Supreme Court New South Wales

• Medium Neutral Citation: PPK Willoughby v Eighty Eight Construction [2014] NSWSC 760
• Hearing dates: 28/05/2014 and 29/05/2014
• Decision date: 11 June 2014
• Jurisdiction: Equity Division - Commercial List
• Before: McDougall J

Decision

Plaintiff's claims fail. Parties to bring in draft orders.

• Catchwords: BUILDING AND CONSTRUCTION - building contracts - Adjudication determinations - whether adjudicator's determination is void for failure to exercise the power given to him under the Building and Construction Industry Security of Payments Act - whether adjudicator abrogated power by accepting the valuation assessed by the Superintendent; BUILDING AND CONSTRUCTION - Building contracts - Certification of progress claims - whether Superintendent had power to issue payment certificate at the time that he did - meaning of 'business day' where undefined in Contract - whether 'business day' means 'working day' - whether Superintendent issued payment certificate prior to last business day of the month
• Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
• Cases Cited: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; IOC Australia Pty Ltd v Mobil Oil Australia Ltd (1975) 49 ALJR 176; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; Tyco Fire and Security v Norfolk Mechanical [2007] NSWSC 585; Re Concrete Construction Group Pty Ltd [1997] 1 Qd R 6
• Category: Principal judgment
• Parties: PPK Willoughby Pty Ltd (Plaintiff); Eighty Eight Construction Pty Ltd (First Defendant); Scott Petersen (Second Defendant); Adjudicate Today Pty Limited (Third Defendant)
• Representation: Counsel: FF Corsaro SC / FP Hicks / M Kloucek (Plaintiff); M Christie SC / L Shipway (Defendant); Solicitors: Madison Marcus (Plaintiff); Beazley Singleton (First Defendant); Moray & Agnew (Second and Third Defendants)
• File Number(s): 2014/68292

Judgment

1 HIS HONOUR: On 17 December 2012, the plaintiff (PPK) as Principal and the first defendant (Eighty Eight) as Contractor made a contract described as a "Construction Agreement". Under that contract, Eighty Eight agreed to execute the construction work described in it. The contract was a "construction contract" for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act).

2 In the usual way, the contract provided for Eighty Eight to make monthly claims for payment on account of work done, for the assessment of those claims, and for the payment of the amount assessed.

3 The matters in dispute relate to:

(1) Eighty Eight's claim for payment, described variously as Progress Claim # 13 and Payment Claim # 13; and

(2) A document said to be a payment certificate, number 14, issued by the Superintendent on 23 December 2013.

4 The disputes in relation to what I will call payment claim 13 were submitted to the second defendant (the adjudicator) for adjudication under the Security of Payment Act. He determined that the adjudicated amount was (in round figures) $450,000.00 exclusive of GST. This was the amount at which the Superintendent under the contract had assessed payment claim 13, and the amount for which the Superintendent issued his payment certificate number 13.

5 PPK challenges the adjudicator's determination. It submits that he did not exercise the statutory power given to him, because he did no more than adopt, as the value of the construction work comprised in payment claim 13, the Superintendent's valuation of that work. Eighty Eight says that this is not the proper characterisation of the adjudicator's reasoning. However, it says, if the determination is held to be invalid, it should have relief in the nature of mandamus so that the adjudication application can be sent back to the adjudicator to be dealt with according to law. That relief is sought by Eighty Eight's cross-claim.

6 The dispute as to payment certificate 14 is not entirely straightforward. By the time that payment certificate was issued, the parties were at loggerheads. PPK claimed that the work performed by Eighty Eight was riddled with defects. It gave a "show cause" notice on 12 December 2013. On the same date, the Superintendent issued what was said to be a direction under the contract suspending the performance of work.

7 On 23 December 2013, the Superintendent, who apparently took the view that Eighty Eight had not made a progress claim within the time limited by the contract, purported to exercise his authority to issue a payment certificate in the absence of any progress claim. He assessed that Eighty Eight owed PPK an amount of $690,000.00 (again in round figures, and excluding GST) for rectification of defects, set this off against the amount of $450,000.00 certified in respect of payment claim 13, and asserted a balance owing to PPK of (in round figures) $240,000.00 exclusive of GST.

8 PPK, by a second cross-claim, seeks judgment accordingly. Eighty Eight opposes judgment. It contends that the Superintendent had no power to issue payment certificate 14 when he did, that it is a nullity and thus that it does not impose on it any contractual obligation to pay the amount claimed.

The real issues

9 Against that background, the issues may be stated as follows:

(1) is the adjudicator's determination void, because he failed to exercise the power given to him under the Security of Payment Act?

(2) If the determination is void, should the adjudicator be ordered to determine the adjudication application in question according to law?

(3) Did the Superintendent have power to issue payment certificate 14 when he did?

10 Eighty Eight raised another issue by its cross-claim. It sought payment, under the contract, of the amount certified by the Superintendent in respect of payment claim 13. It submitted that it had an independent contractual right to be paid this amount. PPK submitted that the amount was not payable, because the payment certificate in question was conditional, and Eighty Eight had failed to comply with, or to satisfy, the stated conditions. It relied on estoppel by convention or alternatively promissory estoppel, based on what it said was a course of dealings between the parties and representations said to arise therefrom.

11 I directed that the issues raised by, and in answer to, Eighty Eight's contractual claim for payment of the amount certified in respect of payment claim 13 be dealt with separately from and after the determination of all other issues in the proceedings. I directed, further, that subject to any order of the court, those (what I might call) reserved issues be dealt with when the court dealt with the issues in other proceedings between the same parties relating to the same contract. In those other proceedings, the issues of defects and delay will be thoroughly investigated. A referee has been appointed. She has inspected the subject works in conjunction with the parties and their experts. The experts are conferring. At some stage, there will be a hearing on the reference and the referee will report.

12 I took the view that, because PPK's defence to the claim for payment under the contract raised (among other things) the extent of any set off for defective work, it was appropriate for that aspect of Eighty Eight's cross-claim to be dealt with when the issue of defects had been fully investigated, and could be considered by the court. The outcome of those other proceedings will be a final determination, after a full hearing, of all defects and related issues, and a final determination of the balance owing by one party to the other. It seemed to me, in those circumstances, that it was appropriate for Eighty Eight's claim for payment under the contract to be dealt with at that time.

13 In the result, since I have concluded (for reasons that follow) that PPK's challenge to the adjudicator's determination fails, Eighty Eight's cross-claim for payment of the amount certified in respect of payment claim 13 becomes moot.

Relevant provisions of the contract

14 The contract incorporated general conditions of contract (GCC) AS 4300-1995. Although those general conditions relate to "design and construct" contracts, it appears to be common ground that Eighty Eight had no design obligation in respect of the subject works.

15 The key provisions are cls 42.1 and 42.8. I set them out:

42.1 Payment Claims, Certificates, Calculations and Time for Payment

At the times for payment claims or upon completion of the stages of the work under the Contract stated in Annexure Part A and upon the issue of a Certificate of Practical Completion and within the time prescribed by Clause 42.5, the Contractor shall deliver to the Superintendent claims for payment supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require. Claims for payment shall include the value of work carried out by the Contractor in the performance of the Contract to that time together with all amounts then otherwise due to the Contractor arising out of the Contract.

If the time for any payment claim under the preceding paragraph falls due on a day which is Saturday, Sunday, Statutory or Public Holiday the Contractor shall submit the claim either on the day before or next following that date which itself is not a Saturday, Sunday, Statutory or Public Holiday.

If the Contractor submits a payment claim before the time for lodgement of that payment claim, such early lodgement shall not require the Superintendent to issue the payment certificate in respect of that payment claim earlier than would have been the case had the Contractor submitted the payment claim in accordance with the Contract.

Within 10 business days of receipt of a claim for payment, the Superintendent shall issue to the Principal and to the Contractor a payment certificate stating the amount of the payment which, in the Superintendent's opinion, is to be made by the Principal to the Contractor or by the Contractor to the Principal. The Superintendent shall set out in the certificate the calculations employed to arrive at the amount and, if the amount is more or less than the amount claimed by the Contractor, the reasons for the difference. The Superintendent shall also set out, as applicable, in any payment certificate issued pursuant to Clause 42, the allowances made for -

(a) the value of work carried out by the Contractor in the performance of the Contract to the date of the claim;

(b) amounts otherwise due from -

(i) the Principal to the Contractor; and

(ii) the Contractor to the Principal;

(c) amounts assessed under Clause 46.4 and not duly disputed;

(d) amounts paid previously under the Contract;

(e) amounts previously deducted for retention moneys pursuant to Annexure Part A; and

(f) retention moneys to be deducted pursuant to Annexure Part A,

arising out of the Contract resulting in the balance due to the Contractor or the Principal, as the case may be.

If the Contractor fails to make a claim for payment under this Clause 42.1, the Superintendent may nevertheless issue a payment certificate and the Principal or the Contractor, as the case may be, shall pay the amount so certified within 14 days of that Certificate.

Subject to the provisions of the Contract, within 28 days of receipt by the Superintendent of a claim for payment or within 14 days of issue by the Superintendent of the Superintendent's payment certificate, whichever is the earlier and within 14 days of the issue of a Final Certificate, the Principal shall pay to the Contractor or the Contractor shall pay to the Principal, as the case may be, an amount not less than the amount shown in such certificate as due to the Contractor or to the Principal, as the case may be, or if no payment certificate has been issued the Principal shall pay he amount of the Contractor's claim. A payment made pursuant to this Clause 42.1 shall not prejudice the right of either party to dispute under Clause 47 whether the amount so paid is the amount properly due and payable and on determination (whether under Clause 47 or as otherwise agreed) of the amount so properly due and payable, the Principal or the Contractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable.

Payment of moneys shall not be evidence of the value of work or an admission of liability or evidence that work has been executed satisfactorily but shall be a payment on account only, except as provided under Clause 42.6.

...

42.8 Set Offs by the Principal

The Principal may deduct form moneys due to the Contractor any money due from the Contractor to the Principal under the Contract and if those moneys are insufficient, the Principal may, subject to Clause 5.6, have recourse to retention moneys and, if they are insufficient, then to security under the Contract.

16 The cross-reference to "Annexure Part A" takes one to item 46 of the annexure. That item indicates that payment claims are to be made on:

Last business day of each month for Works under the Contract completed at such time only.

17 Clause 2 of the GCC defines "day" to mean "calendar day". It also provides:

If the time for giving any notice, issuing any certificate, making any payment or doing any other act required or permitted by the Contract, falls on a Saturday, Sunday or Statutory or Public Holiday, then the time for giving the notice, issuing the certificate, making the payment or doing the other act shall be deemed to be on the day next following which is not a Saturday, Sunday or Statutory or Public Holiday.

18 The cross-reference to cl 42.6 (which deals with the "Final Certificate") may be disregarded.

19 The expression "Superintendent" is defined in cl 2 of the GCC. The definition reads as follows:

'Superintendent' means the person stated in Annexure Part A as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent and notified as such in writing to the Contractor by the Principal and, so far as concerns the functions exercisable by a Superintendent's Representative, includes a Superintendent's Representative.

20 Annexure Part A stated that the Superintendent was:

Ray Robertson: Portfolio Projects Consultancy Pty Ltd

21 It is unclear whether the individual or the company was to be the Superintendent. Nothing turns on this. (In the latter case, presumably, the individual would be the "Superintendent's Representative" for the purposes of cl 24.)

22 It is not necessary to set out cl 24. Nor is it necessary to set out cl 23, dealing with the appointment of the Superintendent. That clause obliged PPK to ensure that there was at all times a Superintendent and that the Superintendent at all times would act honestly and fairly in the exercise of his functions. There was no suggestion in this case that, in relation to payment certificate 14, the Superintendent had acted inconsistently with his obligations of honesty and fairness, or in collusion with PPK.

The making, assessment and certification of progress claims

23 I shall set out what the adjudicator was told as to the process of making and assessment of progress claims. The reasons for doing this will become apparent.

24 First, however, I note that (as one might expect) PPK had procured a loan facility to enable it to fund the construction works. The lender was ING Bank (Australia) Limited (the Bank). At some date which does not appear, but was presumably around 17 October 2010, the Bank, PPK and Eighty Eight entered into a "Building Contract Side Deed". That side deed (as I shall call it) was expressly agreed to be a contractual document (see cl 3(e) of the contract made between PPK and Eighty Eight). Clause 2.5 of the side deed provided:

2.5 Progress Claims

If the Builder is making a progress claim that the Grantor will be requesting the Secured Party to fund under the Facilities, the Builder must provide with its claim evidence (to the satisfaction of the Secured Party and its quantity surveyor) that all major subcontractors who were to have been paid under any previous claim have been paid. The provisions of this evidence may not be the only precondition for funding. The Grantor agrees to provide such evidence with its request for any drawdown under the Facilities.

25 As is probably self-evident, Eighty Eight was "the Builder"; PPK was "the Grantor"; and the Bank was "the Secured Party".

26 The Bank did appoint a quantity surveyor to protect its interests, as cl 2.5 of the side deed contemplated. The company was Hugh B Gage Pty Ltd and the individual was Mr James To. It is uncontroversial that, in respect of each payment claim, Eighty Eight, PPK, the Superintendent and Mr To worked together to arrive at a fair, or at least acceptable, valuation of the work in respect of which the claim was made.

27 Against that background, the material given to the adjudicator as part of PPK's adjudication response included a statement by the Superintendent, Mr Robertson.

28 In para 12 of that statement, Mr Robertson summarised the process for making and certifying of payment claims as follows:

12. In summary, the process for making claims for progress payments were:

(a) 88 Construction would email me a spreadsheet containing a claim for payment and outline the value of the works claimed for by way of setting out a percentage of the works allegedly completed.

(b) I then arranged a meeting on Site with a Quantity Surveyor who was engaged by ING Bank (the financier of the development project) and 88 Construction to do a walk around to determine the amount of works that were actually complete (as opposed to what was claimed). Sometimes 88 Construction did not attend the walk around the Site, but they were always invited by me to attend.

(c) After undertaking the site inspection and reviewing the claim with the Quantity Surveyor, the Quantity Surveyor would issue me his assessment in an Excel Spreadsheet format which I would promptly incorporate into a Payment Certificate and issue to 88 Construction. This was a Certificate of Payment which stated what I determined PPK should pay to 88 Construction.

(d) Sometime after issuing the Certificate of payment (normally rather promptly), 88 Construction sent to me by email a Tax Invoice which only stated the amount which I certified as being payable on the Certificate of Payment.

(e) Prior to being paid, 88 Construction had to provide me with the usual statutory declarations in relation to payments to subcontractors and its certificates of currency for relevant insurance policies.

29 The process outlined by Mr Robertson was followed in relation to payment claim 13 and its certification. The payment claim was submitted, as I have said, on 30 November 2013. The amount claimed, exclusive of GST, was in round figures $540,000.00. Mr Robertson provided the payment claim to Mr To and asked him to review it. Mr To queried some items. Mr Robertson raised those queries with Eighty Eight. They were resolved, apparently to the satisfaction of both Mr Robertson and Mr To. In the result, Mr To approved certification of the amount of $450,000.00 to which I have referred (which included about $44,000.00 for approved variations). Mr Robertson issued his payment certificate 13 on 9 December 2013. It set out the approved amount and the manner of its derivation (the latter in part by reference to an attached schedule) and then stated:

As the works associated with Progress Claim No 13 are complete; please issue the required Tax Invoice; we note the Statutory Declaration/s confirming no subcontractor/supplier monies are owing or outstanding have been issued.

Note: All Statutory Declarations are to be signed by a Justice of the Peace. You are to also required to provide Certificates as required from the Structural Engineer together with a (ongoing) Certificates from the Private Certifier confirming (as required) critical stage inspections have been undertaken in accordance with Statutory requirements.

30 In response, Eighty Eight provided a tax invoice as requested for the approved amount. That tax invoice stated among other things that it was:

... a payment claim made under The Building and Construction Industry Security of Payment Act NSW 1999

31 On 10 December 2013, Mr Robertson stamped that tax invoice (or payment claim) with the words "Approved for Payment" and signed it as "Superintendent for Kiah Willoughby" ("Kiah" was the name given by PPK to the project, or development).

32 At some stage, the parties noticed that Mr Robertson had made an arithmetical error, in the original version of payment certificate 13, in the calculation of GST. The payment claim was for the correct amount. Mr Robertson promptly issued an amended payment certificate stating the correct amount. Nothing seems to turn on this.

33 Mr Simon Napoli of PPK had requested a company known as Tyrrells Property Inspections Pty Limited (Tyrrells) to prepare a defects report. Tyrrells prepared a report, dated 3 December 2013, which indicated that in the view of the Tyrrells' personnel who performed the inspection, the work done by Eighty Eight was in many respects defective.

34 Mr Robertson was not aware of that report when he considered and certified payment claim 13. However, he said in his statement that was before the adjudicator, he had noticed "a mix of major and minor defects in some of the works" from June 2013. At a point between November and December 2013 (and thus, I would think, before he certified payment claim 13 for payment) Mr Robertson had formed the view "that the defects present... may not be able to be rectified" by Eighty Eight, and that Eighty Eight was "adopting an approach of building on top of defects to "hide" the defects".

35 Mr Robertson annexed to his statement a defects list which he had annotated to show where he agreed that the defect existed and, in some cases, his estimate (or agreement with the estimate) of the cost to rectify the defect.

The adjudication

36 As I have noted, PPK did not provide a payment schedule in answer to payment claim 13. On 14 January 2014, lawyers then acting for Eighty Eight gave PPK a notice under s 17(2) of the Security of Payment Act, stating Eighty Eight's intention to apply for adjudication and notifying PPK of its opportunity to provide a payment schedule within five business days of receipt of the notice. PPK availed itself of that opportunity. The payment schedule identified a number of reasons, some of which were said to be "jurisdictional" and others of which were said to be "non-jurisdictional", for withholding payment. As the adjudicator correctly noted, the essential reason for withholding payment was a claimed set off for the cost of rectification of allegedly defective work.

37 Thereafter, Eighty Eight lodged an adjudication application and PPK lodged an adjudication response.

The reasons for the determination

38 The adjudicator called for submissions on two points. One of those points related to the Superintendent's certification. The other related to the use that the adjudicator might make of a defects report, prepared well after payment claim 13 was made and certified, which was included as part of PPK's adjudication response. The adjudicator dealt with those matters at paragraph 27 of his determination ("D27"):

27. In considering the reasons for withholding payment and the submissions provided in the Adjudication Response in support of the Payment Schedule, a matter arose which in my view should be put to the parties for their comment. The two specific issues were:

27.1 My concern regarding the existing certification by the Superintendent and the impact, if any, of the principles raised in Kingston Building (Australia) Pty Ltd v Dial D Pty Ltd as trustee for the Smith Street Unit Trust [2013] NSWSC 173.

27.2 The status of the expert report issued by SGS Building Services Pty Ltd dated 13 February 2014. Particularly in regard to the decision of his Honour McDougall J in Broad Construction Services (NSW) Pty limited v Michael Vadasz [2008] NSWSC 1057.

The request for further submissions was issued and each party provided submissions and further submission relating to the submissions of the other party. A copy of the request for further submissions is at Annex A.

39 In respect of the "Dial D" issue, the adjudicator said, among other things (D34, D35):

34. This is a matter where the Superintendent issued a Payment Certificate (see Tab C of the Adjudication Application) and the sum claimed is the amount certified. It follows that the starting position is that the Superintendent has certified at as at the date of issue of the Payment Claim the sum then due and payable was $495,031.60 including GST. In that calculation, pursuant to the express requirements of the contract the Superintendent made allowance for all relevant deductions including any amounts due from the Contractor to the Principal.

35. In my view the Act requires the value and entitlement to be determined as at the Reference Date. That is, what is the value of the work as at the Reference Date and the defects as assessed at that date are to be taken into account. Clearly defects can arise during the course of the work and the Act requires that they can be applied in reduction of the entitlement of the Claimant. That is also apparent in the contract. However the Respondent seeks to apply an assessment of 23 December 2013 in reduction of an entitlement that accrues on 29 November 2013. 29 November 2013 being the last business day of the month and therefore compliant with the time restriction stated in Item 46(a) of Part A of the Contract. That assessment is Payment Certificate 14, which has been provide as Annex E to the Payment Schedule. With respect that Payment Certificate has a number of issues in its application to the current claim. Those issues include, but are not limited to:

35.1 The assessment is many days after the Reference Date (which is the relevant date for assessing Payment Claim 13)

35.2 The document asserts a value for Payment Claim 13 in the sum now claimed. This is express under the heading, 'Summary of Claims to date'

35.3 There is no evidence that an assessment other than that undertaken by the Superintendent at the Reference Date.

40 In relation to the second issue, the adjudicator concluded (D38) that the defects report could properly regarded as one made in support of a reason for withholding payment raised in the payment schedule. No criticism is made of that aspect of the adjudicator's reasons.

41 The adjudicator approached his task by dealing first of all with each of the reasons for non-payment that had been advanced in the payment schedule and supplemented in the adjudication response, and with issues raised in answer to those reasons. In my view, that was an eminently sensible way to approach the task with which he was confronted.

42 In relation to the reasons for non-payment that were stated in the payment schedule, the adjudicator noted that a number of them had been withdrawn (or not pressed). He concluded that most of the others were not valid reasons for withholding payment. He observed at D47, in my view correctly, that defect rectification was "the kernel of the dispute". As to the claimed set off for defect rectification, the adjudicator identified three issues (D48):

(1) was there a right to set off the cost of defect rectification?

(2) what was the extent of any defective work, and the cost of rectification?

(3) was adjudication a proper forum to decide the question?

43 As to the first issue, the adjudicator dealt with a number of decided cases that had been said to have been of relevance. It is not necessary to look either at those cases or at his reasons dealing with them. He turned to the claimed contractual set off at D53 and said, so far as it is relevant (and omitting his quotation from GCC cl 42.1):

...Clause 42.8 creates a right for the Principal to deduct sums from any entitlement if they are otherwise payable and if the Contractor has insufficient funds available for such deduction may have recourse to sums retained by operation of clause 5.6 and the notices required. My concern is that if the clause is read as the Respondent has, it clashes with the express provisions of clause 42.1 of the contract which creates an express obligation for payment of the certified amount. In contrasting the two provisions, I note at the relevant time there is no evidence of any direction pursuant to clause 30.3 of the contract (defective material or work) and no deduction on that basis that I can locate in the Payment Certificate. If the Principal sought to apply deductions, these would be included in the Superintendent's calculation, that is expressly allowed in clause 42.1 which provides the following:...

44 He then said (D54, D55):

54. The Principal had the opportunity to inform the Superintendent of any deductions for defects or other sums said to act in reduction of the sum otherwise to be certified as payable. Having formed that view, which appears to be the express view of the Claimant in its reliance on section 42(1), the entitlement for deduction for any sums asserted by the Principal to be due and owing would logically inform the Superintendent's assessment. The contract does not include a provision stating the principal must pay the Certified Amount less any deductions it has formed the view should be applied. Those words are not implicit in the Act and there is no reason to read them into the Act. At the date of issue of the Payment Certificate the Superintendent had applied all relevant entitlements of the parties that built or reduced the sum certified.

55. I am satisfied the Claimant has established the contract does not allow the deductions now pressed. In this regard I am particularly persuaded by the express words directing the actions of the Superintendent in subparagraph (a) of the contractual extract above repeated with emphasis added:

(a) the value of work carried out by the Contractor in the performance of the Contact to the date of the claim.

45 The adjudicator's reasoning process was in substance that, since the amount of the payment claim had to be assessed up to the date of the claim, and since there was then no amount certified by the Superintendent to be owing by Eighty Eight to PPK for defect rectification, there was no contractual justification for allowing the amounts claimed as a set off against the value of the work.

46 It matters not whether the adjudicator was correct, or incorrect, in his construction and application of cl 42.1 (and cl 42.8). If he were incorrect (and I am not to be taken as indicating even a tentative view that he was), it was no more than a mistake made within jurisdiction. It is now well settled that the determinations of adjudicators are not susceptible to review simply because there is an error of law in the reasoning process that they adopt. (It is another matter, of course, if the error of law causes the adjudicator to mistake in some fundamental way the jurisdiction that she or he is required to exercise, but that is another matter. So, too, is jurisdictional error arising otherwise than out of an error of law.)

47 Nonetheless, the adjudicator then turned his mind both to the nature and extent of the defects and to the cost of rectification. He identified (D57) various lists of defects that had been compiled between 12 December 2013 and 13 February 2014 (the latter date being the date of the report referred to at D27.2, set out above). At D58, the adjudicator accepted that "each of those defect lists is effectively unanswered and [is] persuasive". However, he said, the Superintendent had issued a payment certificate which valued the work completed as at 29 November 2013, and had not made any reduction, on account of the cost of defect rectification, in the amount of the claim. The adjudicator then said, undoubtedly correctly, that "[t]he work is required to be valued in accordance with the contract". He followed this with the further observation that:

The contract requires the certified sum to be paid.

48 At D59, the adjudicator noted that Eighty Eight's failure to answer the defects lists "does not axiomatically mean the value of the defects as assessed by [PPK] can be applied". He said that the Superintendent may have taken defects into account in his assessment, but in any event that did not matter because "the Superintendent was the arbiter of value".

49 Since PPK's attack on the determination focused closely on the language of D58, 59 I set out those paragraphs:

58. I accept each of those defect lists is effectively unanswered and are persuasive. However, I return to the issue by the Superintendent of a Payment Certificate and the simple fact that in making the assessment of the work completed as at 29 November 2013, no reduction in the value of the work claimed was applied for defects. The work is required to be valued in accordance with the contract. The contract requires the certified sum to be paid.

59. While the reason of the Claimant cannot succeed for want of evidence that does not axiomatically mean the value of the defects as assessed by the Respondent can be applied. This is the express view of the Claimant as expressed in pressing the claim (see for example paragraphs 13 (the Musico extract), 18(e), and 20). There had been an earlier defect list issued and the Claimant was addressing that as evidenced in Annexure G and H of the Application. That document was known to the Respondent and the process was apparently progressing. The Superintendent made no obvious reduction in the entitlement in relation to those defects. However, it is possible that the Superintendent applied the percentage of completion of the various defects in its assessment. That does not in my view matter, as the Superintendent was the arbiter of value and assessed a measure of completion that caused the issue of the relevant Payment Certificate.

50 The adjudicator dealt with the "forum argument" and rejected it. He expressed his conclusions on the entitlement to set off at D62:

62. I am satisfied the certified amount must be considered to be [sic] include any relevant set off for defects at the relevant time. That is the only viable interpretation of clause 42.1 of the contract. Clause 42.8 creates a right, where the assessed sum is a negative to access security funds or to advise the Superintendent of a sum to be applied in reduction. However, the retrospective application of deductions is not contemplated by the contract provisions and cannot in my view be read into those clauses. In that regard the Claimant is successful in relation to the current payment certificate and Payment Claim. As for the challenges asserting the reports should not be considered or that assessing a deduction for defects is outside the scope of the role and statutory obligation of an Adjudicator: these assertions must fail.

51 The adjudicator then dealt with a further claim, relating to liquidated damages. There is no need to consider those paragraphs of the determination.

52 As the adjudicator saw matters, the remaining question was then one of valuation of the construction work, the subject of payment claim 13. He dealt with this at D78 to D81. Again, since PPK's attack focused closely on the words used by the adjudicator, I set out those paragraphs in full:

78. The issues in dispute have dealt extensively with the entitlement of the Claimant and the deductions pressed by the Respondent. Little has been provided by the Claimant by way of support of the value claimed. In this regard I note the observations of President Fitzgerald in Queensland Court of Appeal decision in Re Concrete Constructions Group Pty Ltd [1996] QCA 086, extracted above which include:

What is certified is intended to be paid.

79. The Superintendent has described the process followed in valuing the claim. I note that it is the observation that claims have been consistently overstated and have been reduced by an average of 28% (see paragraph 16 of the Witness Statement). At paragraph 12 of the statement Mr Robertson states:

(a) 88 Constructions would email me a spread sheet containing a claim for payment and outline the value of the works claimed by way of setting out a percentage of the works completed.

(b) I then arranged a meeting on site with a quantity surveyor who was engaged by ING Bank (the financier of the development project) and 88 constructions to do a walk around to determine the amount of the works that were actually complete (as opposed to what was claimed). Sometimes 88 Construction did not attend the walk around [the] site, but they were always invited by me to attend.

(c) After undertaking the site inspection and reviewing the claim with the Quantity Surveyor, the Quantity Surveyor would issue me his assessment in an excel spread sheet format which I would promptly incorporate into a Payment Certificate and issue to 88 construction. This was a certificate of payment which stated what I determined PPK should pay to 88 Construction.

As I understand the valuation process it involved the Claimant firstly self-assessing and issuing the claim. The work was then subject to inspection by Mr Robertson, who I note has 40 years of construction experience and is the sole Director of Portfolio Projects Consultancy. That inspection was done in company with a neutral third party appointed by the financing entity. Again the third party was a qualified construction specialist, being a quantity surveyor and I reasonably assume holding suitable qualifications and skill.

80. That process has involved multiple highly experienced construction specialists meeting and agreeing the value. I see no basis for me undertaking a further valuation. If at the date of the Payment Claim which is effectively also the Reference Date the value has been agreed by the parties tasked to make the assessment, there is no reason for me to displace that.

81. I accept the valuation of the works as assessed by the Superintendent and note that the challenges to values claimed the determination are all based on assessments undertaken well after the date of the Payment Certificate assessment.

The parties' submissions

53 Mr Corsaro of Senior Counsel, who appeared with Mr Hicks and Ms Kloucek of Counsel for PPK, submitted that the adjudicator had failed to perform the statutory obligation to determine the amount of the progress payment to be paid by PPK to Eighty Eight, because he had done no more than adopt the Superintendent's certification in payment certificate 13. Alternatively, Mr Corsaro submitted, the adjudicator had impermissibly fettered his discretion because he had regarded himself as bound to accept the Superintendent's certification (or alternatively, had regarded that certification as deciding the amount of the progress payment).

54 Mr Corsaro pointed to the fact that PPK had submitted, and the adjudicator appears to have agreed, that there were substantial defects in the work done by Eighty Eight. (As to the adjudicator's apparent acceptance of this, see for example D57, D58.) However, Mr Corsaro submitted, the adjudicator had not made any allowance for this and thus had deprived PPK of its entitlement to have the cost of defect rectification set off against any amount otherwise due by PPK to Eighty Eight.

55 In this context, Mr Corsaro referred to the fact that, as the adjudicator said at D78, Eighty Eight provided "little... by way of support of the value claimed".

56 Mr Corsaro submitted that it was clear, both from the adjudicator's reasons generally and from his reference to what Fitzgerald P had said in Re Concrete Construction Group Pty Ltd [1997] 1 Qd R 6 at 8 that he regarded the certified amount as the amount of the progress payment.

57 Mr Corsaro referred to numerous cases that, he submitted, made it plain, that adjudicators are not required or bound simply to accept the amount certified by the Superintendent or equivalent under the relevant construction contract.

58 Mr Christie of Senior Counsel, who appeared with Mr Shipway of Counsel for Eighty Eight, submitted that on a fair reading of the adjudicator's reasons as a whole, the adjudicator had done no more than accept, as evidence of the amount due, the amount certified by the Superintendent following the careful process (including review by the Bank's quantity surveyor) of the elements of payment claim 13. Mr Christie submitted that the process followed by the adjudicator was appropriate in circumstances where, as the adjudicator recorded, the real dispute was not as to the valuation of the work comprised in the payment claim but, rather, as to the amount (if any) which should be allowed as a set off for the cost of rectification of defective work.

Approach to reasons of adjudicators

59 It is well established that courts, in reviewing administrative decisions, should not be too concerned with looseness in the language used, nor with unhappy phrasing, in the reasons given by the decision-maker. Such reasons "are not to be construed minutely and finely with an eye keenly attuned to the perception of error". See Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287, cited with approval by Brennan CJ, Toohey, McHugh, and Gummow JJ in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272.

60 In the latter case, Kirby J (who agreed with the orders proposed by the plurality) made a number of relevant points at 291 (I omit citations):

1. The reasons under challenge must be read as a whole. They must be considered fairly. It is erroneous to adopt a narrow approach, combing through the words of the decision-maker with a fine appellate tooth-comb, against the prospect that a verbal slip will be found warranting the inference of an error of law (88).

2. This admonition has particular application to the review of decisions which, by law, are committed to lay decision-makers, ie tribunals, administrators and others (89). This is not to condone double standards between the reasons and decisions of legally qualified persons and others. It is simply to recognise the fact that where, by law, a decision is to be made by a person with a different, non-legal expertise, or no special expertise, a different mode of expression of the decision may follow. It must be taken to have been contemplated by the lawmaker.

3. Specifically, the reviewing judge must be careful to avoid turning an examination of the reasons of the decision-maker into a reconsideration of the merits of the decision where the judge is limited to the usual grounds of judicial review, including for error of law (90).

61 The points made, both by the plurality and by Kirby J, have been repeated many times. They have been applied also to reasons given by adjudicators. There is good reason to do so. And in the context of adjudicators' reasons, it is necessary to bear in mind that, absent any agreement between claimant and respondent to extend time, adjudicators must reach their determinations within 10 business days of notification of acceptance of the application (s 21 (3)(a)). In many cases, the disputes submitted to adjudication are complex, and the documentation voluminous. The court should be slow to discern, only from infelicity of expression, some underlying defect in the reasoning process.

62 Further, as Kirby J noted, it is necessary to read the reasons in their entirety. If I may say so with respect, I think that the approach taken by Mr Corsaro did not do so. It focused on particular passages of the reasoning, and stripped them from the context of the reasons as a whole. Further, that approach failed to take proper account of the wider context: the dispute as to defects which, as the adjudicator rightly recognised, was the key issue.

Decision

63 I start with a number of propositions which, I think, are uncontroversial. The first is that the statutory task given to adjudicators is to determine an "adjudicated amount": that is to say, "the amount of the progress payment (if any) to be paid by the respondent to the claimant". That is the task described in s 22(1)(a) of the Security of Payment Act.

64 The second proposition is that this statutory task is to be performed where a claimant makes application for adjudication of a payment claim: s 17(1)(a).

65 The third proposition is that a payment claim is a claim made by a person who is or claims to be entitled to a progress payment under a construction contract: s 13(1). A progress payment is a payment to which a person is entitled under s 8 (see definition, s 4). Section 8 gives to everyone who performs work under a construction contract (I leave aside, as presently irrelevant, the supply of related goods or services) an entitlement to a progress payment "on and from each reference date under [that] construction contract".

66 The fourth proposition is that the primary method of calculation of a progress payment is by reference to the terms of the contract: s 9(a). It is only if the contract makes no express provision for calculation that the alternative in s 9(b) applies.

67 The fifth proposition is that valuation of construction work is to be undertaken primarily by reference to the terms of the contract: s 10(1)(a). Again, it is only if the contract makes no express provision for this that the alternative in s 10(1)(b) applies.

68 In this case, it was uncontroversial (and rightly so) that the contract made provision for calculation of the amount of progress payments. That provision is found in cl 42.1. Each progress payment is to include, among other things, "the value of work carried out by [Eighty Eight] in the performance of the Contract to the time" of the payment claim.

69 Clause 42.1 gives a further indication as to how the amount of any progress payment is to be calculated, through the matters set out in paras (a) to (f). The first of those matters is "the value of work carried out...". The second is "amounts otherwise due from" each of the Principal and the Contractor to the other.

70 It was this contractual framework which described, or set the parameters of, the exercise to be undertaken by the adjudicator in the performance of his statutory obligation to determine an adjudicated amount, as required by s 22(1)(a) of the Security of Payment Act.

71 In performing that statutory obligation, the adjudicator was required to consider, only, the matters set out in s 22(2). For convenience, I set out that subsection:

(2) 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.

72 In the present case, the adjudicator considered, to the extent that he thought it appropriate, the matters referred to in paras (a) to (d) of subs (2). There was no inspection, and hence no need to go to para (e).

73 It has not been suggested that the adjudicator failed to consider the provisions of the Security of Payment Act, except in so far as (on Mr Corsaro's submission) he failed to perform his statutory function under s 22(1)(a).

74 As to s 22(1)(b): the adjudicator did consider the provisions of the construction contract. He concluded, correctly, that the governing provision was cl 42.1, and he took into account, as PPK had submitted he should, the set off provisions in cl 42.8.

75 It is clear that the adjudicator considered also the payment claim and the payment schedule, in each case with relevant submissions (duly made) and relevant documentation. A consideration of those documents led him to the conclusion that, leaving aside extensions of time (as to which there is now no complaint), "the kernel of the dispute" was PPK's claimed set off for the cost of rectification of defects (see D47). He was correct to perceive that this issue lay at the heart of the controversy between the parties.

76 Having identified the heart of the controversy, the adjudicator dealt with it. First, he concluded that on his understanding of the contract, there was no right to set off the cost of defect rectification because that cost had not been established, as at the effective date of payment claim 13, as owing by Eighty Eight to PPK. On the adjudicator's view of the contract, PPK was not entitled to set off its liability to Eighty Eight in respect of payment claim 13 by reference to defects that were later (although before the adjudication) investigated thoroughly, and the cost of rectification of which, on PPK's view at least, was quantified.

77 It may be accepted, as Mr Corsaro submitted, that the adjudicator recognised that there was compelling evidence that the work was defective. That the adjudicator appreciated this point is made clear by D58 and D59. But the adjudicator's conclusion, that there should be no set off for the cost of rectification, was based on his understanding that the contract did not permit "the retrospective application of deductions"; on the contrary, it permitted only "any relevant set off for defects at the relevant time [i.e., the date to which the payment claim was calculated]": D62.

78 In this conclusion, the adjudicator may have been right or he may have been wrong. I express no view. But regardless, he turned his mind to the relevant statutory and contractual provisions, to the relevant reason for non-payment, and to the submissions and material in support of that reason. He concluded that the reason was not sustainable. It is wrong to submit, as at one stage Mr Corsaro appeared to do, that the adjudicator had overlooked, and in so doing deprived PPK of the benefit of, its "defence" of defective work.

79 Having dealt with the real issue in dispute (and, I might add, with a number of other issues raised by PPK, which ranged from the specious to the trivial), the adjudicator sought to complete the statutory function of determining an adjudicated amount. It is essential to pause a moment and note the context by reference to which he did that.

80 Eighty Eight had submitted what was then progress claim 13 to the Superintendent. The Superintendent referred it to, and consulted with, Mr To. There can be no criticism of the Superintendent for doing so. First, that process had been established by a clear course of dealing in respect of the preceding 12 progress (payment) claims. Secondly, it was in substance, if not in literal detail, authorised by cl 2.5 of the side deed.

81 Mr To queried some aspects of the progress claim. The Superintendent raised those queries with Eighty Eight. All this was done with the knowledge (although perhaps not the active participation) of PPK. The material shows that this process involved many email communications, and that representatives of PPK were copied into those emails.

82 Eventually, between the three principal actors (Eighty Eight, the Superintendent and Mr To), and without any apparent protest from PPK, the value to be attributed to the construction work the subject of progress claim 13 was settled. It was at that point that Eighty Eight served payment claim 13, for the settled amount. Not surprisingly, the Superintendent approved it for payment. The conditional nature of that approval, and whether or not those conditions were satisfied, are matters that have no present relevance.

83 The Superintendent did not raise any question of a set off for defective work. Nor did Mr To. It may be accepted that, at the time these events happened (including the time of certification of payment claim 13), the Superintendent had no knowledge of the contents of the Tyrrells report. But it is clear, from the Superintendent's statement that was part of the adjudication response given to the adjudicator, that the Superintendent was, at the time of certification, aware that there were (or at least might be) substantial defects in the work performed by Eighty Eight.

84 It is not surprising, in those circumstances, that neither Eighty Eight nor PPK contended, before the adjudicator, that the valuation of the work comprised in payment claim 13 was in some way erroneous. This was not a case where the claimant and the respondent were apart in their valuation of the work. Their contest was as to whether that value should be reduced, in whole or in part, by reason of set offs.

85 Thus, once the adjudicator had concluded that there was no right to set off, he had resolved the essential dispute submitted to him for determination. True it is that, in consequence, he was required to assess an adjudicated amount. But it is completely unclear to me on what basis he could have concluded that the construction work should be valued at any amount other than that effectively agreed between the parties. On the contrary, when one takes into account both the way that the dispute was framed and the way in which the parties addressed it, it is clear that, having dealt with the question of set off, the adjudicator was entitled to conclude, as a matter of fact, that the certified amount should be determined to be the adjudicated amount.

86 In any event, I think, it is not correct to read the adjudicator's reasons as demonstrating that he abrogated his statutory obligation in favour of the figure reached by the Superintendent. On the contrary, in my view, when one reads the reasons as a whole, the adjudicator said that, in the context of the dispute as it had been put before him, the best evidence of the value of the construction work was that agreed by "multiple highly experienced construction specialists" (D80).

87 Those specialists had had every opportunity of inspecting the work and considering the valuation of it proposed by Eighty Eight. There was no dispute as to the outcome of their labours. It follows, in my view, that it was open to the adjudicator to conclude, as he did, that their agreement provided the best evidence of the value of the work. It was for that reason that the adjudicator saw no reason for him to undertake a further valuation or to displace the value agreed between the parties (D80). It was for that reason, and in that context, that the adjudicator accepted the valuation "as assessed by the Superintendent" (D81).

88 It is unfortunate that the adjudicator referred, in the context of valuation of the work, to what Fitzgerald P had said in Re Concrete Construction Group Pty Ltd. Taken in isolation, that reference could suggest that the adjudicator saw his task as being no more than to rubber stamp the Superintendent's determination. But read in the context of the reasons as a whole, I do not see it that way.

89 I conclude that the challenge to the adjudicator's determination fails.

The claim for mandamus

90 That conclusion makes it unnecessary to deal with the claim for mandamus.

Payment certificate 14

91 The Superintendent issued this payment certificate in purported exercise of his power under cl 42.1. For convenience, I repeat the relevant paragraph:

If the Contractor fails to make a claim for payment under this Clause 42.1, the Superintendent may (nevertheless) issue a payment certificate and the Principal or the Contractor, as the case may be, shall pay the amount so certified within 14 days of that Certificate.

92 Payment certificate 14 was issued on Monday, 23 December 2012. It was PPK's case that the last business day of that month for Works under the Contract (Item 46 of Annexure Part A) was, at the latest, the preceding Saturday, 21 December 2013.

93 The contract contains no definition of "business day". Nor does it make any reference to "working day". The contractual provisions for extension of time (cl 35.5), which is where one might expect to find reference to the concept of a "working day", does not use that term; nor does it use the term "business day".

94 It appeared to be common ground that, at least up until the time when disputes broke out in relation to payment claim 13, Eighty Eight, through its employees and subcontractors, had worked on the site on Saturdays (for at least part of the day).

95 On 20 December 2013, Mr Paul Kerr of Eighty Eight sent an email to the Superintendent, copied to a number of people including Mr Napoli of PPK, which, among other things, said:

Our site will be closed from the 21/12/2013 and re-opened on the 2 January 2014.

The parties' submissions

96 Mr Corsaro submitted that, on the proper construction of the contract, the expression "business day" should be construed to mean "working day". He submitted that the last working day was either Friday, 20 December or Saturday, 21 December, 2013. That was shown by the evidence, he submitted, and confirmed by the email to which I have referred.

97 It followed, in Mr Corsaro's submission, that the last business day of the month of December 2013, was one or other of those days.

98 Thus, Mr Corsaro submitted, since Eighty Eight did not deliver a payment claim by, at the latest, 21 December 2013, it was open to the Superintendent to do as he did on 23 December 2013, and issue his own payment certificate.

99 Mr Christie submitted that the expression "business day" should not be construed to mean "working day". He submitted that the expression "business day" had a well understood meaning: any day, other than a Saturday, Sunday, or public holiday. He noted that many statutes so defined the expression "business day", and submitted that, accepting (as he did) that those definitions could not be conclusive, nonetheless, they recognised that established usage.

100 Mr Christie referred to my decision in Tyco Fire and Security v Norfolk Mechanical [2007] NSWSC 585, and called in aid the decision of the High Court in IOC Australia Pty Ltd v Mobil Oil Australia Ltd (1975) 49 ALJR 176.

101 Mr Christie submitted further, and in the alternative, that if, contrary to his principal submission, the expression "business day" should be construed to mean "working day", the notice had been given too early. That was so, he submitted, because:

(1) Saturdays were working days for the purposes of the contract;

(2) Saturday, 21 December 2013 was thus the last working day preceding the issue of payment certificate 14;

(3) Because the last business day (working day) was a Saturday, the time for submission of the claim was either the preceding business day or the next following business day; and

(4) thus, Eighty Eight had until and including Monday, 23 December 2013 (the business day, on this construction, next following Saturday, 21 December 2013) to submit its progress claim for the month of December 2013.

102 In those circumstances, Mr Christie submitted, the Superintendent's issue of the payment certificate was in any event premature.

103 Mr Hicks submitted, in reply, that on the facts Saturday, 21 December 2013 was not a working day. Further, he submitted, by the email to which I have referred, Eighty Eight had made it clear that it did not propose to work on that day.

Decision

104 I start by observing that I do not think that Mr Christie's case obtains any support from my decision in Tyco. In that case, there was a defined term "Business Day". The definition of that term was "a day on which banks are open for business excluding Saturdays, Sundays or public holidays in Sydney, NSW and Auckland and Wellington in New Zealand". The contract itself said what a Business Day was. At most, those facts might support Mr Christie's proposition that there is a generally understood concept of "business day", of the kind recognised in the statutes to which he referred (and, one might add, in many others).

105 Nor do I think Mr Christie's submissions gain a great deal from the decision of the Hight Court in IOC Australia. The contract under consideration in that case provided for the appellant to pay for goods delivered "no later than one hour prior to the close of banking on the last business day of each calendar month...". When the contract was made on 1 June 1973, 31 December 1973 had not been proclaimed to be either a public holiday or a bank holiday. Later, it was.

106 Gibbs J (with whom Stephen and Jacobs JJ agreed) noted that the parties agreed that the expression "the last business day", as it was used in the contract, "means a day on which banking business is carried on, because if that were not so, the reference to "the close of banking" in the clause would be meaningless" (at 179).

107 Gibbs J said, further, that the expression "last business day" had to be understood not just as at 1 June 1973, when the contract was made, but throughout the life of the contract. His Honour said, again at 179, that although the connotation of the words "the last business day" was fixed at the time the contract was made, the question of whether any particular day was "the last business day" of a particular month had to be answered in accordance with the circumstances that existed when that day arrived.

108 As I have said, I do not regard the decision as lending any support to Mr Christie's argument. It does however seem to me to make it clear that the expression in this case, "business day", is to be construed in the context of the contract within which it appears, rather than at large.

109 Nonetheless, I think, it would be wrong to equate "business day" to "working day", or to conflate the two expressions. The concept of a working day is well understood in the building and construction industry. It refers to days when work is (or should be) performed on site. But the commercial activities of building contractors and their subcontractors are not confined to work carried out on site. There are essential head office and other functions which are performed whether or not work is being performed on any particular site.

110 Further, and as a matter of plain English, the word "business" in the context of this contract suggests commercial activity undertaken for profit: the world of trade and commerce. Thus, a "business day" should be regarded as a day when, in Sydney at least, business activities, of a kind relevant to the particular contract, are generally carried on. That is of some relevance in this case, because of the time limits for assessment of progress claims, and the consequences of failure to assess in accordance with those limits. The parties intended to provide that the Superintendent (and Mr To) should have the benefit of business days, rather than days in general, to perform that task.

111 Thus understood, the expression "business day" would not extend to Saturdays, Sundays and public holidays. It would, however, extend to days when business generally is carried on, even though, for one reason or another, work under the contract was not performed on such days.

112 If the construction for which PPK contended were correct, one consequence would be that the expression "business day" would have an ambulatory operation according to whether Eighty Eight was (or was not) performing work under the contract. For example, a Wednesday which was not a public holiday might ordinarily be regarded as a "business day". However, if Eighty Eight had the benefit of an adjudication determination in its favour but had not been paid, it could exercise the right to suspend work under the contract (see ss 24(1)(b), 27, of the Security of Payment Act). On the argument for PPK, any day during which that suspension was effective would, by virtue of the suspension, cease to be a business day.

113 Equally, if the Superintendent were to give a valid notice of suspension under the contract the consequence would be the same for as long as that suspension was in force.

114 In either case, if the suspension continued up until the end of the month in which it started the effect would be, retrospectively, to make the working day immediately preceding the suspension the last business day of the month. It is hard to see that this is what the parties had in mind, objectively, when they made their contract.

115 Further, if "business day" means "working day", the 10 day period fixed for the Superintendent to assess claims would expand or contract, according to whether work was not, or was, being performed on site. That, too, in my view is unlikely to represent the parties' intention, viewed objectively, at the time they made their contract.

116 I accept that it follows from the decision in IOC Australia that the denotation of the expression "business day" must reflect changes in circumstances. However, it would be strange in this case if the parties bound themselves to administer the contract so as to accommodate not just (for example) the unexpected proclamation of public holidays, but also the exercise (or purported exercise) of rights under the Security of Payment Act or under the contract.

117 It was common ground that there were days that were not Saturdays, Sundays or public holidays in the month of December, following 23 December. Indeed, 23 December 2013 was itself such a day.

118 It follows that the last day for Eighty Eight to submit a progress claim for the month of December 2013 had not passed when, on 23 December 2013, the Superintendent purported to issue his payment certificate 14.

119 I conclude that the Superintendent had no power to issue payment certificate 14 when he did, and thus that the certificate has no legal force as between the parties.

Conclusion and orders

120 PPK's claims, in the summons and in its second cross-claim, fail. The summons and second cross-claim should be dismissed. I incline to the view that costs should follow the events of dismissal.

121 On the view to which I have come, Eighty Eight's (first) cross-claim has become moot. I incline to the view that it should be dismissed but that, since it was essentially defensive in nature, the costs incurred in respect of it should be regarded as costs in the proceedings.

122 There are, no doubt, ancillary matters that require attention. In those circumstances, having indicated my views, the only order that I make is to stand the proceedings over to 25 June 2014 at 9:30am before me, and to direct the parties to bring in short minutes of order, to reflect these reasons, at that time. If there is any dispute (including as to costs) I will deal with it then.

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Decision last updated: 18 June 2014