority on
a cloud service (Hightail)
– Applicant pasted same files across to a USB stick
– The respondent was served with the USB stick
– HELD: service of USB stick was not effective service under the NSW
security of payment legislation

61. 61
Reasoning in Parkview:
– Key point: “service” under the NSW security of payment legislation
requires service of a written copy of the application (at [73])
– Findings (at [75]-[81]):
– Generally, service will be effective where the party served has become
aware of the contents of a document
– In case of an email, or upload to cloud, service will not be effected until the
transmission or upload is actually accessed by the recipient
– Service of the USB stick is NOT the same as service of the writing stored
on the USB stick:
– USB does not represent or reproduce words visibly;
– Delivery of a USB is not transmission in writing just as delivering a CD
is not aural transmission of the recording embedded upon it

62. INPEX Operations Australia Pty Ltd v JKC
Australia LNG Pty Ltd [2017] NTSC 45
(15 June 2017)
KEY TOPICS: JURISDICTIONAL
ERROR + DENIAL OF NATURAL
JUSTICE + PAYMENT DISPUTE +
IMPLIED TERMS

63. 63
Facts
– JKC lodged payment claim against Inpex, which Inpex disputed in part
– JKC brought an application seeking to adjudicate part of the dispute
– 34 volumes of material in the application
– Importantly, JKC’s application didn’t contend that Inpex was
contractually precluded from disputing the merits of JKC’s claims
– The adjudicator sought submissions from the parties as to whether
the implied provisions of the CCA applied to the EPC contract based
on a deficiency he perceived in the way the payment terms operated
– Both parties filed submissions to the effect that the implied provisions
did NOT apply

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Adjudicator’s finding
– The implied terms applied
– As there was no evidence as to prove that Inpex had issued a notice
of dispute within the 14 day period set out in the implied terms, there
was a deemed acceptance and Inpex became liable to pay the full
amount
– Inpex applied to Supreme Court (NT) for judicial review

65. 65
Reviewable/jurisdictional error
– Kelly J
[28] An error of law in construing provisions of the Act which give the
adjudicator his jurisdiction to make a determination will render a
determination a nullity reviewable by this Court. However, non-
jurisdictional errors of law or fact made by an adjudicator in the process of
making a bona fide attempt to carry out the functions conferred on him or
her by the Act are not amenable to review by this Court. If the only
complaint were that the Adjudicator had misconstrued the EPC Contract,
then that would not, of itself, render the Determination a nullity,
reviewable by the Court … unless it could be shown that the Adjudicator’s
decision was unreasonable (in the Wednesbury sense) or that there was
a substantial failure to comply with the requirements of procedural
fairness in the circumstances.

66. 66
Denial of natural justice
– Kelly J found a denial of natural justice had been made out
– Relevantly:
– [30] Procedural fairness required that the Adjudicator notify the parties of
“proposed conclusions that were not put forward by the parties and could
not be easily anticipated.” The Court will set aside a purported
determination by an adjudicator where there has been a failure by an
adjudicator to provide such procedural fairness and, as a result, a party
has been deprived of the possibility of a successful outcome.
– Here the adjudicator needed to do more than ask for submissions on
whether the implied terms applied

67. 67
– Adjudicator failed to warn parties that he was considering making a
determination on the basis of the “deemed acceptance” operation of
the implied terms
– Inpex was denied opportunity to put submissions on that issue,
including on the basis that:
– JKC’s payment claim was not compliant with the contract; or
– there was some estoppel or waiver which prevented JKC relying
on 14 day response time; or
– even if the implied terms applied, an adjudicator was still obliged
to be satisfied that the work was done and money owing

68. 68
– Kelly J didn’t accept that it was apparent from asking for submissions
on the implied terms that the adjudicator was flagging he might make
a determination based on the implied terms – this was because the
adjudicator had made it clear that the parties’ submissions on the
implied terms issue had to be restricted to whether the implied terms
applied (at [38])
– Not necessary to assess the merits of Inpex’s arguments on implied
terms – was satisfied that a different outcome may have eventuated
(at [41])
– Kelly J in effect warned adjudicators from making a determination on
a basis not contended for by either party, without first giving the
parties to make submissions on that basis – see [44]

69. 69
Scope of a payment dispute
– Inpex alternatively argued that by determining the matter on a basis
not argued by the parties, the adjudicator had gone beyond his
powers, which were confined to analysing the specific payment
dispute that gave rise to the application
– Inpex’s argument sought to distinguish between payment disputes
arising due to an actual dispute, as opposed to disputes arising due to
mere non-payment
– Kelly J rejected this alternative argument

70. 70
Operation of implied terms
– Inpex further argued that adjudicator had erred in blindly applying the
implied terms “deemed acceptance”, and that he ought to have turned
his mind to the underlying merits of JKC’s claim
– Kelly J rejected this (at [58]):
As has been said many times in cases connected with this Act, the focus
of the Act is on the contract. If the contract between the parties provides
for a claim to be paid in full if not disputed within a given time, then there
is no reason why an adjudicator ought not give effect to that provision in
making a determination on the merits under s 33(1)(b), and every reason
why he should.

71. TAKEAWAYS
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72. Takeaways
Parties must be given full opportunity to be heard on what will
underpin adjudicator’s decision
Reasons must explain the “why” behind adjudicator’s key
findings (why party A expert preferred over party B)
A single jurisdictional error on a minor point (eg costs)
could lead to entire determination being void
Cannot make a determination to pay on amounts not claimed
in the original payment claim
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73. Takeaways
Determinations must be for contractual entitlements only and
be for work covered by the CCA
Do you make a merits dismissal if no payment
claim/dispute?
Set offs cannot be ignored or overlooked – need to
determine current liability to pay
Ground continues to shift on when the implied terms apply
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74. Questions?
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