19/02/2015 – RCQ Construction Pty Ltd v CH Central Village Pty Ltd

RCQ Construction Pty Ltd v CH Central Village Pty Ltd

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19/02/15 – RCQ Construction Pty Ltd v CH Central Village Pty Ltd

Adjudicator

Registration Number

Claimant

Respondent

Project

Project Address

Payment Claim date

Claimed amount

Payment Schedule date

Scheduled amount

S21(2) Notice date

Adjudication Application date

Adjudicator’s Acceptance date

Adjudication Response date

Adjudication Decision date

Adjudicated Amount

Due Date for Payment

QBCC Application fee

Adjudication fees

 

Rate of Interest

Chris Lenz

J622914

RCQ Construction Pty Ltd

CH Central Village Pty Ltd

Central Village Cinemas

N/A

Served 5 December 2014

$1,101,534.58 excluding GST

Served 17 December 2014

$202,517.05 excluding GST

N/A

21 January 2015

28 January 2015 (facsimile and post)

30 January 2015

19 February 2015

$538,554.32 (including GST)

7 January 2015

N/A

50% Claimant

50% Respondent

12.7%

Table of Contents

A. DECISION

B. REASONS

I. Background
II. Application to the QBCC and appointment of Adjudicator
III. Material provided in the adjudication
IV. Is it a Construction Contract within BCIPA?
V. Right to a progress payment and reference date
VI. Payment Claim
VII. Payment Schedule
VIII. Jurisdictional issues
IX. Unsolicited submissions from the claimant and respondent on 4 February 2015
X. Alleged “new reasons in adjudication application
XI. The merits of the claimant’s claim and the payment claim deductions

a. Variations
b. Negative variations
c. The delay claim – EOT 6 – principal caused delay costs

XII. The amount of the progress payment
XIII. Due date for payment
XIV. Rate of interest
XV. Adjudicator’s fees

A. DECISION

I have made a decision under the Building and Construction Industry Payments Act 2004 (“BCIPA”), and in respect of the claimant’s payment claim, that:

as shown on the first page of this decision.

B. REASONS

I. Background

  1. RCQ Construction Pty Ltd (referred to in this adjudication as the “claimant”) was engaged by CH Central Village Pty Ltd (referred to in this adjudication as the “respondent”), to construct the Central Village Cinemas Project (the “work”).
  2. The parties entered into a contract on or about 25 November 2013 for the work.
  3. The work involved in construction of:

(i) a ground floor of nine retail or food tenancies, and arcade, amenities and service areas;

(ii) a first-floor tenancy consisting of five auditoria, of for you, amenities, a concourse and fire exits;

(iii) a second floor mezzanine level consisting of a projection area, plant room, staff amenities and offices;

(iv) roof level plant platform for the ground floor tenancies; and

(v) ground car parking.

  1. This payment claim essentially involves resolution of a dispute regarding 3 variations made by the claimant, together with negative variations assessed by the respondent, as well, as a delay claim by the claimant.
  2. The payment claim was made on 5 December 2014 and on 15 December 2014 the Building and Construction Industry Payments Act 2004 (“BCIPA”) was amended with Transitional Provisions contained within part 7 of BCIPA (the “transitional provisions”).
  3. The payment schedule was served on 17 December 2014.
  4. The adjudication application was made on 21 January 2015, and I received the adjudication response by email and hard copy on 30 January 2015.
  5. On 4 February 2015, the claimant’s solicitors sent my agent 10 pages of submissions dealing with its complaints about the respondent providing “new reasons” in its adjudication response. These submissions were copied to the respondent, and the respondent provided submissions in reply
  6. On 5 February 5, 2015, through my agent, I requested submissions from the respondent as to why I should not consider the claimant’s submissions, and then comments from the claimant.
  7. I received both the respondent and claimant’s submissions in response to my request.
  8. I was also granted a total of 4 days extra time within which to reach the decision.

II. Application to the QBCC and appointment of Adjudicator

  1. The claimant applied to the QBCC on 21 January 2015 for adjudication.
  2. The QBCC identified this application as number 3328 and referred the application to me
  3. By letter dated 28 January 2015 sent by my agent by facsimile to the claimant and to the respondent, I accepted the Adjudication Application and thereby became the appointed Adjudicator.
  4. I was advised by the solicitors for the claimant that they had served the adjudication application on the respondent on 22 January 2015, and they provided proof of service.
  5. The respondent provided an adjudication response to my agent on 30 January 2015, and acknowledged that they had been served on 22 January 2015 [para 1.6 of the response].

III. Material provided in the adjudication

  1. My agent received 4 lever arch folders in the claimant’s adjudication application, which included the payment claim and payment schedule.
  2. My agent received one lever arch folder from the respondent.

IV. Is it a Construction Contract within BCIPA?

  1. In order for adjudication to proceed, it is necessary for there to be a construction contract to which the payment claim relates, so it is necessary for me to find that the contract falls within this definition.
  2. The claimant provided the contract documents in folder 2 of its adjudication application and the respondent did not take issue with its contents. All documents in this folder appeared to contain the initials of both signatories on each page. I am satisfied that these documents comprise the contract, although I’ve not yet made a finding whether each document in the folder is a contract document.
  3. However, for present purposes I am satisfied (without controverting submissions from the respondent) that the Formal Instrument of Agreement, AS 4300 – 1995, the Principal’s Project Requirements, the 12 July 2013 construction tender price submission (the “RCQ letter of offer”), the Drawings, and the Agreement for Lease (Construction) dated 31 August 2012 (the “lease”) form part of the contract.
  4. At paragraph 19 of the application submissions, the claimant asserted that the contract was for construction work and related goods and services within the meaning of BCIPA, and that none of the exclusions applied.
  5. The respondent in the adjudication response does not take issue with this submission.
  6. Nevertheless, it is important to make a finding that it is a contract within BCIPA in order for adjudication to commence.
  7. Schedule 2 of BCIPA defines a construction contract in the following terms:

“means a contract, agreement or other arrangement under which one party undertakes to carry out construction work for, or supply related goods and services to, another party.”

  1. Having regard to the meaning of construction work in s10 of BCIPA, I am satisfied that the contract was for construction of cinema complex which I find is a building, which falls within s10 as it involves the construction of “buildings” as defined in s10(1)(a) of BCIPA.
  2. I am therefore satisfied that contract between the parties falls within the definition of construction contract under BCIPA, thereby attracting the right to the progress payment provisions under the Act.

V. Right to a progress payment and reference date

  1. Paragraphs 20 through to 23 of the application submissions deal with these issues and there are no controverting submissions from the respondent in the response.
  2. s12 of BCIPA provides that:

“From each reference date under a construction contract, a person is entitled to a progress payment if the person has undertaken to carry out construction work, or supply related goods and services, under the contract.”

  1. Progress claim 14 (this payment claim) was served on 5 December 2014 for construction work.
  2. Paragraph 21 in the application submissions states that clause 42.1 of the contract, and Item 46(a) of Part A to the General Conditions of Contract provides for a reference date on the last business day of each month, and I find that this is correct.
  3. Accordingly, I find that the reference date for this payment claim was the last business day in November 2014, and I am therefore satisfied that the claimant submitted its payment claim from a reference date, as the payment claim was made in early December 2014.
  4. Accordingly I’m satisfied that the claimant was entitled to make a payment claim.

VI. Payment Claim

  1. In paragraph 25 of the application the claimant says that on 5 December 2014, it served the payment claim relating to the work by email on the respondent. It is in part B of Volume 1 of the application, and I find that it was suitably endorsed.
  2. In paragraph 1.4 of the response submissions, the respondent conceded service of the payment claim, and no issue was taken with its contents in the response submissions.
  3. I am therefore satisfied it complies withthe requirements of s17(2) of BCIPA.

VII. Payment Schedule

  1. On 17 December 2014 the respondent provided the claimant with a payment schedule, called Payment Certificate 14 which made reference to the work carried out in November comprising 6 pages.
  2. It specifically referred to the payment claim dated 5 December 2014, and specified the schedule amount of $202,517.05 (excluding GST) and I find that it was made within 8 business days of receipt of the payment claim.
  3. The claimant provided the payment schedule in part C of Volume 1 of the application, and the respondent did not take issue with its accuracy or completeness in the response submissions.
  4. I’m satisfied therefore that the payment schedule complies with section 18(2) of BCIPA which can be adjudicated.

VIII. Jurisdictional issues

  1. There were no jurisdictional issues raised by the respondent in the payment schedule and adjudication response. [However, there were submissions from the respondent in response to the unsolicited submissions of the claimant of 4 February 2015, to which I make reference under a separate heading below.]
  2. I have found that the payment claim was from a reference date, was served on the respondent, satisfied s17(2) of BCIPA, and the payment schedule was delivered within 10 business days thereby satisfying s18(4)(b)(ii) of BCIPA.
  3. The adjudication application was made on 21 January 2015. I find this is within 10 business days of receiving the payment schedule, after having taken into account the days in December 2014 and January 2015, which are not business days,according to the definition of business day in Schedule 2 of BCIPA. The transitional provisions of BCIPA apply to the definition of business day, as identified by s116(5)(h) of BCIPA (as amended).
  4. I find that the application was served on the respondent on 22 January 2015, and I accepted the adjudication on 28 January 2015, which meant that applying s24(1) of BCIPA from service or acceptance, the respondent had until 30 January 2015 to provide a response. I find it did so by email and hard copy to my agent, which both arrived at approximately 10.30pm on 30 January 2015.
  5. I find therefore that I have jurisdiction to adjudicate the matter.

IX. Unsolicited submissions from the claimant and respondent on 4 February 2015

  1. I received, through my agent, a 10 page submission from the claimant on 4 February 2015 in response to the adjudication response provided by the respondent on 30 January 2015. The submissions essentially dealt with complaints about “new reasons” provided by the respondent in the adjudication response that the claimant said had not earlier been provided in the payment schedule.
  2. Earlier in the adjudication application [paragraphs 52 through to 79 of the application submissions], the claimant had foreshadowed the possibility of the respondent doing so, because the claimant’s alleged that the reasons identified in the payment schedule were deficient [paragraph 52 of the adjudication application].
  3. Later on 4 February 2015 I received, through my agent, the respondent’s response to the claimant’s submissions in which the respondent urged that I was obliged to ignore these unsolicited submissions.
  4. Having considered those submissions, and John Holland Pty Ltd v The Roads and Traffic Authority of New South Wales and others [2007] NSWCA 19, I reached a tentative view that I was obliged to consider the submissions of the claimant on the basis that they were of “real relevance to the issues”.
  5. Accordingly, on 5 February 5, 2015, through my agent, I requested submissions from the respondent as to why I should not consider the claimant’s unsolicited submissions, and also asked the respondent to respond to the claimant’s submissions by 9 February 2015. In the same letter, I asked the claimant to provide comments on the respondent’s submissions by 11 February 2015. In Annexure “CGL 1” I attach my letter to the parties requesting the submissions, so that these reasons include that letter.
  6. I received both the respondent and claimant’s submissions in response to my request within the time requested.

X. Alleged “new reasons in adjudication application

  1. The claimant emphasised at length in its submissions from paragraphs 56 through to 79 of the application that I should not have regard to any reasons for withholding payment that had not been duly made, and that the respondent was confined to reasons for non-payment stated in the payment schedule.
  2. This submission highlights the tension that exists in adjudication because generally the respondent has the “last shot” before an adjudicator considers the material in order to make a decision.
  3. The issue raised by the claimant is that if new reasons are introduced in the adjudication response which were not identified in the payment schedule, then the requirements of natural justice are not satisfied [paragraphs 60 and 61 of the adjudication submissions].
  4. In paragraph 59 of the adjudication submissions, the claimant referred to the case of Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 in which Palmer J considering the equivalent of s24(4) of BCIPA said that a respondent was not entitled to “ambush” a claimant and said the, “…by disclosing for the first time in its adjudication response that the reasons for the rejection were founded upon a certain construction of the contractual terms, or upon a variety of calculations, valuations and assessments said to be made in accordance with the contractual terms but which the claimant has had no prior opportunity of checking or disputing. In my opinion the express words of section 14(3) and 20(2B) are designed to prevent this from happening…”
  5. I have had regard to the case of John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd & Ors [2004] NSWSC 258 (“Cardno”), where Einstein J at paragraph [31] under the heading “Approaching the facts” said:

“As earlier noted the application of this analysis throws up particular difficulties: the devil lies in the detail. Hence as one approaches the particular matters presently arising for determination it is necessary to in each case to ask for what may properly be described as “reasons not already [included] in the payment schedule”?”

  1. In my view, it is important to determine what lies in the detail.
  2. The adjudication response prompted unsolicited submissions from the claimant, as well as unsolicited submissions from the respondent on 4th February 2015. The issue of “new reasons” was then further dealt with in the submissions from the claimant and respondent which I requested on 5 February 2015.
  3. The parties’ submissions on this point touch on my jurisdiction, and not surprisingly they are competing submissions in that:

i. the claimant submitted that I was unable to consider fresh reasons identified in the adjudication response that had not been provided in the payment schedule. That was emphasised in its 4 February 2015 unsolicited submissions, where the claimant said that the adjudication response did provide fresh reasons, which was of breach of natural justice to the claimant. It therefore reiterated my inability to consider these new reasons;

ii. the respondent submitted I was not entitled to consider the claimant’s 4 February 2015 unsolicited submissions on the basis that:

(a) it would be contrary to the express requirements of BCIPA; and

(b) would (of itself) be a denial of natural justice to the respondent.

  1. In relation to the respondent’s natural justice objection identified in (ii)(b) above, I do not agree with the respondent, because in my request for submissions on 5 February 2015, I specifically asked for the respondent’s submissions in response to the claimant’s 4 February 2015 unsolicited submissions. Accordingly, there was no denial of natural justice to the respondent.
  2. In Cardno, Einstein J at paragraph 13 referred to a judgement of McDougall J in Musico, in which at paragraph 108 McDougall J explained natural justice as follows:

“It follows, in my opinion, that where an adjudicator determines an adjudication application upon the basis that neither party has notified to the other or contended for, and that the adjudicator has not notified to the parties, there is a breach of the fundamental requirement of natural justice that a party to a dispute has “a reasonable opportunity of learning what is alleged against him and of putting forward his own case in answer to it”. (See Lord Diplock in O’Reilly at 279)”

  1. In my request for submissions of the respondent, I stated that John Holland Pty Ltd v Roads & Traffic Authority of New South Wales & Ors [2007] NSWCA 19 (“RTA”) appeared to require me to consider the claimant’s 4 February 2015 unsolicited submissions because in my view they had real relevance in relation to issues arising out of paragraph (a) of s26(2) of BCIPA. In that request I also asked for submissions in response, so I cannot understand the respondent’s arguments about natural justice, because it was entitled to put forward its own case in answer to the allegations made against it by the claimant (to use the words of McDougall J).
  2. Accordingly, in order to circumvent Einstein J’s “devil in the detail” in Cardno, and because the claimant put this matter in issue in its adjudication application, I have carefully considered each payment schedule item and the adjudication response in order to discern whether new reasons have been introduced by the respondent.
  3. The claimant’s unsolicited submissions did emphasise the issue of “new reasons” in the adjudication response, which are prohibited by section 24(4). Accordingly, I was of the view that they had real relevance to the provisions of BCIPA such that the RTA authority appeared to require me to consider these submissions.

 Decision on the unsolicited submissions and the submissions requested by me

  1. It is appropriate to make a decision on whether I have considered the 4 February 2015 unsolicited submissions, particular those from the claimant and the consequential submissions I requested on 5 February 2015.
  2. In paragraph 3 of the 9 February 2015 submissions from the respondent in response to my request, paragraph 3.5 the respondent said that I should disregard them, and to do otherwise would be contrary to the express requirements of BCIPA, and a denial of natural Justice to the respondent [paragraph 3.6].
  3. Given that I afforded the respondent the opportunity to comment on the unsolicited submissions, I reject that my consideration of the claimant’s 4 February 2015 unsolicited submissions would be a breach of natural justice because I gave the respondent the opportunity to comment on them.
  4. I note in paragraphs 4.5 through to 4.13 of the 9th February 2015 submissions of the respondent that it argued that under the authority of RTA, I was only entitled to have regard to all relevant matters before me, regardless of whether they been put before me, strictly in accordance with BCIPA where such matters are relevant to (a) the construction of the Act and 2 other categories (which are not relevant here).
  5. I have confined myself to only this category, because only this one has relevance regarding the provisions of BCIPA in so far as section 24(4) was concerned, which prevents the provision of new reasons in an adjudication response.
  6. I have noted the claimant’s submissions in response to those of the respondent regarding the constraint in this context to matters of real relevance to the construction of the Act. In paragraphs 8 through to 25, the claimant said that the respondent had taken Hodgson JA’s judgement and suggested that I was constrained under the 3 categories (which had been identified by His Honour in the Contrax case), and this constraint was not what His Honour said in RTA.
  7. The claimant’s submission at paragraphs 13 and 14 of the 11 February 2015 explained that in RTA, at paragraph 48 His Honour clarified what he had said in Contrax by saying that, “..the adjudicator should not ignore something which he or she is aware of and also believes is of real relevance to issues arising under paras (a) and (b)…” This was precisely the extract that I referred the parties to in my letter requesting submissions on 5 February 2015.
  8. Paragraph 18 of the claimant’s response submission was that the provisions of the Act are broader than mere construction of the Act, and the claimant identified 3 elements that I needed to be satisfied with in paragraph 21 of the submissions. I accept those submissions and reject the respondent’s purported constraint of Hodgson JA, because in paragraph 48 of RTA, His Honour clarified his earlier Contrax list by putting it another way, as follows:

“To put this another way, I was saying that the adjudicator should not ignore something which he or she is aware of and also believes is of real relevance to issues arising under paragraphs (a) and (b), or simply because the matter was not raised in submissions duly made by a respondent.”

  1. I am satisfied that anything in an adjudication response that provides new reasons that were not in the payment schedule are of real relevance and relate to the provisions of BCIPA, and in my request for submissions to the parties, I had made reference to paragraph 48 of RTA as authority for that approach, and I’m satisfied that it is correct.
  2. I therefore have considered the unsolicited submissions of both parties of 4 February 2015, together with their respective submissions in response to my letter of 5 February 2015, because I feel obliged to do so (“the unsolicited submissions decision”).
  3. However, I agree with the respondent that the alleged “new reasons” complained about by the claimant only relate to quantum regarding variation 35, and AHL VA 004 and AHL VA 005 in a number of respects.

XI. The merits of the claimant’s claim and the payment claim deductions

  1. In paragraph 17 of the claimant’s submissions (and not controverted by the respondent), the claimant submitted that I was required to only consider matters in accordance with s26(2) of BCIPA that requires me to have regard to:

(i) the provisions of BCIPA, and where relevant the provisions of part 4A of the Queensland Building and Construction Commission Act;

(ii) the provisions of the construction contract;

(iii) the payment claim, together with all submissions, including relevant documentation properly made by the claimant support of the claim;

(iv) the payment schedule, together with all submissions including relevant documentation properly made by the respondent in support of the schedule; and

(v) the results of any inspection carried out by me.

  1. The contest between the parties relates to:

(i) 3 variation claims by the claimant for monies owing for variation 15, 35 and 38;

(ii) 6 claims for back-charges by the respondent (one of which had been covered by the claimant in variation 38); and

(iii) The claimant’s delay claim EOT6.

  1. I will consider the valuation of the variation claims, then the back charges (negative variations) and then the delay claim, in the order followed by the parties to the dispute.
  2. In determining the merits of the respective parties’ submissions, I have adopted the approach that, “he/she who asserts must prove” because adjudication is an adversarial process.
  3.  I will consider each issue separately.

a. Variations

Variation 15 – Ceiling Credit

  1. The claimant claims that the deduction relating to this variation should be limited to $38,315 whereas the scheduled amount is $56,880.70.
  2. The $56,880.70amount was the first suggested deduction made by the claimant to the respondent on 16 July 2014 [paragraph 131 (b) of the claimant’s submissions referring to the “first ceiling credit”].
  3. On 5 December 2014, the claimant submitted an amended variation 15 for a credit of $38,351 on the basis that items 1 and 2 in the “first ceiling credit” formed part of the mezzanine level of the cinema, which the claimant said was not part of the claimant’s scope of work [paragraph 131 (d) and (e) of the plaintiff’s submissions].
  4. In paragraph 8 of the adjudication response, the respondent maintained its payment schedule assertions that the ceiling was within the claimant’s scope of work because of the terms of the lease, which it submitted formed part of the Principal’s Project Requirements.
  5. I will consider all the claimant’s and respondent’s arguments about the ceiling scope of work under this heading and will then apply my findings to AHL VA 001, because it is dealing with the same issue.
  6. Earlier, in paragraph 7 of the adjudication response, the respondent had provided detailed submissions explaining why the ceilings formed part of the claimant’s obligations.
  7. In particular, the respondent identified at paragraph 7.13 of the submissions, that clause 4.8 of the Formal Instrument of Agreement provided that was is an “entire agreement” clause which applied to the contract.
  8. The respondent stated that prior negotiations were not admissible to interpret the contract unless the language of the written agreement is ambiguous or susceptible to more than one meaning which it called the “true rule” [paragraph 7.14 of the respondent’s submissions].
  9. At paragraph 7.15 and 7.16 of the adjudication response, the respondent referred to the case of Gladstone Area Water Board & Anor v AJ Lucas Operations Pty Ltd [2014] QSC 311” (Lucas”) in which it said Jackson J affirmed the true rule.
  10. The respondent referred to paragraph 168 of Lucas in which Jackson J held, “Accordingly, for present purposes, I proceed on the basis that I am bound by Mason J’s statement of principle in Codelfa and not to follow Mainteck or cases which follow Mainteck to the extent of any inconsistency.”
  11. At paragraph 163 of Lucas, Jackson J affirmed that a lack of plain meaning or ambiguity is required in the contract for one to have recourse to extrinsic evidence, and His Honour had earlier said he was bound by what Mason J had said in Codelfa.
  12. Unfortunately the respondent had provided the Australian Law Reports (ALR) version of Codelfa and not the CLR version to which it referred to in submissions.
  13. Nevertheless, I have read Mason J’s judgement in some detail and at the bottom of page 374 and page 375 of the ALR, Mason J held:

“The true rule is that evidence of the surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible to more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectation they are not receivable……

Consequently when the issue is which of the two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectation of the parties before or at the time of the contract, except in so far as they expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties presumed intention in this setting.”

  1. The key question becomes whether, in the contract relating to the obligations regarding ceilings, there is ambiguity or susceptibility to more than one meaning.
  2. The express term to which both parties make reference is item 3 (i) of schedule 1 to the lease under the heading Lessors Works, which provides:

“Ceilings

All ceilings to be provided by Lessor to a standard commercial grid ceiling of 15 mm thick Armstrong Fine Fissure ceiling tiles or similar.

All acoustic requirements will be the responsibility of the Lessee”.

  1. The claimant argues that item 3(i) does not impose an obligation, but merely a standard in respect of ceilings which are to be provided by the Lessor [paragraphs 209 through to 221].
  2. Furthermore, the claimant made reference to item 4 of schedule 1 to the lease which deals with the Lessee’s works, and submitted that where works not described as Lessor’s or Lessee’s work, it shall be deemed to be the Lessee’ s work at the Lessee’ s cost [paragraphs 212 through to 214 of the application].
  3. The claimant also added that reading the clause in context, having regard to item 2 of schedule A to the lease, which referred to noise reduction and rain noise, both specified particular ceiling requirements as obligations of the Lessee.
  4. In contrast, the respondent at paragraph 7.7 submitted having regard to the ordinary meaning of the words and the context, the claimant was required to provide all ceilings to the standard specified.
  5. The respondent at paragraph 7.8 of the response submitted that item 3 (i) of the lease did not say where the ceilings were to be provided.
  6. The respondent then at paragraphs 7.9 through to 7.12 of the response also dealt with the issue of an earlier admission by the claimant that the claimant had erroneously failed to exclude the requirement to construct the auditoria ceilings from the scope in the contract.
  7. At paragraph 7.11 the respondent challenged the claimant’s attempt to rely on pre-contractual negotiations between the parties to exclude the ceilings in the RCQ letter of offer or in the other contract documents, as they had not been specifically excluded in the contract.
  8. In my view there is an ambiguity in the contract as to whether or not ceilings were required to be provided by the claimant. On the one hand the respondent’s argument is that, “All ceilings to be provided by Lessor”. The claimant argues that item 3 (i) merely identifies the standard of ceilings which are to be provided by the Lessor, but does not require the Lessor to provide all ceilings.
  9. To my mind this is precisely the sort of case when one may have recourse to pre-contract negotiations as identified by Mason J in Codelfa. The “entire agreement clause” commences with the words, “To the extent permitted by law…”, and in my view this allows the evidence of “surrounding circumstances”, to use the words of His Honour Mason J, to establish objective background facts which were known to both parties and the subject matter of the contract.
  10. Mr Stainton provided a statutory declaration (the “SSD”) that comprised folder 3 in the application and was one entire volume and he dealt with this variation 15 in paragraph 60 through to 102 of his statutory declaration, and paragraph 154 through to 167 in relation to AHL VO 001. He attaches a series of documents to these paragraphs.
  11. It is not appropriate for me to have regard to what Mr Stainton says were his intentions in relation to ceilings or, for that matter any other variation because that would be in contravention of what Mason J said was admissible evidence. However, I am entitled to have regard to consider the objective surrounding facts which were known to the parties at the time of negotiations.
  12. To this extent, it was clear from the prior negotiations that the demarcation of work between the Lessor and the Lessee arising out of the lease was not clear, and RFI 001 on 17 September 2013 [paragraph 70 and attachment “JS – 14” to the SSD] identified that the lease had not been prepared with detailed consideration of the practicalities of the claimant undertaking the base build works.
  13. At paragraph 74 and attachment JS-6 of the SSD it was clear that the claimant stated that the ceilings to each of the auditoria were to be done by the lessee and that no allowance had been made for an exposed to grid/tile ceiling to the concourse below because the mezzanine was being built by the lessee later.
  14. At paragraph 32 and JS -7 of the SSD it was minuted in a meeting dated 29 October 2013 at item 4 that the base build carried out by the claimant did not extend to either the ceilings to the cinema auditoria, all the ceilings to the underside of the plant platform (which was on the mezzanine level).
  15. At paragraph 77 of the SSD, Mr Stainton confirmed what had been discussed at that meeting. In my view this evidence is admissible because it demonstrates that both parties were aware of the lack of grid is ceilings being incorporated in the contract price.
  16. At paragraph 78 and attachment JS -8 of the SSD at item 4 of an email. There was confirmation that no allowance had been made for ceiling tiles to the concourse, DPA or auditoria.
  17. I’m satisfied from this evidence that it was clear from the surrounding circumstances and with common knowledge of both parties that the contract price provided by the claimant did not include for ceiling tiles to the underside of the mezzanine or the auditoria. This deals with the subject matter of the contract identified by Mason J. Such an interpretation does not introduce any meaning into the contract that was not already there, but merely clarifies an ambiguity as to the subject matter.
  18. Such an approach is consistent with what Mason J identified in pages 372 and 373 of Codelfa to give a meaning to what had been agreed as to the “subject matter” of the ceilings in the auditoria, the DPA and the concourse. Mason J at lines 18 through to 21 on page 373 of Codelfa where His Honour made reference to Lord Campbell’s judgement in Macdonald which said, “There cannot be the slightest objection to the admission of evidence of this previous conversation, which neither alters nor as to the written contract, but merely enables us to ascertain what was the subject matter referred to therein.
  19. The respondent provided a declaration of Michael Bryan Stevenson (“MSD”) which supported the respondent’ s submissions and attempted to counter the facts identified in the SSD.
  20. At paragraph 7 of the MSD, Mr Stevenson said he did not agree that concourse ceilings were never part of the claimant’s scope, and at paragraph 8 he advised that neither the Principal’s Representative nor the respondent ever accepted or agreed to the exclusion of the ceilings.
  21. I am unable to use this evidence to resolve the ambiguity in the contract because this evidence falls foul of what Mason J referred to in Codelfa where His Honour held, “But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectation they are not receivable”.
  22. This is evidence of Mr Stevenson intention and expectation, rather than giving evidence of the surrounding facts which were known to the parties at the time of negotiations. I note that Mr Stevenson did not deny the existence of the series of documents provided by the claimant in the SSD advising about the contract price excluding the ceilings that are in issue.
  23. At paragraph 9, Mr Stevenson stated that the removal of the mezzanine level had no bearing on the requirement of the claimant to provide the ceilings. I cannot agree, because one is dealing with a contractor providing a price for construction of elements in a building, and if a critical element of the construction of the mezzanine floor is made the responsibility of the lessee, then as a matter of practicality, I cannot accept that the claimant who is providing a base build would be required to provide this ceiling in any event.
  24. To my mind this would require the claimant to carry out work after the lessee had finished the mezzanine, which appears inconsistent with the underlying theme of the contract that the base build be carried out by the claimant, which was then to be handed over to the lessee.
  25. I accept paragraph 99 of the SSD and the reference to the RCQ’s letter of offer specifically excluding the mezzanine floor. Furthermore, I understand the logic in paragraph 97 of the SSD in which Mr Stainton explained that the mezzanine slab and the concourse ceiling formed part of the same deletion of this scope of work.
  26. I’ve also reviewed the expert report of WT Partnership and am satisfied that this report confirmed [paragraph 36] that the valuation carried out by the claimant for a total credit of $38,315.00 appeared fair and reasonable.
  27. Accordingly, I’m satisfied that despite the first ceiling credit having been provided by the claimant amounting to a deduction of $56,880.70 [JS 18 of the SSD], that in actual fact, items 1 and 2 relating to the underside of the roof, which was to the underside of or above the mezzanine level were legitimate deductions as identified in paragraph 92 of the SSD, because the RCQ letter of offer, together with the Tender addendum 1A, stated that the mezzanine works were to be carried out by the Lessor.
  28. I therefore reject the respondent’s assertions that this ceiling work formed part of the contract on the basis that it was contained in item 3 (i) of the lease, because of the ambiguity surrounding this important item. I therefore reject the payment schedule amount of $56,880.70
  29. Accordingly, I’m satisfied that the payment claim amount of $38,315 as a deduction is the full deduction for variation 15 and for AHL VA 001 (because it deals with the same issue and I have considered all submissions by the parties in relation to this deduction).
  30. Accordingly, in relation to this particular item the adjudication value is the difference between ($38,515.00) and ($56,880.70), which results in a positive figure of $18,565.70.
Item Payment claim Payment schedule Adjudication Value
Variation 15 – ceiling credit ($38,315.00) ($56,880.70) $18,565.70

Variation 35 – Creekside Awning

  1. The claimant claims an amount of $62,994 as a variation under the contract and the respondent provided the scheduled amount as nil with the reason that no variation was directed by the Principal’s Representative.
  2. The claimant’s submissions in relation to this issue are from paragraphs 156 to 177 of the application.
  3. The claimant argues that it is entitled to a variation under clause 40.1 because:

(i) the value engineering concrete awning offer which resulted in savings to the contract price was part of a contract;

(ii) the concrete awning was a different design and material from that had been designed;

(iii) as a result of written concerns from the Principal’s Representative, the original design was reinstated;

(iv) this meant that the value engineering savings were not realised; and

(v) the variation is a claim for unrealised value engineering savings.

  1. I accept that the concrete awning redesign formed the part of the contract price because they were contained within the value engineering savings which were incorporated into the RCQ letter of offer and thereafter into the contract as stated by Mr Stainton in paragraph 112 through to 117 of the SSD. In fact, there is probably qualified acceptance of the concrete awning by Mr Stevenson in paragraph 19 of his statutory declaration.
  2. The claimant submitted at paragraph 163, that a direction needed to be given by the Principal’s Representative for a variation under clause 40 to be enlivened.
  3. The claimant also submitted that it was not a requirement that a written direction be given.
  4. Paragraph 40.1 of the contract provides in the 2nd sentence on page 41 of that, “The Contractor shall not vary the work under the Contract except as directed by the Principal’s Representative or approved in writing by the Principal’s Representative, pursuant to clause 40.
  5. I therefore accept that a direction may be given by the Principal’s Representative that is not in writing, as this is not controverted by the respondent in paragraph 5 of the response.
  6. Mr Stainton in paragraph 103 through to 128 of the SSD provides the background to the concrete awnings and at paragraph 117, he said that the savings of the awnings reduced the contract sum by $62,994, and I accept that, because there’s nothing controverted by Mr Stevenson in his statutory declaration in respect of this issue.
  7. Mr Stevenson provided his evidence in paragraphs 19 through to 23 of the MSD and he denied that the Principal’s Representative made a decision to not adopt the concrete awning. At paragraph 20 of the MSD he directly controverts paragraph 122 of the SSD, where Mr Stainton said that a decision was made by “HPG not to adopt the awning.”
  8. As I’ve mentioned previously, given that adjudication is a contest under the adversarial system, it is incumbent upon the claimant to prove its case, and Mr Stainton’s evidence directly on the point of the direction by the Principal’s Representative is controverted by Mr Stevenson.
  9. Mr Stainton provided evidentiary support for the claimant’s submissions in paragraph 160(d) and (e) that on 31 July 2013, he sent and received an email about the additional columns needed for the concrete awnings.
  10. However, nowhere in the SSD, apart from what I’ve referred to above, am I able to find support that there was a direction given by the Principal’s Representative that the contract awnings were not to be adopted, and that the claimant was to revert to the structural steel awnings that had been originally designed.
  11. At paragraph 164 of the claimant’s submissions, the claimant said that the email of 31 July 2013 from the Managing Director of the Principal’s Representative demonstrated a level of concern about the design change.
  12. At paragraph 110 and attachment JS – 23 of the SSD, Mr Stainton referred to his email to the Principal’s Representative and the response from its managing director. It is important to put this email in context because it is an email some 4 months before the contract is signed.
  13. The Managing Director of the Principal’s Representative in his response email said, “Justin to properly consider this can you confirm the level of saving that will come from this? As you would expect we are going to need to get every tenant to sign off on these given the impact on their frontage. Regards Peter”
  14. In my view, this is not evidence of “a level of concern about the design change”, as identified in paragraph 164 of the claimant’s submissions. I find it is merely evidence of some preliminary discussions about the consideration of this proposal, which if they were of such concern to the Principal’s Representative at that time, then I find it is highly unlikely that the parties would have signed a contract 4 months later incorporating the concrete awnings savings.
  15. In my view it is incumbent upon the claimant to demonstrate a specific direction from the Principal’s Representative that the concrete awnings, post contract, were unacceptable and that a reversion to the steel awnings was required, in order for a variation to the contract to be enlivened.
  16. At paragraph 175(b) of the claimant’s submissions, the claimant referred to, “The combined effect of the concerns about the additional columns and concerns about the changed design aesthetic from both the Principal and the Principal’s Representative, is sufficient to constitute a direction in the change of the quality of any material or work for the purpose of clause 40.1.
  17. If the claimant is relying upon the 31 July 2013 email as the Principal Representative’ s direction that the concrete awnings not proceed, and a reversion to the structural steel was required, I reject his evidence, because it is 4 months before the contract is signed, that it could not constitute a variation under the contract.
  18. I find no evidence anywhere in the claimant’s material that such a direction ever took place, and that included reference to two Project Control Group Reports for the periods ending 31 January 2014 and 30 June 2014, respectively [exhibits JS – 55, and JS -56 of the SSD].
  19. Surprisingly, in JS – 56 with the attached program, which I appreciate it a client’s program, the program items 87 through to 93 makes reference to a structural steel awning with the duration of 38 days between the 12 May 2014 and 3 July 2014.However, the report makes no reference to reversion back to a structural steel awning.
  20. The structural steel awning may well have been constructed in or around that period, but the claimant’s evidence nowhere points to a direction by the Principal’s Representative for it to be changed from a concrete awning to structural steel, apart from the assertions made by Mr Stainton, which in my view are directly controverted by Mr Stevenson.
  21. The adjudication response deals with its submissions on this variation in paragraph 5, to which I have already had regard, without making specific reference to them. I agree with its submissions from paragraph 5.4 through to 5.8 that an express direction would be needed for a change of this nature, and in particular, in paragraph 5.8, where it points out the absurdity of a Principal raising a design query which could possibly be construed as a direction to vary the contract.
  22. For the sake of completeness, I need to deal with claimant’s unsolicited submissions and those submissions that follow from my request. In the claimant’s 4 February 2015 unsolicited submissions in paragraphs 43 through to 45 it alleged that the respondent had provided an additional reason in the adjudication response by raising a dispute about quantum, which it said had not been identified in the payment schedule, which only argued the lack of entitlement.
  23. I’m not prepared to accept that, in an adjudication response, a respondent is unable to deal with quantum, because that is precisely what each claimant in an adjudication application is seeking, sometimes (as in this case) with support from an expert evidence. I cannot accept that a respondent is unable to counter those submissions in its adjudication response merely because it did not challenge the claimant’s quantum in the payment schedule.
  24. In any event, quantum is not an issue because I have found there is no entitlement, so I reject the claimant’s consistent submissions and additional submissions in this regard.
  25. Accordingly, in my view, the claimant has not made out its case for a variation, and I value this variation as nil.
Item Payment claim Payment schedule Adjudication Value
Variation 35 – Creekside awning $62,994.00 $0.00 $0.00

Variation 38/AHL Variation 002 – Carpet adjustment

  1. The claimant’s submissions from paragraphs 178 through to 202 assert that the deduction for carpets to amount to only $78,875, whereas the payment schedule makes reference to a provisional sum of $140,000 in the RCQ letter of offer, which it says is the proper deduction that is applicable.
  2. The respondent deals with this variation in paragraph 6 of its adjudication response. The respondent at paragraph 6.1 identified that the carpet works for the tenancy was included in the provisional sums, and that it had instructed the claimant to remove the carpet work from its scope, and therefore it was entitled to a deduction. The respondent said that this much was agreed between the parties, and I accept this submission, as it can be gleaned from the claimant’s submissions paragraphs 180 and 183, that there is an agreement about the process.
  3. What, of course, is not agreed is the valuation of this variation. The claimant submits that the proper valuation for this deduction should be based on the $45 per square metre rate identified in item 25 A of Annexure Part A of the contract which specifically provided, “Supply and install carpets and underlay to AHL cinemas $45 per square metre excluding GST” [paragraph 191 of the claimant’s submissions].
  4. In paragraphs 6.3 through to 6.5 of the response submissions, the respondent takes issue with the claimant’s purported error in calculating its provisional sum in the RCQ letter of offer.
  5. I find that the RCQ letter of offer does identify a provisional sum amount of $140,000 excluding GST for the carpet work.
  6. The contest between the parties is whether the provisional sum amount of $140,000 in the RCQ letter of offer is the appropriate rate, or whether the $45 per square metre rate applies, which was identified in item 25A of Annexure Part A of the contract.
  7. In paragraph 6.17, the respondent stated that the claimant had not provided submissions or supporting materials, suggesting that the rate included in item 25A of Annexure Part A or any alternative method was the actual amount of the provisional sum that was included in the contract sum for the carpet work.
  8. It added at paragraph 6.19 that the rate specified would be used in the event that the Principal’s Representative issued a direction for the work to proceed.At paragraph 6.21, it reiterated that there was no evidence or assertion that this rate formed the basis of the provisional sum amount, and that the only amount of the provisional sum included in the contract sum was that in the RSC letter of offer. It concluded that there was no discrepancy therefore between the item 25A of Annexure Part A and the RSC letter of offer.
  9. It added at paragraph 6.25 and 6.26 of its submissions that an erroneous under-estimate of a provisional sum being included in the contract sum, such that if that work was not instructed and omitted, then a principal would be entitled to deduct as a credit, an amount in excess of the provisional sum amount included in the contract sum, which the respondent said would be an inequitable outcome and not the proper application of the provisional sum clause (the “absurdity argument”).
  10. The absurdity argument needs consideration, but in my view this should only occur after I have firstly taken steps to construe the contract in accordance with general construction principles in order to determine which provisional sum is appropriate.
  11. It appears from the parties’ submissions that there are 2 possible provisional sums identified in the contract, and it is necessary for me to decide which one applies.
  12. Clause 11 of the contract deals with provisional sums, and the 1st sentence under that clause provides, “Provisional sum included in the contract sum are identified in Annexure Part A.”
  13. Paragraph 188 of the claimant’s submissions stated that the carpet credit should be calculated in accordance with item 25A of Annexure Part A.
  14. At paragraphs 189, and 190 of the claimant’s submissions, the claimant makes reference to an error in the RCQ letter of offer and this is supported by Mr Stainton in paragraphs 136 through to 140 about this error.
  15. In my view, in accordance with the true rule dealt with extensively above under the heading of variation 15, I am only entitled to have regard to this evidence if there is an ambiguity in the contract that cannot otherwise be resolved, which requires objective evidence of the surrounding facts prior to entry into the contract. Mr Stainton’s evidence regarding an error in the RCQ letter of offer, accordingly is not admissible to construe the contract, and I ignore it.
  16. The RCQ letter of offer does specify $140,000 for the carpeting, whereas item 25 A of Annexure Part A of the contract which specifically provided, “Supply and install carpets and underlay to AHL cinemas $45 per square metre excluding GST”.
  17. I find that there is an ambiguity in the contract documents that needs resolution, so to this end I disagree with the respondent’s submissions that there is no discrepancy.
  18. If one looks closer at the items identified in item 25A, I find that sub items 2, 4 and 5, or provide a lump sum for these provisional sum items, and it is only sub item 1 dealing with the carpets that specifically provides a per square metre rate.
  19. At paragraph 194 of the claimant’s submissions it makes reference to clause 8.1 of the contract, which deals with resolution of discrepancies.
  20. I’m obliged to consider this clause because I have found that there is an ambiguity between 2 documents in the contract regarding the quantification of the carpeting provisional sum.
  21. I accept that the order of precedence for interpretation provides that Annexure A takes precedence over the RCQ letter of offer, and I must apply this clause, having found that there is a discrepancy.
  22. Accordingly, I find that the $45 per square metre rate identified in item 25A of Annexure Part A is the appropriate rate for the provisional sum for the carpeting. This is reinforced in my mind by the opening sentence in clause 11 of the contract, which makes specific reference to Annexure Part A and not the RCQ letter of offer.
  23. Turning again to the respondent’s submissions on the absurdity argument referred to above, I cannot find that this argument detracts from what the parties had agreed in the contract, and the absurdity argument deals with an hypothetical as the guide to construing the contract, whereas I am obliged to construe the contract according to its terms, using the ordinary rules of construction.
  24. Accordingly, I cannot allow the absurdity argument to detract from the ordinary approach in construing a contract which I have followed, and the respondent has provided me no authority in support of its absurdity argument for contract construction.
  25. The respondent has not taken issue with the claimant’s 1675 m² measurement of the carpeting area, either in the payment schedule or in the adjudication response. The claimant has obtained an expert report of WT Partnership and at paragraphs 62 and 63 of that report, the author referred to a marked up drawing from the claimant appearing to correlate with the agreement of lease, and that the area appeared to be correct.
  26. At paragraph 65 of the report, the author provided the opinion that the claimant’s variation of $78,875 appeared fair and reasonable.
  27. As a result I reject the respondent’s deduction of $140,000 for this variation, and provide the adjudication value of ($78,875).
Item Payment claim Payment schedule Adjudication Value
Variation 38 – AHL Variation 002 carpet adjustment ($78,875.00) ($140,000) ($78,875.00)

b.      Negative variations

AHL Variation 001 – additional credit for auditoria ceilings

  1. I have already considered the submissions by the parties under variation 15 above because it was dealing with the same subject matter.
  2. As found by me under variation 15 above, I have applied the true rule to the interpretation of the contractual obligation of the claimant in so far as the ceiling tiles are concerned, and had recourse to evidence providing the surrounding circumstances, as provided by the SSD.
  3. The onus is on the respondent to demonstrate the entitlement to the additional credit because it is a variation raised by it, and I find that it has failed to do so for the reasons that I found that the claimant had not agreed to provide ceilings to the auditoria.
  4. I therefore conclude that no further deduction for auditoria ceilings can be made because the claimant had not priced for auditoria ceilings in the contract.
  5. Therefore the respondent is unable to make any further deductions for this item which I therefore value at zero
Item Payment claim Payment schedule Adjudication Value
AHL Variation 001 additional credit for ceiling N/A ($105,000) $0

AHL Variation 003 – Painting to Cinema Premises

  1. In paragraph 225 of the application, the claimant concedes the valuation of the respondent, so I value this amount at ($7,530).
Item Payment claim Payment schedule Adjudication Value
AHL Variation 003 Painting to cinema N/A ($7,530) ($7,530)

The AHL Variation 004– additional ductwork to roof by AHL

  1. In my view, the respondent bears the onus of demonstrating that it is entitled to deduct this amount from the claimant.
  2. In paragraph 10 of the adjudication response, the respondent referred to:

i. a contract drawing of PDT architects showing the location of the plant decks;

ii. a drawing by Cardno showing the rooftop mechanical services to suit the layout;

iii. a drawing from AHL’s mechanical contractor RST showing additional ductwork required as a result of the claimant’s failure to comply;

iv. a reference to Mr Stevenson statutory declaration (“MSD”) as support for the deduction of $85,690

  1. The issues in relation to the deduction, include, whether there are “new reasons” identified in the adjudication response in relation to:

i. documents referred to in the adjudication response;

ii. breach of contract; and

iii. set off.

  1. I need to consider whether the additional documents provided by the respondent in the adjudication response, together with its assertions of breach of contract and set off are “new reasons.” In my view they are because of the payment schedule only stated:

“RCQ design of roof steel and AHL plant room locations caused relocation of roof plant and caused additional ductwork and cost to tenant AHL”.

  1. The claimant’s submissions in the adjudication application, between paragraphs 57 through to 79, submitted that it was necessary for a respondent to state its reasons for non-payment, which differs from indicate as required in New South Wales, as this is what is provided in section 18 of BCIPA.
  2. The resolution of this issue is of real relevance to the provisions of section 24(4) of BCIPA. I find that the there is no mention of any documents, breach of contract or set off in the payment schedule. They were neither indicated, nor stated.
  3. Accordingly, I find that I’m entitled to have regard to the 4 February 2015 unsolicited submissions of both parties and their submissions in response to my request of 5 February 2015.
  4. The reason for doing so is because I consider that documents that had hitherto not been referred to in the payment schedule, together with allegations of breach of contract and set off arguably constitute an ambush as identified in the case of Multiplex referred to abovein which Palmer J considering the equivalent of s24(4) of BCIPA said that a respondent was not entitled to “ambush” a claimant and said,, “by disclosing for the first time in its adjudication response that the reasons for a for the rejection were founded upon a certain construction of the contractual terms, or upon a variety of calculations, valuations and assessments said to be made in accordance with the contractual terms but which the claimant has had no prior opportunity of checking or disputing. In my opinion the express words of section 14(3) and 20 (2B) are designed to prevent this from happening.”
  5. I have considered the issue of breach of contract and set off firstly, because the respondent asserts that issues had been previously extensively agitated, which would then arguably allow it to include documents that hitherto had not been provided or referenced in the payment schedule.

Breach of contract and set off

  1. At paragraph 10.12, the respondent stated that it had previously made the claimant aware of the claimant’s breach of contract, the cost incurred by the respondent as a result of the breach and the amount that would be deducted as a result, and again made reference to the MSD.
  2. At paragraphs 10 and 11 of MSD, Mr Stevenson said that AHL had submitted a claim against the respondent in the amount of $85,690 as a result of the claimant’s failure to comply with the scope of the contract.
  3. At paragraphs 12, 13 and of the MSD there was reference to the documents identified above, and at paragraph 15 of the MSD Mr Stevenson advised the cost of this additional work was required due to the claimant’s breach of contract.
  4. Furthermore at paragraph 16 of the MSD, he said that the respondent was exercising its contractual right of set off under clause 42.8 in the payment schedule.
  5. At paragraph 17 of the MSD, he said that he’d made the claimant aware of the claimant’s breach of contract and the losses incurred by the respondent as a consequence of that breach by email. However, there was no email attached to the MSD.
  6. In the further submissions of the respondent of 9 February 2015, at paragraph 6.3 the respondent merely repeated what it had said earlier, and again referred to the MSD.
  7. In addition, at paragraph 6.6 of these submissions, the respondent said the issue of breach of contract and the deduction had been expansively agitated in prior correspondence such a reference in the payment schedule sufficed to identify it clearly.
  8. Apart from the statutory declaration of Mr Stevenson in paragraph 10, there is no independent evidence, apart from Mr Stevenson’s statement that he had made the claimant aware of the breach of contract and of the set off. Furthermore, I do not find that in his statutory declaration he supports paragraph 6.6 of the further submissions that the issue had been “expansively agitated in prior correspondence”.
  9. In addition, in the claimant’s further submissions dated 11th of February 2015 at paragraph 27, the claimant says that the parties were not well apprised of the issues in dispute, which was what was required for Multiplex to allow the briefest reference in the payment schedule.
  10. At paragraph 178 of the SSD for the claimant, Mr Stainton said that the inclusion of the back charge was the 1st occasion on which the claimant became aware of this back charge.
  11. Furthermore, in paragraphs 27 through to 33 of the claimant’s further submissions it deals with the new reason of “set off” and the claimant said that there was no reference to any basis under the contract for withholding payment. It said that therefore there were no particularised reasons that the claimant could address in its adjudication application.
  12. At paragraph 31 the claimant referred to the case of Brambles Australia Ltd v Philip Davenport & others. [ 2004] NSWSC 120, where Einstein J held that under the New South Wales equivalent of section 24(4) of BCIPA, in which His Honour held, “If clause 24.1 was to have been relied upon it had to be expressly identified.”
  13. In paragraphs 34 through to 37 in the further claimant’s submissions, the claimant stated that the alleged breach of contract had not been raised in the payment schedule, and I have already found that there has been insufficient evidence from the respondent to suggest that this had been extensively agitated previously. Accordingly, I find that the claimant was therefore unable to address an alleged breach of contract in the application, because there is no evidence that it was aware of this allegation, as it was not in the payment schedule.
  14. In the circumstances, the respondent bears the onus of demonstrating that it is entitled to the back charge. I have found competing evidence in the respective statutory declarations of Mr Stainton for the claimant, and Mr Stevenson for the respondent, regarding awareness of the expansively agitated issues in dispute.
  15. I’m not satisfied that the respondent has discharged its onus, particularly since not one email was provided by Mr Stevenson in MSD to demonstrate that any discussions about breach of contract and set off had previously occurred. Furthermore, I find that it would be necessary to provide more than one email in any event for me to determine that “extensive agitation” had previously occurred.

Additional documents

  1. At paragraph 17 through to 26 of the further submissions of the claimant, the claimant stated that the Cardno and RST drawings:

i. had not been contained, nor referred to, in the payment schedule;

ii. were not part of the contract between the claimant and respondent; and

iii. were never sighted by the claimant prior to the inclusion in the adjudication response.

  1. At paragraph 18 of the MSD, Mr Stevenson referred to the attached drawings of Cardno and RST in tab 4 of the adjudication response.
  2. However, document numbers 5 through to 8 in tab 4 were identified as “soft copy only” and I was unable to open these files as I received in error message saying that the file was damaged and could not be repaired.
  3. In my view, it is incumbent upon the respondent to provide these documents at the time of its adjudication response, and I did not consider it appropriate to ask for these documents later, because they were required to be provided within the time limits under BCIPA To do so, in my view would circumvent the strict time limit provisions of BCIPA, and in my view, I did not have the power to do so under section 25 (4) of BCIPA.
  4. For this reason I was unable to accept the submissions made by the respondent on 4 February 2015 that they could provide further copies if they would be of assistance.
  5. Accordingly, I find that none of those drawings were provided in the adjudication response.
  6. At paragraph 58 of the adjudication application submissions, the claimant said that a respondent could not rely upon documents in the adjudication response, which were not included in the payment schedule in accordance with the case of Broad Construction Services (NSW) Pty Ltd v Michael Vadasz [2008] NSWSC 1057 (“Broad”). The respondent in its adjudication response submissions, paragraphs 4.21 through to 4.23 said that Broad was restricted to the extent that the document goes beyond the reasons for non-payment advanced in the payment schedule.
  7. At paragraph 4.28 of the response submissions, the respondent said that Multiplex was authority that a document that is well known to the parties could be incorporated in the payment schedule by reference.
  8. Accordingly, I find that the respondent has failed to discharge its onus of its entitlement to back charge the respondent for this item because:

i. there was no evidence of extensive agitation by the respondent to the claimant about the breach of contract and set off;

ii. this therefore precluded the respondent from relying upon any documents as if they could be incorporated by reference under the Multiplex authority;

iii. in any event, no documents were provided by the respondent in the adjudication response, because they were unable to be opened.

  1. In my view, these are examples of a classic ambush, which section 24 (4) of BCIPA is designed to prevent.
  2. I find that these were fresh reasons for denying payment, and I am not entitled to consider these new reasons in the adjudication.
  3. This leaves me to consider whether there is sufficient material left in the respondent’s material for me to consider whether “RCQ design of roof steel and AHL plant room locations caused relocation of roof plant and caused additional ductwork and cost to tenant AHL”provide a sufficient basis for a deduction.
  4. There is no evidence provided to me to:

i. demonstrate that the claimant’s design of roof steel and the plant room location was incorrectly placed;

ii. show that the relocation and additional ductwork that was carried out by the lessee was caused by the claimant;

iii. understand how the calculation for the deduction was derived.

  1. Accordingly, I find that the respondent has not demonstrated that it is entitled to this deduction.
  2. I therefore the value this deduction by the respondent as nil.
Item Payment claim Payment schedule Adjudication Value
AHL Variation 004 Additional ductwork to roof by AHL N/A ($85,690) $0.00

AHL Variation 005– fire smoke detectors to fit out

  1. In the payment schedule, the respondent stated that the reason for the deduction was that, “50% assessment of AHL claim, currently under assessment as to the extent of fit out smoke detectors in RCQ scope of work as per AFL.”
  2. In the adjudication response, at paragraph 11.3 the respondent said that the reason for withholding payment was that this work was required to be carried out by the claimant as part of its obligation to construct all ceilings.
  3. The claimant in its further submissions of 11 February 2015, in paragraphs 38 through to 42, complained that the respondent was attempting to reframe its purported entitlement to back charge from an amount that, “may be due” to “an amount that is expected to be due to the respondent”. It argued at paragraph 41 that this stronger language to ostensibly to enhance its entitlement should not be allowed by me on the basis that it was a “new reason” and it was not a submission properly made, as required by section 24(4) of BCIPA.
  4. I am not convinced from the claimant’s submissions that the stronger language is of itself a new reason.
  5. Turning to paragraph 7 of the further submissions of the respondent of 9 February 2015, the respondent said that the reason for withholding the amount, as stated in the payment schedule and the adjudication response, was because the claimant was required to construct all ceilings.
  6. Nowhere in the payment schedule do I see the reference to the obligation by the claimant to construct all ceilings and its failure to do so, as the basis for withholding $25,087.65. It merely argues in the payment schedule that it was within the claimant’s scope of work.
  7. However, I have already found that the claimant was not obliged to construct ceilings in the concourse and the auditorium in my decision above in relation to variation 15 and AHL variation 001.
  8. The difficulty I have with the respondent’s submissions is that it has merely referred to half of the smoke detectors, and it is not clear to me where these smoke detectors were to be installed, and whether the ceilings referred to include the concourse and auditorium ceilings.
  9. In my view it is incumbent upon the respondent to be sufficiently particular about the ceilings where these smoke detectors were to be installed, and to also provide some means of calculation as to whether the amount of $25,087.65 is an appropriate amount in the circumstances.
  10. Furthermore, the words “currently under assessment” about which the claimant has complained, in paragraph 242 of its adjudication application, and at paragraph 244, that the back charge was merely a speculation that the fire service work falls under the claimant’s contract. The difficulty with the payment schedule is that it’s not clear what the basis of the assessment is, enabling the claimant to meaningfully respond in its application.
  11. My concern is that it is incumbent upon the respondent to make out its case. It has failed to provide me with sufficient clarity where the fire detectors were to be installed, and how the costs of the claimant’s failure to do so are made out. One of the reasons why this is important is that I’ve made the finding that the claimant was not obliged to construct certain ceilings, and it is not clear to me whether the respondent was arguing that fire detectors were to be installed in those ceilings, as it is merely said that 50% deduction was justified.
  12. Accordingly, I’m not satisfied that the respondent has discharged its onus in relation to this deduction, and I therefore value this amount as $0.
Item Payment claim Payment schedule Adjudication Value
AHL Variation 005 Fire detectors to fit out N/A ($25,087.65) $0.00

AHL Variation 006– Electrical TBA

  1. In paragraph 249 of the application, the claimant states that the respondent had not valued this item. In paragraph 12 of the response the respondent conceded it had made no deduction, so I value this amount at $0.00.
Item Payment claim Payment schedule Adjudication Value
AHL Variation 006 Electrical TBA N/A $0.00 $0.00

c.       The delay claim – EOT 6 – principal caused delay costs

  1. The claimant in submissions 250 through to 331 submitted that it is entitled to delay costs of $97,500 for the transformer delay, which it argued was the responsibility of the respondent.
  2. The claimant had provided earlier submissions regarding estoppel and waiver in respect of time bars under the contract in paragraphs 91 through to 121, which were relied upon by the respondent in its payment schedule and the letter of 12 December 2014, which was incorporated by reference. In that letter, the respondent identified that the claim made in the letter of 20 November 2014 had been made more than 6 months following the purported delay.
  3. In the application submissions, the claimant identified in clause 251, and extracted the full clause 36 of the contract in relation to delay costs, and then in paragraph 253, it extracted clause 35.5 in its entirety.
  4. It identified in paragraph 252 that the delay cost sum which was agreed in item 43 of Annexure Part A was $1500 a day.
  5. At paragraph 254(b), it submitted that it was entitled to delay costs under clause 36 if it was granted an extension of time by me under clause 35.5, and at paragraph 255 said that the respondent had refused to grant an extension of time in respect of EOT 6.
  6. At paragraph 257 it submitted that I was empowered to grant extensions of time.
  7. At paragraph 258 through to 260, the claimant then outlined the basis of calculation of the quantum of the delay claim, but did not then make reference to the 65 days EOT claim, which was dealt with later in paragraphs 321(d) through to 326.
  8. In paragraph 10 of the adjudication response, the respondent did not take issue with the claimant’s submissions:

i. that entitlement to delay costs was governed by clause 36;

ii. which was contingent upon an extension of time having been granted under clause 35.5; and

iii. regarding the quantum calculations.

  1. In the response, the respondent focused on the time bar provision in clause 35.5 and at paragraph 15.2 pointed to the claimant not denying that EOT 6 had been submitted outside the 10 day period stipulated in clause 35.5.
  2. There were 111 paragraphs of submissions by the claimant in respect of this matter (including the estoppel and waiver point) and 50 paragraphs of submissions by the respondent in reply.
  3. Furthermore, in the SSD, Mr Stainton covered the delay claim in paragraphs 203 through to 342, and Mr Stevenson in the MSD dealt with the issue in paragraphs 24 through to 47.
  4. In order to complete the decision, it is not practicable to make reference to every submission by each party and their respective facts, to which each deposes in their material, in order to provide a written reasoned decision.
  5. However, I have read each of the submissions and the statutory declarations dealing with this issue in some detail to discern the underlying merits, so if I have not mentioned a particular paragraph or fact, it is not because they have been ignored
  6. This is a significant contest, and in order to demonstrate clarity in reasoning, I have approached this important claim on the following basis:

i. the point of departure is to determine contractual mechanism, ostensibly entitling the claimant to delay costs as well, as its quantum (the “contractual mechanism”);

ii. thereafter, analyse the contractual mechanism to determine precisely how the contract operates in relation to entitlement (the “operational mechanism”);

iii. apply the facts to the operational mechanism in order to determine whether the claimant has complied with the contract (the “factual matrix”). This is particularly apposite in relation to the issue of time bars, as regards an extension of time (“EOT”);

iv. in the event that there is a time bar, then give consideration to the issues of the estoppel and waiver to determine whether they are applicable, in light of the facts;

v. in the event that waiver and estoppel do not overcome the time bars, consider whether an EOT can be granted by me in any event, elsewhere in clause 35.5 of the contract (the “alternative EOT mechanism”).

Contractual mechanism

  1. Turning firstly to the contractual mechanism, I have already pointed out that the respondent did not take issue with the operation of clause 36 entitling the claimant to delay costs, providing that an extension of time had been granted, and that the quantum was derived from Annexure Part A.
  2. Accordingly, I’m satisfied that the contractual mechanism is as outlined by the claimant in the application.

Operational mechanism

  1. I must now give consideration to the operational mechanism. In my view this requires an analysis of clause 35.5, and the third paragraph of that clause in particular, because in both parties in their submissions initially focus on it as regards an entitlement to an EOT.
  2. The 3rd sentence in paragraph 35.5 is as follows:

“If the Contractor is or will be delayed in reaching practical completion by a cause described in the next paragraph and within 10 days after the delay occurs, the Contractor gives the Principal’s Representative a written claim for an extension of time for Practical Completion setting out the facts on which the claim is based, the contractor shall be entitled to an extension of time for Practical Completion.”

  1. The issue that emerges from this clause is whether entitlement to an EOT is only enlivened if the claimant provided a written EOT claim within 10 days after the delay occurring.
  2. In paragraphs 262 through 274, the claimant in its application submissions states that no time bar is imposed in that there is no mandatory requirement imposed in respect to time, and that alternatively, if the matter is ambiguous, then the clause must be construed contra preferentum against the respondent.
  3. In relation to the issue of time bars at paragraph 263 the claimant submitted that there were 2 preconditions, that needed to be satisfied for a time bar to occur, these being:

i. firstly a specific event; and

ii. secondly, the clause must specify a legal consequence of that event.

  1. It adds at paragraph 264 and 265, that the failure to make a claim within 10 days after the delay occurring did not impose a legal consequence of a failure to give notice, such that it is not a condition precedent to extension of time, nor did it state that a failure to comply this entitled the claimant from an extension of time.
  2. The respondent takes issue with these submissions in paragraph 15 of the response. In particular paragraph 15.3 of the response, it challenges the claimant’s 2 preconditions and says there is no legal precedent to support this approach.
  3. At paragraph 15.4 and 15.5 of the response, it takes issue with condition precedent submissions of the claimant, and says that there were no legal authorities cited in support of the claimant’s submissions.
  4. I do not agree that the claimant did not provide an authority in relation to the condition precedent submission, because at paragraph 267. It referred to the case of Multiplex v Honeywell. In that case , in paragraph 19 of the decision, clause 11.1.3 is the condition precedent clause referred to, and the claimant has provided that clause on page 54 of its submissions.
  5. At paragraph 268 of the application, the claimant submits that, by way of comparison with clause 35.5 of this contract there is no proviso that disentitles the claimant to an extension of time, if it fails to give the requisite notice.
  6. At paragraph 269 of the submission. It therefore concludes there is no specific legal consequence for failing to comply with the notice within the 10 days.
  7. In my view it is not appropriate to consider that Multiplex v Honeywell is authority that the absence of a specific conditions precedents clause in this contract, means that clause 35.5 does not require compliance within 10 days. The Multiplex v Honeywell case can be distinguished on its facts, because it was an entirely different contract.
  8. At paragraph 15.6 of the response, the respondent submitted that in order for an EOT to be granted, the claim must be submitted within 10 days after the delay occurs, and that there was no alternative reason for the 10 day stipulation to exist.
  9. I agree with the respondent, because in my view, the effect of the clause is that there is an entitlement to an EOT if a written claim is made within 10 days of the delay occurring. The words “shall be entitled to an extension of time for practical completion” are governed by the proviso that a written claim for an EOT was made within 10 days.
  10. I do not agree with the claimant in its submissions in paragraphs 270 through to 274 that there is any ambiguity in the meaning of the 3rd paragraph of clause 35.5 to enliven the contra proferentum rule. I agree with paragraph 15.8 of the response submissions that there is no ambiguity.
  11. Accordingly, I am of the view that entitlement for the claimant to an EOT under this part of clause 35.5 means that proviso needs to be satisfied. In a further analysis of clause 35.5, I will deal with alternative EOT mechanism below.

Factual matrix

  1. Turning now to the factual matrix, I have reviewed Mr Stainton’s SSD for the facts. I appreciate that there has already been a concession by the claimant that it did not comply with the 10 day notice period for EOT 6, but Mr Stainton’s facts put the matter in context, which will be needed in light of the estoppel and waiver discussion below.
  2. At paragraph 274 of the SSD, Mr Stainton identifies the EOT claim number 6 dated 14 November 2004, which he attached at “JS 60”. The claim refers to the delay in delivery of the transformer to the site.
  3. Earlier in the SSD, Mr Stainton, at paragraph 244 stated that the last date for delivery of the transformer to site was 28 April 2014, and at paragraph 245, he said that the transformer was not installed an operational until 7 November 2014.
  4. To my mind, based on these facts, the claimant ought to have been aware of the transformer delay on 28 April 2014, when it was obviously not delivered.
  5. It submitted EOT 6 on 14 November 2014, which is not within 10 days after the occurrence of delay.
  6. Accordingly, I find that the claimant was not entitled to EOT 6 under the operational mechanism because entitlement would have been automatic had the proviso of advising within 10 days been adhered to by the claimant.
  7. I note that the respondent considers that failure to comply with this proviso is a time bar [paragraph 15.7 of the response], and the claimant has engaged with the respondent on the time bar issue, so I need to consider the submissions regarding estoppel and waiver.

Estoppel and waiver

  1. I have to decide whether estoppel or waiver prevents the respondent from relying upon this time bar, and as I have said previously, in paragraphs 91 through to 121, the claimant’s application deals at length with these 2 propositions.
  2. At paragraph 91, the claimant identified that the principal’s representative had:

i. failed to respond to the claimant’s extensions of time within 28 days as required under the contract; or

ii. approved a claim for an extension of time that was formerly submitted outside the 10 day period (EOT 3).

  1. At paragraph 93 of its submissions it referred to paragraphs 204 through to 231 of the SSD to demonstrate the conduct of the respondent in respect of EOT’s 1 through to 5 (the “PR’s EOT conduct”).
  2. In reviewing these facts in the SSD, I find that all EOT’s 1 through to 5 deal with rainfall events, and I find that with 4 of those EOT’s, the respondent did not grant the extension of time within the 28 days required under clause 35.5.
  3. The claimant submitted that the PR’s EOT conduct, particularly that regarding EOT 3 attracted the operation of an estoppel, preventing the respondent from relying upon time bars under clause 35.5. Its alternative proposition was that the respondent had waived its rights to rely upon the time bar.
  4. The respondent’s paragraph 13 response submissions dealt with the estoppel issues and its paragraph 14 submissions dealt with waiver.
  5. The claimant firstly referred to the decisions of Deane J and Dawson J in the case of Commonwealth v Verwayen ((1992 (170 CLR 394 (Verwayen) as authority for estoppel by conduct. In both judgements, as I understand them, their Honours essentially considered that estoppel by conduct involved:

i. Party A which had conducted itself in a particular way about a matter;

ii. leading party B to an assumption that A’s conduct about the matter was how A viewed that particular matter;

iii. preventing an unconscionable departure by party A from its view on that matter;

iv. because that would operate to party B’s detriment.

  1. Mr Justice Dean identified that it required an examination of the relevant belief, actions and position of party B [Point 3 on page 444 of Verwayen].
  2. However, at point 4 on page 444, His Honour referred to the conduct of the alleged estopped party [party A in my example] in all the circumstances.
  3. Dawson J, at pages 454 on 455 focused on party A when he said,

“… it should be accepted that a person who has a contractual right may be estopped from enforcing it if he has made representations, or has conducted himself as to lead to an assumption by the other party that he does not intend to enforce it.”

  1. I have read the parties facts in the SSD and MSD and in my view, I should firstly look at the respondent’s conduct, because it is the unconscionability of departing from that conduct, which appears to be the foundation of estoppel.
  2. In so far as the respondent’s conduct is concerned, I have already made reference to the facts in the SSD above, which focus on the conduct in relation to EOT’s.
  3. At paragraph 104 of the claimant’s submissions, the claimant submits that in respect of EOT 6, that the respondent had not raised any issue in regard to time bars in regards to EOT 3 which was over the 10 day notification period, so that it had the belief that the 10 day time bar period would not be applied.
  4. At paragraph 13.12 of the respondent’s submissions, the respondent said that the conduct of the respondent in approving EOT 3 out of time, was insufficient to induce the claimant to assume that the respondent would not rely upon time bars.
  5. I am unable to be persuaded that one instance of the respondent in allowing one EOT out of time in April 2014 demonstrated conduct that time bars were waived by the respondent’s conduct.
  6. In the case of Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd ((1990) 20 NSWLR 251 at 276 referred to at paragraph 97 of the claimant’s submissions, Priestley JJA talked about the acquiescence of Rozelle’s agent, without the requirements of written notice been complied with lead Update to continue with the work, without giving written notice.
  7. In this case as identified by the respondent in paragraph 13.10 of its submissions that with 4/5 of the EOT submissions, it was not necessary to raise the time bar because the claimant had complied with it. I find that EOT 4 and 5, which were made after EOT 3 were made within the 10 day limit, such that I am unable to be convinced that the time bar issue was something about which the respondent had conducted itself in a manner inconsistent with the contract requirements. Mr Stevenson, at paragraph 25 of the MSD advised that he had not waived any time bars, and at paragraph 26 he said exercised his contractual right to grant an EOT in his discretion, and there is nothing in the material to controvert this.
  8. The claimant referred to the case of Miccon, at paragraph 99, where the defendant knew that the plaintiff was carrying out work, accepted the benefit of it and had monitored its progress. In my view that case cannot apply to the facts here where in one out of 5 cases EOT 3 is granted, with EOT’s claimed by the claimant in time on either side of EOT 3 does not fall within a clear case of the application of waiver and estoppel.
  9. The claimant referred to the case of Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 (“Walton”) which provided 6 tests that needed to be satisfied in order for an estoppel to be made out. I’m not satisfied that the 2nd test being that the respondent induced the claimant to assume that the time bars were not going to be enforced has been satisfied on the facts before me. At paragraph 105 of the claimant’s submissions, the claimant referred to the aid EOT’s, as establishing a pattern of conduct that the respondent was this regarding the clause 35.5 contractual mechanism.
  10. I’m not prepared to accept that the late granting of EOT’s by the respondent demonstrates that it had waived a time bar. In my view that was a requirement that the respondent needed to adhere to, but it had no bearing on the claimant’s requirement to claim. To my mind the claimant needs to demonstrate that this pattern of conduct dealt with time bars relating to the claimant’s EOT claims for entitlement. One granting of an EOT, which I accept from the respondent’s evidence was discretionary, could not be construed as a pattern of conduct by the respondent.
  11. In this regard, I accept the submissions of the respondent in paragraph 13.4, that the 28 day stipulation regarding the granting of an EOT’s, did not operate as a time bar as I have found above. This conduct, to my mind, could not affect the time bar requirement regarding the claimant’s need to put in its EOT claims within 10 days, as they are distinct provisions in clause 35.5.
  12. I therefore see no benefit in canvassing all the other tests identified in Walton to see whether they apply to this case because the 2nd test has not been satisfied. I have already considered the tests identified by Deane and Dawson JJ in Verwayen also require a focus on the conduct of the respondent [party A] in my example because it is the unconscionability of that party’s conduct in resigning from its position that founds the estoppel. I simply cannot find sufficient facts to demonstrate unconscionability which is the foundation of the estoppel.
  13. Turning now to waiver, in paragraphs 107 through to 121 of the claimant’s submissions, it appears from the authorities identified that there needs to be a clear and unequivocal representation or conduct by the respondent [see paragraph 111 of the claimant’s submissions and the case of Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57]. Again I do not find such unequivocal conduct by the respondent, such that waiver cannot be made out.
  14. In paragraphs 115 through to 121 of the claimant’s submissions, it attempts to overcome the operation of clause 48, which prevents a term of the contract being waived except with consent in writing, by reference to cases where the no waiver clause was defeated by an estoppel.
  15. Given that I have found that no estoppel arises, in my view clause 48 of the contract preventing waiver without an express term in writing by the respondent remains operative.
  16. There is no evidence of the respondent waving the time bar requirement, so accordingly, the issues of waiver and estoppel have not been made out by the claimant.

The alternative EOT mechanism

  1. I have found that the 3rd paragraph of clause 35.5 provides entitlement to an EOT, only with the proviso that a claim was made within 10 days of the delay occurring (the “time bar” as described by the parties).
  2. I have been unable to find an estoppel or waiver of the respondent in relying upon, the time bar.
  3. In order for the claimant to succeed in its delay claim, it is necessary to determine whether there is an alternative mechanism for the granting of an EOT. The claimant refers to this as the discretionary mechanism in paragraph 287(b) of the application.
  4. It is safe to say that both parties concede that an alternative EOT mechanism exists in clause 35.5, which allows me to grant an extension of time, so I do not feel that there is a need to analyse my entitlement to do so. However, the parties do not agree about the constraints, if any, to me doing so.
  5. The penultimate paragraph of clause 35.5 states:

“Notwithstanding that the Contractor is not entitled to or has not claimed an extension of time, the Principal’s Representative may at any time and from time to time before the issue of the Final Certificate, by notice in writing to the Contractor extend the time for Practical Completion for any reason. The discretion given to the Principal’s Representative under this paragraph is for the benefit of the Principal and the Principal’s Representative, is not required to exercise the discretion fairly or reasonably or for the benefit of the Contractor.

  1. The claimant provides a host of authorities from Hervey Bay (JV) Pty Ltd v Civil Mining and Construction Pty Ltd & Ors. [2008] QSC 58, through Peninsular Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211, and 620 Collins Street Pty Ltd v Abigroup Contractors Pty Ltd(No2) [2006] VSC 491 and Kane Constructions Pty Ltd v Sopov [2005] VSC 237.
  2. The thrust of the claimant’s submissions, particularly those relating to Hervey Bay is that under clause 23 of this contract, I am obliged to act honestly and fairly, such that I can grant an extension of time for any reason, and I have support from the authorities identified above to do so.
  3. However, the respondent at paragraph 15.20 through to 15.22, said that the facts of the contract Hervey Bay could be distinguished because essentially clause 23 of the contract exclude the obligation to act honestly and fairly because of the opening words, “…the Principal’s Representative shall unless, otherwise stated-”
  4. At paragraph 15.22 the respondent then provided the extract of clause 35.5, which I have referred to above, and at paragraph 15.23 submitted that the proper interpretation is that while I can step into the shoes of the Principal’s Representative, but that I am not obliged to grant an EOT, nor obliged to exercise that discretion fairly or reasonably for the benefit of the claimant.
  5. In my view, there is sufficient evidence of the delays caused by the respondent in not having the transformer provided within time, such that if there had not been the qualification in clauses 23 and 35.5 constraining my powers, I would have granted an extension of time which would have resulted in the entitlement to the delay claim on the basis that it would be fair to do so and would be a reasonable measure of time [see clause 23 of the contract.]
  6. However, as an adjudicator I must apply the terms of the contract, and clause 23 is subject to clause 35.5, which provides that, in exercising my discretion I am not required to exercise the discretion fairly or reasonably or for the benefit of the contractor.
  7. However, it would appear as if I could still do so do so, it is just that it is not a requirement that I do so.
  8. However, I find that some words in clause 35.5 constrain me and that is the discretion given to me is on behalf of the Principal. In my view to grant an extension of time, thereby exposing the respondent to a significant delay damages claim under the contract, about which it had not been provided details until mid-November 2014, does not fall within the words “is a discretion for the benefit of the Principal”.
  9. The parties consented to these contract terms and I am not in a position to deviate from them, whatever merits I may consider in such a claim.
  10. Accordingly, I am therefore unable by the words of clause 35.5 to grant the EOT number 6, such that the claimant has not discharged its onus, and I therefore value the delay damages claim as nil.
Item Payment claim Payment schedule Adjudication Value
EOT6 Delay claim $97,500.00 $0.00 $0.00

XII. The amount of the progress payment

  1. I have summarised the value of the disputed items in Table A below, and I have added this value to the revised baseline (identified below)

Table A

Item Adjudication Value
Variation 15 – ceiling credit $18,565.70
Variation 35 – Creekside awning $0
Variation 38/AHL variation 002 – carpet credit ($78,875.00)
AHL variation 001 – additional credit for auditoria ceilings $0
AHL variation 003 – painting to cinema premises ($7,530)
AHL variation 004 – additional ductwork to roof by AHL $0
AHL variation 005 – fire smoke detectors to fit out $0
AHL variation 006 – Electrical TBA $0
EOT 6– delay claim $0
DISPUTED ITEMS ADJUDICATION VALUE  (exclusive of GST) ($67,839.00)
  1. I carefully considered the payment claim and the payment schedule to determine whether there was an agreement regarding the total value of completed construction work to the end of November 2014 (the “November 2014 construction value”) which is $8,280,930 in the payment claim.
  2. At paragraph 45 of the adjudication application submissions, the claimant conceded that previous payments received amount to $7,984,271.92 (the “amounts received”).
  3. Taking the claimant’s total value of completed works including design works, and including its variationsof $8,833,891.20, and deducting the amounts received, the payment claim amount should have been $849,619.28, as identified by the claimant in paragraph 46 of its submissions.
  4. However, the claimant then advised in paragraph 47 that it was pursuing the amount of $650,089.28, and it appears as if this was due to a reduction in its payment claim for EOT6 from $289,500 to $97,500 for only 65 days compared to 193 days as identified in the payment claim.
  5. In order to sensibly value the work, and because of the changes made by the claimant between its payment claim and the adjudication application, I decided to take the figure of $8,280,930, agreed by both parties as the value of completed contract works to end November 2014 as the baseline.
  6. To this baseline, I then added the amount design work of $202,140, which is not in dispute, and subtract the retention amounts of $217,488.60, which is also not in dispute. This revised baseline figure then becomes $8,265,581.40 (the “revised baseline”). Although this figure is not specifically apparent in either the payment claim or payment schedule, it is calculable from both documents.
  7. I then reviewed the payment claim variation column which amounted to $568,309.36, and I note that this sum accorded with the payment schedule amount about the variations claimed. In this variation amount was the sum of $289,500, which was for the delay claim associated with EOT 6.
  8. Accordingly, I have subtracted $289,500 from the amount in the variation column to yield $278,809.36 which was the value for the variations claimed excluding the delay claim.
  9. There were only three variations that were in dispute in this adjudication being variation 15, 35 and 38 which I have now valued. In the variations column for the variations claimed to the end of November 2014 regarding the three disputed variations, the amounts were as follows:

i. variation number 15              ($38,315.00).

ii. variation 35                            $62,994

iii. variation 38                           ($78,875)

  1. In this adjudication I valued variation 35 as nil, but the other two variations remain as the same figure as in the payment claim.
  2. Accordingly, I have deducted the sum of $62,994 (for the incorrectly claimed variation amount) from $278,809.36 to yield the value of variations claimable in this payment claim of $215,815.36 (value of variations).
  3. I have valued the deductions as ($7530) (value of deductions), and the EOT 6 delay claim as nil (EOT 6 delay claim).
  4. In order to determine the adjudicated amount value, I then added the value of the variations, the value of deductions and the value of the EOT6 delay claim summarised in table A to the revised baseline to determine the total value of work to the end of November 2014. I then deducted the amounts received to yield the adjudicated amount I have summarised these calculations in Table B below.

Table B

Revised baseline amount $8,265,581.40
Value of variations $215,815.36
Value of deductions ($7,530)
EOT 6 delay claim $0.00
SUBTOTAL $8,473,866.76
Less amounts received $7,984,271.92
TOTAL $489,594.84
Plus GST $48,959.48
ADJUDICATED AMOUNT $538,554.32
  1. Accordingly, I find the adjudicated amount is $$538,554.32 (including GST).

XIII. Due date for payment

  1. The claimant submitted that the due date for payment under the contract is 15 days from the date of the payment claim which it says is 7 January 2015.
  2. There are no submissions from the respondent about the due date for payment.
  3. Accordingly, the due date for payment is 7 January 2015.

XIV. Rate of interest

  1. I’m obliged to find that the interest rate, and I find that the contract does provides an interest rate for late payments of 10% per annum in accordance with Item 49 of Annexure A.
  2. However, the claimant has submitted that I should apply s15(3) 0f BCIPA which provides that:

“(3) For a construction contract to which the Queensland Building and Construction Commission Act 1991, section 67P applies because it is a building contract, interest is payable at the penalty rate under that section.”‘

  1. I note that the respondent concedes in the response that this rate of interest is payable.
  2. s67P of the Queensland Building and Construction Commission Act 1991 relevantly provides

(3) In this section—

penalty rate means—

(a) the rate made up of the sum of the following—

(i) 10% a year;

(ii) the rate comprising the annual rate, as published from time to time by the Reserve Bank of Australia, for 90 day bills;

  1. I therefore find that this is the appropriate rate, and having regard to the find that the 90 day bank bill rate for is
  2. I have referred to the Reserve Bank of Australia website www.rba.gov.au/statistics/tables/xls/f01hist.xl and find the latest rate is 2.7%.
  3. Accordingly, the rate of interest I calculate is 12.7%
  4. I find the rate of interest is 12.7% interest payable on the adjudication amount.

XV. Adjudicator’s fees

  1. The default provision contained in s34(3)(b) of BCIPA makes the parties bid to the payment to contribute to the payment of any fee in equal proportions, unless I decide otherwise.
  2. The claimant at paragraph 86 said that it was claiming the amount of $650,089.28 excluding GST. I have found that it is entitled to$489,594.84 excluding GST which is 75% of the amount claimed.
  3. However, the assessment of the delay claim and the Creekside awning took a lot of time to assess in which the claimant was unsuccessful, and I see no reason to depart from the default provision in section 34(3)(b) of BCIPA
  4. Accordingly, I find that the claimant is liable to pay 50% of my fees and the respondent is liable to pay 50% of my fees.

Chris Lenz

Adjudicator

19 February 2015