Supreme Court New South Wales Medium Neutral Citation: Australia Avenue Developments Pty Ltd v Icon Co (NSW) Pty Ltd [2018] NSWSC 1578 Hearing dates: 26, 28 September 2018; further written submissions ending 8 October 2018 Date of orders: 19 October 2018 Decision date: 19 October 2018 Jurisdiction: Equity - Commercial List Before: Parker J Decision: The determination of Rosemarie Risgalla as adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW), issued on 14 September 2018 and numbered 2018–TASC–070, is quashed. Catchwords: BUILDING AND CONSTRUCTION – Building and Construction Industry Security of Payment Act 1999 (NSW) ("SOP Act") – payment claims – validity of payment claim – supporting statement under SOP Act, s 13(7) and (9) – whether validity of payment claim requires that the supporting statement be "made" on the same day as the payment claim – whether validity of payment claim requires that the supporting statement declare that all subcontractors have been paid up to the date on which the payment claim is "served" BUILDING AND CONSTRUCTION – Building and Construction Industry Security of Payment Act 1999 (NSW) ("SOP Act") – adjudication of payment claims – scope and parameter of payment claim – allowances made by adjudicator that were not raised in the payment claim – whether the adjudicator erred in making allowances not raised in payment claim – whether the adjudicator exceeded their jurisdiction in making allowances Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW), ss 4, 8, 13, 14, 15, 17, 20(2B), 22, 31, 34 Cases Cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 Beckwith v The Queen (1976) 135 CLR 569; [1976] HCA 55 Brodyn Pty Ltd (t/a Time Cost & Quality) v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394 Central Projects Pty Ltd v Davidson [2018] NSWSC 523 Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393; [2010] NSWCA 190 Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd (2005) 21 BCL 364; [2005] NSWCA 229 Co-ordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd (2005) 63 NSWLR 385; [2005] NSWCA 228 Creative Building Services Pty Ltd v TIO Air-Conditioning Pty Ltd [2016] ACTSC 367 Denham Constructions Pty Ltd v Islamic Republic of Pakistan (No 2) [2016] ACTSC 215 Downer Construction (Australia) Pty Ltd v Energy Australia (2007) 69 NSWLR 72; [2007] NSWCA 49 Duffy Kennedy Pty Ltd v Lainson Holdings Pty Ltd [2016] NSWSC 371 Greenwood Futures v DSD Builders [2018] NSWSC 1407 He Kaw Teh v The Queen (1985) 157 CLR 523; [1985] HCA 43 John Holland Pty Ltd v Road & Traffic Authority (NSW) (2007) 23 BCL 205; [2007] NSWCA 19 Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602 Kyle Bay Removals Pty Ltd v Dynabuild Project Services Pty Ltd [2016] NSWSC 334 Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142 Mt Lewis Estate Pty Ltd v Metricon Homes Pty Ltd [2017] NSWSC 1121 Ostrowski v Palmer (2004) 218 CLR 493; [2004] HCA 30 Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd [2009] NSWCA 157 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 92 ALJR 248; [2018] HCA 4 R v Turnbull (1943) 44 SR (NSW) 108 Category: Principal judgment Parties: Australia Avenue Developments Pty Ltd (Plaintiff) Icon Co (NSW) Pty Ltd (First Defendant) Rosemarie Risgalla (Second Defendant) Representation: Counsel: S Robertson (Plaintiff) M Christie SC/DP Hume (First Defendant) Solicitors: HWL Ebsworth Lawyers (Plaintiff) Vincent Young (First Defendant) Submitting appearance: Rosemarie Risgalla (Second Defendant) File Number(s): 2018/287463 Publication restriction: Nil Judgment 1. In these proceedings, Australia Avenue Developments Pty Ltd ("the Principal") challenges an adjudication determination in favour of Icon Co (NSW) Pty Ltd ("the Contractor") under the Building and Construction Industry Security of Payment Act 1999 (NSW). Unless otherwise stated, statutory references in the balance of this judgment are to that Act. 2. The contract between the parties covers the design and construction of a tower building at Sydney Olympic Park. The original contract sum was approximately $155 million (excluding GST). The contract is dated October 2015 and uses Australian Standard Form 4902-2000 (incorporating amendment number 1). Sterling Project Solutions is the Superintendent. 3. The present dispute concerns the Contractor's progress claim 33 for July 2018. The claim was sent by the Contractor to the Superintendent, acting on behalf of the Principal, on 30 July. The amount claimed was $3.66 million. On 13 August, the Superintendent issued a combined progress certificate and payment schedule in the sum of $1.16 million. On 27 August the Contractor lodged an adjudication application. The application was referred to Rosemarie Risgalla as Adjudicator who issued her determination on 14 September (2018-TASC-070). The Adjudicator determined the amount to be paid as $2.64 million. 4. The present proceedings were commenced on 19 September and have been conducted on an urgent basis. The Principal has paid the scheduled amount to the Contractor and has paid the additional disputed amount the subject of the adjudication into Court, pending the Court's determination in these proceedings. Issues for determination 1. The Principal challenges the Adjudicator's determination on two grounds. First, the Principal contends (by late amendment) that progress claim 33 did not comply with the requirements of the Act for a valid "payment claim" because the supporting statement did not include a declaration concerning payment of subcontractors in appropriate form. The Principal's second contention concerns certain previous deductions made by the Superintendent from the contract works price ("backcharges"). The Adjudicator made allowances in favour of the Contractor on these items. The Principal's argument is that the allowances fell outside the scope of the payment claim and that the Adjudicator thereby exceeded her jurisdiction. Adequacy of supporting statement 1. Section 8 of the Act relevantly provides: (1) On and from each reference date under a construction contract, a person: (a) who has undertaken to carry out construction work under the contract, or (b) who has undertaken to supply related goods and services under the contract, is entitled to a progress payment. 1. Section 13 relevantly provides: (1) A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment. (2) A payment claim: (a) must identify the construction work (or related goods and services) to which the progress payment relates, and (b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and (c) if the construction contract is connected with an exempt residential construction contract, must state that it is made under this Act. … (4) A payment claim may be served only within: (a) the period determined by or in accordance with the terms of the construction contract, or (b) the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied), whichever is the later. (7) A head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim. Maximum penalty: 200 penalty units. … (9) In this section: supporting statement means a statement that is in the form prescribed by the regulations and (without limitation) that includes a declaration to the effect that all subcontractors, if any, have been paid all amounts that have become due and payable in relation to the construction work concerned. 1. The contract provided (cl 37) for a system of progress claims, progress certificates and progress payments. Claims were to be made as at the 25th day of the month (cl 37.1 and Item 32 in the Annexure). This was accordingly the "reference date" for the purposes of the Act: see definition in s 8(2). 2. Progress claim 33 was a lengthy document. It was submitted electronically. It consisted of a two page covering email and eight attachments, which included the progress claim itself and the supporting statement under s 13(7). The email itself was undated but bears a "sent" time stamp of 30 July 2018 at 6:30 pm. 3. The claim itself was an electronic file consisting of a number of spread sheets. The first page was headed "claim number 33" and was described as the "progress claim summary". It carried the date 25 July 2018. 4. The progress claim summary consisted of a table which contained thirty-eight rows, each representing a category of the contract works. For each category the table showed the total value of the contract works, the previously claimed amount, the previous claim as approved, the amount of the current claim, and the amount remaining. 5. Then followed seventy-two pages showing, in similar format, breakdowns of each of the categories shown in the summary. Most, but not all, of these pages carried the date 25 July 2018; some were undated. 6. The supporting statement consisted of a covering page and an attachment in the form of a schedule which listed the subcontractors. The covering page was dated 25 July 2018. It stated: This statement applies for work between 25th October 2015 and 25th June 2018 inclusive (the construction work concerned), subject of [sic] the payment claim dated 25th July 2018. 1. The covering page contained a declaration made on behalf of the Contractor that, to the best of the maker's knowledge and belief: … all amounts due and payable to subcontractors have been paid (not including any amount identified in the attachment as an amount in dispute). 1. The attachment consisted of a table headed "schedule of subcontractors paid all amounts due and payable". For each subcontractor there was shown the ABN, the contract number and identifier, the date of works and the date of payment claim (head contractor claim). In each case the date of the payment claim was shown as 25 July 2018. The date of works was shown as a period of time; the beginning of the period varied from subcontractor to subcontractor but in each case the end date was given as 25 July 2018. 2. The Principal's contention is based on the recent decision of Hammerschlag J in Mt Lewis Estate Pty Ltd v Metricon Homes Pty Ltd [2017] NSWSC 1121. In that case the declaration in the supporting statement was made on 13 December 2016 but identified the payment claim as being dated 15 December. In fact, the payment claim actually submitted was dated 16 December. 3. Hammerschlag J said (at [39]-[40]): [39] There is no room to read the words of ss 13(7) and (9) and the prescribed form as requiring anything other than a declaration which relates to a payment claim, that is a document, which is in existence at the time the declaration is made and which identifies the work to which the claim relates. The declarer must have something before her or him with respect to which she or he can make the supporting declaration. [40] Neither logically nor rationally can a declaration be made that all amounts have been paid to subcontractors in relation to a payment claim which has not yet been made. 1. His Honour went on at [41]-[45] to refer to the legislative background to the provisions. That background shows that the concern was that head contractors would use the mechanism of the Act to obtain payment for work done by subcontractors when the subcontractors had not themselves been paid for that work. His Honour said (at [48]-[51]): [48] On Metricon's [the contractor's] approach, the head contractor could safely make a declaration that all amounts then due and payable to subcontractors had been paid knowing that amounts not then due and payable were to become due and payable between the date of the declaration and the date of the payment claim yet to be made. This would have the consequence that a head contractor could make a payment claim for work done by subcontractors, without having to ensure that those subcontractors had been paid – even though they are entitled to be paid – before the payment claim is actually made. This would be inimical to the policy behind the provisions. [49] Although it is not suggested in this case that Metricon had this motivation, it is to be observed that on its proposed construction, the supporting statement is compliant even though amounts due to subcontractors for work done between 2 October 2016 and 8 December 2016, could become due and payable on 14, 15 or 16 December 2016 and not be covered by the declaration. Significantly the reference date under the head contract was the 15th of each month. [50] A symptom of the unsoundness of Metricon's argument is that the declaration refers on its face to a non-existent payment claim. [51] Having regard to the vice which the sections are intended to avoid, as with provisions of the Act upon which the effectiveness of the decision-making process under it depends, punctilious compliance is required: Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393 at [47]-[48], [96] and [213]-[229]. 1. Counsel for the Principal relied upon this decision to contend that: (1) the supporting statement in this case did not comply with the requirements of ss 13(7) and 13(9); and (2) as a consequence the entire payment claim process for payment claim 33, including the resulting adjudication, was invalid. Both of these propositions were contested by counsel for the Contractor. 2. Counsel for the Principal fastened on the statement by Hammerschlag J that the supporting declaration cannot refer to a payment claim which has not yet been "made" (at [40] and [48]). In the present case, the supporting statement was dated (and presumably signed) on 25 July. The payment claim itself was not served until 30 July. Counsel argued that a payment claim was not "made" in the relevant sense until it was actually served. It followed, according to the argument, that the declaration could not be valid because it predated the date on which the payment claim was "made" by five days. 3. In Mt Lewis, there was a textual incongruity between the declaration in the supporting statement, which was dated 13 December, and the payment claim itself, which was referred to as being dated 15 December and in fact was dated 16 December. In the present case, there is no such incongruity. The claim itself bore the date 25 July 2018 on its initial summary page, and on most of the supporting pages. The supporting statement referred to the payment claim as being dated 25 July 2018 and declared that all payments due to subcontractors up to that date had been made. Both documents clearly spoke from the same date, and that date was 25 July 2018, the reference date. 4. In referring to the date on which the payment claim and the declaration were "made", Hammerschlag J was not using a term of art. The Act does not actually speak in terms of the declaration or the payment claim being "made". Instead it speaks of the payment claim being "served" (s 13(1)) and being accompanied by a supporting statement that "indicates that it relates to" the payment claim (s 13(7)). The statement must include a declaration "to the effect" that all subcontractors "have been paid" all amounts due and payable "in relation to the construction work concerned" (s 13(9)). The Principal's argument must be that in order for a declaration to comply with s 13(9) it must state that all subcontractors have been paid up to the date on which the payment claim is "served" for the purposes of s 13(1). 5. The term "served" in its natural meaning refers to the physical act of delivery of a document to another person, which may happen well after the date of the document itself. Whether a document "relates to" another document would ordinarily depend on the content of the two documents and in particular whether the first document contains a cross-reference to the second. This would not ordinarily have anything to do with when the second document is served externally. 6. Clearly the declaration must refer to the work the subject of the payment claim (the "construction work concerned") and must state that all of the subcontractors have, at the date of the declaration, been paid. But that is all. I see nothing in the language of the Act to support the Principal's construction. 7. As counsel for the Contractor accepted, a consequence of the Contractor's argument would be that if the payment claim and supporting declaration were made up and signed on a particular date, then a delay of even one day thereafter in serving the payment claim would result in non-compliance with the Act. Counsel for the Principal referred in particular to the difficulties which would arise with postal service where notice is deemed to have been effected when the notice is received (s 31(2)) which is likely to occur days after a document has been posted. In response, counsel for the Contractor suggested that the relevant date of "service" might be the date of posting rather than the deemed date of receipt. It is not necessary to go into this because on any view the Contractor's argument requires that if the payment claim were served personally then a one day delay would be enough to invalidate it. 8. I see no reason to think that the Parliament would have intended such a draconian consequence. It is true that the timetable laid down in the Act for the making of payment claims and consequent adjudication applications is "brutally fast": Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 92 ALJR 248; [2018] HCA 4 at [40]. But that timetable runs from the date of service of a payment claim, not the end of the period to which the payment claim relates. Subject to any provision in the construction contract, the contractor actually has up to twelve months after the end of the construction work to which the payment claim relates to lodge the claim: s 13(4). It seems extraordinary to think that the contractor might wait for eleven months after the reference date, make up the claim and supporting declaration, and then fail to comply with the Act by delaying the service of the documents, once signed, for twenty-four hours. 9. The mischief at which s 13(7) is aimed is clear. The Parliament wished to create an additional statutory sanction against any head contractor who used the mechanism of the Act to obtain payment from the principal for work done by subcontractors when it had not paid them what they were owed. As Hammerschlag J noted in Mt Lewis, that would have been a possibility in that case because the payment claim covered the period up to the reference date of 15 December but the supporting statement only covered the period up to 13 December. But that feature is not present in the current case, where the payment claim and the supporting statement both covered the period up to the relevant reference date, which was 25 July. 10. It is true that on this view if, in the present case, a subcontractor had undertaken work but was not contractually entitled to payment until, say, 26 July, then the non-payment would not be covered by the declaration and the contractor could proceed to make a claim and enforce payment on the basis of a payment claim dated 25 July (assuming that the contractor had a contractual right as against the principal to be paid for the work despite not having paid the subcontractor). I do not know how realistic this possibility is, but if it is a lacuna in the legislation then it is one which exists anyway. If the payment claim and supporting statement had been served on 25 July, payment could have been enforced despite the failure to pay the subcontractors amounts which later fell due to them. 11. Counsel for the Contractor presented a further argument based on the fact that s 13(7) creates a criminal sanction, namely a fine. Counsel presented the argument as part of the debate on whether, if there was a non-compliance with the Act, it was such as to invalidate the payment claim and the adjudication proceedings which resulted from it. But I think that, properly analysed, the argument relates to the anterior question of whether there was a non-compliance in the first place, and I will therefore deal with it now. 12. Counsel's argument was based on the principle that statutes creating criminal offences are usually interpreted so as to require an element of mens rea: He Kaw Teh v The Queen (1985) 157 CLR 523; [1985] HCA 43 at 528, 565, 590-1. Counsel argued that the principle should apply in this case. The contention was that the failure to comply with the requirements of s 13(9) had to be in some way intentional or deliberate. 13. I accept for the sake of argument that s 13(7) may have an element of mens rea. But all that means is that the accused must know all of the facts which render the relevant act criminal; it is not necessary for criminal liability to attach to prove that the contractor knew of the existence of the legal obligation: R v Turnbull (1943) 44 SR (NSW) 108 at 109, cited with approval in He Kaw Teh at 572; see also generally Ostrowski v Palmer (2004) 218 CLR 493; [2004] HCA 30. So, for example, if a contractor is unaware of the requirements of the Act and omits the supporting schedule, that could not be a defence to a prosecution under s 13(7). The relevant mens rea would be established by demonstrating that the contractor intentionally served the claim in the knowledge that there was in fact no supporting statement. It would only be if the contractor intended the supporting statement to be present but for some reason that had not happened that any debate about mens rea could arise. 14. For these reasons, it is not necessary to go into the question of what mens rea requirements might exist in s 13(7). There is nothing to suggest that there was anything unintentional about the way in which the declaration was signed and the progress claim was served. 15. The fact that a criminal sanction is involved means that another principle of construction could come into play. The principle was formerly expressed as a rule that statutes creating offences are strictly construed: Beckwith v The Queen (1976) 135 CLR 569; [1976] HCA 55 at 576; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 at [57]. But the rule (if it exists at all: see Alcan at [57]) is one of last resort. 16. In the present case, I consider that the language of s 13(7) is clear and is against the contention of the Principal. Nor, in my view, does the Principal's contention derive any support from the purpose of the legislation. I think s 13(7) should not be read as imposing an obligation to ensure that the supporting statement is up to date at the point of service. The fact that the statute gives rise to a criminal sanction only supports that conclusion. 17. Counsel for the Contractor invited me, should I conclude that there had been a contravention of the Act, to conclude that this nevertheless did not invalidate the adjudication process. Counsel relied on the observations of Ball J in Central Projects Pty Ltd v Davidson [2018] NSWSC 523. His Honour expressed disagreement with the view which had previously been put forward on this question by McDougall J in Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602, which was followed by Meagher JA in Kyle Bay Removals Pty Ltd v Dynabuild Project Services Pty Ltd [2016] NSWSC 334 and Duffy Kennedy Pty Ltd v Lainson Holdings Pty Ltd [2016] NSWSC 371. 18. Most recently, the conflict in the authorities was reviewed by McDougall J in Greenwood Futures v DSD Builders [2018] NSWSC 1407. His Honour acknowledged the force of Ball J's views but considered he should adhere to his own until the issue has been determined by the Court of Appeal. Counsel for the Contractor urged me to reconsider the question for myself. But in view of the conclusion which I have reached on the interpretation of s 13(7), it is not necessary to do so. Adjudication of backcharges 1. The contract contains a clause in conventional form relating to variations which requires that any variations be the subject of an express direction in writing from the Superintendent (cl 36). Clause 56 provides (the terms in italics are defined terms in the contract): 56 EFFICIENCIES The parties acknowledge and agree that: (a) as at the date of the Contract, the contract sum has been determined by reference to the Principal's project requirements; (b) the following innovations and opportunities to reduce the cost of constructing the Works ("Efficiencies") have been identified by the Principal: [there follows a list of items]; (c) following entry into the Contract, the Superintendent may direct variations to the Principal's project requirements to reflect the Efficiencies and the consequent reduction in the contract sum by reason of the variations will be valued by the Superintendent in accordance with subclause 36.4; and (d) the savings by reason of the Efficiencies, as reflect in the reduction of the contract sum as valued by the Superintendent in accordance with subclause 36.4 following direction of the variations referred to in subclause 56(c) above, will remain solely with the Principal and the Contractor will have no entitlement to claim for a share of the savings or to make any other claim arising out of or in connection with any variation directed in relation to any Efficiencies. 1. I have already described the form of payment claim 33. Although the summary showed thirty-eight trade categories, most of these contained nothing in the column headed "this claim". Ignoring those, the rest of the claim summary was as follows: No TRADE TOTAL CLAIM TO DATE APPROVED PREVIOUS CLAIM THIS CLAIM REMAINING 1 CIVIL WORKS $9,932,675.00 $9,932,675.00 100.0% $9,925,576.00 99.93% $7,099.00 0.07% - 27 ELECTRICAL SERVICES $6,308,336.00 $6,308,336.00 100.0% $6,292,336.00 99.75% $16,000.00 0.25% - 32 LANDSCAPING $3,811,099.00 $3,811,099.00 100.0% $3,706,449.00 97.25% $104,650.00 2.75% - 34 CONSULTANTS $3,378,875.00 $3,378,875.00 100.0% $3,376,996.10 99.94% $1,876.90 0.5% - 35 PRELIMINARIES $19,175,535.00 $19,175,535.00 100.0% $19,099,477.00 99.60% $76,058.00 0.40% - 37 PROVISIONAL SUMS $1,572,343.94 $1,081,199.94 68.8% $956,734.84 60.85% $124,465.00 7.92% $491,144.00 38 CLIENT VARIATIONS $20,560,128.49 $20,560,128.55 100.0% $17,558,532.95 85.40% $3,001,595.08 14.60% - TOTAL $175,516,823 $175,025,680 99.72% $171,693,957 97.82% $3,331,744 1.90% $491,144 1. As I have described, the payment claim contained a supporting schedule in similar format for each of the relevant categories. In particular there was a schedule for variations (category 38). This schedule contained fifty-nine items, but only nineteen of them contained an entry in the column headed "This Claim". 2. In response, the Superintendent issued a twenty-four page document headed "Progress Certificate/Payment Schedule". I will refer to this document as the "payment schedule". 3. The first page of the payment schedule identified the total amount of the payment claim as $3,664,918.40 (inclusive of GST) and the amount that the Principal proposed to pay (the scheduled amount) as $1,161,143.50. On the second page the following appeared under the heading "Assessment": The Superintendent has assessed the total amount claimed by the Contractor in its payment claim and has scheduled an amount that is $2,276,159.00 (excl GST) less than the amount claimed by the Contractor, for the following reasons: 1. The next twelve pages consisted of a table headed "Progress Claim No. 33". The table did not refer to any of the items in categories 32, 34 and 35, which were accepted by the Principal. Otherwise it responded category-by-category and item-by-item to the progress claim by indicating the amount claimed in the progress claim, the amount assessed, the difference ("variance") and reasons for non-acceptance. The last entry on the table showed totals (exclusive of GST) of $3,133,160 for the amount claimed, an assessment of $857,000 and a variance of $2,276,159. 2. The next page of the payment schedule was a summary which stated: Therefore, the assessed value of work executed for this claim for the month ending July 2018: Assessment of Total Value of Work Executed for Payment Claim No. 33: Total Value of Work Executed (Excl GST) $169,125,830.87 Less Previously billed (Excl GST) ($168,070,245.87) Assessment of Payment claim No. 33 (Excl GST) $1,050,585.00 Add GST $105,558.50 Assessment of Payment Claim No. 33 (Incl GST) $1,161,143.50 1. The next part of the document was a schedule entitled "schedule 1 - general reasons". There had been a previous adjudication between the parties, numbered 2018-TASC-040. That adjudication was also undertaken by Ms Risgalla, who issued her determination on 27 June. It related to payment claim 30 which had been served on 1 May. The Principal's objections in the table included a number of items which, so the Principal contended, had already been the subject of the earlier adjudication and could not be re-agitated. The objections also included efficiencies which had previously been the subject of a direction by the Superintendent which were now contested by the Contractor. The "general reasons" referred in some detail to the earlier adjudication proceedings and the provisions of cl 56, among other things. 2. Accompanying the payment schedule was a progress payment certificate which stated: Description Total Value to Date Complete to Date (excl. GST) (excl. GST) WORK AS FOLLOWS: Original Contract Sum: See attached Contract Breakdown for details $154,707,111.00 $154,317,987.00 Variations to the Contract: See attached Variation Breakdown for details $13,680,421.87 $13,934,843.87 Bonus Payment: $873,000.00 $873,000.00 Subtotals (excl GST) $169,260,532.87 $169,125,830.87 Total Value of Work Executed (excl GST) $169,125,830.87 Less Retention (excl GST) $ - Less Previous Assessment of Work (excl GST) $ (168,070,245.87) Amount of Assessment of Work – scheduled amount (excl GST) $1,055,585.00 GST $105,558.50 Amount of Assessment of Work – scheduled amount (incl GST) $1,161,143.50 1. The certificate was followed by the "Variation Breakdown" documents referred to in the certificate. These Variation Breakdown documents contained item-by-item figures showing the variations between what was claimed in the progress claim and what was allowed in the payment certificate. The first document contained figures for the first thirty-seven categories of contractual works. The second document contained figures for the contract variations which were category 38. 2. There then followed several hundred pages of accompanying documents including the adjudication response and adjudication determination from the previous dispute between the parties. 3. Section 1 of the Principal's adjudication application was headed "introduction". Under the subheading "overview of dispute" the following appeared: 1.9 The Respondent (predominantly due to its dissatisfaction with Determination 2018-TASC-040) has applied new backcharges that account for over $1million of the difference between the parties. 1.10 Interestingly no reasons for withholding are provided for these new Respondent backcharges (they are simply line items in the 'Progress Claim Variation Breakdown'). 1.11 These backcharges are: 'Deletion of paint to fire stairs' ($93k); 'Lift speeds' ($661k); 'Ground floor glass' ($142k); and 'Green Tinge glass' ($236k). 1.12 A reversal of these raises the scheduled amount to over $2 million. 1.13 Icon's variation claims are minor. The dispute is largely contained in these backcharges. 1. On page 4 of the application under the heading "reconciliation" the following appeared: Taking account of the above and noting the Respondent does not appear to take the point (the parties have both preserved their contractual positions cognisant of Determination 2018-TASC-040) the table below sets out the new items to be determined in this Adjudication Application absent those items that have previously been agitated: 1. The table identified electrical services (category 27), provisional sums (category 37) and variations (category 38). The items in these categories reflected items in the original progress claim. The backcharges appeared as a further separate group of five items, numbered 14, 66, 72, 73 and 76. 2. The Contractor stated that no reason had been put forward in the payment schedule for "withholding" payment by reference to these five backcharge items. The Contractor referred to s 20(2B) of the Act, which provides that a respondent cannot include in an adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule. The Contractor argued that this provision meant that the backcharges "should not be taken into account" but then went on to present submissions on the merits, arguing that they should be reversed. 3. The Principal's adjudication response stated in reply: In its Application, Icon has put forward a claim that is inconsistent with both the Payment Claim and the Payment Schedule, confusing the ambit of this Adjudication. In short, Icon has sought to recover previously deducted backcharge amounts despite not having claimed for those amounts in its Payment Claim. In doing so, Icon has inexplicably asserted that these backcharge amounts are entirely "new". 1. The Principal submitted that the backcharge items in question were in no way "new". The backcharges had not been the subject of the payment claim or the payment schedule. The Principal submitted that therefore it was not within the Adjudicator's jurisdiction to consider the Contractor's claims to have them reversed. 2. The Adjudicator's determination addressed this point as follows: 5. In respect of the Respondent's submission that backcharges were not included in the payment schedule, I note the following: a. Progress Payment Certificate 33 dated 30 July 2018, which is included as an attachment to the payment schedule, includes a variation amount to the contract of $13,934,843.87. The variation amount was used in the calculation of the schedule amount on page 15 of the payment schedule. In calculating the variation amount, the Respondent both itemised and included deductions for: [backcharge items] … b. While the payment schedule (pages 3 to 14) includes a table of assessed items together with reasons and which exclude the foregoing variations, it is clear that the deduction associated with the above variations form part of the payment schedule and have accordingly been scheduled by the Respondent, albeit with no specific reason provided. 6. I do not agree with the Respondent's submission that as the Claimant had not 'disputed or claimed in its Payment Claim the backcharges previously set-off by the Superintendent', these being Variations 14, 66, 72, 73 and 76, I do not have jurisdiction to consider these items. My reasons are: a. As referenced in Point 5 above, the variation amounts were included in the payment schedule and are part of the difference between the claimed amount and the scheduled amount, this being $2,281,159.00 (excluding GST), as opposed to the $282,203.15 (excluding GST) which the Respondent submits should be the scope of my determination considerations. The significant difference of itself tests the credibility of the Respondent's submission. b. It is my understanding that in Denham Constructions Pty Ltd v Islamic Republic of Pakistan (No 2) [2016] ACTSC 215, the court rejected the argument that because a valuation was not previously contested, it was now subsequently excluded from challenge in an adjudication application. Mossop AsJ held: 59. A decision not to seek adjudication of a claim which has not been paid does not involve an election to not further pursue that claim. First, everything that occurs under the SOP Act occurs on an interim basis without affecting substantive rights under the contract: s 38. Second, so long as it has not been adjudicated, an amount previously claimed may be claimed again subsequently: s 15(6). The Act does not imply a need to immediately adjudicate all claims or abandon them. Rather, claims may be repeated and adjudicated subsequently although this comes at the cost of delay so far as the claimant is concerned. 1. In the balance of the adjudication determination the Adjudicator went on to consider the merits of the backcharge items, largely upholding the Contractor's arguments. 2. Counsel for the Principal argued that: (1) the Adjudicator made an error in entertaining a challenge to the five backcharge items, in that those items had not been part of the payment claim and were not properly part of the adjudication process; and (2) that this error was a jurisdictional one which invalidated the determination. Initially it was contended on behalf of the Principal that the Court could, and should, remit the application for re-determination by the Adjudicator but this contention was abandoned on the second day of argument. Counsel for the Contractor disputed that the Adjudicator had made any error and contended that, even if an error had been made, it was a non-jurisdictional one with which the Court could not interfere. 3. I have already set out the relevant provisions of s 13. The critical provision for present purposes is s 13(2) which sets out the requirements for a payment claim, including that it must "identify the construction work (or related goods and services) to which the progress payment relates" and must "indicate…the claimed amount". The term "claimed amount" is defined (s 4) as: …an amount of a progress payment claimed to be due for construction work carried out, or for related goods and services supplied, as referred to in section 13. 1. Section 14 relevantly provides: (1) A person on whom a payment claim is served (the "respondent") may reply to the claim by providing a payment schedule to the claimant. (2) A payment schedule: (a) must identify the payment claim to which it relates, and (b) must indicate the amount of the payment (if any) that the respondent proposes to make (the "scheduled amount"). (3) If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment. 1. Section 17 deals with the making of an adjudication application. The section provides for the circumstances in which such an application may be made and for time limits within which it must be made. The only provisions relating to the content of the adjudication are that it must be in writing (s 17(3)(a)) and that it must "identify the payment claim and the payment schedule (if any) to which it relates" (s 17(3)(f)). It may also "contain such submissions relevant to the application as the claimant chooses to include" (s 17(3)(h). 2. Section 22 relevantly provides: (1) An adjudicator is to determine: (a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the "adjudicated amount" ), and (b) the date on which any such amount became or becomes payable, and (c) the rate of interest payable on any such amount. (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. (3) The adjudicator's determination must: (a) be in writing, and (b) include the reasons for the determination (unless the claimant and the respondent have both requested the adjudicator not to include those reasons in the determination). 1. Of the five disputed backcharge items, item 14 (deletion of plenum walls) appeared in the variation schedule in support of the payment claim. But nothing was included for that item in the column identifying the amount claimed. The other four items did not appear in the schedule at all. The payment claim thus did not include any claim for the reversal of the backcharge items in question. 2. The adjudication application was incorrect in asserting that the five backcharge items had been raised in the payment schedule as a credit against progress claim 33. Although cl 56 of the contract was referred to generally in the Principal's payment schedule, and was relied upon for some of the items in the Principal's objections, the objections did not refer to any of the five items, for the simple reason that the progress claim had not sought reversal of any of those items. The items did appear in the breakdown document for the contractual variations, but this was only a reconciliation of the figures in the project progress certificate which showed the breakdown of prior contractual claims and payments. It had nothing to do with the calculation of the scheduled amount. 3. It seems to me that the Adjudicator was led into error by the Contractor. The Adjudicator was wrong to say that the five backcharge items were referred to in the payment schedule. They were (through the variation breakdown document) referred to in the progress certificate, but not in the payment schedule. In any event, the question was whether they were included in the payment claim and, for reasons I have given, they were not. The reference to the decision in Denham Constructions was irrelevant. It would have been open to the Contractor to raise a challenge to the backcharge items in the progress claim. But it is clear from the form of the progress claim that the Contractor did not actually do so. 4. Creative Building Services Pty Ltd v TIO Air-Conditioning Pty Ltd [2016] ACTSC 367 concerned a progress claim, described as a "final progress claim", made after there had been twelve earlier progress claims. The difference between the amounts claimed in the earlier claims and the amounts allowed by the superintendent was $301,000. The final claim included $42,000 for further work. The adjudicator awarded $143,000, after taking into account work the subject of previous claims as well as the most recent work. 5. Mossop AsJ (as his Honour then was) found that on the true construction of the final claim, it was a claim only for $42,000. As a result, in awarding a larger amount than what was claimed the adjudicator had made an error. His Honour analysed the statutory provisions of the ACT legislation (which are materially in the same terms as the Act) and concluded that (at [48]): 48. … the capacity to determine the amount of a progress payment must be confined, at the upper end, by the claimed amount. That is because the statutory process of a payment claim, payment schedule, adjudication application and adjudication response are all based upon the identification by a claimant of the claimed amount and a response by the respondent to that claim. The statutory process is clearly one which permits the parties by an adversarial process to define the scope of their dispute. That is consistent with the contractual processes which the Act mirrors and partially adopts. It is also consistent with the autonomy that parties have to determine the claims which they wish to make and pursue under the Act. It would be inconsistent with those statutory processes if, notwithstanding that a claimant had only sought a particular amount, the adjudicator awarded a greater amount. 1. I agree with his Honour's conclusion that an adjudicator cannot award a sum larger than the amount claimed in the payment claim. But I think it goes further. Where, as is usually the case, the payment claim is made up of a number of individual items for which an amount is claimed, the adjudication must be limited to those items and those amounts. An application for an adjudication is an application for adjudication "of a payment claim" (s 17(1)). This can only include amounts actually claimed in the payment claim. That is the only view consistent with what his Honour recognised as the adversarial nature of the process. 2. The next question is whether the Adjudicator's error was jurisdictional in character, such that it invalidated her determination. Counsel for the Contractor argued that it was not. Counsel submitted that any error was as to the construction of the payment claim and the payment schedule, and the Act left it to the Adjudicator to construe those documents. Counsel submitted, in particular, that such documents were likely to be technical in nature and that for the Court to engage in the process of construing them for itself would be inconsistent with the rapid, and rough, process of determination of progress claims mandated by the Act. 3. In Brodyn Pty Ltd (t/a Time Cost & Quality) v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394, the contract provided for reference dates on the 14th and 28th of each month. On 13 June the principal purported to terminate the contract. Work had ceased by that point. The contractor served three purported payment claims, each of which was described as a "final claim". These were served on 27 June, 28 August and 28 September. The first two claims were rejected but did not proceed to adjudication. When the third claim was rejected, the contractor obtained an adjudication in its favour on that claim. The principal challenged the determination on the ground that it had not been open to the contractor to make multiple claims. 4. The leading judgment was given by Hodgson JA. His Honour first addressed generally the nature of judicial review, and in particular the availability of certiorari, under the Act. In the course of this, he said (at [56]): 56 It was said in the passage in Anisminic quoted by McDougall J [in Musico v Davenport [2003] NSWSC 977] that a decision may be a nullity if a tribunal has refused to take into account something it was required to take into account, or based its decision on something it had no right to take into account. However, in Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163 at 177 the High Court said that this would involve jurisdictional error if compliance with the requirement in question was made a pre-condition of the existence of any authority to make the decision. I do not think that compliance with the requirements of s.22(2) are made such pre-conditions, for the same reasons as I considered the determination not to be subject to challenge for mere error of law on the face of the record. The matters in s.22(2), especially in pars.(b), (c) and (d), could involve extremely doubtful questions of fact or law: for example, whether a particular provision, say an alleged variation, is or is not a provision of the construction contract; or whether a submission is "duly made" by a claimant, if not contained in the adjudication application (s.17(3)(b)), or by a respondent, if there is a dispute as to the time when a relevant document was received (ss.20(1), 22(2)). In my opinion, it is sufficient to avoid invalidity if an adjudicator either does consider only the matters referred to in s.22(2), or bona fide addresses the requirements of s.22(2) as to what is to be considered… 1. In Brodyn, the principal alleged error on the basis that the termination of the contract and the cessation of work meant that there was only one available reference date after the termination of the contract. The principal contended that once the first final payment claim had been made, no further adjudicable claim was possible because of s 13(5) of the Act. 2. Hodgson JA rejected this contention, concluding that fresh reference dates continued to accrue after the termination of the contract. He added (at [66]): There is also a question whether this point could in any event lead to a conclusion that the determination was void. If there is a document served by a claimant on a respondent that purports to be a payment claim under the Act, questions as to whether the document complies in all respects with the requirements of the Act are generally, in my opinion, for the adjudicator to decide. Many of these questions can involve doubtful questions of fact and law; and as I have indicated earlier, in my opinion the legislature has manifested an intention that the existence of a determination should not turn on answers to questions of this kind. However, I do not need to express a final view on this. 1. In Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142 the principal responded to the contractor's payment claim by contending, in the payment schedule, that clauses in the contract had the effect that certain of the contractor's items could not be claimed. In its adjudication application, the contractor contended that if on their true construction the relevant clauses had that effect, they were rendered void by s 34 of the Act, which prohibits contracting out. The adjudicator made a determination in the contractor's favour on the relevant claims. 2. The principal argued that the adjudicator's determination was wrong and s 34 did not have the effect claimed for it by the contractor. The leading judgment was given by Hodgson JA. His Honour did not find it necessary to decide finally whether s 34 applied or not. He said (at [49]): In my opinion, an error of fact or law, including an error in interpretation of the Act or of the contract, or as to what are the valid and operative terms of the contract, does not prevent a determination from being an adjudicator's determination within the meaning of the Act. Section 22(2) does require the adjudicator to consider the provisions of the Act and the provisions of the contract; but so long as the adjudicator does this, or at least bona fide addresses the requirements of s 22(2) as to what is to be considered, an error on these matters does not render the determination invalid. 1. In both Co-ordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd (2005) 63 NSWLR 385; [2005] NSWCA 228 and Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd (2005) 21 BCL 364; [2005] NSWCA 229 the contractor's progress claim was for delay damages. In each case the principal contended that such damages could not be the subject of adjudication under the Act because it did not satisfy the definition of "claimed amount" which required that the progress payment claimed be "due for construction work carried out, or for related goods and services supplied". The two appeals were heard on the same day before the same bench and the judgments were given on the same day. 2. In each case, the leading judgment was given by Hodgson JA. His Honour concluded that the delay damages claimed satisfied the statutory definition. He set out his reasons for this in Hargreaves from [38] to the first part of [45]. His Honour then added in the balance of [45]: … even if s 13 is construed as limiting claims to claims for payment for construction work carried out or for related goods and services supplied, it would be for the adjudicator to determine whether or not such amounts should be included in the amount determined, having regard particularly to s 9(a) and other provisions of the Act and the contract. This appears to be what each adjudicator did; and I am not satisfied even that any error of law on the face of the record has been established, much less an error of the kind that could invalidate a decision. 1. In Climatech, Hodgson JA added (at [24]): … what is referred to an adjudicator for determination is a claimant's payment claim, and what an adjudicator is to determine is the amount of the progress payment to be paid on the basis of that claim and on the basis of other considerations in s 22(2) of the Act. Accordingly, the task of the adjudicator is to make a determination within the parameters of the payment claim, although that is not to say that, if an adjudicator were to make an error which can later be seen as taking the determination outside those parameters, it necessarily invalidates the determination. 1. Ipp JA limited his concurrence to the reasons given by Hogdson JA in Hargreaves at [38]-[45], and expressly did not comment on the other issues raised. 2. In John Holland Pty Ltd v Road & Traffic Authority (NSW) (2007) 23 BCL 205; [2007] NSWCA 19, the contractor served a progress claim for additional costs allegedly resulting from instructions given by the superintendent on the principal's behalf. The principal served a payment schedule declining to pay the claim on various grounds including that the contractor was not entitled to a variation under the terms of the contract and that some or all of the delays claimed had not been caused by the variation. The contractor made an adjudication application and the principal made an adjudication response in which it argued that the claim was properly one for expert determination and the arbitrator had no jurisdiction to entertain it under the Act. This was a new point which had not been raised in the payment schedule. The adjudicator did not refer to it in the determination, apparently because he considered it had not been "duly made" for the purposes of s 22(2)(c). 3. Hodgson JA (with whom Beazley JA, as her Honour then was, agreed) gave the leading judgment. He said (at [55]): The relevant requirement of s 22(2) is that the adjudicator consider the provisions of the Act, the provisions of the contract and submissions duly made. If an adjudicator does consider the provisions of the Act and the contract which he or she believes to be relevant, and considers those of the submissions that he or she believes to have been duly made, I do not think an accidental or erroneous omission to consider a particular provision of the Act or a particular provision of the contract, or a particular submission, could either wholly invalidate a determination, or invalidate it as regards any part affected by the omission. One could express this by saying that such an accidental or erroneous omission does not amount to a failure to comply with s 22(2), so long as the specified classes of considerations are addressed; or alternatively, if one takes the view that s 22(2) does require consideration of each and every relevant provision of the Act and the contract and each and every submission duly made, the intention of the legislature cannot have been that this kind of mistake should invalidate the determination. In a case where there were 1,000 submissions duly made, an accidental failure to consider one of them could not reasonably be considered as invalidating a whole determination; and there is no basis for partial invalidation of a determination, that is, invalidation only of that part affected by the omitted submission. 1. In each of Hargreaves, Climatech and John Holland, Basten JA wrote a separate judgment agreeing with Hodgson JA on the outcome, but his reasoning differed from that of Hodgson JA in some respects. In particular, his Honour did not fully accept Hodgson JA's views on the scope of jurisdictional error under the Act. In John Holland, he said in response to the contractor's argument that a submission was "duly made" under s 22(2)(c) (at [71]): This argument is based on a false premise, and has given rise to this Court being invited to consider a number of false issues. The false premise is that the scope of the payment schedule and the identification of submissions "duly made" by the Respondent in support of the schedule are matters to be objectively determined by this Court. In my view they are not: they are matters to be determined by the adjudicator. 1. On his Honour's view, because the adjudicator was empowered to determine whether the submissions were "duly made", no question of jurisdictional error could arise. 2. In Downer Construction (Australia) Pty Ltd v Energy Australia (2007) 69 NSWLR 72; [2007] NSWCA 49 the contractor had been engaged to design and construct a tunnel. Under the terms of the construction contract, the contractor bore the risk of all physical conditions and characteristics on the site except for "latent conditions" which was a defined term in the contract. In the course of the work, water entered the tunnel. Following completion, the contractor made a payment claim for project delay costs, direct and disruption costs, and costs for collection and control of seepage. A supporting schedule set out the basis for the claim. The schedule asserted that the contractor had encountered fractures or fissures (referred to as "bedding plane shears") linked to a rechargeable water source while excavating the tunnel, and that these bedding plane shears constituted "latent conditions" within the meaning of the contract. The schedule contained further particulars identifying the bedding plane shears at particular distances ("chainages") along the tunnel works. 3. The principal served on the contractor a payment schedule that denied the claim and disputed that the water ingress resulted from "latent conditions" for the purpose of the contract. The contractor then made an adjudication application. In the accompanying submissions, the contractor acknowledged that the chainage location of one of the bedding plane shears stated in the schedule to its payment claim was incorrect and provided a revised location, but maintained the claim. The principal argued in response that the latent conditions described in the adjudication application were not the same as those identified in the payment claim. According to the principal, this meant the adjudication application was not an application for the adjudication of the payment claim. The adjudicator made an award in favour of the contractor. 4. On review by this Court, Nicholas J found that the location of the bedding plane shears stated in the contractor's submissions was substantially different from that put forward in the payment claim. He held that the adjudicator erred in focusing on the water ingress itself as the latent condition, a conclusion which was influenced by the adjudicator's reading of the parties' submissions and other documentation as opposed to relying solely on the payment claim and schedule. As a result, the adjudicator determined a substantially different claim. 5. His Honour then considered whether the adjudicator's error could be characterised as a jurisdictional error. After referring to Climatech at [24] (see [74]-[76] above), his Honour concluded (at [114]): 114. In the present case the adjudicator failed to determine Downer's payment claim the basis of which was the latent conditions consisting of the bedding plane shears which resulted in excessive water ingress. He made a determination in respect of a substantially different claim. As a result, the determination lacked a basic and essential requirement for its existence as it was not the adjudication of the payment claim. There has not been an adjudication of the payment claim within the meaning of the Act and, accordingly, the determination is void. 1. The contractor appealed. On appeal the leading judgment was given by Giles JA. After referring to previous authorities including Brodyn, Climatech and John Holland, his Honour concluded (at [87]-[88]): 87. In my opinion, determination of the parameters of the payment claim is a matter for the adjudicator, and a reasonable but erroneous decision by the adjudicator does not invalidate the determination. In the present case, in determining the amount of the progress payment (if any) to be made it was for the adjudicator to decide whether the water ingress fell within latent conditions for the purpose of the contract, and the parameters of the payment claim in that respect. He did so. As to both, it could not be said that the adjudicator's decision was without foundation, and if the adjudicator addressed the matters and came to his decisions, even if other decisions could have been come to, he did what the Act required – he determined the adjudicated amount. As was stated in Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd (at [49]): "… an error of fact or law, including an error in interpretation of the Act or of the contract, or as to what are the valid and operative terms of the contract, does not prevent a determination from being an adjudicator's determination within the meaning of the Act." 88. There is good reason for leaving determination of the scope and nature of the payment claim to the adjudicator, apart from the purpose of the Act earlier mentioned. The scope and nature of the payment claim will often be, and in the present case was, open to be elucidated and evaluated with the benefit of the adjudicator's specialised knowledge. 1. In Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd [2009] NSWCA 157 the contractor served a payment claim in February 2008. The principal provided a payment schedule with a scheduled amount of nil, claiming that the works were defective and that the contractor in fact owed the principal money rather than the other way around. The contractor did not apply for adjudication of this payment claim. Instead, in March 2008, it served a fresh payment claim claiming the same amount. In response, the principal served another payment schedule with the scheduled amount of nil. In giving reasons for this amount, the payment schedule referred to and incorporated by reference reasons given in the February payment schedule. The adjudicator allowed the claim. Part of the adjudicator's reasons was that it was not legitimate for the principal to have incorporated contentions from the February payment schedule in the March payment schedule by reference; s 14(3) of the Act required that the reasons had to be set out in the payment schedule itself. 2. The leading judgment was given by Giles JA. He said (at 67): In my opinion, what a payment schedule indicates as the reasons for the scheduled account being less than the claimed amount and for withholding payment is also a matter for the adjudicator, and if the adjudicator makes an error in that respect it does not invalidate the determination. Added reference to s 22(2)(d) does not take this further, see Brodyn Pty Ltd v Davenport at [56] holding that it is sufficient that the adjudicator bona fide address the requirements of s 22(2) as to what is to be considered. By s 22(2) the legislature has committed to the adjudicator consideration of the payment claim, any payment schedule, and all submissions duly made. There is no reason to regard a correct view of what a payment schedule indicates as more basic and essential to a valid determination than an adjudicator's view of what a payment claim identifies or indicates, or whether a submission has been duly made. 1. In Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393; [2010] NSWCA 190 the contractor served a payment claim on the principal on 31 December. The due date for payment was 13 January. The principal made no response by way of payment schedule. The contractor then proceeded to make an application for adjudication. The application was made on 11 February, which was outside the twenty business day period required by s 17(2)(a) of the Act. The adjudicator considered, for reasons which were found to be "plainly wrong", that the application was in time and went on to make a determination in favour of the contractor. The issue was whether this error was jurisdictional and the Court could intervene. Questions were formulated and referred to the Court of Appeal. 2. The appeal was heard by Spigelman CJ, Basten JA and McDougall J. Separate judgments were given by all three members of the Court. All members of the Court agreed that the error was jurisdictional and the adjudicator's determination could be the subject of an order in the nature of certiorari. On the true construction of the Act, compliance with s 17(2)(a) was to be determined by the Court, not the adjudicator. 3. As I will explain in more detail below, I do not consider that the facts in any of these Court of Appeal decisions are directly relevant to the particular circumstances with which I am concerned in this case. The facts in Creative Building Services, however, were. 4. In Creative, having concluded that the adjudicator made an error in making an award for more than what was claimed in the payment claim, Mossop AsJ went on to consider whether the error was jurisdictional. He concluded that it was, for a number of reasons. 5. In the first place, the adjudicator is given no express authority to determine what is claimed in the payment claim (Creative, at [49(a)]). This is comparable with the question whether the time limits in s 17(2) have been complied with, where the Act likewise confers no express power of decision on the adjudicator (Chase at [36], per Spigelman CJ). It is to be contrasted with the determination of the dispute arising from the payment claim. Matters arising at that stage are, in accordance with s 22(2), to be left to the adjudicator to consider, which include whether submissions made by the principal are "duly made" (as in John Holland; cf [78]-[79] above) or the interpretation of the construction contract to which the payment claim relates (as in Contrax; cf [72]-[73] above). Put another way, determining what is claimed in the payment claim is a different question to the determination of the dispute itself. 6. Secondly, what the contractor claims in the payment claim can be determined from the payment claim itself, before any adjudication occurs (Creative at [49(c)]). As with the question of compliance with s 17, it arises at an anterior point to determination of the dispute (Chase at [43]-[45]). Furthermore, the determination of the amount claimed may have consequences outside any adjudication which may be made, or even if there is no adjudication at all. In particular, if there is no payment schedule, the contractor can proceed to enforce the "claimed amount" as a debt (s 15(2)(a)(i)) (Creative at [49(d)]). No equivalent independent statutory issue arose concerning the grounds for non-payment in the payment schedule in John Holland or concerning the interpretation of the contract in Contrax. 7. Thirdly, the determination of what is claimed in the payment claim, as distinct from interpreting the claim and dealing with it, is not a matter which itself requires "particular expertise of adjudicators" or "difficult questions of construction" (cf Chase at [218]). It simply involves determining what is being claimed in the payment claim. Mossop AsJ described it as a "simple numerical conclusion" (Creative, at [49(b)]); see also [49(e)]). In Chase, the determination of whether service had been effected was also a simple question (cf at [233]); and that was a question of fact rather than a question of interpretation of the payment claim so the reasoning there applies here a fortiori. 8. I agree with Mossop AsJ's analysis. In my view, a determination in favour of a contractor which goes beyond what the contractor claimed in the progress claim is a jurisdictional error. That is what occurred in this case. 9. Of the Court of Appeal decisions to which I have referred, this case is closest to Downer. But in my view, the critical aspect of that case was that the adjudicator's error related to the basis or grounds of the payment claim, not the amounts claimed in the payment claim. The payment claim was a claim for delay and associated costs resulting from water entering the tunnel. The particular location of the bedding plane shears which led to the water entry had nothing to do with the quantum of the costs being claimed. The parts of the schedule supporting the payment claim which were departed from in the adjudication application were not essential to its validity. The Act does not require that a progress claim be supported by grounds or submissions at all. 10. In my view, the reference to the adjudicator determining the "parameters" of the payment claim was a reference to the adjudicator determining the grounds, factual or legal, upon which the contractor advanced the claim. The present case is not about the parameters of the claim in that sense but about the more fundamental question of whether a claim was made at all. 11. For these reasons, I consider that in making determinations in favour of the Contractor so far as the five backcharge items are concerned, the Adjudicator exceeded her jurisdiction under the Act. Conclusions and orders 1. I have concluded that: (1) the supporting statement which accompanied the payment claim complied with the requirements of s 13(9), and this basis for the challenge to the Adjudicator's determination fails; (2) the Adjudicator erred in making determinations in the Contractor's favour with respect to the five backcharge items; and (3) that error was a jurisdictional one which invalidated the Adjudicator's determination. 1. The Adjudicator's error only concerned the five backcharge items. But it was not suggested that an order could be made which would set aside the allowances made by the Adjudicator for those items and preserve the remainder of the determination. Accordingly, an order in the nature of certorari will be made quashing the determination as a whole. I will hear from the parties, if necessary, on any consequential orders (such as the payment out of monies in Court), and on costs. 2. The orders of the court are: 1. Order that the determination by the second defendant as adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW), issued on 14 September 2018 and numbered 2018–TASC–070, be quashed. 2. Direct that within 14 days of today's date the plaintiff bring in proposed orders dealing with any consequential issues and costs; if the orders are not agreed, they are to be the subject of a further hearing on a date, and subject to directions, to be fixed by arrangement with my Associate. ********** Amendments 22 October 2018 - Typographical amendments 22 February 2019 - [73] change "contractor" to "principal" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 February 2019