Supreme Court New South Wales

• Medium Neutral Citation: Rail Corporation of NSW v Nebax Constructions [2012] NSWSC 6
• Hearing dates: 03/01/2012
• Decision date: 03 January 2012
• Jurisdiction: Equity Division
• Before: McDougall J

Decision

Continue interlocutory orders. Stand over for final orders.

• Catchwords: ADMINISTRATIVE LAW - Building and Construction Industry Security of Payment Act 1999 (NSW) - questions of administrative law - where adjudicator materially denied parties natural justice by determining his jurisdiction in a way for which neither party had contended and without giving them the opportunity to be heard - whether adjudicator's determination void.; BUILDING AND CONSTRUCTION - Building and Construction Industry Security of Payment Act 1999 (NSW) - whether s 7(1) authorizes more than one adjudication application to be made at the one time for the one payment claim.
• Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW); Civil Procedure Act 2005 (NSW)
• Cases Cited: Alan Connolly & Co v Commercial Indemnity [2005] NSWSC 339; Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; Chase Oyster Bar v Hamo Industries [2010] NSWCA 1990; Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd [2011] NSWSC 165; Watpac Constructions (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168
• Category: Procedural and other rulings
• Parties: Rail Corporation New South Wales (ABN 59 325 778 353) (Plaintiff); Nebax Constructions Australia Pty Limited trading as TrackSyde Constructions (ACN 101 054 068) (First Defendant); Adjudicate Today Pty Limited (ABN 3910 9605 021) (Second Defendant); Callum Campbell (Third Defendant)
• Representation: Counsel: N J Kidd (Plaintiff); A W Smith (First Defendant); Solicitors: Maddocks (Plaintiff); Warren McKeon Dickson (First Defendant)
• File Number(s): 2011/410319

Judgment - EX TEMPORE

1 HIS HONOUR: The plaintiff (RailCorp) and the first defendant (Nebax) are parties to a contract made on about 15 December 2009 (the contract). That contract is a construction contract for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act). Under the contract, Nebax was required to undertake platform resurfacing work at some 25 separately identified railway stations under the control of RailCorp.

A disputed progress claim

2 On 31 October 2011, Nebax made what it described as "Progress claim No 18" by email addressed to the relevant officer of RailCorp. That email read, so far as it is relevant:

"Please find attached invoices in relation to progress claim No 18 in the platform resurfacing programme 2009-10. The above claims are for the month of September 2011 ...".

3 There were sent with the email some five invoices, four of which remain in issue, and various other required documents. RailCorp served a payment schedule in respect of each of those invoices. Presumably it took that course because each individual invoice stated that that it was "a payment claim made under the [Act]". In some cases, the payment schedule provided for a scheduled amount of nil. In other cases, the payment schedule indicated a scheduled amount of less than the amount of the claim.

Reference to adjudication

4 The dispute or disputes thereby constituted were referred to adjudication. Nebax made not one but five adjudication applications: one in respect of each tax invoice and its appropriate payment schedule. The applications were made to the second defendant who referred them to the third defendant. The third defendant accepted nomination and proceeded with the adjudication in each case.

5 In each case (although I am concerned only with four of the five individual claims, as it is convenient to refer to the individual tax invoices), RailCorp took the point that there were five separate adjudication applications referable to the one contract and the one payment claim. It referred to ss 13(5) and 17(1) of the Act. It said that the adjudicator lacked jurisdiction to deal with the applications, either because s 17(1) did not permit multiple applications for the one payment claim or because s 13(5) did not permit multiple payment claims under the one contract for the one reference date.

6 The adjudicator dealt with that argument by finding, in substance, that there were in fact 25 separate contracts. He did so by referring to the provisions of the contract relating to "separable portions", and reasoned that each of the separable portions was to be treated as a separate contract governed by the one head contract. Thus, he concluded, he had jurisdiction to deal with the applications that were made.

Challenge to the determination

7 RailCorp challenges that determination. It says, in essence:

(1) in dealing with the matter in the way that he did, the adjudicator denied natural justice to the parties, and specifically to RailCorp, by proceeding on the basis that there were 25 separate contracts, in circumstances where neither party had contended this and where neither was given an opportunity to put submissions to the contrary.

(2) Alternatively, it submitted, the adjudicator lacked jurisdiction because s 17(1) of the Act did not permit the making of separate adjudication applications for separate portions of the one payment claim.

(3) In the further alternative, it submitted that if there were in truth five separate payment claims, but arising under one contract, then this was a clear breach of s 13(5), which was (RailCorp submitted) a jurisdictional requirement.

8 Nebax appeared to accept that there was but one contract and that the adjudicator's reasoning on this point was erroneous. However, it submitted, in the circumstances of this case, the contract administrator had given a direction that separate claims be made for each separable portion of the works, and that this had the effect of creating a separate reference date for each portion. Alternatively, it submitted, it was not open to RailCorp to take the point in circumstances where the point had not been raised in its payment schedules (see s 20(2B) of the Act).

9 In relation to denial of natural justice, Nebax submitted, in substance, that denial of natural justice was significant only if the outcome would have been (or might have been) different if in some way, or if submissions could have been put that would (or might) have led to a different result; and in this case, again because of the "direction" point to which I have referred, there would have been no different result.

10 Finally, Nebax submitted, relief in the nature of certiorari should be refused because the point had not been raised in the payment schedule, in circumstances where the direction to which I have referred had been given (not once, but twice), and in circumstances where, thereby, it had been led to proceed in the way that it did.

A procedural diversion

11 The matter came before me during the vacation. RailCorp and Nebax sensibly agreed that the matter should proceed to hearing on a final basis. Unfortunately, as it now appears, the second defendant has been served only (if at all) very recently, by email; and if that is to be regarded also as service on the third defendant (the adjudicator), there is absolutely no reason to think that the matter has come to the attention of the adjudicator.

12 I have no doubt that when the second and third defendants are served, they will take the usual (and proper) course of filing appearances whereby they submit save as to costs. But my absence of doubt on the point cannot justify an exclusion of their right to be heard should they wish. The adjudicator, in particular, has a real (if theoretical) interest in the matter, because the effect of the making of an order in the nature of certiorari would be that he has not made any determination at all. That could mean, for example, that he has no entitlement to retain the fees that he has been paid for the work that has been done. Those fees are not insubstantial.

13 In the circumstances, the parties accepted that I should express my view on the basis of the material that is now before me and on the arguments that have been put, but that I should refrain from making final orders until the second and third defendants have been given an appropriate opportunity to consider their positions. Although there are risks in taking that course (because, if the second or third defendants do wish to be heard, they may well claim that I have prejudged the matter), nonetheless, having regard to the amount at issue and to the work that the parties have done to get the matter ready for hearing today, and bearing in mind the dictates of s 56 of the Civil Procedure Act 2005 (NSW), I conclude that I should proceed in the manner just indicated.

Relevant provisions of the contract

14 I start by going to relevant provisions of the contract. In form, the contract is constituted by RailCorp's letter of 15 December 2009 to Nebax, whereby RailCorp accepted Nebax's revised tender for the performance of the works for a specified lump sum. The letter specified, in a schedule to which reference was made in the body of the letter, that the contract documentation should include some 12 described documents.

15 The letter referred to RailCorp's "RFT" (Request For Tender) number WS 7203, contract number CW 5090 and the "platform resurfacing program 2009/10"). It commenced as follows:

Rail Corporation New South Wales (RailCorp) accepts your company's Proposal dated 15 th September 2009 for the Platform Resurfacing Program 2009-10, in accordance with Request for Proposal No WS7203 and in accordance with the documents listed in attached Schedule A, for the revised fixed cost of $10,495,623 exclusive of GST. This is not subject to rise and fall, exchange rate or customs duty variation.

The Contract between RailCorp and Nebax Constructions Australia Pty Ltd shall be entirely constituted by this Letter of Acceptance and the documents listed in attached Schedule A.

16 The contract documentation included the RFT (to adopt the language of the parties). In the introductory part of that RFT, RailCorp made clear that there was but "one single contract". I set out part of the "tender background":

It is RailCorp's intention to award this package as one single contract (comprising all Separable Parts) on a "ALL or NONE" basis.

Tenderers shall note the following possibilities and make provision for the following possibilities in their tender:

1. Cancellation of all work at any one station, in which case, the amount quoted for that Separable Part will not be payable to the contractor,

2. Cancellation of work in any possession and rescheduling it in another subject to a one week advance notice, in which case, the amount payable to the contractor will not change.

17 Part B of RailCorp's tender schedules (which were also identified as part of the contract documentation) stated the following:

NOTE: The Tender Price for each of the following Separable Parts must be independent and separable. The Tender Amount quoted for each Separable part will form a part of the contract and will be used in the event of any of the following events:

1. Cancellation of all platform resurfacing work at any one station, in which case, the amount quoted for that Separable Part will not be payable to the contractor,

2. Cancellation of resurfacing of a particular platform in any one station, in which case, the amount that will not become payable to the contractor will be discussed and agreed based on the amount quoted for that particular Separable Part.

3. Cancellation of work in any possession and rescheduling it in another subject to a one week advance notice, in which case, the amount payable to the contractor for that Separable Part will not change.

18 The separable parts were then described. As I have said, each part related to a different railway station. It is apparent from what I have just quoted that the requirement to specify a tender amount for separable parts was relevant at least to the cancellation of some of the work (in effect, the removal of some of the work - one or more separable parts - from the scope of works). It is also clear that the division into separable parts served the purpose of enabling RailCorp and Nebax to agree on damages for delay to any separable part, caused to Nebax by events for which RailCorp was responsible. That was also specified, in this case on page 3, of Part B of the tender schedules. It is not necessary to set out that material. Finally, it enabled liquidated damages to be specified for each separable part rather than overall.

19 The general conditions of contract (again, agreed to be part of the contract documentation) included a number of provisions which were referred to in submissions. Those provisions include clauses 3.1, 10.11, 11.2(b), 12.6, 12.13, and 13.7. I set out those clauses, together with the definitions of so many of the defined terms (indicated by initial capital letters) as are necessary to give content to them:

1.1 Glossary of Terms

Unless the context otherwise indicates, whenever used in the Contract, each word or phrase in the headings in this clause 1.1 has the meaning given to it under the relevant heading.

...

Contract Administrator

The person nominated in the Contract Particulars or any other person nominated by the Principal from time to time under clause 3.2 to replace that person.

Direction

Means any decision, demand, determination, direction, instruction, notice, order, rejection or requirement.

Practical Completion

The stage when in respect of the Works or a Separable Part:

(a) the Works are, or the Separable Part is, complete except for minor Defects:

(i) which do not prevent the Works or the Separable Part from being reasonably capable of being used for the intended purpose of the Works or the Separable Part; and

(ii) which can be corrected without prejudicing the convenient use of the Works or the Separable Part;

(b) those tests which are required by the Contract to be carried out and passed before the Works or the Separable Part reach Practical Completion have been carried out and passed;

(c) all documents and other information referred to in the Contract, including all Approvals, which are required for the use, operation and maintenance of the Works have been supplied to the Contract Administrator; and

(d) the Contractor has done everything which the Contract requires it to do as a condition precedent to Practical Completion, including those things described in the Contract Particulars.

Separable Part

A part of the Works described in the Contract Particulars.

3.1 Contract Administrator

The Contract Administrator will give Directions and carry out all its other functions under the Contract as the agent of the Principal (and not as an independent certifier, assessor or valuer)

The Contractor must comply with any Direction by the Contract Administrator given under a provision of the Contract.

Except where the Contract otherwise provides, the Contract Administrator may give a Direction orally but must as soon as practicable confirm it in writing.

...

10.11 Delay Costs

Where the Date for Practical Completion of the Works or a Separable Part is extended due to a breach of the Contract by the Principal, the Contractor will be entitled to be paid the extra costs incurred by the Contractor arising out of or in connection with the delay in the carrying out of the Contractor's Activities arising out of this breach of Contract up to but not exceeding the amount specified in the Contract Particulars.

...

11.2(b) any adjustment to the Contract Sum will be determined under clauses 11.3(b) and 11.3(c); or

...

12.6 Payment Claims

Subject to clause 12.12, the Contractor must give the Contract Administrator payment claims on account of the Contract Sum and any other amounts payable by the Principal to the Contractor under the Contract:

(a) upon the later of:

(i) the times stated in the Contract Particulars and the times required by clauses 12.13 and 12.15;

(ii) 3 Business Days after the Contractor has submitted a draft payment claim to the Contract Administrator setting out the amount which the Contractor intends to claim in its forthcoming payment claim; and

(iii) the Contractor having given to the Contract Administrator such further information in respect of the draft payment claim as the Contract Administrator may, within 3 Business Days of receipt of the draft payment claim referred to in paragraph (ii), reasonably require;

(b) in the format prescribed by Schedule 7 or in any other format which the Contract Administrator reasonably requires: and

(c) which are based on the Priced Bill of Quantities, the Cost Schedule or the Schedule of Rates to the extent these are relevant.

The Contractor cannot include in any payment claim under this clause 12.6, a Claim which is barred by clause 16.5.

A payment claim is not a document notifying an obligation on the Principal to make any payment and the Principal will have no liability to make a payment of any amount in respect of a payment claim unless the amount has been included in a Payment Schedule and Recipient Created Tax Invoice issued by the Contract Administrator in accordance with clause 12.7.

The Contractor agrees with the Principal that the date prescribed by paragraph (a) as the date on which the Contractor must make a payment claim is, for the purposes of section 8 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (in this clause 12, the "Act"), the "reference date".

...

12.13 Practical Completion Payment Claim and Notice

Within 28 days after the issue of a Notice of Practical Completion for the Works or a Separable Part, the Contractor must give the Contract Administrator:

(a) a payment claim which must include all amounts which the Contractor claims from the Principal on account of the Contract Sum or otherwise under the Contract; and

(b) notice of any other amounts which the Contractor claims from the Principal,

in respect of any fact, matter or thing arising out of, or in any way in connection with, the Contractor's Activities or the Contract which:

(c) in the case of the Works, occurred prior to the Date of Practical Completion of the works; and

(d) in the case of Separable Part, occurred prior to the Date of Practical Completion of the Separable Part, in so far as the fact, matter or thing relates to Separable Part.

The payment claim and notice required under this clause 12.13 are in addition to the other notices which the Contractor must give to the Contract Administrator under the Contract in order to preserve its entitlements to make any such Claims.

Without limiting the previous paragraph, the Contractor cannot include in this payment claim or notice any claims which are barred by clause 16.5.

13.7 Liquidated Damages

If the Date of Practical Completion of the Works or a Separable Part has not occurred by the Date for Practical Completion for the Works or the Separable Part the Contractor must pay liquidated damages at the rate specified in the Contract Particulars for every day after the Date for Practical Completion until the Date of Practical Completion or the Contract is terminated, whichever is first.

This amount is an agreed genuine pre-estimate of the Principal's damages if the Date of Practical Completion not occur by the Date for Practical Completion.

The amount payable under this clause 13.7 will be a debt due from the Contractor to the Principal.

20 It will be noted that clauses 10.11 and 13.7 refer to the Contract Particulars. In each case, the reference provides for the specification of an amount if there is no separable part and, where (as here) there are separable parts, an amount relevant to each separable part.

21 Likewise, the definition of date for Practical Completion in clause 1.1 contemplates, in the alternative, that there are not, or are, separable parts.

The payment claim and payment schedules

22 It is necessary also to pay some attention to the form of the progress claim and the payment schedules. I have set out the terms of the email of 31 October 2011. The invoices sent with it followed a standard pattern. Each had the date 30 September 2011. Each had a unique tax invoice identifier. Each referred to the same job number, the same job details, the same contract number and the same progress claim number. They differed, of course, in their statement of the subject of the particular claim. Two related to specific railway stations, at Guildford and Yennora. One appears to be a claim for extras or variations over the whole of the project. Another relates to the provision of "deadman anchors" at one particular (although not identified in the invoice) station.

23 The payment schedules responded to the claims individually. Again, they had a common format, but gave separate reasons, bearing in mind the nature of the claim to which they responded. Each misidentified the contract as "C 707". No one submitted that this misidentification of the contract is of any significance.

24 In each case, where the scheduled amount was less than the claimed amount, reasons were given.

The "direction" relied on

25 According to Nebax, the payment claim was submitted in the way that it was as a result of directions given by the contract administrator, who at the relevant time was Mr Ari Kalamotas.

26 On 29 June 2010, Nebax submitted its progress claim 8. Mr Kalamotas responded the same day saying:

"Please amend and submit individual progress claims ...".

27 That course was apparently followed until progress claim 17 was lodged, on 26 August 2011. For reasons that are not clear, that appears not to have been broken up. Accordingly, on 8 September 2011, Mr Kalamotas responded by email:

"Please provide separate invoices for the variations at each location. ...

28 Nebax complied with that response.

Practical completion

29 Nebax relied on the fact that practical completion had been granted for a number of stations, including two (Guildford and Yennora) that were the subject of progress claim 18. It is common ground that practical completion has been granted for, among others, those stations. There is no evidence to enable the court to conclude affirmatively when it was that this occurred. Such evidence as there is (and this applies only to the work at Guildford Station) would suggest that practical completion was granted on or shortly after 5 October 2011. I mention this because at one stage, Mr Smith of counsel, who appeared for Nebax, submitted that in relation to those two stations, there were separate reference dates by reference to the provisions of clause 12.13. Even if that argument were available, in circumstances where it had not been raised in the payment claim or adjudication application for the relevant stations, it must mean that, so far as the evidence goes, there is no basis for concluding that practical completion occurred for the period to which the payment claim related (the month ending 30 September 2011).

One only progress claim 18

30 The payment schedules did not assert, as a reason for refusing payment, that it was not open to Nebax to make more than one payment claim for the one reference date. There are two things that can be said about this. The first is that, on the evidence that I have at present, the better view appears to be that there was but one payment claim, broken up into, or particularised by reference to, a number of separate separable portions of the works and an individual claim for variations.

31 I have no doubt that, in an appropriate case, it is open to a claimant to submit one payment claim, for the purposes of the Act, that comprises several invoices, even though each invoice is separately said to be a payment claim for the purposes of the Act. Macready M (as his Honour then was) so held in Alan Conolly & Co v Commercial Indemnity [2005] NSWSC 339 at [23]. As his Honour's preceding analysis makes clear, that is a finding based on the facts of the particular case. I have no doubt that his Honour's finding was sound in law, and in an appropriate case, as I have indicated, I would accept that one payment claim, for the purposes of the Act, may be constituted by multiple invoices, and that this is so even where each invoice is said to be, individually, a payment claim in its own right.

32 The second is that I do not see anything in the language of the "directions" relied upon, the relevant parts of which I have set out, to suggest that Rail Corp, through its agent the contract administrator, required separate payment claims to be made for each job. On the contrary, I think, what Rail Corp, or perhaps more accurately Mr Kalamotas, required, was that each payment claim be broken up in such a way as to facilitate an assessment of the work claimed for each separable portion or other element of the total of the claim. So understood, the directions do not seem to me to be in any way inconsistent with the language of the contract, which clearly requires that there should be one payment claim for each reference date: see clause 12.6. In any event, it must be open to doubt whether the power to give directions conferred on the contract administrator by clause 3.1 of the contract would enable him unilaterally to vary an express term of the contract.

Section 20(2B)

33 It is convenient at this point to consider the arguments under s 20(2B) of the Act. That subsection reads as follows:

(2B) The respondent cannot include in the adjud i cation response any reasons for withholding payment unless those reasons have already been included in the payment schedule provided to the claimant.

34 It is common ground that the payment schedules in this case did not take the point that there were multiple claims in breach of s 13(5). However, several things may be said about that. The first is that the jurisdictional argument that was raised in the adjudication responses was not that argument. It was, rather, that s 17(1) of the Act did not permit multiple adjudication applications to be made for the one payment claim. Of necessity, that is a point that could not be taken until the allegedly offending multiple adjudication applications were lodged.

35 The second point is that even if the point could have been taken earlier, parties cannot confer jurisdiction beyond that which the Act gives, although no doubt they may agree between themselves to accept, or abide by, a determination made in excess of or want of jurisdiction.

36 More significantly, it appears to me, s 20(2B) talks of "reasons for withholding payment". That is not what is at issue here. The question that was raised for the adjudicator's consideration was whether he had any jurisdiction to hear the multiple applications that were lodged.

37 In Olympia Group (NSW) Pty Ltd v Hansen Yuncken Pty Ltd [2011] NSWSC 165, Ball J said at [11], of a similar argument put to him for consideration, that s 20(2B) prevented the respondent:

"from raising in its adjudication response a reason for not making a payment that was not raised in its payment schedule. It did not prevent it from raising grounds on which it was asserted that the adjudicator did not have jurisdiction to make a determination".

38 I agree. The point could not have been taken in the payment schedule. Thus, the alternative submission referred to at [8] above and the submission referred to at [10] above must fail.

39 In Chase Oyster Bar v Hamo Industries [2010] NSWCA 190, the Court of Appeal considered whether an adjudicator had power to determine an adjudication application not made in compliance with s 17(2)(a) of the Act. It held that he did not. No question was raised of s 20(2B). Nor could it be raised. The point did not arise until the non-compliant adjudication application was made. In this case, the point did not arise (if it arose at all) until the allegedly non-compliant applications were made.

40 One then comes back to the arguments based on s 17(1), denial of natural justice and s 13(5).

Section 17(1)

41 The adjudicator appears to have proceeded on the basis that s 17(1) was jurisdictional. That subsection reads as follows:

17 Adjudication applications

(1) A claimant may apply for adjudication of a payment claim (an "adjudication application") if:

(a) the respondent provides a payment schedule under Division 1 but:

(i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or

(ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or

(b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount.

42 In Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421, Hodgson JA (with whom Mason P and Giles JA agreed) held at [53] that the "basic and essential requirements" for validity of an adjudicator's determination included "the making of an adjudication application by the claimant to an authorised nominating authority". His Honour did not say in terms that s 17(1) authorised the making of only one adjudication application for one payment claim.

43 Nonetheless, it seems to me, when one considers the structure of the Act as a whole, it is reasonably clear that there should be one only application for adjudication of any one payment claim. Section 8(1) gives the right to a progress payment. Section 13 of the Act gives to a person claiming an entitlement to a progress claim the right to serve a payment claim. Section 14 provides for a response, through a payment schedule. Section 17 provides for "adjudication of a payment claim" where, among other things, a payment schedule is provided under which the scheduled amount is less than the claimed amount. I set out those sections, so far as they are relevant:

8 Rights to progress payments

(1) On and from each reference date under a construction contract, a person:

(a) who has undertaken to carry out construction work under the contract, or

(b) who has undertaken to supply related goods and services under the contract,

is entitled to a progress payment.

...

13 Payment claims

(1) A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the "claimant") may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.

(2) A payment claim:

(a) must identify the construction work (or related goods and services) to which the progress payment relates, and

(b) must indicate the amount of the progress payment that the claimant claims to be due (the "claimed amount"), and

(c) must state that it is made under this Act.

...

(5) A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.

(6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.

...

14 Payment schedules

(1) A person on whom a payment claim is served (the "respondent") may reply to the claim by providing a payment schedule to the claimant.

(2) A payment schedule:

(a) must identify the payment claim to which it relates, and

(b) must indicate the amount of the payment (if any) that the respondent proposes to make (the "scheduled amount").

(3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment.

...

17 Adjudication applications

(1) A claimant may apply for adjudication of a payment claim (an "adjudication application") if:

(a) the respondent provides a payment schedule under Division 1 but:

(i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or

(ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or

(b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount.

(2) An adjudication application to which subsection (1) (b) applies cannot be made unless:

(a) the claimant has notified the respondent, within the period of 20 business days immediately following the due date for payment, of the claimant's intention to apply for adjudication of the payment claim, and

(b) the respondent has been given an opportunity to provide a payment schedule to the claimant within 5 business days after receiving the claimant's notice.

(3) An adjudication application:

(a) must be in writing, and

(b) must be made to an authorised nominating authority chosen by the claimant, and

(c) in the case of an application under subsection (1) (a) (i)-must be made within 10 business days after the claimant receives the payment schedule, and

(d) in the case of an application under subsection (1) (a) (ii)-must be made within 20 business days after the due date for payment, and

(e) in the case of an application under subsection (1) (b)-must be made within 10 business days after the end of the 5-day period referred to in subsection (2) (b), and

(f) must identify the payment claim and the payment schedule (if any) to which it relates, and

(g) must be accompanied by such application fee (if any) as may be determined by the authorised nominating authority, and

(h) may contain such submissions relevant to the application as the claimant chooses to include.

(4) The amount of any such application fee must not exceed the amount (if any) determined by the Minister.

(5) A copy of an adjudication application must be served on the respondent concerned.

(6) It is the duty of the authorised nominating authority to which an adjudication application is made to refer the application to an adjudicator (being a person who is eligible to be an adjudicator as referred to in section 18) as soon as practicable.

44 It seems to me that, because s 13(5) prevents (with a presently irrelevant exception for which subs (6) provides) the service of more than one payment claim per reference date per construction contract, and because the right to adjudication "of a payment claim" is clearly referable to a payment claim that complies with the various requirements of s 13, there can only be one adjudication application for any particular payment claim for any particular contract.

45 The proposition that there may be multiple adjudication applications in respect of different parts of a payment claim seems to me to be completely inconsistent with the underlying objective of the Act, which is to provide an enforceable right to progress payments and a speedy and relatively cheap and efficient means for enforcement of those rights. It also seems to me to be inconsistent, if not directly then at least by implication, with the approach of the plurality (Macfarlan JA and Handley AJA) in Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190, where their Honours expressed a clear view against the repetitious lodging of payment claims seeking to enforce the same claim. It may be noted that Allsop P concurred in the result, although for somewhat different reasons.

46 Thus, it seems to me, the better view of s 17(1) is that there can only be one adjudication application for any one payment claim. To put it another way, it seems to me that s 17(1) does not authorise the lodging of multiple adjudication applications in respect of the one payment claim.

47 On that basis, the adjudicator was required to do as he did, and to consider whether the objection to jurisdiction was good. It is clear that an adjudicator's decision that he does have jurisdiction cannot bind the court. See Chase at [97] to [101] (Basten JA, with whom on this point I agreed).

48 It is necessary to draw attention to the fact that the primary position taken by Nebax is that it had lodged one only payment claim, consisting of five separate subclaims. Even if that were not its position, I would so conclude. As I have said, I read the directions to which it referred in submissions as relating to the form of the payment claim, and not as to some apparent creation of a right expressly forbidden by s 13(5) of the Act.

Natural justice

49 In this case, the adjudicator clearly considered that the objection to jurisdiction was valid at the level of principle. That is to say, he seems to have considered that if there were in truth five adjudication applications relating to the one payment claim arising under the one contract, then there would be a jurisdictional issue.

50 The adjudicator dealt with this at paras 27 to 40 of the reasons annexed to his determination. I set out paragraphs 27 to 38, which constitute the essence of his reasoning:

27. This application is one of five Adjudication Applications submitted by the Claimant to the Authorised Nominating Authority. Each application was submitted separately by the Claimant on 24 November 2011.

28. Applications 620 to and including 623 relate to the one contract, namely the platform resurfacing contract, in accordance with the Respondent's submissions. They all refer to being part of a progress claim numbered 18, as submitted by the Claimant to the Respondent on 31 October 2011. Application 624 is obviously not related to the previous 4 claims given its unique contract number.

29. Progress claim 18 is a reference number contained on each Payment Claim. The subsequent individual tax invoices associated with the individual Payment Claims contain a unique reference number which ultimately is associated to each individual Adjudication Application. The fact that each refers to being a part of progress claim 18 is more of a reference to the claims relation with the head contract. Each Payment Claim made under the Act is unique to a separable and specific contract, which I shall explain in due course.

30. The Act prevents a Claimant submitting more than one Payment Claim in any one reference period under the contract.

31. The Respondent contends that, to the extent progress claim 18 is one single Payment Claim, the Claimant is only entitled to submit one application to adjudication under section 17 of the Act in relation to that Payment Claim.

32. The Respondent concludes that noting in the Act entitles a claimant to subdivide any one Payment Claim and issue numerous Adjudication Applications to be determined at the same time.

33. Section 17 of the Act contemplates one adjudication application for each Payment Claim for each reference date under a contract.

34. The Construction Contract is made up of 25 separable portions with each portion relating to a different specified railway station.

35. It is clear that the parties wished to treat each station as a separable and independent portion of the contract, with individually assigned contract values for each station. The Construction Contract states that the tender price for each of the separable parts must be independent and separable.

36. It is apparent that the parties intention was to treat each of the 25 independent railway stations as completely separate components of an overall global contract for the resurfacing works. In fact the contract specifically identifies the 25 independent components.

37. I am satisfied that there were five different payment claims pertaining to 5 different contracts (governed by a head contract) giving rise to the five separate Adjudication Applications.

38. I am satisfied that the Construction Contract contemplated that in relation to invoicing, progress claims and subsequent payments, each of the 25 railway stations were to be treated in isolation and as a separate contract, to be governed by the terms of the head contract, namely Contract No. CW5090, Platform Resurfacing Program 2009/10.

51 It will be seen that the adjudicator reasoned, based on the existence of separable parts of the works, that there were in fact 25 separate contracts: one for each separable part of the works.

52 That is not an approach that either party had taken. It was not referred to at all in the payment claim, the payment schedules, the adjudication application or the adjudication response. Nor is it an approach adopted by Nebax in this court. Mr Smith, in my view entirely correctly, accepted that there was but one contract. If that concession had not been made, I would so hold: the language of the various parts of the contract documents to which I have referred makes it clear.

53 In those circumstances, it seems to me, the adjudicator dealt with the objection as to jurisdiction on a basis for which neither party had contended. It is not disputed that he did not give either party notice of his intention to do so, or offer them an opportunity to be heard on the point.

54 The obligation to provide natural justice, in relation to the Act, has been considered in a number of cases. I set out the relevant principles, as I understood them, in my decision Watpac Constructions NSW Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168 at [141] to [147]. For convenience, and since I remain of the view set out in those paragraphs, I incorporate them into these reasons:

[141] Hodgson JA discussed natural justice, in the scheme of the Act, in Brodyn at 441-442 [55]. His Honour said in that paragraph that an adjudication determination will be void if, among other things, "there is a substantial denial of the measure of natural justice that the Act requires to be given".

[142] Any entitlement to natural justice must accommodate the scheme of the Act, including the extremely compressed timetable provided for the submission of payment schedules, adjudication applications, and adjudication responses; and the limited time (subject to the consent of the parties, which they may give or withhold at their will) for an adjudicator to determine an application. It must also accommodate the fact that, in many cases, claimants and respondents will prepare their documents themselves, and will not avail themselves of legal advice in doing so.

[143] In Musico v Davenport [2003] NSWSC 977, I said at [107]

that where an adjudicator is minded to decide a dispute on a basis for which neither party has contended, then natural justice requires the adjudicator to notify the parties of that intention, so that they could put submissions on it.

[144] However, as I pointed out in John Goss at 716 [42], "the concept of materiality is inextricably linked to the measure of natural justice that the Act requires parties to be given in a particular case." That meant, I said, that the principles of natural justice "could not... require an adjudicator to give the parties an opportunity to put submissions on matters that were not germane to his or her decision".

[145] I see no reason to depart from those views; and neither party submitted that I should. In particular, I think, my insistence on materiality is consistent with the reference by Hodgson JA in Brodyn to "substantial denial... of natural justice."

[146] In this context, Gleeson CJ said in Re Minister for Immigration and Multicultural Affairs ; ex parte Lam (2003) 214 CLR 1 at 13 - 14 [37] that fairness is not abstract but practical. His Honour said that "[w]hether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice". To like effect, Kirby J said in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 291 that the court should not undertake the task of "combing through the words of the decision-maker with a fine appellate tooth-comb [sic], against the prospect that a verbal slip will be found warranting" the intervention of the court.

[147] I accept, however, that the court should not be too ready to find that a denial of natural justice was immaterial; that it had no real or practical effect; or that (in the present context) there was nothing that could have been put on the point in question. But it remains the case, I think, that the denial of natural justice must be material, and that submissions that could have been put might have had some prospect of changing the adjudicator's mind on the point.

55 Prima facie, therefore, the adjudicator did deprive the parties - in particular

RailCorp - of natural justice. Was that material? Could submissions have been put that might have persuaded him to change his mind? In my view, each of those questions should be answered "yes".

56 Had the matter been raised, it would have been open to RailCorp to take the adjudicator to the relevant portions of the contract to which I have referred already; in particular, the insistence, in the letter of 15 December 2009, that there was one contract for the specified lump sum; and the insistence and the acceptance, in the form of tender, that the contract was to be constituted by the tender documents as specified. It would also have been open to RailCorp to take the adjudicator in more detail to the provisions of Part B2 of the tender schedule, and to the relevant provisions of the contract, to show him the purposes for which the contract works under the one contract were it to be divided into separable portions.

57 The adjudicator may or may not have accepted those submissions. If he did, he should not have concluded, for the reasons that he did, that he had jurisdiction. If he did not, then on the view I have taken, it would not matter because, as I have said, he could not determine his own jurisdiction conclusively. But the salient point is that as proceeding as he did, the adjudicator deprived RailCorp of the opportunity to put submissions, that in my view, would have had force and, indeed, should have persuaded him to a view different to the one that in fact he expressed.

58 Thus, I conclude, there was a material denial of natural justice.

59 It is clear that a material denial of natural justice renders the determination void. That proposition is supported by the authorities (including Brodyn and Chase ) and was not controverted.

60 As I have said, Mr Smith submitted that it would have been open to his client to rely on the so-called direction, and on the submission of separate individual tax invoices each described as a payment claim, to argue that there would have been, or were, separate reference dates under the one contract. I do not think that this argument is sound. But the point is not whether or not it is sound. The point is, as I have indicated, whether the parties were given an opportunity to address the issue. Certainly, I am not persuaded that the argument is indubitably correct, so that the loss of the ability to put submissions had no practical consequence in terms of outcome. I say that for reasons that I think I have indicated, including of course that the proposition is inconsistent both with the language of the contract and with s 13(5) of the Act, and I have grave doubts that the power vested in the contract administrator to give directions could be intended to vary the contract, let alone to set at nought, a mandatory requirement of the Act.

Conclusion

61 For those reasons, my present view is that RailCorp is entitled to the relief that it seeks. It is not necessary, having regard to what I have just said, to look at the separate s 13(5) argument, which would arise only if I had come to a different view on the matters that I have dealt with so far.

62 Bearing in mind the procedural difficulties, the course that I propose to take, having given these reasons, is to continue the interlocutory relief already granted and to stand the matter over to a convenient date in the new term so that the second and third defendants can be heard (should they so wish) or so that, if they do not wish to be heard, appropriate orders can be made. Thus, apart from continuing the present interlocutory regime, I reserve all further orders.

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Decision last updated: 30 January 2012