Construction Contracts Act
2015 case review
Greg Nairn
22 July 2015
HAMERSLEY IRON PTY LTD -VJAMES [2015] WASC 10 (16 January
2015)
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Sheds further light on what will constitute
reviewable jurisdictional error
Confirms test for leave to enforce
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Reminder: section 31(2)(a) and (b)
Section 31(2)(a):
adjudicator must dismiss
without a determination
on merits if he/she finds
one or more of identified
criteria exist (eg not a
construction contract)
Section 31(2)(b): if not
dismissed, adjudicator
must determine on BoP
whether any party to the
payment dispute is liable
to make a payment
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Question is not whether or not criteria actually exist
SECTION 31(2)(a)
CRITERIA
Focus is on adjudicator’s reasoning and conclusion
Unreasonableness, manifest illogicality or irrationality
Misconstruction of the CCA
Misconception of nature of function
Irrelevant considerations involved
Mandatory relevant considerations ignored
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SECTION 31(2)(b) MERITS
DETERMINATION
Also amenable to judicial review
Various grounds will suffice
eg Misunderstands nature or limits of powers
eg Misconception of nature of function
eg Decision in bad faith
eg Denial of natural justice
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No jurisdictional error on the facts of
Hamersley
Attack on adjudicator’s treatment of a set-off claim,
specifically how principal’s “costs to complete” were to
be calculated
No error, let alone jurisdictional error, established
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However, leave to enforce was
refused
Accepted “pay now, argue later” object of the Act
Mere arguable counterclaim not enough to deny leave to
enforce
However, additional factor motivating refusal of leave
was contractor’s insolvency
S 553C of the Corporations Act requires an account to
be taken of the parties’ mutual dealings
S 553C would be frustrated if determination enforced
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GRC GROUP PTY LTD and KESTELL
[2015] WASAT 11 (6 February 2015)
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An adjudicator is not entitled to dismiss an
application under section 31(2)(a) on the basis
that the adjudicator found that the payment claim
was not “bona fide”.
Bona fides of the claim was relevant only to the
determination on the merits under section
31(2)(b).
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LEND LEASE BUILDING CONTRACTORS PTY LTD
T/AS SITZLER BAULDERSTONE JOINT VENTURE V
HONEYWELL LIMITED T/AS HONEYWELL BUILDING
SOLUTIONS & ANOR [2015] NTSC 10 (9 February
2015)
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Determination that applicant contractor was
entitled to a sum of money, but deferring
obligation of respondent to pay until applicant
provided replacement guarantees, survived
judicial review
The deferral component of the determination
depended on a reading of the contract and any
error made was not jurisdictional in error
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FIELD DEPLOYMENT SOLUTIONS PTY LTD
-v- SC PROJECTS AUSTRALIA PTY LTD
[2015] WASC 60 (16 February 2015)
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Sheds light on scope of SAT review of
adjudicator’s decision to dismiss
Sheds further light on what constitutes a
“construction contract”
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SCOPE OF SAT
REVIEW
“De novo” review
SAT to consider matter afresh
SAT can uphold a decision to dismiss for different
reasons to adjudicator
SAT can have regard to evidence/arguments not
before the adjudicator
Touchstone is what is the “correct and preferable”
decision
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“CONSTRUCTION
CONTRACT”
Construction of a gas pipeline is construction work
Rehabilitation work on land on which a pipeline is
constructed is construction work
Hauling, moving earth to pipeline and at the site for
use in rehabilitation is construction work
Processing plant exception not applicable as pipe
function was merely to transport, not process, gas
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FIELD DEPLOYMENT SOLUTIONS PTY LTD
-v- JONES [2015] WASC 136 (20 April 2015)
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Contractor sought in Supreme Court to quash two
adjudication decisions to dismiss
Mitchell J refused on basis it was (1) futile
(contractor out of time to recommence); (2)
alternative remedy available, namely s46 CCA
review to SAT
SAT recently rejected Field Deployment’s attempt
to lodge its review out of time: SC Projects and
Field Deployment [2015] WASAT 69.
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DELMERE HOLDINGS PTY LTD -v- GREEN
[2015] WASC 148 (24 April 2015)
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Sheds light on what will/will not constitute a
“payment claim” and that adjudicator’s failure to
properly deal with the evidence about whether a
payment claim exists will be a jurisdictional error
Strong support (obiter) for view that CCA for
contractual entitlements only; no claims “outside
the contract”
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RATIO: PAYMENT
CLAIM AND ERROR
Revolved around VC17
VC17 stated: In accordance with … clause 34(d), we submit
the costs of this Variation to the contract.
Cl 34 was variation clause; provided for submission of
variation costing information
Clause 34 was separate to payment claim provisions which
provided mechanism for how a variation was to be claimed
K Martin J found mere submission of a document under
GC34 could not be, and was not, a payment claim
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RATIO: PAYMENT CLAIM
AND ERROR (cont’d)
Rejected contractor’s attempt to paint VC17 as a payment
claim
Further noted that contractor issued a formal invoice for
VC17 after adjudication was lodged – that was the payment
claim
Adjudicator’s failure to have regard to that invoice was a
jurisdictional error
Adjudicator had misconceived his function by proceeding on
erroneous basis that payment dispute existed
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KUREDALE PTY LTD -v- JOHN HOLLAND
PTY LTD [2015] WADC 61 (21 May 2015)
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Leave to enforce case
JHG made a payment before adjudication
determination was handed down – it was argued
that this was in partial satisfaction of the
determination (related to the same head of claim)
Keen DCJ accepted that was arguably the case
but still granted leave to enforce based on the
“pay now, argue later” purpose of the CCA
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LAING O'ROURKE AUSTRALIA
CONSTRUCTION PTY LTD -v- SAMSUNG C
& T CORPORATION [2015] WASC 237
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Confirms Blackadder test for when a “payment
dispute arises” (payment dispute can arise via a
dispute before due date for payment passes)
Extensive commentary/guidance on the role of the
adjudicator under s31(2)(b) and when
jurisdictional error can be established
Also sheds further light on leave to enforce
applications
Appeal has been lodged
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Samsung: s31(2)(b) and jurisdictional
error
Detailed commentary on adjudicator’s duties under s31(2)(b)
Core duty is to determine CONTRACTUAL liability on
BoP
There must be, as an objective fact a PAYMENT CLAIM
and a PAYMENT DISPUTE, each UNDER a construction
contract
Adjudicator’s opinion on those core matters is not
conclusive and is open to review – matters must be
objectively present
If determination cannot be readily supported by analysis of
contract, court will likely infer a jurisdictional error has
occurred
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FIRST DETERMINATION
IN SAMSUNG
Two adjudications. First was for ordinary progress claim
which was never certified as contract was terminated.
Second was for value of works up to date of termination.
Mitchell J: contract did not support liability of Samsun to pay
the progress claim. Contract had been terminated including
progress claim/certification provisions (cl 37).
Only contractual entitlement to payment then arose under a
different clause (cl 39A). No other available conclusion.
Adjudicator’s refusal to so find in accordance with contract
supported inference that adjudicator was determining claim
other than in accordance with the contract
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SECOND DETERMINATION
IN SAMSUNG
This time adjudicator did have regard to clause 39A which
provided for payments to LORAC where termination
occurred
Mitchell J: adjudicator nevertheless failed to go on and
determine the meaning and operation of that provision
Cl 39A required adjudicator to consider (1) whether LORAC’s
payment claim exceeded the contract sum when aggregated
with earlier payments (2) whether Samsung had any
applicable set-off entitlements
Adjudicator failed to make findings on those critical issues.
This indicated adjudicator failed to comply with s31(2)(b)
duty to make a contractual liability determination on BoP
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Samsung: leave to enforce
No leave to enforce as jurisdictional error
established
Further, no leave to enforce as His Honour was
satisfied that the payment required to be made
by the determination had in fact been made by
Samsung
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MODULAR FORMS PTY LTD and CECICH
[2015] WASAT 76 (6 July 2015)
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Confirms adjudicator’s ability to dismiss an
application in part and determine the balance
Confirms dismissed portion can be reviewed
under s46 CCA
Confirms SAT, on a review, cannot substitute its
decision for the adjudicator
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The take-away points
from the 2015 cases
Expansion of case law on (1) nature of adjudicator’s role in merits
determination (2) ability to review a merits determination (3) leave to
enforce
Contractor’s entitlements must be rationally tied back to the contract
Take care to fully consider and explore relevant contractual
provisions
Failure to do so will leave determination exposed to review
Expect even closer scrutiny of merits determinations
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