South East Qld Excavations Pty Ltd v Mount Cotton Constructions Pty Ltd

South East Qld Excavations Pty Ltd v Mount Cotton Constructions Pty Ltd

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Adjudicator Chris Lenz
Registration Number J622914
Claimant South East Qld Excavations Pty Ltd
ACN/ABN ABN 76 117 180 355
Address 2/33–35 Ereton Drive, Arundel QLD 4214
Respondent Mount Cotton Constructions Pty Ltd
ACN/ABN ABN 62 002 243 263
Address 57 Jardine Drive, Redland Bay QLD4165
Project Ormeau Service Station Development
Project Type Civil construction for Service Station
Project Location ORMEAU, QLD
Payment Claim date 27 April 2015
Claimed amount $90,155.92 including GST
Nature of claim Standard
Payment Schedule date 11 May 2015
Scheduled amount $15,861.66 including GST
S20A Notice date N/A
Adjudication Application date 22 May 2015
Adjudicator’s Acceptance date 28 May 2015
Adjudication Response date 9 June 2015
Jurisdiction Yes
Adjudicated Amount $88,674.95 (inc GST)
Due Date for Payment 1 June 2015
Rate of Interest 12.15%
Claimant Fee Proportion (%) 0% 
Respondent Fee Proportion (%) 100%
Decision Date 29 June 2015

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. Threshold issues

a. Late service

Adjudication response not properly made

Denial of natural justice

b. Retention

V. Is it a Construction Contract within BCIPA?

VI. Right to a progress payment

VII. Payment Claim

VIII. Payment Schedule

IX. The merits of the claimant’s claim and the respondent’s contra charges

c. The claimant’s evidence

d. The respondent’s evidence

e. The complaints about the payment schedule

f. Disputed amounts claimed for the contract works

g. Disputed variation amounts

h. The contra charges

X. Adjudication amount

XI. Due date for payment

XII. Rate of interest

XIII. 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 second page of this decision.

B. REASONS

I. Background

  1. South-East Qld Excavations Pty Ltd (referred to in this adjudication as the “claimant”) was engaged by Mount Cotton Constructions Pty Ltd (referred to in this adjudication as the “respondent”), to carry out civil earth works and internal and external works for the Ormeau Service Station development at 7 Eggersdorf Road, Ormeau in Queensland (the “work”).
  2. The payment claim dated 27 April 2015 for $90,155.92 including GST, comprised contract works together with variations less what had been paid to date.
  3. The payment schedule dated 8 May 2015 assessed the payment claim at $15,861.66 including GST.
  4. The adjudication application dated 22 May 2015 was served on the respondent on 25 May 2015, and the adjudication response was served on me on 9 June 2015 and on the claimant on 15 June 2015.
  5. On 15 June 2015 the claimant’s solicitors submitted that I was unable to have regard to the response because it had not been properly made, because it had not been served on the claimant within 2 business days, as required by Building and Construction Industry Payments Act 2004 (“BCIPA”). They also argued that there would be a breach of natural justice if I had regard to the response, because at the time it made the submissions, the claimant argued that it had not received the response.
  6. I made a request for submissions from the respondent and submissions in response from the claimant and during this period, it was discovered that the response has been served on the claimant on 15 June 2015.
  7. Given that the service of the response became a significant issue, I requested and was granted an extension of time by both parties to provide my decision from 24 June 2015 to 29 June 2015.
  8. In the decision below, under the heading of Threshold issues, I discuss these submissions in some detail, including my decision to reject unsolicited submissions from the claimant regarding specific examples of alleged new reasons for non-payment.

II. Application to the QBCC and appointment of Adjudicator

  1. The claimant applied to the Queensland Building and Construction Commission (“QBCC”) on 22 May 2015 for adjudication, and the QBCC referred the matter to me.
  2. I am a registered adjudicator under BCIPA with registration number J622914.
  3. I accepted the adjudication application on 28 May 2015 and thereby became the appointed Adjudicator.

III. Material provided in the adjudication

  1. I received the application electronically, which was printed into 2 lever arch folders and it included the payment claim and payment schedule. I received a response on 9 June 2015 in a small lever arch folder from the respondent.
  2. I also received submissions from the claimant (some unsolicited) and the respondent which I had requested.
  3. The claim was for a sum under $750,000, which, according to schedule 2 of BCIPA means that it is a standard payment claim.

IV. Threshold issues

  1. Two issues are evident in this application, namely:

(i) A claim for retention money by the claimant, that had not formed part of the payment claim (“retention moneys”); and

(ii) It emerged from submissions made to me by the claimant’s solicitors on 15 June 2015 that the respondent had not served the adjudication response on the claimant within 2 business days as required by the Act (“late service”).

  1. In my view it is necessary for these two issues to be considered as threshold issues because:

(i) the retention money claim is arguably outside jurisdiction, as it was not made in the payment claim;

(ii) the claimant’s solicitors submitted that I could not have regard to the adjudication response if it was late because the adjudication submissions were not properly made.

  1. I will deal firstly with the late service, and then the retention moneys because late service has a bearing on the extent of material to which I may have regard in the adjudication.
  2. This is important because I need to consider each party’s submissions in order to establish jurisdiction and the extent of material to which I may have regard, so it is appropriate consider these before descending into the merits of the dispute.

a. Late service

  1. Although there were some earlier “skirmishes” between the parties, after my appointment regarding service of the payment claim as well as the timing of the response, the response was nonetheless delivered to me on 9 June 2015. However, it was not served on the claimant within two business days of delivery to me.
  2. This fact emerged from submission from the claimant’s solicitors on 15 June 2015. These submissions, which were four pages in length, also asserted that the adjudication response was not properly made (as it not been served within the two business days as required by section 24A(8) of BCIPA), and that there would be a denial of natural justice if I made a determination on the material provided only to me.
  3. As a consequence, I wrote to the respondent on 16 in June 2015 requesting the following submissions:

(i) whether, despite what had been asserted by the claimant, it had served the adjudication response on the claimant, or its solicitors;

(ii) if it had not done so, whether BCIPA prohibited the respondent serving the adjudication response forthwith on the claimant;

(iii) if the respondent was prohibited from serving the adjudication response, whether I was precluded from considering the response in the adjudication decision.

  1. My request for submissions was made pursuant to s25(3) of BCIPA and a time was set for the respondent’s submissions of 4 PM on 17 June 2015, as well as a request for written submissions in response from the claimant by 4 PM on 18 June 2015.
  2. Before receiving the respondent’s submissions at approximately 4 PM on 17 June 2015, the claimant’s solicitors advised me in a two-page letter that the claimant had been served with the response on 15 June 2015, but maintained that the adjudication response was not properly made, and also identified actual examples in the response of new reasons for non-payment, which it had earlier foreshadowed in its adjudication application.
  3. I had not requested submissions from the claimant in relation to the examples of alleged new reasons for non-payment. The claimant had already put me on alert about the prohibition of new reasons for non-payment in its application paragraphs 60-74. I am duty-bound to scrutinise the response to ensure that no new reasons emerge as they are prohibited by s24(4) of BCIPA for standard payment claims. As to the 17 June 2015 submissions about new reasons for non-payment, I have disregarded those unsolicited submissions.
  4. I then received the respondent’s submissions in accordance with my request, and essentially only my request (iii) was answered, because it had emerged that the response had been served on 15 June 2015, and therefore it was not necessary to answer the first two of my requests.
  5. The respondent’s answer was divided into two parts, namely (1) whether the adjudication response was properly made, and (2) an alleged denial of natural justice.
  6. On 18 June 2015, the claimant’s solicitors then provided their submissions in reply, and they addressed (1) whether the adjudication response was properly made, and (2) the reasons not properly made in which the claimant again referred to paragraph 60-74 of its adjudication application and its letter of 17 June 2015.
  7. The claimant’s solicitors did not take issue with the natural justice submissions of the respondent, which had been in reply to the claimant solicitors’ letter dated 15 June 2015.
  8. I therefore now make a decision about the late service in the context of whether the adjudication response has been properly made and whether there’s been a denial of natural justice.

Adjudication response not properly made

  1. Essentially, the claimant’s submission is that the respondent’s failure to serve the adjudication response on the claimant within 2 business days, which is contrary to s24A(8) of BCIPA, means that an adjudication response is not properly made under s26(2)(2)(d) of BCIPA.
  2. s24A(8) of BCIPA provides:

(8) A copy of an adjudication response must be served on the claimant no more than 2 business days after it is given to the adjudicator.

  1. In particular, in its 15 June 2015 letter, the claimant referred to the authority of Hutchinson Pty Ltd v Cada Formwork Pty Ltd & Ors. [2014] QSC 63, where at paragraph [59] Mr Justice Lyons said that “this provision limits the matters which an adjudicator might consider.”
  2. The claimant does not provide the paragraph number in Cada, where it referred to Lyons J’s statement that, “It seems to me that, for the purposes of s 26(2) of the BCIP Act, a properly made submission is one made in a manner provided for in that Act” (which I find was paragraph [61]).
  3. However, it is important to put this case in context, because it dealt with a claimant providing additional evidentiary documentation to the authorised nominating authority to support its claim (the “additional material”) after it had made its adjudication application. It appeared that the adjudicator had regard to this additional material, and the respondent had not been given the opportunity to make submissions in relation to this material.
  4. I find that this adjudication is distinguishable on its facts, because in this adjudication, the response was provided to me within time in accordance with s 24A (2) of BCIPA, and the respondent was entitled to provide a response under BCIPA. Nevertheless, Lyons J statements about what is considered properly made are considered below.
  5. I was prepared to consider these Cada submissions of the claimant because, although they were unsolicited on 15 June 2015, they were again referred to in the claimant’s reply submissions on the 18 June 2015, and they dealt with the issue of the late provision of the response, which the respondent had been asked to address in its submissions.
  6. The respondent’s submissions [paragraph 4.2(1) dated 17 June 2015] identified that s24 of BCIPA contained the fundamental requirements which determine whether the response has been properly made.
  7. The respondent essentially argued that one needed to focus on the failure to strictly comply with the provisions of section 24A(8) only. It argued that s25 (2) of BCIPA expressly dealt with a fatal time consequence in a respondent not complying with the time requirement of providing the response to the adjudicator, but submitted that BCIPA did not have a similar provision in relation to s24A(8).
  8. It cited Lardil Peoples v Queensland [2001] FCA 414 as authority that a fatal time component for one provision, but not for other procedural provisions, meant that procedural requirements were not obligatory.
  9. The claimant argued that Lardil is distinguishable on its facts, and I found it rather a difficult authority to follow, particularly not having been given any specific paragraph and extracts from the case, so I do not find it particularly persuasive in this context to support the respondent’s argument.
  10. The respondent also argued, that “must” in s24A(8) is not mandatory but directory only, when one had regard to the purpose of the legislation, and particularly “what is the effect of non-compliance” [paragraph 14 of its submissions].
  11. It invited me to apply the principles of statutory interpretation in accordance with Project Blue Sky Inc v Australian Broadcasting Authority [1998] 194 CLR 355 [Blue Sky] by investigating “A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid.”
  12. The respondent further referred to the text: Statutory Interpretation in Australia by Pierce and Geddes, at page 425 [paragraph 12 of its submissions] which when considering the failure to comply with a legislative provision, and whether the failure has a fatal effect on a protagonist, essentially required me to, “impute an intention to Parliament as to those consequences, because Parliament is most unlikely to have contemplated the consequences of non-compliance”.
  13. The respondent [paragraph 13 of the submissions] also referred me to the case of Accident Compensation Commission v Murphy – [1988] VR 444 [Murphy] in which the Full Court, in dealing with the construction of a statute said this:

“There is no question in the present case but that the provision means that the hearing of an application must be commenced within 60 days of its lodgment. That is to say, the question is not one of construing Parliament’s intent. That intent is clear. It is that there must be compliance with the prescribed time limit. But what is not clear, and must be decided, is what Parliament intended should be the result if there were non-compliance with the statutory requirement. Upon this question Parliament has provided no express opinion and the Interpretation of Legislation Act affords no assistance. The provision is a procedural requirement. The question to be determined is thus whether the requirement is mandatory so that disobedience will render void what has been done or what is threatened to be done, or is directory only in which case non-compliance will be treated as an irregularity that does not affect the validity of what has been done or might yet be done.

The authorities make it plain that this question is answered by determining the whole scope and purpose of the enactment. A construction given one enactment is unlikely to be of assistance in the interpretation of another. It is “the importance of the provision that has been disregarded, and the relation of that provision to the general object to be secured by the Act” that must be assessed: Howard v Bodington (1877) 2 PD 203, at p. 211. It is also of assistance to ascertain whether failure to adhere strictly to the requirement has caused prejudice to those for whose benefit the requirement was introduced or whether the public interest would suffer a disservice if it were held to be mandatory.”

  1. The respondent concludes (at paragraph 15 of its submissions) that the claimant’s arguments had no legal basis and that there was no authority to support such a proposition that the response was not properly made.
  2. This means that I have to consider the issue as a matter of legal principle and using the principles of statutory interpretation.
  3. In reply, the claimant [at paragraph 16 of its 18 June submissions] accepted that recourse must be had to the statute in question, and also referred to Blue Sky, paragraph [93], that I must have regard to the language of the relevant provision and the scope and the object of the whole statute.
  4. The claimant focused on the legislative intention of the introduction of a new time requirement under s24A(8) [paragraph 17 of its submissions]. It then expanded on its argument (supported by authority, but not that of the High Court) on 2 bases:

(i) as to the scope and context of the Act, it was a fast track system and that it was simply critical that the rigid approach be taken to compliance with the terms of the Act;

(ii) Parliament under the Amendment Act had sought fit to impose an additional time requirement, and effect must be given to this enactment because otherwise it was no different from the former s24(5) provision. It added that it could not be consistent with a deliberate introduction of 2 business day requirement, that Parliament did not intend strict compliance with it.

  1. These are compelling arguments, however, in my opinion, I must be guided by Blue Sky because it is a decision of our High Court and I must consider a whole range of factors and not merely those attractive arguments identified by the claimant. This is borne out by the claimant’s reference at paragraph [93] of Blue Sky that I must have regard to the language of the relevant provision and the scope and the object of the whole statute.
  2. Blue Sky requires me to ask whether the purpose of the 2 business days provision in s24A(8), meant that the respondent’s failure to do so rendered its adjudication response not properly made.
  3. Parliament had not sought fit to specify the consequences of a breach of this provision, which it could easily have done. Perhaps Pearce and Geddes are correct in their statement (at page 425) that Parliament is most unlikely to have contemplated the consequences of non-compliance.
  4. Nonetheless, as identified in Murphy, Parliament has expressed no opinion, and it is therefore up to me to decide, having regard to the whole of BCIPA, whether the service of the response on the claimant outside the 2 business days’ requirement renders its adjudication response not properly made.
  5. Blue Sky involved a complaint by a New Zealand film and television organisation that a standard imposed by the Australian Broadcasting Authority was inconsistent with a trade protocol between Australia and New Zealand. s122 of the Broadcasting Services Act 1992, allowed the ABA to determine standards and the standard imposed discriminated against New Zealand content, which was in breach of the trade protocol.
  6. The High Court agreed that the Australian content standard was authorised by the literal meaning of section 122, however, the legal meaning of section 122, the Court found was different and the content standard ought to have ensured that it was not inconsistent with the protocol.
  7. At paragraph [93] of the [1998] HCA 28 report of Blue Sky, McHugh, Gummow, Kirby and Hayne JJ agreed with a New South Wales Court of Appeal decision which “was critical of the continued use of the elusive distinction between directory and mandatory requirements.” The High Court held that such classifications have outlived their usefulness because they deflect attention from the real issue which is whether an act done in breach of the legislative provision is invalid.
  8. As identified by the respondent in its submissions, it extracted the key test identified by the High Court (paragraph[94]) that, “A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid.”
  9. s7 of BCIPA which contain the Objects of the Act makes provision that a claimant may claim and receive a progress payment, and s8, identifies How Objects is to be achieved and makes provision for a claimant to make a payment claim as well, as a respondent being able to put in a payment schedule, as well as for a disputed claim to be adjudicated.
  10. I find therefore that BCIPA’s objects and how the objects are to be carried out, whilst facilitating the claimant making a payment claim, also recognises that a respondent’s payment schedule, and that a disputed claim can be adjudicated.
  11. Whilst I understand the claimant’s submissions about the case law confirming that it is a fast track process (citing Taylor Projects Group Pty Ltd v Brick Department Pty Ltd & Ors. [2005] NSWSC 439); in construing this contentious new provision in s24A(8), I find that BCIPA does not expressly cover the consequences of failure to abide by the 2 business days requirement.
  12. As regards timing, s24A(2) requires the respondent to provide a response to the adjudicator within the later of two time limits, and I have found that it provided the response to me within time.
  13. In relation to an adjudication response, there is a prohibition on me considering one, if it is not provided within time because s25(2) of BCIPA provides:

“An adjudicator must not consider an adjudication response or a claimant’s reply unless it was given to the adjudicator within the time that the respondent or claimant may give it to the adjudicator.”

  1. If the respondent had not provided me with the response within time, I would have no jurisdiction to consider it. However, it did so, which to my mind meant that the submissions contained within the adjudication response are to be considered by me. They were properly made; because to use Lyons J’s statement in Cada, “… a properly made submission is one made in a manner provided for in that Act.”
  2. Nevertheless, I find that the response was only given to the claimant 4 business days after I had received my copy, which is clearly in breach of s24A(8).
  3. The claimant argues (citing English authority) that this new provision requiring service on the claimant within 2 business days after service on me, indicates Parliament’s deliberate intent that strict compliance was required, and that legislative history can form an indispensable guide to the legislator’s intention.
  4. In my view, I have to look at the words of BCIPA, to discern whether an act done in breach of the legislative provision is invalid, and I recognise the need for speed identified in However, Taylor must be considered in context. At paragraph 49 Einstein J held:

“49 The point was made in Emag that the whole of the rationale underpinning the procedures laid down by the Act is directed at providing a quick and efficient set of procedures permitting recovery of progress payments and the quick resolution of disputes in that regard; that the time limits under the Act are strict and that the consequences of not complying with stipulated time limits may be significant. In my view it is simply critical for a rigid approach to be taken to compliance with the terms of the Act, particularly for the reason that the legislation provides for a fast dual-track interim determination, reserving the parties’ final legal entitlements for subsequent determination. The adjudicator is not shown to have erred in failing to consider the payment schedule provided by Taylor on 20 January 2005.”

  1. Taylor’s need for speed recognises category (1): quick recovery of progress payments and category (2): quick resolution of disputes, with a particular emphasis on the latter. However, I do not find that it is authority for importing draconian consequences of failure to comply with a 2 business day timing requirement of service of an adjudication response on a claimant as rendering an adjudication response not properly made. A response served late on a claimant does not fall within category 1 because the matter has already gone to dispute. It may possibly be a category 2 if it prevents a quick resolution of the dispute, but in my view it is a “bridge too far” to render a delayed service of a response on a claimant as a response not properly made.
  2. BCIPA essentially provides that the response is the “last shot” in the dispute as the claimant has no statutory right of reply, and it is only if the adjudicator seeks submissions, that a claimant has a statutory right of reply. Accordingly, a late service of a response does not prevent the claimant from exercising a statutory right of reply, because it has none.
  3. As I have already found, I am obliged to consider an adjudication response that is provided to me within time, and I found that the response is properly made, which means that s26(2)(d) requires me to consider the response submissions.
  4. In construing BCIPA to decide whether a breach of s24A(8) means that the response is invalid, I have found that there are 3 provisions regarding responses in this context, namely:

(i) a specific provision in BCIPA dealing with timing of the delivery of responses to the adjudicator [s24A(2)]. I have already found that the response was served on me within that time limit; and

(ii) a prohibition on me considering a response that is served on me outside BCIPA’s time limits [s25(2)]. Given that the time limit was met, I am not prevented from considering the response; and

(iii) I am required to consider the response, as they contain submissions properly made in support of the payment schedule [s26(2)(d)], as they have been made within the Act [Lyons J in Cada.

  1. There is no binding Court authority in Queensland to constrain my interpretation of BCIPA, and in light of these 3 provisions identified above, and using the guidance of Blue Sky, I cannot accept that late service has the catastrophic consequence on a respondent of rendering its response not properly made, because the BCIPA provisions on the response have otherwise been met.
  2. In Blue Sky at paragraph [70] the High Court held that, “A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions.”
  3. In my view, the interpretation that I’ve given to the statute maintains this harmony.
  4. Accordingly, I find that a response served on me in time is properly made, such that a failure to serve the response on the claimant within 2 business days does not convert it into an invalid response rendering it not properly made.

Denial of natural justice

  1. I recognise that in relation to jurisdictional matters, the claimant may at any time make submissions to an adjudicator about jurisdictional considerations, and if a response is not provided to the claimant at all, then the claimant may be prevented from dealing with jurisdictional points.
  2. To that extent, I recognise that s24A(8) of BCIPA requires service of the response, such that if the response is never given to the claimant, then an issue of natural justice arises because an adjudicator would then be making decisions on response submissions, about which a claimant would not be aware.
  3. However, that is not the case in this adjudication because the response was served and the claimant has been vigilant about the failure of the respondent to serve it with the response within the time required, and has made submissions about this deficiency.
  4. The claimant has no statutory right to give a reply to the response as BCIPA makes no provision for one.
  5. The claimant provided no reply to the respondent’s paragraph 4.3 submissions of 17 June 2015 that the claimant had not pointed to any detriment that it has suffered. I find that no detriment has been demonstrated.
  6. In addition the respondent said that the claimant has had ample opportunity to raise jurisdictional issues, and in fact had done so, and the respondent chose not to reply to that submission.
  7. I have already found that the response was served, albeit late, and that the claimant has made 3 sets of submissions in relation to the service of the response from 15 June 2015 to 18 June 2015.
  8. The parties granted me an extension of time until 29 June 2015 because of the service of response issue, which has meant the adjudication has been extended by 3 business days. This is one business day less than the delay caused by the respondent not serving the response in time.
  9. Given that the claimant had demonstrated no detriment by the late service of the response, and has provided 3 sets of submissions in relation to this issue, I’m not satisfied that it has demonstrated any breach of natural justice.
  10. Accordingly, I am satisfied that there has been no denial of natural justice so I will consider the response as part of the adjudication material.

b. Retention

  1. This is an issue that has been raised by the claimant in the application, and I have considered that it is a threshold issue, because it was not a claim made in the payment claim.
  2. In the payment claim found in Tab B, the claimant identified retention as follows

“Retention (MAX retention HELD 5% of contract sum)         $-26,196.05”

  1. However, at paragraph A3 of the applicant’s submissions it claimed an amount of retention “upon termination of the contract.”
  2. At paragraph 86, the claimant included the amount of retention of $27,542.39 to be decided by me.
  3. At paragraph D 16, the claimant said the contract was terminated on 15 May 2015, and this was reinforced under paragraph M 277 of the claimant’s submissions.
  4. I find that the contract was terminated on 15 May 2015. However, I make no finding about either party being entitled as a matter of law, to terminate the contract for breach, because it is not relevant to this decision.
  5. The claimant then provided submissions from paragraphs 276 through to 289 in support of its claim for retention based on the facts that the contract had been terminated.
  6. At paragraph 287, the claimant said that adjudicators have the power to determine claims for retention in adjudication, citing Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 and [65]&[66] McDougall J as authority.
  7. I accept that paragraph [65] of McDougall J’s decision, says that “Clearly, the legislature intended that adjudicators should have power to determine such claims.” However, in the previous sentence, His Honour made reference to… “a final payment claim that included a claim for the retention sum.
  8. At paragraph [66], His Honour explained that an adjudicator was not bound by certification provisions under the contract.
  9. At paragraph [64], His Honour said, “In the present case, the claim was in effect Club’s final payment claim. There is no doubt that the adjudicator was empowered to deal with it (both because of the definition of “progress payment” in s4 and because, by the operation of s13(3), it was open to Club to include in its payment claim a claim for retention fund).”
  10. Accordingly, I find that Trysams the only authority for the proposition that adjudicator may regard to claims for retention, if the claim was in the payment claim.
  11. The payment schedule’s references to retention are as follows:

(i) on page 1 “retention claimable under sub contract agreement” $27,542.39

(ii) less retention money – refer above $27,542.39;

(iii) on page 2 under item 1 “preliminaries” – “No retention taken from claim. Contract not signed nor returned.”

  1. In the response under “erroneous allegations” the respondent says that it believed the claim for entitlement for attention was incorrect and referred to Annexure’s C, D, E, F, and U for its reply.
  2. Annexure C contained a letter from Norton Rose Fulbright to the claimant dated 8 May 2015, which dealt with breach of contract, but there is no reference to retention monies.
  3. Annexure D appears to be a spreadsheet relating to times for payment, and again, there is no reference to retention monies.
  4. Annexure E is a photograph depicting roadworks, and does not assist in relation to retention monies.
  5. Annexure F is the same letter from Norton Rose Fulbright to the claimant dated 8 May 2015, to which was attached payment schedule no.9, and does not further assist regarding retention
  6. Annexure U are 2 emails from Laura Walton of Norton Rose Fulbright to Guy Morris dated 5 June 2015 and 9 June 2015. Importantly, paragraphs 2 and 3 in the 9 June 2015 email makes the following observations:

(iv) “Even if the termination was lawful, which is denied, even on SEQ’s case any entitlement to recover retentions did not accrue until the purported termination date of 15 May 2015. That was well after the reference date of 25 April 2015.

(v) A party is not entitled recover, in adjudication, payment for any amount that accrued after the reference date (see, for example, BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd & Ors [2012] QSC 346. Further, the retentions were not claimed for payment in the payment claim 10 and SEQ has no entitlement to recover, in adjudication, an amount that was not claimed in its payment claim.

  1. Having made the finding that the contract was terminated on 15 May 2015, and having regard to the submissions in paragraph M of the application, paragraphs 276 to 289, it may well be that the claimant was entitled to its retention.
  2. However, the key issue is that the entitlement to return of retention (if any) only occurred on termination of the contract which was 15 May 2015, and this I find is after the date of the payment claim of 27 April 2015. Both the payment claim and the payment schedule had made reference to retention, but in the context that it was a deduction from the amount due under the contract.
  3. In my view, I do not have jurisdiction to consider a claim for the return of retention monies made for the first time in the adjudication application, because the entitlement to those moneys only arose after the payment claim and the payment schedule had been provided.
  4. It would, in my view be inappropriate for an adjudicator to consider issues of breaches of contract after the payment claim and payment schedule had been provided, both of which essentially characterised the dispute, in order to determine a further contractual entitlement.
  5. I find therefore that the claim for retention cannot form part of the adjudication decision.

V. Is it a Construction Contract within BCIPA?

  1. At paragraph 19 of the submissions, the claimant submits that the sub contract civil earthworks falls within a construction contract under BCIPA.
  2. There are no controverting submissions from the respondent in the payment schedule to deny this.
  3. I am therefore satisfied that sub contract between the parties regarding civil earthworks falls within the definition of construction contract under BCIPA, thereby attracting the right to the progress payment provisions under the Act.

VI. Right to a progress payment

  1. In paragraphs 20 through to 24 of the claimant submissions, the claimant refers to section 12 of BCIPA, demonstrating an entitlement to make a claim, because clause 12 of the contract requires the claimant to submit claims for progress payments on the 25th of the month, which it argues is the reference date.
  2. At paragraph 23 the claimant submitted that the payment claim was served on 27 April 2015, which had not been disputed by the respondent, and at paragraph 24 it identified that it had been endorsed.
  3. There are no controverting submissions in the payment schedule to any of these assertions, and I find that:

(i) clause 12 of the contract provides the reference date as the 25th day of the month;

(ii) the payment claim was served on 27 April 2015;

(iii) the payment claim had been endorsed.

  1. Accordingly, I am satisfied that the claimant was entitled to a progress payment.

VII. Payment Claim

  1. In paragraphs 33 through to 38 of the adjudication submissions, the claimant demonstrates the extent of the payment claim that it had provided, and referred to a copy of it at Tab B of the adjudication application.
  2. The payment schedule did not reject that this was the payment claim, nor that it had not complied with the elements of s17(2) of BCIPA, namely that it:

(i) identified the construction work;

(ii) stated, the amount of the progress payment;

(iii) was endorsed under BCIPA.

  1. At annexure B of the response, the respondent provided the payment claim which appeared to be identical to that in Tab B.
  2. I am therefore satisfied that the payment claim in Tab B, complies with s17(2) of BCIPA.
  3. I am satisfied from paragraph 26 of the adjudication submissions (not controverted in the response, and the statutory declaration of David Widdicombe and the evidence of delivery in DW 9, that the payment claim was served on the respondent on 27 April 2015.

VIII. Payment Schedule

  1. In paragraph H of the claimant’s submissions, the claimant made reference to the two-page payment schedule and attached it at Tab C in the payment schedule did not reject that this was the payment schedule.
  1. In annexure A of the response, the respondent attached the payment schedule, which appears to be identical to that in Tab C.
  2. I am therefore satisfied therefore that the payment schedule is that provided in Tab C.
  3. From paragraphs 44 through to 83 of the claimant’s application submissions identified the deficiencies in the payment schedule, which it argued had not adequately identified the reasons for withholding payment.
  4. At paragraph 50 and 74, the claimant asserted that, pursuant to s24(4) of BCIPA, the respondent could not include any reasons for withholding payment that had not been in the payment schedule.
  1. As I have already said under the Threshold Issues above, I will be considering fresh reasons closely in the decision.

IX. The merits of the claimant’s claim and the respondent’s contra charges

  1. At paragraph 86 of the application, the claimant provides a very useful summary of the amounts claimed under the contract about which there is a dispute. I have extracted the relevant information in the table below. I have included a column, detailing the reasons for the difference between the payment claim and the payment schedule amount which I extracted from the payment schedule.
  2. I will be closely scrutinising these reasons to ensure that no fresh reasons have emerged in the adjudication response.
  3. Given that adjudication is an adversarial process, I have considered that the correct approach in considering the merits is to follow the principle, “he who asserts must prove”.
  4. The claimant must demonstrate its entitlement to the contract works and variations as well as the quantum (claimant’s onus of proof) after having dealt with the respondent’s objections in the payment schedule.
  5. The respondent must demonstrate its entitlement to the contra charges as well as quantum (respondent’s onus of proof), all of which, having been denied as legitimate by the claimant.
  6. This requires me to consider the evidence of the disputing parties.
  7. It is appropriate to generally identify the extent of, and the weight to which I have accorded to the evidence of both parties as an overall observation because it has a bearing on the party’s respective onus of proof. However, where necessary, I have dealt with the evidence or submissions in more detail in relation to a specific claim.

c. The claimant’s evidence

  1. The claimant has provided 2 statutory declarations in support of its application, being those of:

(i) Scott Widdicombe dated 22 May 2015 with one attachment – the director of the claimant and a licensed builder, with 35 years contractual and commercial experience in civil contracts;

(ii) David Widdicombe dated 22 May 2015 with 30 attachments – the general manager of the claimant and a licenced site supervisor: open builder with significant contractual and commercial experience in civil contracts.

  1. The claimant had also provided a copy of the contract at Tab D, and the respondent has not denied that this is the contract.

d. The respondent’s evidence

  1. The respondent has provided a statutory declaration of Wayne John Saguss dated 9 June 2015, of WJ Saggus Truck Hire, who identified himself as the claimant’s site supervisor. His statutory declaration did not identify any experience or qualifications.
  2. Based on my evaluation of the evidence and the weight given to it, I make a finding that, where Mr Saguss gives evidence as to quantum, I prefer the evidence of Mr Widdicombe because of his demonstrated experience and the fact that he has given a comprehensive statutory declaration on oath, as well as the fact that Mr Saggus has not demonstrated his experience to give opinion evidence on quantum upon which I could rely.
  3. Mr Saguss’ evidence regarding facts about which he was aware will be evaluated on its merits in relation to each aspect of the adjudication.
  4. The respondent has also attached various Annexures which it has referred to in its submissions. This includes, Annexure H, which is purportedly the output of a computer estimate program Cost X generated by Mr Sada Pillay, senior estimator for the respondent.
  5. The validity of this computer estimate program, and the input data has not been explained that all.
  6. Furthermore, despite a reference to a statement of Mr Pillay, on pages 3, 6, 8, and page 33 there is no supporting statement or statutory declaration of Mr Pillay in the response.
  7. I find therefore, where the Cost X may be admissible, I accord very little weight to it because there is no certainty that it is an appropriate programme to be used, nor that the data that had been inputted is correct.
  8. The respondent appears to entirely rely upon Mr Saguss’ evidence (a representative of the claimant), which is most unusual. There is no evidence from Mr Briscoe, who was the project manager for the respondent, nor from Mr Guy Morris, nor from Mr Chris Scoope.

e. The complaints about the payment schedule

  1. It is appropriate at this stage to consider the extensive submissions about the alleged deficiencies payment schedule provided in the application, particularly from paragraphs 44 through to 83.
  2. I have been unable to find any controverting submissions from the respondent in the response relating to the insufficient reasons in the payment schedule, particularly as regards the lack of calculations supporting the respondent’s assessment.
  3. The claimant referred to the case of Multiplex Constructions Proprietary Limited v Luikens [2003] NSWSC 1140, which it said remains good law in Queensland, citing John Holland Pty Ltd v Waltz Marine Services Pty Ltd & Ors [2011] QSC 39, [408] Wilson J (“Walz”).
  4. I could not find paragraph [408] in Walz, and I note that Luikens was not identified as a case cited in Her Honour’s judgement, such that I’m not prepared to accept that Luikens was approved in Walz.
  5. There was a paragraph [408] on page 26 of Walz, at paragraph [47] of Her Honour’s judgement, which appeared to be a submission made by John Holland in reliance upon Luikens as case authority to prohibit the claimant from introducing new factual and legal base of information to support the adjudication application, which had not been contained within the payment claim.
  6. Essentially Luikens prohibits a respondent from an ambush of a claimant by rejecting a claim in the payment schedule, and then in an adjudication response identifying for the first time calculations, valuations and assessments, which the claimant had no prior opportunity of checking or disputing.
  7. The claimant also explained (paragraph 61 through to 71) that the New South Wales cases relied upon the wording in the New South Wales Act, which required a respondent to indicate rather than state its reasons for non-payment, and state is the wording in BCIPA.
  8. Despite Walz not expressly approving Luikens, as mentioned previously, there are no controverting submissions from the respondent in relation to these cogent submissions of the claimant, so I am satisfied that where significant calculations have been provided in the response, and no calculations or explanation about quantum have been provided in the payment schedule reasons, the respondent, is likely to fall foul of the ambush
  9. The reason why the ambush prohibition exists is that s24(4) of BCIPA, in the case of a standard payment claim, prohibits a respondent from including reasons in the adjudication response that had not been included in the payment schedule.
  10. In my view, a respondent is entitled to put the claimant to proof about its quantum by challenging the accuracy of the calculations provided by the claimant, But if it has provided no reasons or calculations in its payment schedule, in my view it is unsafe to allow the respondent in the response to lead controverting evidence by way of its own calculations. This is the classic ambush, because the claimant has no right of reply, and contravenes s24(4) of BCIPA. I have called this the ambush prohibition in the decision below.
  11. I will consider this issue in relation to each claim below.

Table depicting Items in dispute

# Item Description PC PS Reasons
A Preliminaries Preliminaries $58,113.50 $56,297.55 No retention taken from claim. Contract not signed nor returned
B Bulk excavation Bulk excavation $39,595.20 $29,696.40 Bulk excavation to 50% of the southern side has yet to take place
C Flexible pavements Flexible pavements $267,526.20 $241,911.00 Pavement works have only been completed to the external side
D V 7 Delete chip seal $nil ($16,500.00) Client not accepted and request 16,500 deletion
E V8/V11 Stand down $2022.50 Not valued Requires more information
F V11/v14 Remove concrete kerb and path $8180 Not valued Requires more information
G V15/V18 Credit no excavation and CBR between chainage 0- 40 ($5134.70) ($10,000) Whilst NCC is agreeing to this credit as variations, MCC requires substantiation of actual invoices to validate claims. These rates appear to be well below standard industry rates. These rates are actually less than the cost of the sub base.
H V16/V19 Extra A/C to deep lift area $30,613.80 $20,000. Whilst NCC is agreeing to this addition, as a variation, MCC requires substantiation of actual invoices to validate claim. These rates appear to be well above standard industry rates
I Contra charge 1 Rectification repairs to fibre-optic cables $nil TBA Rectification cost to be advised
J Contra charge 2 Repairs to damaged pipes $nil $1500 Machine damage to pipes for SW
K Contra charge 3 Redistribution of spoil $nil $21,500 Removal of spoil to deposit to correct location on site
L Contra charge 4 Removal of existing concrete driveway entrance $nil $1860 Removal of existing driveway noted SEQ’s original contract
M Contra charge 5 Removal of excess road base $nil $1240
N Retention Retention $27,542.39

f. Disputed amounts claimed for the contract works

  1. I have highlighted these 3 claims identified as A to C in yellow in the table above, and I consider each in turn.

#A Preliminaries

  1. The payment claim amount of $58,113.50 extracted a payment schedule response with an amount of $56,297.55 with the reason for non-payment identified in the schedule was, “No retention taken from claim. Contract not signed nor returned.”
  2. In the response at page 3, the respondent complained that the claimant did not quantify the real cost to complete the contract works and that the claimant’s bill of quantities was never part of the contract documents, nor were made available to the respondent in the assessment of the value of this item. In my view, these are fresh reasons for non-payment, and I reject them as falling foul of section 24(4) of BCIPA.
  3. No calculation in support of the scheduled amount was provided, and yet in the response the respondent devoted two and a half pages to quantum, in which it referred to annexure H, where Mr Pillay ostensibly provided a trade breakdown of the calculations in his Cost X estimate report.
  4. These respondent’s submissions regarding quantum are in my view inadmissible because they are essentially providing new reason for non-payment in contravention of the ambush prohibition identified above.
  5. Accordingly, I value the preliminaries at $58,113.50.

B Bulk excavation

  1. The payment claim claimed $39,595.20 for this work and the payment schedule identified the amount of $29,696.40 with the reasons for non-payment, “Bulk excavation to 50% of the southern side has yet to take place”.
  2. The respondent did not provide any calculations in support of its quantum, and yet in the response from pages 5 to 7 refers to the Cost X calculations and a non-existent submission of Mr Pillay.
  3. At the bottom of page 6 and the top of page 7 of the respondent challenges the rate of $5 per cubic metre for small sized road excavation work as ridiculously low and refers the Cost X calculations to support a figure of $30,600, which it says is close to its payment schedule amount. I have already said that I will give very little weight to the Cost X calculations, as mentioned above.
  4. Accordingly, I value the bulk excavation amount as $39,592.20.

C Flexible pavements

  1. The payment claim amount is $267,526.20 and the payment schedule is $241,911 with the reasons for reduced payment being, “Pavement works have only been completed to the external side.” No calculations were provided by the respondent to support this scheduled amount, and there is no explanation as to what is meant by the “external side”. In such circumstances, it would be reasonable to expect at least some identification of the extent of the external side so that the claimant had an appreciation of why it was not being paid the full amount.
  2. The response at page 8 complained that the claimant’s bill of quantities was never part of the contract documents nor had they been made available to the respondent. This was not a reason provided in the payment schedule, and I reject these reasons is contravening s24(4) of BCIPA.
  3. The respondent then referred to the “submission of Sada Pillay” and his assessment at annexure H. I have already found that Mr Pillay did not provide a statement nor a statutory declaration in the material provided to me.
  4. The respondent also makes reference to attached drawings and cost computer calculations, and that it derives support from (presumably paragraphs 3 and 4) of Mr Saggus’ statutory declaration in which he says that the computer cost estimate to finish is consistent with the payment schedule amount.
  5. I have already found that Mr Saggus is not an expert, such that it would be entirely unsafe to accept his evidence of quantum, and I have confined his evidence to facts about which he had direct experience.
  6. In my view, some calculation or explanation expanding on what was meant by the external side was necessary, and given that this did not occur, the response falls foul of the ambush prohibition identified above.
  7. Accordingly, I value this item as $267,526.20.

g. Disputed variation amounts –

  1. I have highlighted the claims identified as D through to H in green in the table above.
  2. I will consider each variation in turn.

D Variation 7

  1. The claimant has said that there is nil deduction for this variation, but I note previously that it had already made a deduction of $11,168.29 for this item that was deleted. Accordingly, I understand that the claimant’s argument about nil deduction means that it maintains its valuation for this variation.
  2. The respondent values this deduction at $16,500 with the reason that, “Client not accepted and request 16,500 deletion.” The respondent provided no supporting calculations for its payment schedule reasons.
  3. I note on page 11 of the respondents submissions that it refers to an estimate from quantity surveyor’s Napier Blakely in annexure P, which it claimed had been given to the claimant on 16 January 2015.
  4. There is no evidence upon which I can rely that this occurred, and Mr Widdicombe makes no reference to it in his statutory declaration, and he particularly controverts receipt of any documentation from the respondent in paragraph 66 of his statutory declaration where he said that the respondent had not provided any correspondence in relation to this claim by the respondent for a deduction of $16,500.
  5. Mr Saggus makes an assessment of the payment claim amount and concurs with the respondent that the payment claim deduction amount for these works is ridiculously low and that this variation is undervalued. I have already explained that Mr Saggus is not an expert, and is not entitled to the provide opinion evidence about quantum
  6. Nevertheless, the respondent challenges the quantum of the claim made by the claimant, and it is entitled to do so. It provided detailed criticism of the basis of the claimant’s calculation of its deduction. For example, in item 2 which refers to 100 mm thick CBR 45 sub base, the submissions essentially identify that:

(i) when one takes into account the claimant’s cost of $40.37 to supply the materials;

(ii) and the Fulton Hogan quotation of $44.27 per cubic metre;

(iii) it only leaves $4.63 per cubic metre to provide:

(a) various items of equipment to remove spoil, proof roll the sub base, provide 2 separate layers of road base and complete a final trim

(b) with supervision,

and that activity, together with the other deduction claims for the 125 mm thick CBR 80 sub base with an ostensible deduction of $662.29 is implausible, and seriously flawed.

  1. I have rejected its reliance upon Mr Saggus’ evidence, and have found that the Napier Blakely QS estimate had not been provided to the claimant.
  2. Whilst it may be that the deductions by the claimant are inaccurate, there is no admissible evidence that I can allow to make a valuation of what this deduction ought to be.
  3. Furthermore, it is somewhat troubling that Mr Widdicombe’s statutory declaration, already referred to in paragraph 66, that the claimant received no correspondence from the respondent for 6 months about this credit amount.
  4. In my view, some calculation or explanation supporting the $16,500 deduction beyond the reason that the client had not accepted it was required, and given that this did not occur, the response falls foul of the ambush prohibition identified above.
  5. Accordingly, I value this variation at ($11,168.29).

E Variation 8/11

  1. The payment claim amount is $2022.50 and the payment schedule amount is not valued because the reason was, “Requiring more information”. I do not find that this is a satisfactory reason for non-payment.
  2. At paragraph 4 of his statutory declaration, Mr Saggus refers to time sheets from the respondent’s traffic controller and his own timesheets, which, unfortunately he does not put into evidence. It also states that Mr Warren Irving of the respondent was not qualified to sign variation dockets and that he (Mr Saggus) was not on site that day.
  3. To my mind it would be extremely unsafe to accept that Mr Saggus was in a position to identify who was qualified on behalf of the respondent to sign variation dockets, when he worked for the claimant, and not the respondent. He was also not on site that day, so I’m not clear what his time sheets would have shown.
  4. At page 13 of the submissions of the respondent said that Mr Saggus had stated that the Labour charge of 4 was incorrect in the cost of 2 labourers should be in the cost of excavator and semi truck hire, but I see nothing in his statutory declaration to that effect.
  5. Accordingly, I’m not satisfied that the respondent has satisfactorily challenged the claimant’s variation amount, and I value this claim at $2022.50.

F Variation 11/14

  1. The claimant claims the sum of $8180 in the payment claim and the payment schedule amount is not valued with the reason that, “Requesting more information”. I do not find that this is a satisfactory reason for non-payment.
  2. In the adjudication response, the respondent stated (page 14) that the claimant needed to comply with the contract in relation to the variation and needed to provide this information. However, it did not state this was a contractual reason for non-payment in the payment schedule by reference to clause 15(b) and (c) of the contract.
  3. In challenging the quantum of the claimant’s claim, the respondent, at the bottom of page 14 of the respondent said, “As per the statutory declaration of Wayne Saggus, the Claimant can say (sic) the cost base was $185 a tonne and not $400.”I do not find this statement in the statutory declaration of Mr Saggus anywhere.
  4. Accordingly, the respondent has failed to demonstrate with evidence upon which I can rely that there is anything erroneous in the claimant’s payment claim, and I value this variation at $8180.

G Variation 15/18

  1. The payment claim amount is a deduction of $5134.70 and the payment schedule amount is($10,000), with the respondent’s reasons that, whilst it agreed to a credit for the variation, it argued that the rates of the deductions were well below standard industry rates and less than the cost of the sub base.
  2. Furthermore, the respondent reasons required substantiation of the actual invoices to validate the claim.
  3. At paragraph 32 of the response the respondent refers to the statutory declaration of Mr Saggus whom it said actually set out this work, and provided the correct details for it.
  4. I have not found in Mr Saggus’ statutory declaration that he had set out this work, because he only made reference to this setting out in variation 19.
  5. I refer to paragraph 4 of the statutory declaration in which Mr Saggus says the claim is a gross under value of the valuation and that he concurred with the assessment of the valuation in annexure H.
  6. I previously said that I’m not prepared to accept Mr Saggus’ evidence as to quantum as he has provided no evidence of his qualification to do so, and therefore he is not entitled to provide opinion evidence. Whilst I accept his evidence that the rates may have been material only rates, there is no cogent direct evidence from him as to what the appropriate rates were.
  7. Mr Saggus is not in a position to confirm the valuation in annexure H because he is not an expert. In any event, I am not prepared to give annexure H much weight, because Mr Pillay did not provide a supporting statement or statutory declaration about the Cost X. estimating model.
  8. Furthermore, at paragraph 194 of the application submissions, with reference to the statutory declaration of David Widdicombe paragraphs [103] to [105] demonstrates that Mr Scroope had agreed with the trade breakdown in this variation. The respondent, somewhat surprisingly, given that it contested this claim, did not take issue with this important point.
  9. Accordingly, the respondent has failed to demonstrate with evidence upon which I can rely that there is anything erroneous in the claimant’s payment claim deduction, and I find that the respondent had agreed with it.
  10. I value this variation at ($5134.70).

H Variation 16/19

  1. The payment claim amount is for $30,613.80 and the payment schedule amount is $20,000 with the respondent’s reasons that, whilst it agreed to an addition for the variation, it required substantiation of actual invoices it argued that the rates were well above standard industry rates. However, it provided no substantiating details or calculations as to what those rates should have been.
  2. The claimant again argued that the respondent had agreed with the trade breakdown. [Paragraph 214 of the submissions] by reference to the statutory declaration of Mr Widdicombe at paragraphs [116] to [119]. Again, somewhat surprisingly, the respondent did not take issue with this submission, and yet it can test the value of the variation.
  3. Whilst I accept that Mr Saggus has provided direct evidence that he set out this work, and provided a photograph at annexure W, as well as his estimate of the area actually involved in this variation. However, I am unable to consider his evidence as to quantum for the reasons stated above.
  4. It is not possible for me to perform calculations or make estimates from the photographs and the attached plan as to what the correct dimensions and volumes for this extra A/C actually entailed, because the adjudicator must rely upon evidence provided to them.
  5. Neither Mr Scroope nor the respondent took issue with the claimant’s submissions that Mr Scroope had agreed to the trade breakup for this variation, so that even if there has been an overvaluation as alleged by Mr Saggus, I find that the respondent agreed with it.
  6. I value this variation at $30,613.80.

h.      The contra charges

  1. I have highlighted the contra charges identified as I through to M in turquoise in the table above one I consider each one in turn.

I Contra charge 1

  1. The respondent in the response agrees that the amount for this item is $0.
  2. Accordingly, the value that I give to this item is $0.

J Contra charge 2

  1. This claim relates to the repairs to damaged pipes amounting to $1500 (excluding GST).
  2. The respondent referred to Mr Saggus’ statutory declaration in which he said he knew that the claimant’s operator damaged the drainage pipes and that he agreed the costs would be borne by the claimant.
  3. He further said that he had agreed with Mr Scroope to a value of not more than $2000 to fix the damage.
  4. Mr Saggus has not demonstrated that he has experience regarding assessments of quantum as I’ve found previously.
  5. There are no calculations as how this amount has been derived to demonstrate that it had been agreed between the parties.
  6. Furthermore, I accept the claimant’s submissions and the statutory declaration of Mr Widdicombe that no notice had been given under clause 15 of the contract that this was a variation for the respondent to be entitled to set off this amount.
  7. Accordingly, the contra charge for this item is $0.

K Contra charge 3

  1. This contra charge relates to the redistribution of spoil in which the respondent has deducted an amount of $21,500 (excluding GST) for the costs of redirecting this spoil. No calculations were provided in the payment schedule as to how this amount was calculated.
  2. The respondent at page 37 of the submissions refers to Annexure R about conversations both verbal and in writing were taking place between the parties about the alleged shortage of fill that it would be a major variation.
  3. Annexure R provides some volumes regarding excavation and spoil left on site, together with an email from Reg Parker to Peter Houston dated 22 October 2014 and an email from Gary Briscoe, project manager of the respondent to Reg Parker and David Widdicombe.
  4. It appears as if the emails relate to an alleged lack of fill on the site, and that the claimant allegedly had another job with available fill close by which could be placed on this project.
  5. This is in contrast to the statutory declaration of Mr Widdicombe who explained at paragraph [134] that there was basically a balance between cut and fill on the site under the scope of work. He said that the claimant ran out of fill at the bulk earthworks stage because it could not complete the earthworks to obtain fill from a road box from Eggersdorf Road, with the consequence that it demobilised from site. [Paragraph 136].
  6. He then said that after demobilising from site, other sub contractors stockpiled their spoil on site [paragraphs 137 to 139], such that on the claimant’s return, after completing the balance of the earthworks, there was substantially more spoil left on site than what was needed for fill purposes. [Paragraph 141]. At paragraph [140], he said that the developer wanted fill to remain on site.
  7. At paragraph [144], he explained that he had outlined the circumstances to Chris Scoope in an email dated 22 January 2015, which he attached at annexure DW – 29. In this email, Mr Widdicombe explained that the claimant was not responsible for removal of this spoil.
  8. This email is 3 months after the emails attached in Annexure R of the response and explains the claimant’s position.
  9. In its submissions, the respondent, and in particular, Mr Scroope, has not controverted what Mr Widdicombe has said about this issue.
  10. It has been left to Mr Saggus, one of the claimant’s supervisors to controvert Mr Widdicombe to some degree.
  11. Mr Saggus says [paragraph 4] that the fill had been incorrectly dumped by the claimant on the internal car park works and that the claimant had refused to move it.
  12. He purportedly carried out a calculation on 9 June 2015 of 3364 m³ of excess fill on site. Even though I’m not satisfied of his qualifications to carry out such a calculation, this does not deal with the responsibility of redistribution of the fill
  13. He confirmed that the owner wanted to keep the excess fill on site, which accords with what Mr Widdicombe said.
  14. It appears to me that Mr Saggus is focusing on the incorrect location of the fill, and his evidence does not take into account Mr Widdicombe’s arguments about the responsibility for moving the fill.
  15. On balance, I accept the plausibility of Mr Widdicombe’s evidence, which has not been controverted by the respondent, particularly in relation to the fact that there was nearly a balance of earthworks at the outset of the contract, which could not be satisfied because the claimant had to demobilise from site. I am satisfied that in the claimant’s absence, other sub contractors placed spoil on the site, and that, despite using some of this spoil as fill, there was a balance left over, which was not the responsibility of the claimant.
  16. I am therefore unable to find that the respondent is entitled to deduct any amount from the claimant by way of set off.
  17. Furthermore, the respondent has not demonstrated its contractual entitlement to the set off, and it has not controverted the claimant’s submissions that the only way the respondent was entitled to set off was to raise a variation, by notice under clause 15 of the contract, which the claimant alleged had not occurred.
  18. I am obliged to value the claim under the contract, and the respondent has not made any submissions about any entitlement to set off under the contract to which I could have regard.
  19. Accordingly, I find that the respondent has failed to discharge its onus as regards entitlement. Furthermore, it had not provided in calculations as to quantum, such that I would characterise it as falling within the ambush prohibition, if I’m wrong on the entitlement point.
  20. Accordingly, the contra charge for this item is $0.

L Contra charge 4

  1. This contra charge relates to the removal of existing concrete driveway entrance amounting to $1860.
  2. Surprisingly, the respondent did not refer to Mr Saggus’ statutory declaration that he requested the respondent remove the driveway, in which he said that a cost of $1000-$1500 would not be unreasonable. However, this amount claimed is $1860, and in any event Mr Saggus has not demonstrated his experience in relation to quantum to be considered an expert to provide opinion evidence.
  3. The respondent merely stated in its submissions that the driveway was part of the claimant’s contract, and that the works were completed by the respondent with the claimant’s consent.
  4. There are no calculations as how this amount has been derived to demonstrate that it had been agreed between the parties.
  5. Furthermore, I accept the claimant’s submissions and the statutory declaration of Mr Widdicombe that no notice had been given under clause 15 of the contract that this was a variation for the respondent to be entitled to set off this amount. These submissions were not controverted by the respondent.
  6. Accordingly, the contra charge for this item is $0’

M Contra charge 5

  1. The respondent in the response agrees that the amount for this item is $0.
  2. Accordingly, the value that I give to this item is $0.

X. Adjudication amount

  1. I have tabulated the contract value amounts found for each item in the adjudication table below. I have then used the contract amount in the payment claim to determine the total payment due, which included the items not in dispute, from which I have deducted the amount previously paid (as outlined in the payment claim) to determine the adjudicated amount

Adjudication table

# Item Description Contract amount
A Preliminaries Preliminaries $58,113.50
B Bulk excavation Bulk excavation $39,595.20
C Flexible pavements Flexible pavements $267,526.20
D V 7 Delete chip seal ($11,168.29)
E V8/V11 Stand down $2022.50
F V11/v14 Remove concrete kerb and path $8180
G V15/V18 Credit no excavation and CBR between chainage 0- 40 ($5134.70)
H V16/V19 Extra A/C to deep lift area $30,613.80
I Contra charge 1 Rectification repairs to fibre-optic cables $nil
J Contra charge 2 Repairs to damaged pipes $0
K Contra charge 3 Redistribution of spoil $0
L Contra charge 4 Removal of existing concrete driveway entrance $0
M Contra charge 5 Removal of excess road base $0
N Retention Retention $0
 
  1. I therefore have agreed with each contract claim item and variation item identified by the claimant in its payment claim, and with no contra charges of the respondent.

Contract amount claimed

Variations

Less Contra charges

TOTAL

Less retention

SUBTOTAL

Plus GST

TOTAL

Less previously paid, and last claim

ADJUDICATED AMOUNT (incl GST)

$494,666.24

$69,104.93

$0.00

$563,771.17

$27,542.39

$536,228.78

$53,622.88

$589,851.66

$501,176.71

$88,674.95

 

 

 

  1. Accordingly, I find the adjudicated amount is $88,674.95 (including GST).

XI. Due date for payment

  1. s15 of BCIPA deals with the due date for payment under the contract. I am satisfied with the claimant’s submissions (as there are no controverting submissions from the respondent on this point) that the contract governs the new date for payment.
  2. I find that, pursuant to clause 12(c)(i) of the general conditions of contract that payment is 25 business days after submission of the payment claim.
  3. I have already found that the payment claim is dated 27 April 2015, which means the due date for payment is 25 business days later, which I calculate to be 1, June 2015, which accords with the claimant’s submissions at paragraph [291].
  4. Accordingly, the due date for payment is 1, June 2015.

XII. Rate of interest

  1. I am unable to find that the contract provides an interest rate for late payments.
  2. At paragraph 292 and 293 of the claimant’s submissions, it alleges that interest under section 67P of the Queensland Building and Construction Commission Act 1991, (the “QBCC Act”) is applicable.
  3. There are no controverting submissions from the respondent on this point, and given this is an adversarial system. I therefore accept the claimant’s submissions.
  4. s67P(3) of the QBCC Act provides that the rate of interest is 10% plus the bank bill rate published by the Reserve Bank for 90 day bank bills.
  5. I have searched the Internet and on http://www.rba.gov.au/statistics/tables and the latest 90 day bank bill rate is for May 2015 which is published as 2.15%.
  6. I find the rate of interest is 12.15% interest payable on the adjudication amount.

XIII. Adjudicator’s fees

  1. The default provision contained in s35(3) of BCIPA makes the parties liable for the my fees is in equal proportions, unless I decide otherwise.
  2. I may decide otherwise having regard to s35A(2) and I do so because

(i) the claimant has succeeded in its payment claim;

(ii) the respondent’s payment schedule reasons were inadequate;

(iii) in the adjudication response, the respondent’s purported to introduce new reasons;

(iv) by serving the adjudication response on the claimant 4 days late, put the claimant on alert, and it made submissions that the response was not properly made. This required me to request submissions from the parties regarding the late service of the response, and legal issues associated with determining whether I could consider the response as part of the adjudication took up as significant amount of time in the decision making.

  1. I am satisfied that the claimant sufficiently explained its payment claim, and provided me with sufficient material to be satisfied of its validity, and the respondent’s reasons for non-payment in the payment schedule were generally not satisfactory.
  2. This meant the claimant was put to the expense of having to have the matter adjudicated, and as I’ve already said, by not serving the adjudication response on the claimant within 2 business days after providing it to me caused delay and additional expense in the adjudication.
  3. Accordingly, I exercise my discretion in this case to find that the respondent is liable to pay 100 % of my fees under 35(3) of BCIPA.

Chris Lenz

Adjudicator

29 June 2015