BGC Construction Pty Ltd v Citygate Properties Pty Ltd [2016] WASC 88

Significance

The Supreme Court of Western Australia has confirmed that the time prescribed by section 31(2) of the Construction Contracts Act 2004 (WA) (Act) for an appointed adjudicator to make a determination will be applied strictly.

Cal Doran also notes that the court provided valuable guidance as to the standard of reasoning that an adjudicator is required to maintain in discharging their statutory function.

Facts

The reasons contained in the decision concerned three interrelated applications arising from a dispute about a construction contract for the extension of a shopping centre between the builder, BGC Construction Pty Ltd (builder) who was the plaintiff and Citygate Properties Pty Ltd (Citygate).

In the first application, the builder sought leave to enter judgment against Citygate in respect of two determinations made by the same adjudicator for the sums of $402,273.21 and $392,145.00, both exclusive of GST (the First Determination and the Second Determination respectively).

In the second and third applications, Citygate applied for the judicial review and quashing of each of the First Determination and the Second Determination respectively.

Facts – First Determination

Citygate disallowed $1.5 million of the builder's 14th progress claim for $5.3 million. The builder commenced an adjudication application for the amount disallowed.

The adjudicator sought an extension of time to determine the application and the parties consented to an extension to 26 February 2015.

On 25 and 26 February 2016, the adjudicator and the parties conferred in relation to a further extension of time, however, the builder refused to consent to a further extension.

At 11.52pm on 26 February 2016, the adjudicator issued an email to each of the parties' solicitors containing a preliminary determination which referred to detailed variations contained in 'Annexure B', however, Annexure B was not attached to the email.

At 12.53am on 27 February 2016, the adjudicator issued an identical email to each of the parties' solicitors, this time attaching Annexure B.

Facts – Second Determination

The builder commenced an adjudication application in respect of its 16th progress claim.

The adjudicator sought an extension of time to determine the application and the parties consented to an extension to 5 May 2015.

At 3.37pm on 5 May 2015, the adjudicator issued an email to the parties expressing that he would not deliver his determination until his fees had been paid. The builder was unable to pay its share of the adjudicator's fees until 8 May 2015.

The adjudicator issued his determination to the parties on 8 May 2015, however, the determination was dated 5 May 2015. The determination comprised a narrative section, which recorded that Citygate was liable to pay the builder the sum of $392,145.00 plus GST, and an annexed schedule, which extended over 100 pages and dealt with 55 'variation claims' and 9 'backcharges'. The determination contained a number of deficiencies which made it impossible for the parties to understand the figure awarded by the adjudicator.

Decision

Tottle J quashed each of the First Determination and the Second Determination and consequently dismissed the builder's application for leave to enforce those determinations.

In making the above orders, his Honour held, amongst other things, that:

  • The First Determination was taken to be dismissed at midnight on 26 February 2016 pursuant to section 31(3) of the Act as the parties had not consented to a further extension of time.
  • The adjudicator was entitled to request for advance payment for his fees for the Second Determination pursuant to section 44(4) of the Act.
  • The adjudicator failed to exercise the statutory jurisdiction conferred on him by the Act, and therefore committed jurisdictional error, by failing to give rational reasons for the Second Determination pursuant to section 36(d) of the Act.

In reaching his conclusion in relation to the Second Determination, his Honour commented as follows:

'It is incumbent on an adjudicator to make it plain in the reasons that he or she has engaged with the issues... The reasons should make plain what the Adjudicator has determined and why. The authorities make it clear that the reasons do not have to be detailed or elaborate but an adjudicator cannot omit to give reasons entirely in respect of significant items and leave the parties to work out for themselves the basis upon which a determination has been made.'