A Challenging Adjudication

September, 2014

A recent decision (1) of the WA Supreme Court provides important guidance on several key issues arising under the Construction Contracts Act 2004 (WA) (“the Act”).

Specifically, it explored:

Proceedings

Wqube applied to the Supreme Court for judicial review of 2 adjudication determinations made under the ActOne determination was by Mr Loots and the other by Graham Anstee-Brook.  Wqube asserted that both adjudicators made the same errors and the matters in issue were the same for both applications. Consequently, the applications were heard together.  Chaney J gave judgment on 17 September 2014 dismissing both applications.

 Facts

M&C made a progress claim under its construction contract with Wqube.

A Mr H Mallen, acting in the capacity of ‘superintendent’s representative[2]’, issued a payment recommendation for full payment of the progress claim. M&C asserted this payment recommendation constituted a progress certificate under cl 37.2 of the contract.

Nine days later, Mr K Craven of Wqube wrote to M&C, advising of his appointment as the new Superintendent, adding that Mr Mallen had not been validly appointed as the superintendent’s representative and that Mr Mallen’s payment recommendations were not progress certificates. Mr Craven enclosed a ‘Payment Certificate’ stating no monies were payable to M&C in respect of its progress claim.

The issues considered by the Supreme Court were as follows:

Jurisdiction

The first issue considered by Chaney J was whether the Act was intended to give adjudicators jurisdiction to determine questions of law and the power to determine those questions incorrectly without that determination being subject to prerogative relief. His Honour determined that question in the affirmative, with the result that the test for jurisdictional error in relation to a determination under the Act is that applicable to an inferior court.

Valid appointment of Superintendent’s Representative

 Wqube argued that the superintendent had not validly appointed the superintendent’s representative under the contract because the superintendent had not provided written notification of the appointment to the parties.

His Honour found that Mr Mallen had undertaken the function of superintendent on a number of occasions prior to the present recommendation, with no objection from Wqube.  Consequently, there was evidence supporting the inference that Mr Mallen had been appointed for the purpose of assessing progress claims.

His Honour also noted that the requirement to give notice under the contract was not necessary for the valid appointment of the superintendent’s representative as the failure to give the notice did not necessarily prove that the superintendent’s representative had not been appointed.

Good faith

Wqube alleged that evidence as to the role of the superintendent’s representative had not been dealt with by the adjudicators in their determinations and, therefore, this issue had not been addressed in good faith.  Specifically, Mr Loots had not dealt with certain statutory declarations. His Honour rejected this ground holding, in particular, that the fact that Mr Loots did not deal with the statutory declarations did not mean that he failed to address the question for determination in good faith.

Form of adjudication application

The Act, s 26, prescribes that an adjudication application must be prepared in accordance with the regulations. Reg 4 requires the inclusion of the ABN or ACN of the “prescribed appointer” in the application “to the extent to which the person required to give the details knows those details.” In the present case, neither the ABN nor the ACN of IAMA were on the application. Did this render the application invalid?

His Honour found that it did not. He found that those directly involved in the preparation of the adjudication application on behalf of M&C did not know the ABN or ACN of IAMA.

Further, his Honour considered that the knowledge referred to in reg 4 is not constructive knowledge from a public source and if an adjudication application does not include certain details, such as an ABN or ACN, it is open to the adjudicator to infer that the detail is not known to the applicant.

Jurisdictional error

Wqube argued that Mr Loots misinterpreted cl 37.2 of the contract which resulted in him incorrectly determining that the progress certificate issued by Mr Craven was invalid.  This amounted to a jurisdictional error on the basis that it constituted a misapprehension or disregard of the nature and limits of the functions and powers of an adjudicator.

While holding that Mr Loots was in error in his construction of the clause, his Honour said that Mr Loots was simply engaged in an exercise of construction which did not involve any misapprehension or disregard of the nature or limits of his functions or powers under section 31 of the Act, even if that construction was in error.

Procedural fairness

Wqube also argued that it had been denied procedural fairness in that Mr Loots made an alternative determination on the invalidity of the progress certificate issued by Mr Craven, without informing the parties of his intention to do so or giving them an opportunity to make submissions regarding it.

After noting that Mr Loots’ alternative determination was not the basis of his finding that Wqube was liable to make payment to M&C, his Honour held that the validity of Mr Craven’s progress certificate and the application of cl 37.2 were issues before Mr Loots and procedural fairness did not require him to provide an opportunity to the parties to make further submissions merely because Mr Loots’ construction of cl 37.2 had not been the subject of submissions by the parties.

 

[1] WQUBE Port of Dampier Pty Ltd (Wqube) v Philip Loots of Kahlia Nominees Ltd [2014] WASC 331

 

 

Privacy Policy | Terms of Use