Introduction

The Supreme Court of Western Australia has recently confirmed its position on the stringent time-constraints prescribed by the Construction Contracts Act 2004 (WA).

In highlighting the importance of deadlines under the Act, in particular, in relation to its specialised adjudication procedures, the Court makes clear the risk parties assume when failing to lodge their documents on time.

The case

In Re Graham Anstee-Brook; Ex Parte Karara Mining Ltd [No 2] [2013] WASC 59, DM Drainage and Construction Pty Ltd (DMC) had entered a contract with Karara Mining Pty Ltd (Karara) to construct a pipeline to supply water from the Twin Hills borefield to Karara’s mine site in WA.

A dispute eventuated between the parties in which DMC claimed Karara had refused to make payment for works under the contract. On 24 January 2012, DMC brought an adjudication application to have the dispute resolved under the Act.

Pursuant to section 27(1) of the Act, Karara was required to prepare and serve its response to DMC’s application within 14 days - in this case, by 7 February 2012. Karara eventually served its response on 10 February 2012.

The adjudicator resolved that Karara pay DMC an amount close to $5,000,000 for works performed pursuant to the contract. The adjudicator acknowledged that, as Karara had lodged its response to DMC’s application 3 days after the prescribed deadline, he ought to ignore it and resolve the dispute entirely on the strength of DMC’s application.

Supreme Court proceedings

Karara brought the proceedings to the Supreme Court, claiming that the adjudicator had made a jurisdictional error and denied it procedural fairness by refusing to accept its response to DMC’s adjudication application.

The Court, presided over by Le Miere J, initially held the view that Karara maintained an ‘arguable case’ and ordered the adjudicator’s decision be quashed on the basis that a jurisdictional error had occurred when he refused to acknowledge Karara’s response, and that Karara was, in turn, denied procedural fairness.

However, upon Karara’s later application to the Court to have the order made absolute, Le Miere J reconsidered his position, resolving to dismiss the application on the basis that the adjudicator had not in fact perpetrated any such jurisdictional error, as had been alleged by Karara, and determining that, in failing to consider Karara’s response, the adjudicator had not denied Karara procedural fairness.

The Act

In coming to its decision, the Court held that section 27 of the Act did not afford the adjudicator a discretion to extend the respondent’s time to file its response and did not oblige him to consider any such response served out of time. The Court noted that “a response filed out of time is not a response for the purposes of section 27 of the Act”. If no response was received within the time allowed, then the adjudicator was required to proceed to make the adjudication determination as soon as the time for service of the response had expired.

Further, as the Act had provided Karara with an opportunity to be heard, "...there was no denial of procedural fairness by the adjudicator failing to have regard to material furnished by the applicant outside of the 14 day period required by section 27 of the Act."

Key points

  • Supreme Court confirms stringent timeframes for service of respondent’s documents under the Construction Contracts Act 2004 (WA).
  • A failure by an adjudicator to acknowledge a respondent’s response that is served out of time is not a jurisdictional error.
  • In turn, an adjudicator is not obliged to consider a response served out of time and may make a decision based solely on the applicant’s documents.

Conclusion

The decision in Re Graham Anstee-Brook; Ex Parte Karara Mining Ltd [No 2] [2013] advocates strongly for the policy behind the Construction Contracts Act 2005 (WA); that parties to construction contracts have available a “quick, informal, inexpensive and provisional determination” procedure to payment disputes.

It is imperative to acknowledge that the Act does not give an adjudicator discretion to extend timeframes for compliance. Further, the adjudicator is under no obligation to consider a response that is filed out of time. Respondents to adjudication applications must therefore ensure strict compliance with their timeframes or risk a determination being made against them without consideration of their response.