adjudication discussion evening (6 sep, sydney) - 1/3

WWW.CORRS.COM.AU

11 September 2017

REFERENCE DATESRECENT CASES IN NSW

3454-0474-0102v1

SLIDE 2

REFERENCE DATESRECENT CASES IN NSW

1

Background: Southern Han2

Practical completion3

Deemed reference dates4

5

The Act – what’s the issue?

13 (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.

8(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.

REFERENCE DATE – JURISDICTIONAL?

• 5 May 2015, at first instance:

[40] … an essential requirement triggering the right to make a payment claim,

which in turn triggers the adjudicator’s jurisdiction.

• 25 September 2015, on appeal to the NSW Court of Appeal:

(1) The existence of a reference date to support a payment claim is not a

jurisdictional fact; it is not an essential pre-condition for the making of a valid

payment claim.

(2) The words “on and from each reference date” in s 8(1) do not purport to

identify a person, they identify the time on and from which a person who

satisfies the description in either (a) or (b) of that sub-section is entitled to a

progress payment.

(3) The words … in s 13(1) refer, in their ordinary meaning, to a person failing

within either s 8(1)(a) or 8(1)(b).

(4) The words “or who claims to be entitled to a progress payment” in s 13(1)

make clear that the existence of a dispute as to the entitlement of a person to a

progress claim does not preclude the making of a valid payment claim.

• 21 December 2016, on appeal to the High Court of Australia:

The existence of a reference date under a construction contract within the meaning

of s 8(1) of the Act is a precondition to the making of a valid payment claim under s

13(1) of the Act.

REFERENCE DATE – JURISDICTIONAL?SOUTHERN HAN V LEWENCE CONSTRUCTIONS

• The Contract

– Based upon AS 4000 (see Ball J at first instance)

– 36.4 Practical Completion

The Contractor shall give the SI at least 14 days written notice of the date upon which the Contractor

anticipates that PC will be reached.

When the Contractor is of the opinion that PC has been reached, the Contractor shall in writing

request the SI to issue a certificate of PC.

Within 14 days after receiving the request, the SI shall give the Contractor and the Principal either a

certificate of PC evidencing the date of PC or written reasons for not doing so.

– 44.3 Final Reference Date

[(a)] For the purpose of section 8(2) of the SOP Act, there are only two reference dates after PC

being:

i) The first date for a progress claim arising immediately after PC (as determined by subclause

37.1); and

ii) The date provided in subclause 37.4 for the Contractor to give its final payment claim.

Clause 37.1, which incorporates Item 28 of the Schedule, provides that a progress claim may be

made on the 28th day of each month for “Works under Contract” done to the 28th day of that month.

– Practical Completion

... that stage in the carrying out and completion of WUC [work under the Contract] when …

– Date of Practical Completion

a) the date evidenced in a certificate of practical completion as the date upon which practical

completion was reached …

ABERGELDIE CONTRACTORS -V- FAIRFIELD CITY COUNCIL [2017] NSWCA 113

• The Contract

– Based upon AS 4000 (see Ball J at first instance)

– 36.4 Practical Completion

The Contractor shall give the SI at least 14 days written notice of the date upon which the Contractor

anticipates that PC will be reached.

When the Contractor is of the opinion that PC has been reached, the Contractor shall in writing

request the SI to issue a certificate of PC.

Within 14 days after receiving the request, the SI shall give the Contractor and the Principal either a

certificate of PC evidencing the date of PC or written reasons for not doing so.

– 44.3 Final Reference Date

[(a)] For the purpose of section 8(2) of the SOP Act, there are only two reference dates after PC

being:

i) The first date for a progress claim arising immediately after PC (as determined by subclause

37.1); and

ii) The date provided in subclause 37.4 for the Contractor to give its final payment claim.

Clause 37.1, which incorporates Item 28 of the Schedule, provides that a progress claim may be

made on the 28th day of each month for “Works under Contract” done to the 28th day of that month.

– Practical Completion

... that stage in the carrying out and completion of WUC [work under the Contract] when …

– Date of Practical Completion

a) the date evidenced in a certificate of PC as the date upon which practical completion was

reached …



• The facts

– 16 September 2015: Contractor wrote to Council – PC achieved on that date.

– 28 October 2016: Contractor sent payment claim to SI.

– 25 November 2015: SI certified PC to have been achieved on 16 September 2015.

– 25 November 2015: Contractor sent payment claim to SI.

– 7 December 2015: Payment schedule issued for nil amount – no reference date.

– Adjudication: Contractor entitled to payment on November 2016 payment claim.

– Supreme Court at first instance: PC was in September so November 2016

payment claim was invalid as it was the second payment claim after PC.

• The (primary) controversy

– Common ground: valid reference date was a precondition to service of a valid

payment claim.

– Council contended: PC occurred on 16 September 2016 with the result that the

relevant payment reference date was 28 September 2016.

– Contractor contended: PC occurred on the date the certificate of PC issued, with

the result that the relevant reference date was 28 November 2016.

– When was PC?

ABERGELDIE

• Reasons (Basten JA)

Contract’s language is consistent with Contractor’s contention that the issue

of the certificate...provides the date on which PC is achieved [at 34]:

(1) “has been” completed indicates that the event has occurred “but connotes

that the actual time of completion is unimportant”; it is likely to be something

which has just happened .

(2) Structure of clause 34.6 consists of two steps requiring Contractor’s (1)

anticipatory notice as to the date upon which PC “will” be reached and (2)

notice of an opinion that PC “has been” reached. SI then has 14 days to

consider. “When” refers to when the opinion is reached.

(3) Certificate is not said to “state” but rather “evidence” the date.

(4) Unresolved question as to whether in identifying the Date of PC the Court

is to consider the objective facts or whether the SI has formed an opinion on

the underlying facts (and if so, when). SI is the best placed person to assess.

(5) Structure and language of the contract is entirely consistent with … the

conclusive event [being] the issue of the certificate of PC, which must depend

on a contemporaneous opinion of the SI.

ABERGELDIE

• Reasons (Basten JA)

– Construction is consistent with commercial context:

• Cl14 care of works dependent on knowledge

• Cl 16 insurance

• Cl 27 removal of temporary works

– Contractor cannot know whether PC reached until it received the

certificate … which … must, by implication, be dated and the date of the

certificate will evidence the date of PC.

– Therefore the relevant reference date was 28 November 2016.

– Pursuant to clause 37.1, the claim of 25 November 2016 was made on

that date.

ABERGELDIE

Takeaways

• Construe the contract, not the conduct.

• Under AS 4000, the date of PC is properly the date of issue

of the certificate of PC.

• Abergeldie has application that is broader than the question

of determining a reference date.

• The Contract

[All Seasons] shall claim payment progressively in accordance with Item 37.

An early progress claim shall be deemed to have been made on the date for

making the claim. (Emphasis added)

Item 37 says On the 2oth day of the month.

• The facts

– On 20 June 2016 All Seasons served a payment claim.

– On 12 July 2016 All Seasons made a progress claim under the contract and

purportedly under SOPA.

– The 12 July 2016 claim was referred to an adjudicator who determined that

she had jurisdiction to deal with it.

– Adjudicator determined the adjudicated amount was the claimed amount, All

Seasons obtained a judgment upon an ANA certificate for that amount.

• The (primary) controversy

– Was All Seasons entitled to a progress payment as at 12 July 2016, in

circumstances where it had made a payment claim for the reference date

accruing (on 20 June 2016) in the previous month, and where the next

reference date (20 July 2016) had not accrued at the time its progress claim

was served? [7(1)]

REGAL CONSULTING SERVICES -V- ALL SEASONS AIR [2017] NSWSC 613

REGAL CONSULTING SERVICES -V- ALL SEASONS AIR [2017] NSWSC 613• Reasons

– Southern Han followed:

– Common ground that 12 July 2017 claim was effective under the contract

as it was deemed to have been made on the proper date.

– Did the second sentence of cl 37.1 operate for the purposes of SOPA?

– Deeming sometimes creates “statutory fictions” but not always.

– Why did the parties include the deeming provision in their bargain?

(Muller v Dalgety & Co (1909) 9 CLR 693)

– Clause 37.1 was used to create a contractual fiction. “By setting out a

timetable for the making of progress claims, their assessment, and the

payment of any amount owing, it enables the parties to plan their work

and to manage their cash flow.” [at 42] Cl 37 is not concerned with SOPA

[at 50]

– There is nothing in the contract to make the stipulated date ... a condition

of entitlement . . . The effect of the deeming provision, whilst fictitious, is

not to give an entitlement that does not otherwise exist. [at 48]

REGAL CONSULTING SERVICES -V- ALL SEASONS AIR [2017] NSWSC 613

Takeaway

• Where the reference date has not arrived in fact, the

payment claim will be ineffective [at 49]

• To put it another way, where the reference date has not

arrived in fact, the claimant cannot be described as (in the

introductory words of s 13(1)) “a person referred to in s 8(1)”

who is . . . entitled to a progress payment [at 49]

• … there was no available reference date to support the

progress claim that All Seasons served on Regal on 12 July

2016. It must follow that the adjudicator lacked jurisdiction …

[at 53]

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11 September 2017

DISCUSSION?

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