Brook Brothers Constructions v Robert Wilkies, Valerie Wilkies & Termayne Mackay

Brooks Brothers Constructions v Robert Wilkies, Valerie Wilkies & Termayne Mackay

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08/03/2013 – Brook Brothers Constructions v Robert Wilkies, Valerie Wilkies & Termayne Mackay

Adjudication Application No. 244

Claimant:                                          

Respondent:                                    

BROOK BROTHERS CONSTRUCTIONS

ROBERT WILKES, VALERIE WILKES, TERMAYNE MACKAY

 

 

 

Background

1. Brook Bros Constructions, ABN 65713662001 (referred to in this adjudication as the “claimant”), entered into a written contract with Robert Wilkes, Valerie Wilkes and Termayne Mackay (referred to in this adjudication as the “respondent”), on 7 September 2012 for the construction of a two-storey house at 77 Haylock Street in Wynnum West in Queensland (the “contract”).

2. The Claimant carried out work under the contract and the work was certified by a building certifier as complete on 27 October 2012.

3. The contract provided for progress payments and the claimant was paid for stages 1 to 6, excluding stage 4 which was the enclosed stage payment of $97,200 which had not been paid (the “enclosed stage claim”).

4. The claimant served a payment claim on 11 January 2013 for the enclosed stage claim.

5. On 11 February 2013 the respondent provided a payment schedule to the claimant stating that the respondent did not agree to pay any sum claimed under the payment claim.

Appointment of Adjudicator

6. The Claimant applied in writing to the Queensland Law Society (“QLS”) on 6 February 2013 for adjudication. Subject to my finding jurisdiction, which is dealt with below, I find that the application in writing satisfies s21(3)(a) of the Building and Construction Industry Payments Act 2004 (the “Act”).

7. I find the application was to QLS, as an authorised nominating authority, thereby satisfying s21(3)(b) of the Act.

8. By letter dated 8 February 2013, QLS referred the adjudication application to me to determine, pursuant to s23(1) of the Act. I am registered as an adjudicator under the Act with registration number J622914. 

9. I accepted the nomination by facsimile dated 13th February 2013 sent to the claimant and to the respondent by email and post and I became the appointed Adjudicator by virtue of s23(2) of the Act.

10. On 18 February 2013, after the time had expired for delivery of an adjudication response, the respondents’ lawyers wrote to me enclosing a facsimile dated the 10th February 2013, containing a payment schedule, stating that it had been served on 11th February 2013 (the “respondent’s 18 February letter”).

11. I wrote to the claimant and respondent requesting an extension of time until 8 March 2013 to provide the adjudication decision, and this was granted by the parties. The reason for the request was that the adjudication had initially comprised an adjudication application, with an assertion that there was no payment schedule, and after I accepted the nomination, the respondents’ solicitors wrote enclosing a payment schedule.

12. Given that there were no submissions attached to the application, and not having received an adjudication response, but having received a payment schedule, I made several requests for further submissions under section 25(4) of the Act.

13. Additional material was provided by the claimant and respondent during communication with them, and this material is identified below.

Material provided in the adjudication

 14. I list the Claimant’s material and the Respondent’s material separately.

Claimant’s Material

This material consisted of the following documents:

(a) The application dated 6 February 2013;

(b) Notice of intent to apply for adjudication dated 25 January 2013;

(c) Payment claim dated 11 January 2013;

(d) HIA Queensland plain language construction contract dated 7 September 2012;

(e) A payment claim dated 6 August 2012

(f) In response to my sending to the claimant on 22nd of February 2013, the respondent’s 18th February letter, the claimant sent me an email stating that the claimant received the payment schedule a couple of weeks after the deadline and enclosed:

a.       a compliance assessment dated 12 June 2012;

b.      a development application decision notice dated 15 June 2012;

c.       a form 21 final inspection certificate dated 27 October 2012;

(g) in response to my request for submissions dated 26 February 2013 the claimant provided submissions dated 26 February 2013;

(h) in response to my request for submissions dated at 7 March 2013, the claimant provided submissions on that date together with some attached documents.

Respondent’s Material

The Respondent’s material consisted of:

(a)A letter to me dated 18 February 2013 attaching a payment schedule dated 10 February 2013;

(b)submissions as to jurisdiction dated 28th February 2013;

(c)submissions in respect of my request for submissions and response to the claimant’s submissions dated 28 February 2013;

(d)statement of Robert William Wilkes dated 28th of February 2013;

(e)statement of Michael Singee Hui dated 28 February 2013.

Jurisdiction

15. s3 of the Act requires that:

(1) the date of the construction contract (which can be written or oral, or partly written and partly oral) must be after 1 October 2004 [s3(1) of the Act]; and

(2) that the construction work was carried out, or the related goods and services supplied for construction work, in Queensland, see s3(4) of the Act.

16. Turning firstly to schedule 2 of the Act.  It defines a construction contract as follows:

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

17. The claimant’s material attached the contract dated 7 September 2012 and I am satisfied that this was the date of the contract between the claimant and respondent. 

18. The contract was for the construction of a two-storey brick veneer home, and I am satisfied therefore that there was a contract as provided by Schedule 2 of the Act, However, it is necessary for me to determine whether the contract related to construction work or to supply related goods and services in relation to construction work.

19. Construction work is defined in s10of the Act as:

 “(1) Construction work means any of the following work –

(a)  The construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures, whether permanent or not, forming, or to form, part of land… ”

20. I am satisfied that the construction of the house falls within the definition of construction of buildings in s10(1)(a) of the Act.

21. I am therefore satisfied that the contract date was after 1 October 2004, and it related to construction work as defined in s10 of the Act.

22. I find therefore that s3(1) of the Act has been satisfied for the reasons outlined above.

23. I find that Wynnum West is in Queensland thereby satisfying that the construction work was carried out in Queensland. Accordingly, the exclusionary provisions of s3(4) of the Act do not apply.

24. The contract is for the carrying out of domestic building work; however, on page 2 of the contract in response to the question “Is the owner a resident owner?” the answer written in is “NO”. Accordingly, I find that the contract does not fall within the excluding provisions of s3(2)(b) of the Act.

25. Consequently, I have jurisdiction to adjudicate this matter and now proceed to do so, being mindful of the constraints imposed by the Act in carrying out this function.

26. However, in response to my request for submissions, the respondent’s solicitors provided submissions as to further issues regarding jurisdiction, and I deal with those submissions, once I have canvassed the scope of the adjudication as provided by s26 of the Act.

Scope of the adjudication

27. s26(1) of the Act requires that I am to determine:

a. The amount of the progress payment, if any, to be paid by the Respondent to the Claimant (the “adjudicated amount”); and

b. The date on which any such amount became or becomes payable; and

c. The rate of interest payable on any such amount.

28. s26(2) of the Act identifies the matters that I may consider in determining an adjudication application. s26(2) of the Act provides:

“In deciding an adjudication application, the adjudicator is to consider the following matters only(my emphasis added):

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

(b) the provisions of the construction contract from which the application arose;

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

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

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

29. s26(2) of the Act, appears to limit what an adjudicator may consider. However, Hodgson JA in The Minister for Commerce (formerly Public Works & Services) v. Contrax Plumbing (NSW) Pty. Ltd. & Ors. [2005] NSWCA 142 and John Holland Pty Ltd v Roads & Traffic Authority of New South Wales & Ors [2007] NSWCA 19 did not find that the adjudicator was constrained to only those items in the NSW equivalent of s26(2) of the Act. His Honour held that the Act did not limit an adjudicator, if the adjudicator thought that if there were issues that could have a bearing on the questions to be decided (essentially the s26(2) requirements), then the adjudicator was entitled to consider them and ask for submissions from the parties about them, even if they had not been raised in the submissions.

30. After advising the parties by email on 13 February 2013 that I accepted the adjudication, and after the time limit for the delivery of an adjudication response, on 18th of February 2013 I received a letter from the respondents’ solicitors to which they attached a payment schedule dated 10th of February 2013 (the “respondents’ 18 February letter”). The respondents’ solicitors asserted that the payment schedule was faxed on 11th February 2013, and this put an entirely different complexion on the adjudication application, because the application identified that no payment schedule had been delivered.

31. The respondents’ 18 February letter was forwarded to the claimant, and the claimant responded by email saying, “We received it but it came a couple of weeks after the deadline, so we did not have any comments on its contents”. Attached to the email were some documents relating to approvals (the “approval documents”).

32. When there had been no adjudication response delivered within the time frame, it appeared as if I was confined to the contents of the payment claim and the adjudication application in reaching my decision. However, once the issue of the existence of a payment schedule arose, I considered it appropriate to seek submissions from the parties and seek an extension of time within which to make the decision to allow the parties’ time to provide these submissions and for me to give consideration to them.

33. The reason for this request for submissions on 26 February 2013 was that $97,200 was in dispute, and there were some anomalies in the application regarding whether or not there had been a payment schedule served, such that I advised the parties that to do justice between them it was necessary to ask for submissions before making my decision.

34. The submissions that I sought from the parties (with a request that the other party comment on those submissions) were as follows:

(a) when the claimant received the payment schedule and how it received it;

(b) whether the claimant had completed the work under the contract;

(c) the respondent identify by reference to only the reasons in the payment schedule, why the respondent was contractually entitled to deny the payment claim;

(d) the claimant explain why I should consider the approval documents.

35. In the contending submissions about the payment schedule, the claimant advised that it had received the payment schedule on 13 February 2013 by registered post, whereas the respondent asserted that it had been served by facsimile on 11 February 2013.

36. In relation to the submissions about completion of the work under the contract, the claimant referred to 6 progress payment schedules in the contract in which it identified that it did not been paid for claim number 4 but had been paid for the last 2 stages under the contract. The respondent, at paragraph 8 of its further submissions provided on 28th of February 2013 said that the claimant had not confirmed that it completed the work for stage 4 and had not provided any evidence to support that it had. The respondent argued that I could not be satisfied on the material that the claimant was entitled to the payment claim.

37. In relation to the submissions supporting a contractual entitlement to deny the payment claim, the respondent claimed a set off pursuant to clause 4.8 of the contract, and it expanded this set off as being an equitable set off arising out of a right to damages for breach of contract. In addition the respondent claimed that it was subject to an enforcement notice issued by the BCC, and made an offsetting claim based on the fact that the claimant did not obtain a development approval for a dwelling and was therefore in breach of contract. The claimant’s submissions on this point dealt with service of the payment schedule and did not engage on the contractual entitlement point.

38. In relation to its entitlement to provide me with the working documents, the claimant asserted that the payment claim should be paid because all other claims had been paid reliant upon the certificate of classification/occupation of the building issued by the Brisbane City Council and that the owner had possession of the completed premises and continue to benefit from it. In response, the respondent said that the approvals were not provided as part of the submissions with the adjudication application or in a response to a request by me and should not be considered by me.

39. Despite not being requested to do so, the respondent provided submissions as to the adjudicator not having jurisdiction on 28th of February 2013. The respondent argued that despite an issue of jurisdiction not being raised in a payment schedule, they were entitled to submit that there was no jurisdiction for the adjudication to proceed because of there was (1) no valid payment claim and (2) an adjudication application was not properly made.

40. The claimant did not respond to these submissions by the time requested.

41. On 7 March 2013 I asked the claimant whether it had received the respondent’s submissions, and the claimant confirmed that it had received them. I was therefore satisfied that the claimant had chosen not to respond to the submissions. I also asked the claimant when it had served with the payment claim, and the response was that it had been served by post on 11 January 2013.

42. On 7 March 2013, I requested the respondent respond to the claimant’s assertions about to the date of and service by post of the payment claim, but I did not receive a response by the requested time of 11 o’clock on 8 March 2013. However, at 2.19pm, the respondent advised that it was relying upon paragraph 6 of its existing submissions in relation to jurisdiction that it not been served on 11 January 2013.

43. In my view I am compelled to deal with jurisdictional issues because it is important for the parties that adjudication decisions do not miscarry which would otherwise result in applications to set aside the decision with consequent costs and delays to progress payments. I therefore consider these jurisdictional issues before deciding whether I am able to consider the merits of the payment claim and payment schedule, and the submissions provided. 

Jurisdictional issues

44. Paragraph 2 of the respondent’s jurisdictional submissions refers to the essential elements of a valid adjudication decision by reference to the case of Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 (“Brodyn”) and the decision of Mr Justice Hodgson at page 441. The respondent argued that that not been service of the payment claim and there was an invalid adjudication application, which are 2 elements in Brodyn.

45. At paragraph 53 and following, Hodgson JA said with reference to the similar NSW legislation said: 

“[53] What then are the conditions laid down for the existence of an adjudicator’s determination? The basic and essential requirements appear to include the following:

  1. The existence of a construction contract between the claimant and the respondent, to which the Act applies (ss.7 and 8).
  2. The service by the claimant on the respondent of a payment claim (s.13).
  3. The making of an adjudication application by the claimant to an authorised nominating authority (s.17).
  4. The reference of the application to an eligible adjudicator, who accepts the application (ss.18 and 19).
  5. The determination by the adjudicator of this application (ss.19(2) and 21(5), by determining the amount of the progress payment, the date on which it becomes or became due and the rate of interest payable (ss.22(1)) and the issue of a determination in writing (ss.22(3)(a)).

46. I appreciate that the respondents’ submissions target only items 2 and 3 above, however, it may be necessary for me to check that each basic and essential requirement has been complied with in order to proceed to decide the matter.

Detailed consideration of each Basic and Essential Requirement

The first basic and essential requirement – the construction contract

47. I have already found that there is a construction contract to which the Act applies, which gave me jurisdiction to proceed with the adjudication.   

48. I have therefore established the first basic and essential requirement.

The second basic and essential requirement – service of the payment claim

49. The second basic and essential requirement requires the service of the payment claim on the Respondent in accordance with s17 of the Act. This is the 1st jurisdictional challenge raised by the respondent.

50. s103(1) of the Act allows the contract to provide for the way of service, and Clause 28.1 of the contract provides:

“Unless otherwise stated in this contract, a notice is deemed to be given and received if this notice is:…

(b) posted by ordinary prepaid mail to the other parties last known address, 2 working days following the day it was posted;….”

51. The claimant confirmed on 7 March 2013 in its email submission that it posted the payment claim on 11 January 2013. This date is consistent with the date on the adjudication application.

52. Although the respondent did not directly controvert this submission by the time requested; at 2.19pm it maintained its earlier submissions in paragraph 6 provided on 28th February 2013. It had asserted at paragraph 5 that there was no evidence of service having been provided and in paragraph 6 of the submissions it denied having been served with the payment claim on or about 11 January 2013. In support of that submission it referred to paragraph 10 of a statement of Robert William Wilkes, in which Mr Wilkes denies receiving a payment claim prior to being attached to an email dated 31 January 2013.

53. I have reviewed Mr Wilkes’ statement, which in paragraphs 8 and 9 erroneously referred to dates in January 2012 for service of emails (instead of 2013) and paragraph 10, in which he focuses entirely on emails for the receipt of payment claims from the claimant, whereas elsewhere in his statement he also refers to receiving payment claims by post. The respondent was given the opportunity to make submissions about the claimant’s assertions that it posted the payment claim on 11 January 2013 and did not do so in the time requested. However, at 2:19 PM it maintained that it was not served on 11 January 2013. However, that does not deal with receiving the payment claim by post at a later date.

54. It is evident from paragraph 6 of Mr Wilkes’s statement that he had previously received an email claim for the enclosed stage on 18 November 2012, and in paragraph 3 and 4 that he had received 5 claims by post, including the fixing and practical completion stage which he had authorised to be paid.

55. I find from Mr Wilkes’s statement that payment claims were made by both email and post, and am not satisfied (in the context of him focusing in on emails in paragraphs 8 to 10) that there is sufficient evidence of non-receipt by post to adequately rebut the claimant’s assertion that the payment claim was posted.

56. I am therefore satisfied that the payment claim was posted on 11 January 2013, and based on the presumption in clause 28.1 of the contract I find that it was delivered on 14 January 2013.

57. Accordingly I find that proper service of the payment claim took place as required by s17 of the Act so that the second basic and essential requirement is satisfied.

The third basic and essential requirement –application to an ANA

58. I have already found the Claimant has validly made the application to the QLS which is an ANA.

59. The respondent argues this is not a valid application because:

(a) it purported to rely upon a payment claim that had never been served, or alternatively/further that original invoice was not a payment claim;

(b) the altered invoice had not been served on the respondent;

(c) the application was misconceived on the basis that no payment schedule was served under part 3, division 1 of the Act by the time the application was made;

(d) alternatively, the application was misconceived on the basis that there was no evidence of service of the notice of intention to apply for adjudication before the adjudication application on 8th February 2013;

(e) the adjudication application was made before time.

60. I have already found that the payment claim was served on 14 January 2013. As to the alternative objection identified in paragraph 8 to 11 in the respondent’s submissions that the original invoice was not a payment claim made under the Act, I am not prepared to consider this submission because it was not raised in the payment schedule. Even though no adjudication response was provided, to my mind it is prohibited by section 24 (4) of the Act as being a reason for withholding payment which had not been included in the payment schedule. In my view it is a detailed complaint about the contents of an invoice which should have been identified in the payment schedule, rather than trying to raise it now as a jurisdictional issue.

61. Given that I was not prepared to consider the submissions in relation to the alleged “altered invoice” not having been served on the respondent, I am not prepared to consider this submission is one going to jurisdiction, because the issue of the altered invoice could have been dealt with in a payment schedule for the reasons identified in the paragraph above.

62. As to the other objections that the application was misconceived or was made before time requires closer analysis.

63. The respondent correctly states that strict compliance with the requirements of the Act is necessary. I have found that the payment claim was served on 14 January 2013 because I have found that the claimant posted the payment claim. In accordance with section 18 (4)(b)(ii) of the Act, the respondent had to provide a payment schedule by 29 January 2013 (within 10 business days after receiving the payment claim, taking into account the Australia Day holiday).

64. In order to consider the timeframes in more detail, it is necessary for me to determine when the payment schedule was served. The claimant says it was on 13 February 2013, and the respondent says it was sent by fax on 11th of February 2013 (confirmed in paragraphs 2 and 3 of Mr Hui’s statement to which he attached exhibits A and B).

65. The claimant chose not to provide any controverting submissions in response to those of the respondent, and I am satisfied from Mr Hui’s statement and his attachments that the payment schedule was sent by facsimile on 11th of February 2013.

66. Therefore the respondent had not provided a payment schedule by 29 January 2013, which enlivened the claimant’s right to proceed to adjudication under section 21(1)(b) of the Act, providing:

(a) within 20 business days immediately following the due date for payment it provided a notice of intention to apply for adjudication as provided by s21(2)(a) of the Act, and

(b) it gave the notice under section 21(2)(b) of the Act requested service of a payment schedule within 5 business days after receiving the notice.

67. I have found that the payment claim was served on 14 January 2013, and clause 4.5 of the contract stated that the respondent must pay the progress claim to the claimant within 5 working days of receiving the claim. Accordingly, I find that the due date for payment was 21 January 2013.

68. However, on 21 January 2013 the time for the delivery of a payment schedule had not yet expired. Nonetheless by 29 January 2013 no payment schedule had been received, and this was after the due date for payment. Accordingly, after 29 January 2013 the claimant was entitled to proceed under section 21(1)(b) of the Act to request a payment schedule by notice.

69. However, the application stated that it was made under section 21(i)(a)(ii)of the Act and in paragraph 6 it identified option 2 that the respondent has failed to pay the scheduled amount by the due date. This is incorrect because no schedule had been provided.

70. To my mind the precise ground upon which the application is founded on a QLS form with a “tick a box facility” is not an essential requirement for an application. The QLS notes at page 3 provide that “the checklist and form is provided for your assistance only and does not constitute legal advice”. Provided that an application was made, it then requires me to consider whether the notice was within the prescribed time, and whether the adjudication application falls within the requirements of the Act, rather than whether the correct box was ticked.

71. The notice was dated 25 January 2013, which if it was served on that date, would in my mind be premature because the date for service of the part 3 division 1 payment schedule had not yet expired.

72. On 26 February 2013, in response to my request for submissions on that date the claimant said, “The notice of intent to apply for adjudication was issued on 25 January 2013 via Australia Post.”

73. The respondent at paragraph 24 of its submissions states that the notice was only served on 4 February 2013 because at paragraph 11 of Mr Wilkes’ statement he said that he received the notice which was dated 25 January 2013 by registered post.

74. I am satisfied that this is the date the notice was served because it is consistent with both the claimant’s submission (referring to it being sent by post) as well as the respondent’s submission (that it was received by post).

75. Accordingly, the respondent had until 11th of February 2013 to provide a payment schedule (because it had 5 business days after receiving the notice to do so), and I have already found that on this date a payment schedule was provided.

76. I find that the adjudication application had been lodged on 6 February 2013, which I find was premature because the claimant had until 11th of February 2013 to provide a payment schedule.

77. Accordingly, I accept the respondent’s submissions at paragraph 26 that the claimant was not entitled to make an application under the Act until 12th of February 2013.

78. Even if the claimant’s submission was accepted about the payment schedule having been served on 13 February 2013, the adjudication application would still have been premature.

79. The consequence of my finding is that the third basic and essential requirement is not satisfied.

80. There were some anomalies in the adjudication application and the respondent asserted that it did provide a payment schedule which was not identified in the adjudication application. Accordingly, it was necessary for submissions to be obtained from the parties in order to ensure that there were sufficient facts for the matter to proceed.

81. I therefore find after requesting submissions from the parties and analysing those submissions in some detail that I do not have jurisdiction to decide this adjudication.

82. Whilst no doubt the claimant may be disappointed that a claim it has made for an enclosed stage for a building that is complete has not been successfully adjudicated, the claimant must appreciate that an adjudicator cannot make an adjudication decision if the adjudicator does not have jurisdiction.

83. This lack of jurisdiction arises out of the claimant failing to adhere to the time limits prescribed by the Act, and for an adjudicator to proceed in the face of a lack of jurisdiction not only is unlawful and creates an injustice, but it may result in significant expense and delay for both parties if the respondent chose to challenge a decision for want of jurisdiction.

Chris Lenz

8 March 2013