Construction Contracts Act 2004 (WA) (Act) – whether adjudication application made within time – whether purported variation to contract in clear and unequivocal terms – whether payment is security or retention money
This case demonstrates the importance of having regard to the nature of the money claimed in an adjudication as this can affect the time limits. In this case, there was an effective variation of a payment which changed its nature under the Act and meant the application was out of time.
R & D Building Pty Ltd (applicant) entered into a contract with Mr Jackson (respondent), pursuant to which the applicant would construct a residence for $2,260,008 plus GST. The contract provided for a retention. In October 2013, the parties agreed that the balance outstanding on the retention would be considered to be a 'deferred payment' payable on 21 December 2013 (Variation). The parties also exchanged emails during December 2013 (December emails) which the applicant contended was a further agreement to defer payment beyond 21 December 2013. Practical completion of the residence was achieved on 21 June 2013.
The applicant applied for adjudication under the Act on 28 February 2014 requiring payment of the deferred payment negotiated by the parties. The applicant contended that the payment dispute arose when its invoice for the balance of the deferred payment was rejected on 24 February 2014.
The adjudicator found that the deferred payment was in the nature of security or retention money and was due on 21 December 2013, which meant that the application was out of time. Under the Act,whether and when a payment dispute arises depends on the type of money claimed such that different time periods apply to payments and the releases of retentions and security.
The applicant sought a review of the adjudicator's decision.
The State Administrative Tribunal affirmed the adjudicator's decision and dismissed the applicant's application.
The Member found that the effect of the Variation was to change the character of the payment from retention money to a deferred payment of money otherwise payable under the contract. The time limit in section 6(a) of the Act applied and the final payment was due on 21 December 2013. A payment dispute arose on that date when it was not paid, and the adjudication application was therefore out of time.
The Tribunal also held that the December emails did not vary the contract, primarily because the respondent's alleged acceptance of a change in payment terms — which constituted of a statement that he would '...revisit towards to end of January' — was not clear and unequivocal. It merely indicated the respondent's intention to reconsider his position at a later time. The alleged variation also failed because, while the respondent would receive a benefit in postponing payment, the applicant received no consideration.