HL Contractors (Qld) Pty Ltd v Grindley Constructions Pty Ltd

HL Contractors (Qld) Pty Ltd v Grindley Constructions Pty Ltd

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15/11/13 – HL Contractors (Qld) Pty Ltd v Grindley Constructions Pty Ltd

Adjudication Application no. 30346

Authorised Nominating Authority

Adjudicator

Registration Number

Claimant

Respondent

Project

Payment Claim

 

Payment schedule

 

Adjudication Application

Adjudicator’s Acceptance

Adjudication Response

Adjudication Decision

Adjudicated Amount

Due Date for Payment

Rate of Interest

Apportionment of Adjudication Fees

Institute of Arbitrators & Mediators Australia

Chris Lenz

J622914

HL Contractors (Qld) Pty Ltd

Grindley Constructions Pty Ltd

Masonic Care Landscaping, SANDGATE, QLD

Served 25 September 2013 for an amount of

$122,692.53 excluding GST

Served 10 October 2013 for amount of $59,072.95 including GST 25 October 2013

30 October 2013 (email & letter)

1 November 2013

15 November 2013

$85,108.49

10 October 2013

10%

Claimant          50%

Respondent     50%

TABLE OF CONTENTS

Contents

A. DECISION

B. REASONS

I. Background

II. Application to an ANA and appointment of Adjudicator

III. Material provided in the adjudication

Claimant’s Material

Respondent’s Material

IV. The Construction Contract

V. Payment Claim

VI. Payment Schedule

VII. Adjudication application

VIII. Jurisdictional issues

IX. Entitlement to claim

X. The amount of the progress payment

XI. Due date for payment

XII. Rate of interest

XIII. Authorised Nominating Authority and 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. HL Contractors (Qld) Pty Ltd (referred to in this adjudication as the “claimant”) was engaged by Grindley Constructions Pty Ltd (referred to in this adjudication as the “respondent”) to carry out landscaping and civil contracting works at the Masonic Care Queensland, Sandgate Apartments, B and C in Queensland (the “work”).
  2. The contract was in writing, dated 26 April 2013.
  3. The contract and variation work has been carried out this year and the claimant asserts they were practically complete on 25 September 2013, which is denied by the respondent.
  4. The claimant’s payment claim of 25 September 2013 comprised $84,791.15 of contract works together with $37,901.38, totalling $122,692.53 (excluding GST).
  5. The respondent served a payment schedule on 10 October 2013 for an amount of $59,072.95 including GST.

II. Application to an ANA and appointment of Adjudicator

  1. The claimant applied to the Institute of Arbitrators and Mediators Australia (“IAMA”) on 25 October 2013 for adjudication. By delivery on 28 October 2013, IAMA referred the adjudication application no. 30346 for me to determine.
  2. IAMA is an Authorised Nominating Authority under BCIPA and I am a registered adjudicator under BCIPA with registration number J622914.
  3. By letter dated 30 October 2013 sent by email and post to the claimant and to the respondent, I accepted the Adjudication Application and thereby became the appointed Adjudicator.
  4. On 1 November 2013 I received the adjudication response from the respondent, which I noted had also been provided to the applicant and its solicitors.

III. Material provided in the adjudication

  1. The following material was provided to me by the parties:

Claimant’s Material

The adjudication application documents comprised the following:

(i) The Adjudication Application form dated 25 October 2013. Under cover of a letter dated 24 October 2013 together with an index;

(ii) Section 3 attaching the payment claim;

(iii) Section 4 attaching the payment schedule;

(iv) Section 5 attaching the contract;

(v) Section 6 , headed adjudication application;

(vi) Section 7 headed executive summary;

(vii) Section 8 headed adjudication submissions;

(viii) Section 9 with 4 Appendices attaching correspondence;

(ix) Section 10 allegedly containing supporting documents, but there appeared to be none provided.

Respondent’s Material

  1. The respondent provided an adjudication response comprising:

(i) A covering letter dated Friday, 1 November 2013;

(ii) Annexure 1: Response to Claimant General reference:

(iii) Annexure to response to section 3 of the application;

(iv) Annexure 4: response to section 7 of the application – executive summary;

(v) Annexure 5 – response to section 8 of the application;

(vi) Annexure 6 response to section 9 of the application;

(vii) Annexure 7 response to section 10 of the application;

(viii) Appendix 1: payment claim submitted to grandly;

(ix) Appendix 2 payment schedule issued to claimant;

(x) Appendix 3 fully executed. Contract issued to claimant on 18 June 2013;

(xi) Appendix 4: signed programme, variations and payment schedule;

(xii) Appendix 5 letter of intent issued to claimant dated 26 April 2013;

(xiii) Appendix 6 grinned the construction, general conditions of subcontract;

(xiv) Appendix 7. Respondent’s letter to claimant dated for October 2013 identifying landscape architect defects;

(xv) Appendix 8. Further correspondence relating to alleged defects.

IV. The Construction Contract

  1. There is a contest about what is the correct version of the contract. The claimant in section 5 of the application, attached a copy of what it says is the contract, however, in its covering letter of 1 November 2013, the respondent stated that the applicant omitted several contract documents from the adjudication submission. Furthermore, under annexure 3 in its 10 submissions, the respondent identifies the missing pages in the claimant’s version of the contract.
  2. I note at paragraph 9 of those submissions that the missing pages all appear to be even numbers, so I draw the inference that the claimant simply copied the contract on one side only.
  3. Accordingly, I am satisfied that the contract provided by the respondent at appendix 3 which, at page 22 of this document appears to have been executed, is the contract between the parties.
  4. However, I need to decide whether these documents demonstrate that there is a “construction contract” under BCIPA, but prior to that I need to be satisfied that the claimant carried out construction work.
  5. Construction work is defined in section 10 of BCIPA and I find that the landscaping, irrigation and civil works fall within the meaning of section 10(1) of BCIPA which provides for activities, including “pipelines”, “installations for land drainage”, “drainage”, “water supply,” “earthmoving” “landscaping and the provision of roadways and other access works.”
  6. Accordingly, I am satisfied that the claimant carried out construction work under BCIPA. I now need to assess whether the contract is a construction contract under BCIPA.
  7. Schedule 2 of BCIPA states that a 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.”
  8. I am satisfied that the sub contract deed dated 26 April 2013 falls within the definition of a contract to carry out construction work and is therefore a construction contract under BCIPA.

V. Payment Claim

  1. I refer to the payment claim attached in section 3 of the application which contained a 1 page spreadsheet identifying the construction work carried out, including variations (with the amounts claimed and totalled), together with a significant number of photographs, extension of time requests and notifications of delay and an extension of time register under cover of a document that stated, “this and the attached supporting documents is a payment claim under section 17 of the Building and Construction Security of Payment Act 2004 (Qld).
  2. Whilst the Act has been misdescribed with the words “Security of” added, such misdescription in my view, does not sufficiently deviate from the requirements in section 17(2)(c) of BCIPA, such that a reasonable person would understand that it was a payment claim under BCIPA. The respondent had not taken issue with this point, so I am satisfied that this payment claim complies with section 17 (2) of BCIPA and is a valid payment claim.
  3. Given that the respondent provided a payment schedule dated 10 October 2013 in response to the payment claim I am satisfied that the payment claim was served on the respondent.

 

VI. Payment Schedule

  1. Both parties provided a copy of the payment schedule, and I am satisfied that a payment schedule dated 10 October 2013 was served on the claimant.
  2. The claimant attached in appendix 4 under section 9 of its submissions a facsimile from the respondent sent at 17:56 on 10 October 2013. This facsimile was a response to the claimant’s letter dated 13 September 2013 in which the respondent took issue with the claimant’s claims in that letter, and explained why the EOT claims were not accepted.
  3. At paragraph 60 and 61 of the claimant’s submissions it asserts that this letter is not part of the payment schedule, such that the respondent is not entitled to utilise the reasons for non-payment identified in that letter because it was not part of the payment schedule, which was delivered a short while later on 10 October 2013.
  4. At paragraph 60 and 61 of the respondent’s submissions it is evident that the respondent concedes that this letter does not form part of the payment schedule, and I have not considered any reasons in that letter (for non-payment) in this decision.
  5. However, I have looked at both the claimant’s letter dated 13 September 2013 and the respondent’s letter dated 10 October 2013 to find that the EOT’s and delay claims were delivered to the respondent on 13 September 2013, and no earlier.
  6. This finding of fact is open to me as an adjudicator, because it was contained within the documents provided in the application, and it is important because it touches on the issue of the date of delivery of those claims, which is needed for an analysis of the time bar argument between the parties.

 

VII. Adjudication application

  1. Before I could adjudicate the matter, I needed to be satisfied that the adjudication application had been served on the respondent.
  2. I have the adjudication response dated 1 November 2013 from the respondent, which refers to the submissions, and documents contained within the adjudication application. Accordingly, I am satisfied that the adjudication application was served on the respondent.

 

VIII. Jurisdictional issues

  1. The claimant submits in section 8 (paragraph 5) of its submissions that it was not required to hold a contractor’s licence.
  2. In annexure 5 of the respondent’s submissions, at paragraph 5 the respondent asserts that the claimant was required to hold a contractor’s licence pursuant to the Queensland Building Services Authority Regulations 2003 part 9.
  3. However, the respondent takes the matter no further in providing any further submissions in support of this assertion and the consequences if the claimant was required to be licensed.
  4. I am bound by section 26 (2)(a) of BCIPA which, as far as the Queensland Building Services Authority Act 1991 (the “QBSAA”) is concerned only requires me to consider part 4A of it, and licensing requirements are not in this part.
  5. In addition, s26(2)(c) & (d) of BCIPA requires me to consider the parties’ submissions in support of the payment claim and payment schedule respectively, and those submissions referred to in paragraphs 26 and 27 above, do not assist me in making a finding either way about the need for the claimant to be licensed, nor (if applicable) the consequences of not being licensed.
  6. In light of s26(2) of BCIPA (and the paucity of submissions in relation to this issue from both parties) it is not appropriate therefore to consider this issue any further.
  7. Accordingly, I make no finding about whether the claimant needed to be licensed.

 

IX. Entitlement to claim

  1. Both the claimant and respondent deal with the issue of the entitlement to extensions of time (EOT’s) and to claim costs associated with the delays the subject of the EOT’s, which is essentially the subject of variations 4 through to 28.
  2. In addition, the claimant submits that there was either directed acceleration or constructive acceleration of the project.
  3. All variations 4 through to 28 totalling $37,901.38 are in issue, with the respondent stating in the second note of its payment schedule:

All variations are to be approved in writing by Grindley Constructions (QLD) head office prior to invoicing. Variation (sic) 4 to 28 have not yet been assessed or approved, therefore have not been included in this payment schedule. Please ensure all variations are approved in writing by means of a variation advice notice issued by Grindley Construction (QLD) head office prior to invoicing.

Subcontractor is required to submit supporting documents for assessment of variations including but not limited to proof of purchase, site instructions, day dockets etc.

  1. The payment schedule’s assertion that there has been no approval in writing by the respondent’s Queensland’s head office, such that these variations have not been included in the payment schedule, I find falls within the “reasons for withholding payment” required by s18(3).
  2. There is a significant contest between the parties about whether or not the time bars identified in the contract are enforceable and the answer to that question has a bearing on the variation claims 4 through to 28.
  3. I will therefore consider the issues of acceleration and enforceability of time bars separately below.

Acceleration

  1. In paragraphs 14 through to 31. The claimant makes submissions in relation to acceleration with its attendant “acceleration – related costs”.
  2. The claimant, at paragraph 30 of section 8 of its submissions request that I look of the delay notices in the claim in section 5 and the project diary in section 9. Section 5 of the submissions deals with the contract, and I presume Appendix 3 in section 9 is the project diary being referred to.
  3. I assume the claimant meant that I should look at the delay notices and EOT’s contained within section 3 which deals with the payment claim. In neither of those documents referred to do I find submissions demonstrating that the claimant is entitled to its costs if there was acceleration either directed or constructive relative to provisions in the contract.
  4. In paragraph 31 of the submissions, the claimant says that, “that pursuant to clause 4 of the contract between the parties acceleration is not a risk accepted by the applicant.”
  5. Unfortunately, the entire clause 4 is not contained in the contract documents provided by the claimant, so I have referred to the appendix 3 of the respondent’s submissions for the full contract, and I find that clause 4.1 provides that:

“Subject to the provisions of the sub contract, the sub contractor accepts all risks associated with the carrying out of the subcontract works, including, without limitation, the risks associated with or arising out of or in relation to:

(a)  any ambiguities…

(b)  Delays and cost increases…

(c)   All increased costs howsoever incurred in the execution of the sub contract works resulting from any delay or disruption in the progress of the sub contract works;

(d)  all delays and increased costs, losses and expenses directly or indirectly or howsoever arising out of the availability and occupation of part of the works; and

(e)  any other matter in respect of which, pursuant to the sub contract, the sub contractor is required to accept the risk.”

  1. Having construed the wording of that clause, I cannot find that acceleration is not a risk accepted by the applicant because the clause is extremely widely drafted and deals with delay or disruption in the progress of the works.
  2. Having regard to the submissions of the respondent in annexure 5, I am not satisfied that acceleration was directed in any event by the letter dated 22 July 2013.
  3. The respondent at paragraph 15 submits that no acceleration had been undertaken by the claimant because the practical completion date was after the 22 July 2013 letter.
  4. Whilst it’s not clear to me how much work was still required to be done by the claimant from 22 July 2013, the onus is on the claimant to demonstrate that it could not have completed the work by 20 August 2013, which was the date for practical completion at the time of 22 July 2013 letter. I do not find that the claimant has discharged this onus.
  5. Accordingly, I am not satisfied that the claimant has demonstrated that there was acceleration.
  6. Even if I did find that acceleration was an excepted risk under the contract. I do not find that the claimant has provided (in its submissions) a mechanism under the contract for payment for such a risk, and its entitlement to payment, which is necessary for it to be paid.
  7. Accordingly, I am unable to accept the claimant’s submissions in relation to acceleration.

Time bars

  1. The bulk of the claimant’s submissions in section 8 relate to its assertion that the time bar clause 68.3 is a penalty provision, and is therefore void.
  2. Earlier in section 7 – executive summary, at paragraph 13, the claimant foreshadowed the respondent arguing that the claim is barred because the claimant failed to give written notice of claim within the time prescribed in the contract.
  3. In paragraph 14, the claimant then outlined that the case of Andrews v Australia and New Zealand Banking Corporation [2012] HCA 30 (“Andrews”) supports its contention that the time bar is a penalty provision.
  4. Surprisingly in annexure. 4 of the respondent’s submissions at paragraph 13 and 14 the respondent stated no comment. However, the respondent later in its response to the substantive submissions of the claimant contained in section 8, argued that Andrews was not applicable, and that the time bars were not a penalty.
  5. I find therefore that it is necessary for me to deal with this issue of time bars because it has been raised by the claimant in its submissions, which thereby entitles the respondent to respond, whether or not the respondent raised that as a reason in the payment schedule.
  6. In my view, the claimant bears the onus of demonstrating that it is entitled to its claim, and I am obliged to consider the contract in its entirety in deciding whether time bars apply, in this case to the claimant’s variation claims 4 through to 28.
  7. The claimant makes reference to an extract from Mr Philip Davenport’s book “Adjudication in the Construction Industry” 3rd edition (2012) regarding the case of Andrews and penalty clauses. Unfortunately my 3rd edition version of this book has no reference to Andrews, because the book was published in 2010 before Andrews was decided. It may be that there is a later publication, but I was not provided with a copy of the extract to which the claimant referred.
  8. I presume that paragraphs 41 through to 45 of the submissions in section 8 are an extract of what Mr Davenport says, presumably in another book or in another publication.
  9. In the 6th,  7th, 10th and the start of the 11th paragraphs under paragraph 42 the claimant’s submits (presumably from Mr Davenport’s words):

“Andrews has not changed the law. It merely clarifies the law on penalties. As the (High)Court acknowledges at [38], even in Roman law a penalty might be reduced if found to be excessive. Prior to Andrews, there was a widespread belief that contract provision could only be a penalty if it punished a party for breaching the contract.

For example, in Interstar Wholesale Finance v Integral Home Loans. [2008] NSWCA 310, the Court of Appeal at [106] held that the doctrine of penalties is limited to the circumstances, the breach of contract. In Andrews at (50] .the High Court said the Court of Appeal misunderstood the scope of the penalty doctrine….

The principal contended that the sub contractor’s entitlement to payment was extinguished when the sub contractor failed to give a notice. Both instances of the forfeiture by one party of an entitlement to money where the amount forfeited bore no relationship to the damages suffered by the other party. In Andrews, the High Court found that Interstar was wrongly decided. For the same reason, John Goss was wrongly decided. Granted, the claimant. In John Goss failed to raise the arguments of the time bar was a penalty for. However, the time bar clearly penalised John Goss, Leighton’s subcontractor. Now any claimant faced with such a time bar clause should argue that the time bar is a penalty.

The reasons given by McDougall J for upholding the validity of the time bar are not good law.”

  1. Mr Davenport has significant experience in adjudication and I must have regard to what he says. However, I am not persuaded that Andrews is authority for the proposition that a time bar clause is a penalty, either generally or specifically in relation to clause 68.3 of this contract.
  2. In my view, Andrews’ criticism of Interstar was that the Court of Appeal did not allow a penalty doctrine to extend to a situation where a stipulation was not a contractual promise.
  3. In the case of a time bar, one is dealing with a contractual promise to provide notice of a claim or delay within a specific time frame, so the criticism of Interstar does not apply.
  4. As to the reference to Roman law, in paragraph[38] reducing a penalty if found to be excessive, I cannot understand how this applies to the common law.
  5. It appears to me that the critical question when considering the penalty doctrine is whether it is a rule of law or of equity because an adjudicator is limited to applying the law and not the rules of equity.
  6. In paragraph [63] of Andrews, the High Court stated that, “It should be emphasised that, in any event, under the judicature legislation it is equity not the law that is to prevail. In Interstar the Court of Appeal thus had no basis for the proposition that the penalty doctrine is a rule of law, not of equity.”
  7. Whilst it may be arguable that the penalty doctrine as identified in the case of Dunlop Pneumatic Tyre Co Ltd v New Garage And Motor Co Ltd [1915] AC 79 is now a settled rule of law, it was dealing with the payment of a sum of money to Dunlop in the event of a breach of resale price agreement by its supplier. The issue there was whether the sum of money payable was a penalty.
  8. In the case of a time bar where one is not dealing with genuine pre-estimates of damages, but a loss of entitlement to claim, in my view, if one were to extend the penalty doctrine to time bars, one is clearly in the realms of equity.
  9. Unfortunately, the claimant’s submissions were not page numbered, but midway on page 11 of section 8 of the submissions, the claimant states that:

For the penalty doctrine to apply to a time bar, it is not necessary that there is an express contractual requirement for the claimant to give notice within the specified time. It is sufficient that the absence of notice within the prescribed time will impose upon the claimant a detriment that is a penalty. See Andrews at [67]. The detriment does not have to be the payment by the claimant to the respondent of a sum of money. See Andrews at [12]

  1. I am unable to find in Andrews at paragraph 67 authority for what the claimant has stated. As I have said, if one is to extend the penalty doctrine to time bars where sums of money are essentially “being lost” by a failure of a subcontractor to adhere to a time bar, the focus appears to be on the detriment suffered by the subcontractor by its own failure and not the potential to the unjustified “benefit” thereby granted to the contractor. As I’ve said, this proposition ascends into the law of equity which is not within an adjudicator’s jurisdiction.
  2. The reference to the case of Gilbert Ash (Northern) v Modern Engineering [1973) 1BLR 75 on the same page deals with a different proposition which is a sub contractor’s failure to comply with conditions of the subcontract for which a contractor then has the right to withhold payment of moneys. This case is not analogous with a time bar provision where one is dealing with a notice provision which puts a contractor on alert about a possible claim, thereby giving it the opportunity to reduce its potential liability that may arise.
  3. I’ve considered the claimant’s further submissions about the distinction between the primary stipulation (that being the requirement to give notice) and the collateral stipulation that if it fails to do so, it is not entitled to payment. Again until the High Court makes a determination about time bars, to my mind this is in the realms of equity. The cause of the sub contractor’s lack of entitlement to payment is its failure to abide by a time bar to which it agreed in the contract, and in my view the analysis put forward by the claimant about the additional detriment suffered by it to the benefit of the principal is not something that has been settled by a court in the claimant’s favour.
  4. In paragraph 51 and 52 of the claimant’s submissions. It states that if there is a difficulty to assess damages in money terms, that does not mean that damages are not assessable in money terms and that such prejudice or damage would be a matter of evidence and that the respondent had failed to argue this point, and could not now do so.
  5. I do not understand this submission because this is descending into an assessment of damages, to which an adjudicator cannot have regard, unless the contract provides for it. The potential prejudice or damage to a respondent for a failure by a claimant to adhere to a time bar is not something that can be determined until the event occurs, but to merely label the time bar as a penalty because of this fact, has not yet attracted the authority of the court from the submissions provided to me.
  6. In paragraph 50 of the claimant’s submissions, in response to the respondent saying it’s in its correspondence that the delay notices were received some 40 days late, the claimant said that it took immediate steps after taking legal advice. Whether it did so upon legal advice or otherwise, the fact is that the claims were lodged late under the terms of the contract, and in my view the claimant will need to seek assistance from the laws of equity to overcome this issue.
  7. Therefore I’m unable to find that the clauses in the sub contract agreement identified in paragraph 57 of the claimant’s submissions are void. The the
  8. I am persuaded by the respondent’s submissions in paragraph 51 in annexure 5 that when one is dealing with the concept of penalties one needs to look at whether the particular stipulation is a penalty as at the time of making a contract, not at the time of breach.
  9. When one is considering time bars, and the failure to abide by them, it is to the detriment of the claimant if it does not abide by the time bar, and it is uncertain as to what detriment against or possible benefit in favour of the respondent. This to my mind is where equity intervenes, and an adjudicator has no equitable jurisdiction in decision making.
  10. Accordingly, until the High Court determines that a time bar is a penalty I am constrained by common law cases and in this regard. The 2 cases cited by the respondent of Australian development Corporation Pty Ltd and White Constructions (ACT) Pty Ltd and Ors (1996) 12 BCL 317, and Wormald Engineering Pty Ltd and Resources Conservations Co-International (1992) 8 BCL 158, which identified the difficulty in quantifying damage, constrains me to find that the time bar clause 68.3 does not attract the penalty doctrine.
  11. Furthermore, at paragraph 49 of the respondent’s submissions, it refers to the case of Opat Decorating Service (Aust) Pty Ltd v Hansen Yunken (SA Pty Ltd (1994) 11 BCL 360, which states that notice requirement in certain extension of time clauses were mandatory conditions precedent, and I am constrained by this decision in finding that the claimant had failed to satisfy the conditions precedent.
  12. The consequence of this finding is that the variations 4 through to 28 do not attract entitlement in this adjudication because I find that they are time-barred. I have found that these claims were first notified on 13 September 2013, and the underlying delays were last experienced on 3 September 2013 (variation 28) according to the extension of time register in the payment claim.
  13. Therefore, in relation to the most recent delay in variation 28 and the provisions of clause 68.4, the delay should have been advised by 11 September 2013, and the it is only on 13 September 2013 that all EOT claims were provided.
  14. Accordingly, I find that the claimant was not entitled to its claims for variations amounting to $37,901.38.

Other claims

  1. However, the claimant is entitled to its claims under the contract and the variations that have already been considered by the respondent and I now need to turn to this aspect of the claim in order to determine the amount of the progress payment.
  2. From paragraphs 62 through to 78 of the claimant’s submissions in section 8, the claimant criticises the respondent’s compilation of the payment schedule, and that the “respondent is guilty of one of 2 things.”
  3. I make no finding about either of these allegations because that is not my function, however, it was very difficult to follow the payment schedule, because it identified amounts that were payable, that were not the subject of this payment claim. Furthermore it made assertions about its assessment of the percentage approved for particular claims and references to major defect rectification, without quantifying these amounts.
  4. It did not explain these amounts payable on account in any meaningful way in the payment schedule.
  5. In paragraph 62 through to 78 of the
    respondents submissions under annexure 5, the respondent attempted to explain the basis of the amounts identified in its schedule, and that payments were only on account.
  6. It then tried to explain, for example, in paragraph 71 that the amount for payment identified for the block C driveway was only $13,807.71, rather than the $15,341.90 due to their major defect rectification still being required, such that the balance of $1534.19 represented a part payment of variation 1 for civil works to be paid on account.
  7. This calculation was not provided in the payment schedule, and it is not obvious from the payment schedule that an amount of $1534.90 was a part payment to variation 1 for the civil works, and in my view, I am constrained by the figures identified in the payment schedule.
  8. Accordingly, what I have done is used the respondent’s payment schedule where it has identified the amount for payment, and have valued the work under the contract, including the 3 approved (at least in part) variations in arriving at the adjudicated amount.
  9. Whilst the respondent has asserted in the payment schedule that there are major defects in the works, it provides no quantification in the payment schedule of what the value of those defects are, so I am unable to value any alleged defects under s14(2)(b)(iv) of BCIPA.
  10. I do note that in the payment schedule, the respondent provided an alternative assessment of variation number 1, which related to the earthworks to the bio-retention basin in which it deducted some supervisor costs and some labour costs from the claim, resulting in a value of $50,876.
  11.  I note that the claimant did not take issue with this valuation in the application when it could have done so if it disagreed with this valuation, and I am therefore satisfied that variation 1 should be valued at $50,876, and not $56,711.50 as claimed by the claimant.
  12. Furthermore, one of the reasons why it is appropriate to use the respondent’s payment schedule mechanism for the calculation is that it deducted the sum of $11,513 retention, and again the claimant did not take issue with this amount in the application when it could have done so.
  13. Accordingly, I am satisfied that this amount of retention must be deducted from the amount payable as the contract provides for retention.

X. The amount of the progress payment

  1. Adjudication requires me to value the work done under a construction contract either by means of specific provisions under the contract or by reference to contract price, rates and variations under section 13 and 14 of BCIPA.
  2. The payment schedule identified that the amount for payment for the contract work was $195,656.29.
  3. The payment schedule also identified variations 1, 2 and 3, and variations, 2 and 3 were approved to 100%, which amounted to $4630.08 and $470 respectively.
  4. This leaves the valuation of variation number 1, and I note the respondent has approved this variation as per its assessment of $50,876.
  5. I’m unable to value any defects as alleged in the payment schedule because no value has been provided, nor am I able to discern from the payment schedule how the respondent allocated amounts payable on account.
  6. I also have no understanding as to why a number of the claims had only been approved to 90%, when the “amount for payment” column provided the full amount under the contract. Accordingly, I make no deductions from the “amount for payment” column. My calculations are as follows:

Description

Contract Work

Variations 1, 2 and 3

Total

Less retention

Total value of work

Less previously certified

 

Plus GST

Adjudicated amount

Amount for payment

$195,656.29

$55,976.08

$251,632.37

$11,513.00

$240,119.37

$162,748.02

$77,371.35

$7,737.14

$85,108.49

 

107.  Accordingly, I value the adjudication amount as $85,108.49

XI. Due date for payment

  1. s15 of BCIPA deals with the due date for payment, and I have to first consider whether clause 22.7 of the contract and its attendant Item 14D of Appendix 1 is contrary to the provisions of s67U or W of the QBSAA.
  2. Item 14D states payment is to be made 30 days after the end of the month in which the progress claim is submitted.
  3. S67U of the QBSAA provides:

“67U Void payment provision in construction management trade contract or subcontract

A provision in a construction management trade contract or subcontract is void to the extent it provides for payment of a progress payment by a contracting party to a contracted party later than 25 business days after submission of a payment claim.”

  1. I find that this is a subcontract within the meaning of the QBSAA such that s67U applies, and given the contract period exceeds the 25 business days after submission rule, I find that this contract provision is void.
  2. Accordingly, by reference to section 15(1)(b) I find that the due date for payment is 10 business days after the payment claim.
  3. The payment claim was served on 25 September 2013 and the due date for payment was 10 business days after service of the claim.
  4. I find that the due date for payment was 10 October 2013.

XII. Rate of interest

  1. I find that the contract does not provide an interest rate.
  2. I find that the relevant provision is 15(2)(a) of BCIPA which refers to section 59 (3) of the Civil Proceedings Act 2011 and this section provides:

59 Interest after money order

(1) This section does not apply in relation to a proceeding for a cause of action arising before 21 December 1972.

(2) Interest is payable from the date of a money order on the money order debt unless the court otherwise orders.

(3) The interest is payable at the rate prescribed under a practice direction made under the Supreme Court of Queensland Act 1991 unless the court otherwise orders.

  1. I am satisfied that the interest is at the rate prescribed by the practice direction of the Supreme Court, and practice direction number 22 of 2012 provides the interest rate to be 10%.
  2. I find the rate of interest is 10% interest payable on the adjudication amount.

XIII. Authorised Nominating Authority and Adjudicator’s fees

  1. The default provision contained in s34(3)(b) of BCIPA makes the parties liability for the ANA’s fees is in equal proportions, unless I decide otherwise. The same approach applies to the adjudicator’s fees in s35(3) of BCIPA, with equal contributions, unless I decide otherwise.
  2. The claimant has obtained less than what it claimed and a significant amount of time was spent on dealing with the time bar is a penalty submissions, which were unsuccessful, thereby disentitling the claimant to its variations 4 through to 28.
  3. I therefore decide that the default provisions should not be disturbed and that the claimant and respondent are equally liable to pay the ANA’s fees under s34(3)(b) and my fees under 35(3) of the Act.

Chris Lenz

Adjudicator

15 November 2013