Supreme Court New South Wales

• Medium Neutral Citation: Anderson Street Banksmeadow Pty Ltd v JCM Contracting Pty Ltd [2014] NSWSC 102
• Hearing dates: 19 February 2014
• Decision date: 24 February 2014
• Before: Ball J

Decision

Summons filed 1 November 2013 be dismissed with costs.

• Catchwords: BUILDING AND CONSTRUCTION - Building and Construction Industry Security of Payment Act 1999 (NSW) - adjudication determination - whether plaintiff denied natural justice - whether denial of natural justice material to determination of adjudicator
• Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
• Cases Cited: John Holland Pty Ltd v TAC Pacific Pty Ltd [2009] QSC 205; [2010] 1 QdR 302; Maxstra NSW Pty Ltd v Blacklabel Services Pty Ltd [2013] NSWSC 406; Trysams Pty Limited v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399; Watpac Construction (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168
• Category: Principal judgment
• Parties: Anderson Street Banksmeadow Pty Ltd ABN 82 151 696 561(Plaintiff); JCM Contracting Pty Ltd ABN 56 098 150 531 (First Defendant)
• Representation: Ms M McMahon (Plaintiff); N A Nicholls (First Defendant); Ted Smithies (Second Defendant); Australian Solutions Centre Pty Ltd ABN 68 085 917 219 (Third Defendant); Daniel Massey, Solicitor & Consultant (Plaintiff); Colin Biggers & Paisley (First Defendant)
• File Number(s): 2013/330289
• Publication restriction: N/A

Judgment

1 By a summons filed on 1 November 2013 the plaintiff, Anderson Street, seeks a declaration that an adjudication determination made by the second defendant, Mr Smithies (the Adjudicator), under s 22 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) regarding a dispute with the first defendant, JCM, is void and of no effect on the ground that Anderson Street was denied natural justice by the Adjudicator.

2 Anderson Street also seeks an injunction permanently restraining the third defendant, Australian Solutions Centre Pty Ltd (the Authority), from issuing an adjudication certificate under s 24 of the Act.

3 Both the Adjudicator and the Authority have filed submitting appearances.

Background facts

4 Anderson Street and JCM entered into a construction contract on 10 October 2012 for the performance of excavation work by JCM at a site being developed by Anderson Street at Banksmeadow. No formal written contract for the excavation work was executed by the parties. However, it is not disputed that the terms of the contract are as set out in a document entitled "Scope of Works, Bulk and Detailed Excavation Revision A" (the SOW).

5 Clause 2.13 of the SOW relevantly provided:

Progress claims will be monthly, submitted on the 15th of each month. Payment terms are 45 days.

6 On 15 November 2012, JCM sent two invoices to Anderson Street by email. The first invoice was numbered 1995 and dated 5 November 2012. It was sent at 2.34 pm (the first invoice). The second invoice was numbered 1996 and dated 15 November 2012. It was sent at 2.35 pm (the second invoice).

7 It is not entirely clear what happened after 15 November 2012. However, Anderson Street did not pay the second invoice and, on 19 July 2013, JCM served a notice on Anderson Street giving notice of its intention to suspend work under the contract. The notice relevantly said:

Our Payment Claim (Tax Invoice No. 00001996) was served on 15 November 2012 pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) ('Act'). The amount of the claim was $6,545.00 (including GST).

It is apparent that no payment schedule was provided to us within the time required under the Act nor has payment been received. The due date for payment was 30 days from the date of our payment claim and this date has elapsed.

Since the due date for payment has elapsed and we have not yet received payment for the amount due under the Act, we hereby serve notice of our intention to suspend work under the construction contract.

8 That notice was clearly given in accordance with s 27(1) of the Act which provides:

A claimant may suspend the carrying out of construction work (or the supply of related goods and services) under a construction contract if at least 2 business days have passed since the claimant has caused notice of intention to do so to be given to the respondent under section 15, 16 or 24.

Section 15(2) permits a claimant to serve notice of intention to suspend carrying on construction work where a claimant serves a payment claim and the respondent does not provide a payment schedule to the claimant in response to that claim in accordance with the timetable set out in s 14(4) - with the result that the respondent becomes liable under s 14(4) to pay the claimed amount on a due date for the progress payment to which the payment claim relates.

9 Anderson Street responded to JCM's suspension notice on 22 July 2013. In that response, it said:

The reference date in the subcontract for subcontractors' progress claims is the last day of the month. Which in this case refers to 31 October 2012 as the reference date for the progress claim in question.

Using that reference date invoice 1995 was issued by JCM on 5th November 1012. Accordingly invoice 1996 was the second invoice issued in reliance to the reference date and Section 13[5] of the Act, only allows 1 payment claim in respect of a reference date. Accordingly JCM cannot rely upon invoice 1996 to support a suspension notice under the Act.

If JCM does suspend the work they will be in beach [sic] of the subcontract, although we note that JCM is already in breach in refusing to return to site to complete their works.

10 JCM responded to that letter on 23 July 2013 asking for an explanation of the suggestion in the letter that the reference date was the last day of the month.

11 There was then further correspondence between the parties. Anderson Street did not answer JCM's query in relation to the reference date. It asserted that JCM had imported a quantity of excavated material without authorisation onto the site and complained about JCM's continued suspension of work. JCM denied that it had imported material onto the site without authorisation and maintained its entitlement to suspend the works.

12 On 31 July 2013, Anderson Street gave notice terminating the contract. The notice relevantly said:

In the circumstances of this refusal [that is the refusal to recommence work] and the dumping of imported material onto our site, it is clear that JCM has no intention of completing its works. That behaviour amounts to a repudiation of JCM's contractual obligations and accordingly Anderson Street Banksmeadow Pty Ltd accepts JCM's repudiation and hereby terminates the contract.

13 On 23 August 2013, JCM made a payment claim for $79,901.10. The claim had a number of items.

14 Anderson Street served its payment schedule on 6 September 2013.

15 In these proceedings, Anderson Street submitted that the question whether it was entitled to terminate the contract was relevant to four of the items specified in the payment claim.

16 The first item was a claim for $3,121.36 in respect of "Basecourse". According to the payment schedule, no work had been commenced on that item. However, Anderson Street claimed that as a matter of goodwill it had previously allowed JCM 5 per cent of the total price for that work. The payment schedule stated that "This concession for payment is withdrawn ...". Consequently, Anderson Street claimed a refund of $3,121.36. Although the payment schedule does not specifically say so, it might be inferred that the concession was withdrawn because it was alleged that JCM had wrongfully repudiated the contract.

17 The second item relates to a contract amount for "Preliminaries and Supervision" totalling $5,238.58. In relation to this item, Anderson Street maintained that 25 per cent of the contract works remained outstanding, that the item for Preliminaries and Supervision related to the entire contract works and that consequently it was "more than reasonable" for Anderson Street to withhold 15 per cent in respect of that item. Again, although Anderson Street does not specifically say so, it might be inferred that that was reasonable because it was alleged JCM had wrongfully repudiated the contract.

18 The third item related to the "Retention Allowance on the contract value" totalling $26,902.12. Anderson Street maintained that, since the contract had not reached practical completion and JCM had abandoned completion of the works, it was entitled to retain 10 per cent of the contract sum (including variations) and that the amount retained was only $28,763.11, which was less than 10 per cent.

19 The last item related to a claim for the excavation of Pile Caps. Anderson Street conceded that the relevant work had been done but claimed that it was defective.

20 On 10 September 2013, JCM made an adjudication application to the Authority in accordance with s 17(1)(a)(i) of the Act. The application was served on Anderson Street on 11 September 2013.

21 In its submissions in support of the application, JCM complained that Anderson Street "did not administer the agreement in accordance with the terms of the SoW". It gave a number of examples. One of them was expressed in the following terms:

1. Reference Date - In various correspondence (see example at Annexure D.3) the Respondent has relied on the reference date as being 'the last day of the month'. The SoW provides a reference date of the 15th of each month (item 2.13).

Annexure D.3 is Anderson Street's letter dated 22 July 2013.

22 In relation to the first item (Basecourse), JCM made the following submission:

The Claimant has completed preparation of the entire site for the Basecourse to be laid and this would equate to at least 5% of the total Basecourse works allowance in the contract sum. The Respondent had previously assessed and paid this and it is unreasonable to now attempt to claw back this item from amounts properly due. Given the Respondent has terminated the contract the Claimant will not have the opportunity to complete the remaining Basecourse works and therefore will be unable to recover the value of the works completed to date (being the 5% previously assessed and paid) should the adjudicator find in favour of the Respondent.

23 In relation to the second item (Preliminaries and Supervision), JCM made the following submissions:

7.7 The Claimant disputes the Respondents reason for withholding payment. The Claimant believes that the delays experienced in completing the Project warrant an entitlement to claim 100% of the Preliminaries allowance. The Claimant commenced on site in October 2012 and was expected to complete the contract works in December 2012. Due to delays with the Respondent's works and other subcontractors, the Claimant was forced to demobilise and leave the site in February 2013. The Claimant has since been incurring costs for both its on-site and off-site overheads against which it is entitled to claim for payment. Since leaving the site the Claimant has had to spend significant monies and management time in chasing payments from the Respondent, attending meetings with the Respondent, engaging professional advisors and the like, as well as funding retention amounts behind held by the Respondent and providing environmental protection equipment to the site which is ongoing. All of these costs are directly related to the Respondent's failure to manage the Project and its other subcontractors which has delayed completion of the works, and the Claimant is entitled to recover these costs from the Preliminaries portion of the contract sum.

7.8 The Respondent issued the Claimant with a notice on 31 July 2013 terminating the contract. Given that the Claimant will not be returning to site to complete the contract works it is apparent that there will be no future opportunity for this Preliminaries amount to be recovered should the adjudicator find in favour of the Respondent. The Claimant request that the adjudicator find in its favour for the amount of $4,726.35 ex GST.

24 In relation to the third item (the Retention Amount), JCM made the following submissions:

7.11 By way of background, the Respondent's reason for termination was that the Claimant had suspended the work (see correspondence from the Respondent dated 31 July 2013 at Annexure D.7). The Claimant had validly issued a suspension notice pursuant to section 27 of the Act (Annexure D.2) against Invoice number 1996 dated 15 November 2012 (Annexure D.2A). In circumstances where the Respondent refused to address overdue payments, it was unreasonable to expect the Claimant to return to site and carry out further works.

7.12 Through various correspondence the Respondent asserted that the Claimant's suspension was in breach of the agreement and invalid on the basis of Reference Dates. It is evident from Annexures D.2 and D.2A that the Claimant validly suspended works against its claim (Invoice 1996) dated 15 November 2012 which was the only claim issued against the Reference Date of 15 November 2012. ...

7.13 The Claimant's primary position is that the retention provisions contained at item 2.13 of the SoW no longer apply because the Respondent has issued a termination notice. Therefore the Claimant has incorrectly allowed retention at a rate of 2.5% in its payment claim when in fact it should have allowed Nil. ....

25 In relation to the fourth item (Pile Caps), JCM denied that the work it had done was defective and gave an explanation for that denial.

26 On 16 September 2013, the Authority referred JCM's adjudication application to the Adjudicator in accordance with s 17(6) of the Act.

27 On 18 September 2013, Anderson Street provided a response to the adjudication application, as permitted under s 20 of the Act.

28 In commenting generally on the adjudication application, Anderson Street made the following submission:

It is true that the Claimant issued a notice on 19 July 2013 purporting to suspend under Section 27 of the Act in reliance on Invoice 1996. As is so often the case with the Claimant the notice was ill conceived in that it was based on a payment claim that was the second payment claim made in respect of a reference date and therefore had no standing under the Act (see Section 13). Invoice 1996 was issued by the Claimant as a separate invoice at 2.35pm on 15 November 2012. Unfortunately for the Claimant, it issued invoice 1995 which although dated 5 November 2012 was in fact only issued as a separate invoice to the Respondent at 2.34pm the same day. While it may only be a minute the fact remains that invoice 1996 was the second separate claim made under the Act in respect of the reference date of 15 November 2012. (See Annexure B) and therefore no entitlement to suspend can follow.

The response went on to assert that the reference in Anderson Street's letter dated 22 July 2013 to invoice 1995 being issued on 5 November was a typographical error and should have been a reference to 15 November.

29 In relation to Basecourse, Anderson Street made the following submission:

On the Claimant's own submissions the highest its position can be put is that it "has completed preparation of the site for the basecourse" (paragraph 7.6). In the circumstances where the Claimant now makes its claim for everything it could hope for it is not unreasonable for the Respondent to look at its prior position and to take an [sic] hard line removing the ex gratia payment of 5% that it had previously made. What is good for the claimant must similarly be allowed to the Respondent.

...

The termination was lawful and resulted from the repudiation by the Claimant of the contract because it had chosen to suspend and not return when the unlawfulness of the suspension was pointed out to it. The Claimant effectively abandoned the contract and repudiated. The Respondent accepted the repudiation and terminated. ...

30 In relation to Preliminaries and Supervision, Anderson Street made the following submissions:

The Respondent repeats its position put in the payment schedule.

The Respondent says further that the termination was lawful and the fact that more than 25% of the contract works remain incomplete means that its valuation of this head of claim is generous. It is the acts of the Claimant in abandoning the works that have brought about the termination. There is no accrued right in the Claimant to recover the preliminaries, quite to the contrary, it has been overpaid.

31 In relation to the Retention Amount, Anderson Street asserted that it had lawfully terminated the contract, that termination of the contract did not require the release of the security and that it was entitled to use that security to engage others to complete the work.

32 In relation to Pile Caps, Anderson Street maintained that the work was defective and said:

The Respondent is entitled, where the contract has been terminated as a result of repudiation to rectify the defective work. That right accrued prior to termination and remains.

33 The Adjudicator issued a determination in favour of JCM on 23 September 2013.

34 The Adjudicator dealt with the parties' submissions concerning the reference date. He pointed out that Anderson Street now agreed that the reference date was the 15th day of each month. He continued:

● With respect to the Respondent's adjudication response submission that both invoices (Nos. 00001995 and 00001996) were served on the same date, I note the following:

- The Respondent's letter of 22 July 2013 indicates that invoice No. 00001995 was not issued on the same day as invoice no. 00001996, namely '... invoice 1995 was issued by JCM on 5th November 2012'

- In paragraph 4 of the adjudication response, the Respondent submits that the date of 5 November 2012 in the letter of 22 July 2013 was a typing error. However, given that the Respondent was at the same time arguing the end on the month reference date which would capture both invoices, I am not inclined to accept that the previous acceptance of 5 November 2012 as the date of receipt of invoice No. 00001995, can be dismissed as a typing error

- The invoice listings provided by the Respondent in Annexure D of the adjudication response, indicates a pattern whereby invoices issued on the same day are dated accordingly. The exception is invoice nos. 00001995 and 00001996

- I note in Annexure I of the adjudication application, that the Respondent has requested that invoices be resubmitted. On this basis, I would observe that the email dated 15 November 2012, attaching Invoice No. 00001995, could be a resubmission of the invoice.

● Based on the foregoing, I consider there are too many inconsistencies in the Respondent's submissions to prefer them over those of the Claimant.

Adopting the 15th day of each month as the reference date, and on the basis that I am satisfied that invoice No. 00001995 was served on or about 5 November 2012, means that Invoice No. 00001996 was properly served under the Act, contrary to the submissions of the Respondent.

35 In relation to the item for Basecourse, the Adjudicator noted that "The Claimant's submission that the work was completed in preparation of the basecourse is consistent with the Respondent's previous assessment of the work being 5% complete". For that reason, he concluded that Anderson Street was not entitled to any deduction in respect of Basecourse work.

36 In relation to the item for Preliminaries and Supervision, the Adjudicator concluded that, given JCM was on site for a period greater than the time anticipated in the project program, "I consider it appropriate to value the work on an actual cost basis rather than the percentage basis relied on by the Respondent". The Adjudicator also said:

With respect to the issue of contract termination, I determined in Section 6 of this determination that the Claimant had properly suspended work under the Act.

Having reached those conclusions, the Adjudicator allowed the amount claimed by JCM.

37 In relation to the Retention Allowance, the Adjudicator accepted JCM's submission that the retention provisions had not survived termination of the contract. Consequently, he concluded that Anderson Street was not entitled to retain any retention amount.

38 In relation to the Pile Caps, the Adjudicator accepted JCM's submission that the relevant work had not been done defectively.

39 Anderson Street challenges the Adjudicator's determination on four bases:

• The Adjudicator determined the repudiation issue on a basis not contended for by JCM and in respect of which Anderson Street was not afforded an opportunity to make submissions;
• The Adjudicator determined the repudiation issue by making a finding for which there was no supporting evidence;
• The Adjudicator took into consideration irrelevant matters contrary to s 22(2) of the Act;
• The Adjudicator failed to have regard to matters to which he was required to have regard in accordance with s 22(2) of the Act.

Although it is not apparent in relation to the second two, each of these grounds is concerned with the conclusion that the Adjudicator reached that JCM had not repudiated the contract by suspending the works.

The Act and relevant legal principles

40 It is not necessary to set out the relevant provisions of the Act in any detail. The Act is intended to provide a simple and expeditious process by which disputes between builders and contractors concerning progress payments can be resolved so that contractors are not left out of pocket in respect of payments due to them.

41 Under s 13, a person who is entitled to a progress payment under a construction contract is entitled to serve a payment claim. Sections 13(5) and (6) relevantly provide:

(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.

"Reference date" is relevantly defined in s 8(2)(a) as "a date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out ...". In the present case, that date was clearly the 15th of each month.

42 Under s 14 of the Act, a person on whom a payment claim is served may reply to the claim by providing a payment schedule. The payment schedule must be provided on the earlier of the time specified in the contract or 10 business days after the payment claim was served. If no payment schedule is served within the time specified, the respondent to the claim is liable to pay the claimed amount.

43 Under s 17 of the Act, if a respondent serves a payment schedule a claimant may apply for adjudication of the payment claim. The adjudication application must be made within the time specified in s 17 and "may contain such submissions relevant to the application as the claimant chooses to include". Under s 20, a respondent may lodge with the adjudicator a response to the claimant's adjudication application within the time specified in the section. Again, the response may contain "such submissions relevant to the response as the respondent chooses to include. However, under s 20(2B):

The respondent cannot include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule provided to the claimant.

44 Under s 21 of the Act, the adjudicator must determine an application "as expeditiously as possible" and, in any event, within 10 business days after the date on which the adjudicator accepts the application or such further time as the claimant and respondent agree. The adjudicator may request further written submissions from either party and must give the other party an opportunity to comment on those submissions.

45 Section 22(2) of the Act provides:

In determining an adjudication application, the adjudicator is to consider the following matters only:

(a) the provisions of this Act,

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

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

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

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

46 There is no doubt that an adjudicator is bound by the rules of natural justice. However, the content of the obligation to comply with the rules of natural justice is affected by the nature of the process to which the rules apply. As McDougall J explained in Watpac Construction (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 168 at [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.

See also Maxstra NSW Pty Ltd v Blacklabel Services Pty Ltd [2013] NSWSC 406 at [79] per Rothman J.

47 Moreover, for the court to grant relief in respect of a failure to follow the requirements of natural justice, the failure must be material. The concept of materiality was explained in these terms by McDougall J in Trysams Pty Limited v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 at [52]:

... the concept of materiality is inextricably interlinked with the concept of natural justice, insofar as the latter concept is relevant to the determinations of adjudicators under the Act. On my view, that flows not only from Hodgson JA's use of the adjective "substantial" in Brodyn, but also from the point made by Gleeson CJ in Lam: that the law is concerned with the practical effect of the alleged denial of an opportunity to be heard. Thus, the concept of materiality requires some analysis of at least:

(1) the importance or otherwise of the relevant subject matter (as to which, it is said, there was a denial of an opportunity to put submissions): in particular, its significance to the actual determination; and

(2) whether or not there were submissions that could properly have been put that, as a matter of reality and not mere speculation, might have affected the determination.

Similarly, in John Holland Pty Ltd v TAC Pacific Pty Ltd [2009] QSC 205; [2010] 1 QdR 302 at 40, Applegarth J, after reviewing the authorities in New South Wales, said:

The adjective "substantial" has been used in the relevant authorities to capture the principle that the opportunity denied was material, namely that the matter about which the adjudicator did not provide an opportunity to be heard was a point upon which the adjudicator based his or her decision and was significant to the actual determination. In addition, the Court's concern is with the practical effect of the alleged denial of natural justice. Reference to the High Court's decisions in Stead v State Government Insurance Commission and Ex parte Aala supports the proposition that even if the Court is satisfied that there has been a denial of natural justice, relief may be denied if it can be shown that compliance with the requirements of natural justice could have made no difference to the outcome. It is probably sufficient in this regard for the applicant for relief to show that there were substantial submissions that, as a matter of reality and not mere speculation, might have persuaded the adjudicator to change his or her mind. [Citations omitted]

Consideration

48 Although Anderson Street puts its claim in various ways, in substance its complaint is that the Adjudicator rejected Anderson Street's submission that the claim made in invoice 1996 was made on the same day as the claim made in invoice 1995 (contrary to s 13(5) of the Act) for reasons that were not raised by JCM and on which Anderson Street was given no opportunity to make submissions.

49 Before dealing with that submission directly, it is necessary to say something about the reasons relied on by the Adjudicator.

50 The Adjudicator observed that a problem with Anderson Street's submission was that, in its letter dated 22 July 2013, it said that invoice 1995 was issued on 5 November 2012. Anderson Street was aware of that issue and it sought to deal with it by saying that the reference to 5 November was a typographical error and it should have been a reference to 15 November. The Adjudicator rejected that submission for three reasons.

51 First, the Adjudicator pointed out that, at the time the 22 July 2013 letter was written, Anderson Street wrongly maintained that the reference date was the last date of each month. The Adjudicator was conscious of the fact that invoice 1995 was dated 5 November 2012 and that invoice 1996 was dated 15 November 2012. If the reference date was the last day of each month, and if both invoices had been issued on the date they bear, then both invoices would still have been issued in respect of the same reference date (that is, 31 October 2012). Consequently, when the letter of 22 July 2013 claimed that the two invoices were issued in respect of the same reference date, it is not obvious from that claim that the reference to 5 November 2012 was a typographical error. Invoice 1995 could have been issued on the date it bears (5 November) and it would still be correct to say that invoice 1996 (which bears the date and was clearly issued on 15 November) was issued in respect of the same reference date. Only when it became apparent that the reference date was the 15th of each month did it become critical for Anderson Street to establish that invoice 1995, although dated 5 November, was issued on 15 November. If it was issued on the date it bore, then it must have been issued in respect of a reference date prior to 15 November 2012, whereas invoice 1996 was issued in respect of that reference date.

52 Second, the Adjudicator pointed out that there was evidence that, where JCM issued more than one invoice on the same day, each invoice bore the same date. The fact that invoice 1995 and 1996 bore different dates suggested that they were issued on different days.

53 Third, the Adjudicator pointed out that there was evidence that at least on one other occasion during the course of the project Anderson Street had asked JCM to resubmit an invoice. Consequently, it was possible that JCM sent invoice 1995 to Anderson Street on 15 November 2012 in response to a request that the invoice be resubmitted.

54 Anderson Street's complaint boils down to a complaint that it was not given an opportunity to address those three reasons.

55 In my opinion, the fact that Anderson Street was not given an opportunity to address those three reasons did not in the circumstances amount to a denial of natural justice.

56 Anderson Street raised for the first time in its adjudication response the argument that invoices 1995 and 1996 were both issued in respect of the 15 November reference date. Previously, it had asserted that both invoices had been issued in respect of a 31 October reference date, although it had not made that assertion in its payment schedule. Anderson Street was conscious that one of the difficulties with its submissions was the apparent concession made in its letter dated 22 July 2013. It sought to address that difficulty by submitting that the letter contained a typographical error. The Adjudicator had to address that submission, as Anderson Street must have appreciated. He did so by reference to the letter dated 22 July 2013 itself and other material that was before him. In my opinion, he was entitled to assume that Anderson Street had said all it could say on the issue. Anderson Street can hardly say it was denied natural justice because the Adjudicator decided the issue by reference to arguments and materials not raised by JCM, since under the procedures required by the Act, JCM had no further right to make submissions. In my opinion, the Adjudicator was not required to invite JCM to make submissions on the issue. Nor was he required to give Anderson Street an opportunity to comment on his reasoning process when that reasoning process depended on material that was already before him.

57 In any event, even if Anderson Street was denied natural justice, I do not accept that that denial was material. I say that for two reasons.

58 First, it is not clear what further submissions or evidence Anderson Street could have made that would have made a difference.

59 Anderson Street might have submitted that there was no evidence that invoice 1995 had been sent to it prior to 15 November 2012. But an absence of evidence does not establish anything. It was still open to the Adjudicator to conclude from the date of the invoice and the letter of 22 July 2013 that invoice 1995 must first have been set to Anderson Street on or about 5 November 2012 and to conclude that it must have been resent on 15 November 2012 because the original had been misplaced. This last conclusion was open without reference to any other occasion on which Anderson Street had requested that an invoice be resubmitted.

60 Second, it is plain in any event that the conclusions of the Adjudicator in respect of each of the four items to which it is said the question of repudiation was relevant did not depend on the resolution of that question.

61 The conclusion that Anderson Street was not entitled to a refund of the amount it had paid in respect of Basecourse depended on the Adjudicator's acceptance of JCM's submission that it had done part of the work - a conclusion that the Adjudicator thought (rightly) was supported by the fact that Anderson Street had already paid for that part of the work.

62 The conclusion that JCM was entitled to its claim in respect of Preliminaries and Supervision depended on the Adjudicator's view that, because of the delay in the project (which was not caused by JCM), JCM should be paid on an actual cost basis. Although the Adjudicator referred to the repudiation issue, it is apparent that that was not the basis of his decision.

63 The conclusion that JCM was entitled to recover the Retention Amount depended on the Adjudicator's view that the provisions of the contract relating to the retention amount came to an end on termination of the contract. There is nothing in the Adjudicator's reasoning to suggest that that conclusion turned on whether the termination was lawful or not. It is doubtful that the Adjudicator's conclusion on that matter was correct. But his decision is not challenged on that ground.

64 The conclusion that JCM was entitled to recover an amount in respect of Pile Caps depended on the Adjudicator's view that JCM had done work in respect of that item that was not defective. Again, the repudiation issue was irrelevant to that conclusion.

Orders

65 The summons should be dismissed with costs.

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Decision last updated: 24 February 2014