Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd (No 2)

1. [1]

   These proceedings arise out of two adjudications under the Building and Construction Industry Security of Payment Act 1999 (“SOPA” or “the Act”). The adjudications took place under two separate contracts between a head contractor and a sub-contractor. They obliged the head contractor to pay $71 million in total to the sub-contractor. In the present proceedings, the sub-contractor seeks to enforce the payment of the adjudicated amounts. The head contractor seeks to set the adjudications aside or alternatively to stay their enforcement until the parties’ rights are determined by arbitration.

2. [2]

   The dispute between the parties has already been the subject of proceedings in this Court, which resulted in a judgment of Rees J last December: Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2023] NSWSC 1550 (“J1”). At J1 [11]-[28] her Honour summarised the background and some of the contractual provisions. The background for the purposes of the present dispute may be further summarised as follows.

3. [3]

   The contracts in question were for works forming part of a large infrastructure development being undertaken at Moorebank in Western Sydney, known as the Moorebank Intermodal Terminal Project. The development is being carried out by a Commonwealth government business enterprise named National Intermodal. The head contractor is Qube RE Services (No 2) Pty Ltd (“Qube”). The sub-contractor is Martinus Rail Pty Ltd (“Martinus”).

4. [4]

   The contract between National Intermodal and Qube is known as the “Development and Operation Deed” (“DOD”). The two sub-contacts between Qube and Martinus, which are the subject of these proceedings, were both dated July 2022. They are styled “Interstate Terminal Works Contract” dated 8 July 2022 (“INTS Contract”) and “Interstate Rail Access Works Contract” of the same date (“ISRA Contract”). I will refer to them collectively as “the Contracts”. The Contracts were on “construct only” terms; that is, Martinus was to undertake the specified construction work in accordance with designs provided by Qube.

5. [5]

   As is conventional, the administration of the Contracts took place under the direction of a superintendent appointed by Qube (“the Superintendent”). The Superintendent was obliged by the terms of the Contracts to “act independently”. Qube appointed Mr Peter Marshall of Rail Planning Services Pty Limited (“RPS”).

6. [6]

   In February last year, Martinus was estimating that the date for practical completion under the Contracts was ten months away, in December. Over the following months that date blew out. By August it had reached June this year (still ten months away). According to Qube, at that point the adjusted date for practical completion under the Contracts, taking into account approved extension of time claims, was 30 November. The “sunset date” by which completion of Qube’s works was required under the DOD was 24 January this year.

7. [7]

   For its part, Martinus blamed Qube for the delay. According to Martinus, the necessary designs to undertake the work had been delivered late, and were in some cases inadequate. Furthermore, Qube had failed to give access to the site to allow Martinus to undertake the works. According to Martinus, access had been delayed in some cases by more than a hundred days after the originally scheduled date. Martinus claimed not only that it was not responsible for the delays, but also that Qube was liable for additional costs attributable to them.

8. [8]

   It seems that these arguments were not accepted by the Superintendent. Martinus’ payment claims for the period up to 31 May went to adjudication. In early August, the adjudicator (Mr Alan Stapleton, not the adjudicator whose adjudications are in issue in these proceedings) handed down determinations in favour of Martinus totalling $11.1 million. These amounts were paid by Qube.

9. [9]

   Matters came to a head at the end of August. Qube issued formal notices invoking the show cause procedure required for termination of the Contracts. Martinus responded, but Qube took the position that the response was unsatisfactory. On 25 September, Qube issued formal notices of termination for cause. On the same date, it issued formal notices of termination for convenience to take effect if the terminations for cause proved to be invalid.

10. [10]

    Martinus disputes the validity of the termination for cause, but it is common ground that the Contracts were terminated on 25 September; the question is whether the termination was for cause or for convenience.

11. [11]

    Martinus’ payment claims under the Contracts for the period up to 31 August 2023 also went to adjudication before Mr Stapleton. Early in November, he delivered determinations in favour of Martinus, totalling $4.6 million. These amounts were also paid by Qube.

12. [12]

    By this point Qube had paid a total of $113 million (or perhaps $117 million) to Martinus under the Contracts, including adjudicated amounts.

13. [13]

    In early December, Qube issued formal notices of dispute under the dispute resolution clauses of the Contracts. Qube alleged that it was entitled to substantial damages from Martinus for breach of contract, and to reimbursement of monies which should not have been allowed in the adjudications before Mr Stapleton.

14. [14]

    The dispute resolution clause in the INTS Contracts (which I understand to have been the same in the ISRA Contract) provided for an elaborate multi-stage process. The first step involved negotiations between appointed representatives of the parties. If these negotiations were unsuccessful, there was to be what the Contracts described as an “Escalation of Dispute” involving further negotiations between the parties at senior executive level. Provision was made for the executive negotiators, if unable to agree on a resolution of the dispute, to refer it to mediation, expert determination or arbitration. If the matter was not resolved through mediation or expert determination (including if any party was dissatisfied by the expert’s determination), the dispute would be determined by formal arbitration.

15. [15]

    Following the issue of the notices of dispute, the earlier proceedings in this Court to which I have referred were commenced. Martinus applied under the Commercial Arbitration Act 2010 for an injunction restraining Qube from calling on the bank guarantees provided as security for Martinus’ obligations under the Contracts. The application was heard by Rees J on 11 December and her Honour delivered judgment on 20 December. She dismissed the application.

16. [16]

    Although the injunction was refused, Qube did not immediately call on the bank guarantees. That did not happen until 8 February this year.

17. [17]

    The payment claims which resulted in these proceedings were also issued on 8 February (shortly after, but in ignorance of, the call on the bank guarantees). The amounts claimed were $104.1 million for the INTS Contract and $33.3 million for the ISRA Contract. Qube responded on 22 February. Qube alleged that under each Contract it was owed money by Martinus. The scheduled amounts were credits of $1.4 million for the INTS Contract and $1.4 million for the ISRA Contract. The difference between the parties was therefore almost $140 million.

18. [18]

    On 7 March, Martinus issued its adjudication applications. Qube was served later that day. The applications claimed payment of $104.1 million under the INTS Contract and $33.3 million under the ISRA Contract. They were referred to Mr John Tuhtan (“the Adjudicator”). On 15 March, Qube duly provided its responses to the applications.

19. [19]

    The adjudication proceedings before the Adjudicator were complex and proved to be protracted. The payment claims, payment schedules, applications and responses involved scores of disputed items, hundreds of pages of submissions and thousands of pages of supporting material.

20. [20]

    Under the timetable laid down by the Act, the adjudications were to be completed by 2 April. On 22 March, the Adjudicator requested an extension of 21 business days, noting the volume of documents and the complexity of the issues . The parties consented. In the end, four further extensions of time were sought and granted, taking the date for delivery of the determinations to the second half of July. According to counsel for Qube, the Adjudicator’s fees were calculated on the basis that he spent more than 9 hours a day, on average, on the adjudication over the 132 calendar days (that is, including weekends and public holidays) between the beginning of the adjudications and the delivery of the determinations. I did not understand these figures to be in dispute.

21. [21]

    The Adjudicator delivered his determinations on 22 July. Including the reasons, they consisted of 560 pages for the INTS adjudication and 287 pages for the ISRA adjudication, although there was a degree of repetition. The Adjudicator determined that progress payments of $63.1 million should be made under the INTS Contract and $7.1 million under the ISRA Contract. He also decided that Qube should pay the whole of the costs of the adjudications. The Adjudicator’s fees totalled $543,000 which was split $209,000 for the ISRA adjudication and $334,000 for the INTS adjudication).

22. [22]

    On 2 February, Qube had given notices pursuant the dispute resolution procedure under the Contracts escalating the dispute to executive level. A mediation took place unsuccessfully and it seems there were no further attempts at executive resolution. On 27 March, while the adjudication proceedings were pending, Qube issued formal notices of referral to arbitration under the Contracts. On 26 July, four days after delivery of the Adjudicator’s determinations, Qube served notices of arbitration under the rules of the Resolution Institute, the body under whose auspices arbitrations of disputes are to occur under the Contracts. Counsel for the parties told me that the identity of the arbitrator has not yet been agreed.

23. [23]

    Under the Act the time for payment of the adjudicated amounts was 29 July. Qube failed to pay and the commencement of the present proceedings followed soon after.

Issues for determination

1. [24]

   There are three proceedings before the Court. The first two proceedings (2024/278693 and 2024/278984) were commenced by Martinus to enforce payment of the adjudicated amounts under the Act. I will refer to them as the “enforcement proceedings”.

2. [25]

   Adjudication certificates were filed on 30 July, commending the enforcement proceedings. Judgments were entered, pursuant to s 25 of the Act, on the following day. For the INTS Contract the judgment was $66.087 million. For the ISRA Contract it was $7.595 million.

3. [26]

   On 5 August, Qube filed its own proceedings (2024/286961), to which I will refer as the “judicial review proceedings”. In these proceedings Qube seeks to set aside the determinations on the grounds of alleged jurisdictional error on the part of the Adjudicator.

4. [27]

   Qube’s primary case is that the errors made by the Adjudicator are so extensive that the whole of the adjudications should be set aside, along with the judgments based on them. An interim order has been made staying execution on the judgments entered in the enforcement proceedings until after I deliver my judgment, as a condition of which Qube has paid $4 million to Martinus and lodged bank guarantees to secure the remaining amounts outstanding under the judgments.

5. [28]

   Alternatively, if the judicial review proceedings fail or only result in the adjudications being partially set aside, Qube applies for stays of any remaining obligation to pay. These applications have been made by way of notices of motion filed in the enforcement proceedings (for convenience I will refer to them as a single application).

6. [29]

   In these circumstances, I will deal first with the judicial review proceedings. I will then consider the stay applications in the enforcement proceedings in the light of my conclusions in the judicial review proceedings.

Judicial review proceedings

1. [30]

   In their written submissions, counsel for Qube advanced 37 challenges to different components of the adjudications. Counsel also challenged the Adjudicator’s determinations on costs.

2. [31]

   Counsel for Qube did not challenge every single component of the Adjudicator’s determinations. But their primary position was that the determinations were so riddled with jurisdictional errors that the determinations should be set aside as a whole. Alternatively, counsel asked me to set aside the determinations to the extent that Qube’s challenges were sustained, pursuant to s 32A of the Act.

3. [32]

   Authoritative guidance on jurisdictional error has recently been provided by the judgment of six members of the High Court in LPTD v Minister for Immigration [2024] HCA 12; 98 ALJR 610. At [2]-[3], the Court identified the relevant context (citations omitted):

4. [33]

   The Court continued at [4] (citations omitted):

5. [34]

   At [6]-[7], the Court addressed the requirement of “materiality” (citations omitted):

6. [35]

   At [9]-[13], the Court discussed how these principles operate in practice. There are two requirements, namely that an error has occurred, and if so, that that error was material (if materiality must be demonstrated to establish jurisdictional error). The onus lies on the applicant to satisfy the court on the balance of probabilities that the alleged error in fact occurred. If that is established, then whether the error is, or is not, material is determined by inference from the evidence adduced on the application.

7. [36]

   The Court went on to give specific guidance on the test of materiality (citations omitted):

8. [37]

   Counsel for both parties addressed me in some detail on the principles which have emerged from the case law on the identification of jurisdictional error in the particular context of the Act. I will address those submissions at this point.

9. [38]

   Nature and scope of adjudication proceedings: The requirements of an adjudication determination are set out in s 22(1), which provides:

10. [39]

    An adjudication application is an application for adjudication “of a payment claim” (s 17(1)). A payment claim is a claim “to be entitled to a progress payment” (s 13(1)). Relevantly for present purposes, the entitlements claimed by Martinus were entitlements “calculated in accordance with the terms of” the Contracts (s 8(1) and s 9(a)).

11. [40]

    Formal requirements for a payment claim are set out in s 13(2). Relevantly they include:

12. [41]

    Formal requirements of a payment schedule are set out in 14(2) and (3). Of particular significance is subsection (3), which provides:

13. [42]

    As the Court of Appeal (Basten JA, with whom Macfarlan JA and Emmett AJA agreed) explained in Joye Group Pty Ltd v Cemco Projects Pty Ltd [2021] NSWSCA 211 at [12]:

14. [43]

    It had previously been suggested by Hodgson JA in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 that where an item in a payment claim was disputed in the payment schedule, but no reasons were articulated, the Adjudicator was still required to consider what was properly payable having regard to the “true construction of the Contract and the Act” and the “true merits of the claim”. In Ceerose Pty Ltd v A-Civil Aust Pty Ltd (2023) 112 NSWLR 225 the suggestion was examined in detail and rejected. Payne JA, with whom the other members of the Court agreed, stated (emphasis added):

15. [44]

    The decision of the Court of Appeal (Spigelman CJ, Basten JA and McDougall J) in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393 confirms that judicial review may be obtained in at least some cases where the adjudicator makes a (purported) determination of a dispute which falls outside the scope of the Act. In that case, there was an issue about whether the adjudication application had been served on the respondent within the time limit prescribed by s 17(2)(a). The adjudicator considered that it had been. The Court of Appeal held, however, that the Court was not bound by that determination, which was plainly incorrect. The result was that there had never been valid adjudication proceedings at all.

16. [45]

    The scope for review is however limited as a result of Court of Appeal decisions which accept that adjudicators may in some respects determine the scope of the adjudication for themselves: see Australia Avenue Developments Pty Ltd v Icon Co (NSW) Pty Ltd [2018] NSWSC 1578 at [74]-[86]. In Downer Construction (Australia) Pty Ltd v Energy Australia (2007) 69 NSWLR 72, the Court of Appeal (Giles JA, speaking for the Court) stated (at [87]):

17. [46]

    In Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2018] NSWCA 339 an adjudicator made a determination in favour of a contractor which included the reversal of “backcharges” previously levied by the principal, the reversal of which had not been claimed in the contractor’s payment claim. The Court of Appeal (Basten JA, with whom Meagher and Leeming JJA agreed) rejected the principal’s challenge to the adjudicator’s jurisdiction.

18. [47]

    At [23]-[25], Basten JA described how the issue arose:

19. [48]

    His Honour had earlier quoted the passage from Downer reproduced above and commented (at [19]):

20. [49]

    Having described at [23]-[25] how the issue in the instant case arose, his Honour continued (at [26]-[27]):

21. [50]

    After reviewing what had occurred in the adjudication, his Honour concluded, at [32]-[33]:

22. [51]

    Consideration of parties’ submissions: This topic is addressed in s 22(2)(b) of the Act. For context, I set out the whole of s 22(2):

23. [52]

    The express terms of s 22(2) are negative in form: all they do is restrict the material to which the Adjudicator may have regard (it has in fact been held that there may be circumstances in which the Adjudicator can have regard to other matters, but that is not material for the purpose of the present case). The section does not say, in terms, that the Adjudicator must consider the material specified. But it seems that the obligation is read as meaning “the adjudicator is to consider, and to consider only” the specified material. For instance, in the passage just quoted from Icon, at [32], Basten JA said that s 22(2) of the Act “requires” that the adjudicator “is to consider” the provisions of the construction contract and the payment claim.

24. [53]

    In Ceerose, Payne JA (with whom Ward ACJ and Basten AJA agreed) addressed the practical question of how breach of the obligation to “consider” material in s 22(2) is to be established. His Honour stated, at [62]-[69]:

25. [54]

    The High Court in LPTD expressly identified “ignoring relevant material” as conduct of a decision-maker which may amount to jurisdictional error. But as I understood counsel for Martinus, they did not accept that an adjudicator’s failure to consider a submission, even if it involved a contravention of s 22(2), would be a jurisdictional error for the purposes of the Act.

26. [55]

    It is true that not every contravention of s 22(2) has been so treated. The key decision of the Court of Appeal in this regard is Brodyn. The leading judgment was given by Hodgson JA.

27. [56]

    His Honour began by referring to the “basic and essential requirements” specified, expressly or impliedly, in the Act, which, if not satisfied, could give rise to jurisdictional error. His Honour stated, at [53], that there were at least five such requirements, including:

28. [57]

    After referring to some of the more detailed procedural requirements of the Act, including: s 13(2) as to the content of payment claims; s 17 as to the contents of an adjudication application; and s 22 as to the matters to be considered by the adjudicator and the provision of reasons, his Honour continued at [55]-[56] (emphasis added):

29. [58]

    These observations must, of course, be read in the light of the more recent decision of the Court of Appeal in Chase Oyster Bar: see, in particular, Spigelman CJ at [20]-[32].

30. [59]

    In isolation, the first emphasised sentence in [56] of Brodyn appears to support the conclusion for which counsel contend. But I do not think that, when his Honour’s remarks are read in context, they actually do support it. In the second emphasised sentence, his Honour spoke of addressing the requirements of s 22(2) “as to what is to be considered”. Forming a view, bona fide but incorrect, that a submission has not been “duly made” and then not addressing it further (if not itself sufficient “consideration” for the purposes of s 22(2)) is not a jurisdictional error.

31. [60]

    But I think it is implicit in what his Honour was saying that a failure to address a submission which is not attributable to having formed such a view, for example because of inadvertence, would be. And, at [57], his Honour went on to say explicitly that if there was “a failure by the Adjudicator to receive and consider submissions” occasioned by breach of s 22(2), the determination would be a nullity. I will proceed on this basis, subject, of course, to the requirement of materiality.

32. [61]

    Natural justice: As we have seen, Hodgson JA stated in Brodyn that “substantial denial of the measure of natural justice that the Act requires to be given” is a jurisdictional error. That has never been disputed in later cases.

33. [62]

    Counsel for Martinus, however, referred me to Demex Pty Ltd v McNab Building Services Pty Ltd [2023] NSWCA 261, where the Court of Appeal observed that the requirements of procedural fairness are somewhat attenuated in the context of the Act. Kirk JA, speaking for the Court at [9]-[24], identified various reasons for that. These reasons included: that the decision did not finally determine the parties’ rights (albeit that for practical purposes an obligation to pay a sum of money could put the principal at risk of not being able to recover it in practice); the tight deadlines provided by the Act; and the fact that adjudicators are not required to be lawyers but may instead be persons from the building industry experienced in the administration of building contracts.

34. [63]

    His Honour concluded, at [32]:

35. [64]

    The “rules” of natural justice, as they apply to statutory proceedings, are generally regarded as including an obligation to entertain, and take account of, submissions by the parties. In the case of adjudications under the Act, that obligation is expressly stated in s 22(2). Clearly, in limiting natural justice under the Act to “substantial” or “significant” departures from the rules involving “substantial practical injustice”, Kirk JA was drawing attention to the requirement of materiality now laid down by the High Court in LPTD. But I have already accepted that a breach of s 22(2) can only amount to a jurisdictional error if it is material in the relevant sense. I do not read his Honour as saying that the obligation in s 22(2) should be further “reduced” beyond that (if that is what counsel intended).

36. [65]

    Other procedural rules of natural justice, such as the obligation not to decide a matter on a point which occurs to the decision-maker without giving notice to the parties, are not expressly stated in the Act. They may be spelled out of the express provisions, or arise separately by implication (although the factors mentioned in the Act may limit the extent to which this can happen). If so, breach of them will, to amount to jurisdictional error, have to satisfy the requirement of materiality. But as with the obligation under s 22(2), I do not understand Demex to require some further attenuation of their effect.

37. [66]

    Reasons for determination: Reasons are addressed in s 22(3), which relevantly provides:

38. [67]

    It is common in administrative law to speak of an obligation to give “reasons” for a decision. But that is not quite the way in which s 22(3)(b) is worded. It speaks of an obligation to give “the reasons” for the determination and goes on later to refer to “those reasons”.

39. [68]

    The natural grammatical meaning of this language is to oblige adjudicators to record in their adjudication determinations the reasons which they actually had for making the determination. This was the construction of s 22(3)(b) advanced by the appellant in Fulton Hogan v Cockram Constructions (2018) 97 NSWLR 773, a case to which I was referred by counsel for Martinus.

40. [69]

    The Court of Appeal (Meagher JA, with whom Barrett AJA agreed) was prepared to accept that construction, at least for the sake of argument. On that construction, s 22(3)(b) arguably presupposes that “reasons” within the meaning of the Act existed for the determination, and those reasons were conceptually independent of what had been recorded: see the concurring judgment of Basten JA at [4]-[8]. Thus, it may be said that, implicitly, s 22(3(b)) requires that adjudicators have such “reasons” for their determinations.

41. [70]

    It would follow that two types of error could arise under s 22(3)(b). One would arise if the reasons which the adjudicator actually had for determining the application were not recorded, or wholly recorded, in the determination. That would be a clear breach of the express terms of s 22(3). The other would arise if the adjudicator had not actually had “reasons” within the meaning of the Act for the determination, in breach of the possible implicit requirement of the enactment.

42. [71]

    The next question is what “reasons” mean for the purposes of the Act. On one view, the term means no more than the thought process followed by the adjudicator, no matter how bizarre or irrelevant that process might be. On that view, if an adjudicator were to decide to resolve an adjudication by flipping a coin, and then record that he had done so in his published reasons, he would comply with s 22(3)(b).

43. [72]

    The alternative view is that the term implicitly requires that there be some element of rationality to the thought process, or relevance to the determination made. Clearly, it cannot have been intended that “reasons” in s 22(3)(b) means “correct reasons”. But in the coin-toss example, it may be possible to argue that the adjudicator’s thought processes were so irrelevant to the task at hand that it did not to amount to “reasons” under the Act.

44. [73]

    I have gone into this in some detail because it seemed to me in the course of the oral argument that it might provide a statutory foundation for a requirement of “legal unreasonableness”, which is one of the grounds on which counsel for Qube challenged components of the Adjudicator’s determinations. But neither counsel seemed particularly interested in developing that thought further. Having regard to the conclusions I have reached on “legal unreasonableness”, it is not necessary to do so and I will proceed on the basis that s 22(3)(b) creates an obligation to give reasons without analysing that obligation in more detail.

45. [74]

    Counsel for Martinus of course accepted the existence of such an obligation. But counsel submitted that breach of it did not constitute jurisdictional error.

46. [75]

    Counsel, in the end, accepted that in Fulton Hogan the Court had left this question open. But counsel submitted that it had been determined in the negative by Brereton J in City of Ryde v AMFM Constructions Pty Ltd & Anor [2011] NSWSC 1469, and that I should follow that decision.

47. [76]

    In City of Ryde, Brereton J referred to the previous decision of the High Court in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme (2003) 216 CLR 212 where four of the five members of the Court held that failure of a decision maker to comply with a statutory obligation to give reasons under the Migration Act 1958 (Cth) for cancelling a visa was not a jurisdictional error. In a joint judgment, three members of the Court said (at 226):

48. [77]

    In his concurring judgment, McHugh J said (at 227-228):

49. [78]

    At [9], Brereton J said:

50. [79]

    As McHugh J said in the passage just quoted, whether the act of giving reasons is a condition of validity of the decision in question is always a matter of construction of the governing statute. Counsel for Martinus’ submission comes down to saying that adjudicators could hand down determinations which simply set out the amount allowed, without including any reasons at all, or without including reasons for specified components of the determination, and such determinations would be valid and enforceable as if they contained a full set of reasons. Can that intention be attributed to Parliament?

51. [80]

    In my opinion, what Brereton J said in City of Ryde does not sustain counsel’s submission. It is one thing to say that, where mandamus is available to compel the giving of reasons, a plaintiff should not be allowed to “bypass” that step by challenging the decision itself on the ground that the failure to give reasons invalidated it. But that is not realistic in the context of the Act. The Act requires that the reasons be given in the very same document which records the adjudicator’s determination. If the determination is given without reasons, it is hard to see how the statutory obligation could be enforced by mandamus, particularly when the very tight timetables prescribed by the Act for proceeding to judgment and enforcement are taken into account.

52. [81]

    Apart from the practical availability of mandamus, I think that there are other considerations relating to presumed Parliamentary intention which make this conclusion untenable. One must ask why it was that Parliament required the giving of reasons in the first place.

53. [82]

    The self-discipline involved in writing reasons is, in general, a benefit to the decision-making process, in that it is apt to improve the quality of the decision quite independently of the later publication of those reasons. But even if this is part of the explanation, it is not the whole of it.

54. [83]

    Parliament has, by the enactment of s 32A of the Act, confirmed the availability of judicial review of adjudicator’s determinations for jurisdictional error. It must therefore have been intended that adjudicators’ reasons would at least be sufficient to allow that right of judicial review to be exercised.

55. [84]

    But it does not end there. Section 22(5) confers on the adjudicator a wide power to vary determinations including a power to correct any error “arising from an accidental slip or omission”. This power may be invoked not only by the adjudicator of his or her own motion, but by the parties. The power is wide. Any error or omission, whether of fact or law, or whether jurisdictional or non-jurisdictional, can be so corrected. Clearly, the parties could not meaningfully exercise their right to seek review of a determination on that ground unless reasons for the determination are given in the first place.

56. [85]

    In any event, the utility of providing reasons to parties is not necessarily limited to allowing decisions to be challenged, any more than a duty to give judicial reasons only applies to decisions, or aspects of decisions, which are subject to appeal. Parliament must have intended, in my view, that, as with judicial proceedings, reasons, as a matter of principle, must be provided so that parties who are unsuccessful in adjudications can see why they lost.

57. [86]

    The extent of the reasons required is, of course, another matter. It no doubt depends on what can reasonably be expected having regard to the tight timetables prescribed by the Act and the relative importance of the different components of the determination being made: a point made by Brereton J in City of Ryde at [13]; see also Ceerose at [64] quoted at [53] above. And, to be jurisdictional, any such breach would have to satisfy the requirement of materiality. But within these confines, it seems to me, an absence of reasons for a determination may give rise to a jurisdictional error.

58. [87]

    “Legal unreasonableness”: The starting point for the submissions of counsel for Qube was the discussion concerning unreasonableness as a ground for judicial review by three of the five members of the High Court in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 362-367 ([63]-[76]). The case concerned the exercise of a statutory discretion. At 367 ([76]), the Court stated:

59. [88]

    The Court’s judgment in Li makes it clear that the identification of “legal unreasonableness” is not confined to inferring jurisdictional errors of other types in cases where no reasons, or no adequate reasons, are given for a decision. A vitiating error may be identified in a reasoned decision: see in particular at 350-351 (at [26] and [28)].

60. [89]

    In LPTD, the High Court identified potential jurisdictional errors as including “exceeding the bounds of reasonableness” and “in some cases, making an erroneous finding or reaching a mistaken conclusion”. One or other of both of these would appear to encompass “legal unreasonableness”. In practice, other potential errors identified by the Court, such as “identifying a wrong issue” and “asking the wrong question” may also result in a decision which can be described as lacking an "evident and intelligible justification”.

61. [90]

    Turning to jurisdictional error under the Act, counsel referred me to various subsequent decisions at first instance, both in this Court and in the Supreme Court of Queensland, which have accepted that a decision which “lacks an evident and intelligible justification” or some similar formulation, may involve jurisdictional error: Queensland Bulk Water Supply Authority v McDonald Keen Group Pty Ltd [2009] QSC 165 at [32]; Bouygues Construction Australia Pty Ltd v Southern Cross Electrical Engineering [2017] NSWSC 1665 at [21]; CC Builders (Aust) Pty Ltd v Milestone Civil Pty Ltd [2019] NSWSC 1251 at [29]; Prime Constructions (Qld) Pty Ltd v HPS (Qld) Pty Ltd [2019] QSC 301 at [39].

62. [91]

    One of the judgments was the decision of Stevenson J in Bougyes. That decision, however, was an interlocutory decision concerning the arguability of a jurisdictional challenge to a determination, rather than a final decision. In the following year, his Honour stated in Pinnacle Construction Group Pty Ltd v Dimension Joinery & Interiors Pty Ltd [2018] NSWSC 894 that:

63. [92]

    Counsel for Martinus scathingly described “legal unreasonableness” as “the traditional refuge of the damned in administrative law cases”. They emphasised that in his concurring judgment in Li, Gageler J (as his Honour then was) stated that the concept of “legal unreasonableness” should not be used as an invitation to merits review; it can only apply where a condition, arising expressly or impliedly, of the validity of the administrative decision in question has not been satisfied.

64. [93]

    Counsel however did not go so far as to submit that the first instance decisions to which counsel for Qube referred were incorrect in accepting that, at least in some circumstances, the lack of an evident and intelligible justification for a determination could amount to jurisdictional error. As I understood their position, this was possible in theory, but “extraordinary” in practice.

65. [94]

    I would add, however, that an important practical limitation arises from the decision of the High Court that no judicial review is available for error of law on the face of the record: Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1. Rarely, if ever, could a decision, even if it involved a patent error of construction of the relevant building contract, be challenged for “irrationality” if a direct challenge based on error of law would not be available.

66. [95]

    In City of Ryde, at [12], Brereton J explained some previous judicial review decisions on the footing that the adjudications in question involved decisions having been made on an “essentially capricious basis”. One characteristic of reasoned decision making is that the decision-maker acts consistently and in accordance with an external body of rules, so that, if the same circumstances recur, the decision-maker will make the same decision. A determination which is reached capriciously would arguably be a determination otherwise than in accordance with the process of decision-making assumed by the Act. This might be an indication of the sort of determination which could be challenged as “legally unreasonable”.

67. [96]

    The payment claims were in conventional form. Each consisted of a summary page, containing figures for the various components of the claim and, showing, for each category, amounts previously allowed and additional amounts claimed in the current claim. Attached was a spreadsheet which contained a line-by-line breakdown for the figures in the summary. Accompanying the claim were various supplementary documents referred to in the spreadsheet.

68. [97]

    Qube’s payment schedules appear to have been prepared for Qube by the Superintendent. Each schedule took broadly the same, conventional, form as the payment claims. That is, the schedule consisted of a summary dealing with categories of claim, setting out the amount scheduled for each category, supported by a lengthy spreadsheet annexed breaking the categories down into individual items. The spreadsheet contained, for each item, a comment field which set out in summary terms the grounds on which the claim for that item was rejected or accepted only in part. The schedule was accompanied by supplementary documents incorporated by reference into the spreadsheet.

69. [98]

    In order to understand the issues presented in the adjudication, it is necessary describe the payment claims and payment schedules in more detail.

70. [99]

    The summary page for Martinus’ INTS payment claim identified two groups of categories. Martinus’ ISRA payment claim summary followed the same format.

71. [100]

    Group 1 consisted of Preliminaries (category 1A) and Contract Works (Category 1B)). Preliminaries were allowances under the Contracts for costs associated with the preparation of, and otherwise preliminary to, the execution of the Contract Works, which were the works specified in the Contracts.

72. [101]

    Group 2 consisted of: a group of Variations associated with changes to the design of the works, and referred to collectively as “CN-521” (item 2A.1); other Variations (Category 2A.2); a claim based on “Termination for Convenience”, being additional entitlements Martinus had if that was the true basis for termination (item 2A.3); and a claim for delay costs consequent upon contested claims for extensions of time (“EOTs”; Category 2B.1).

73. [102]

    The summary page for Qube’s INTS payment schedule contained the same elements as Martinus’ payment claim, but organised differently. Preliminaries and Contract works were combined (item 1). That item also included Variation claim CN-521. The other Variation claims, EOTs and Termination for Convenience were shown separately (items 2, 3 and 4B). Qube also raised a credit for off-sets (item 4A) claimed consequential on termination (which, on Qube’s case, had been a termination for cause).

74. [103]

    The mismatch between the parties’ categories made it difficult, in some cases, to marry up Martinus’ claims with Qube’s scheduled amounts and supporting grounds, although the parties were apparently able to navigate their way through the problem and the totals all reconciled. The mismatch became an issue in the adjudication and I will return to it below.

75. [104]

    The disputes concerning the Variations and EOT claims involved questions of contractual entitlement as well as quantification. So too did the Termination for Convenience claim. The Contract Works and Preliminaries claims were largely matters of quantification (although potentially affected by the outcome of the disputed variations).

76. [105]

    Martinus’ adjudication applications were prepared on its behalf by its solicitors. Each application took the form of a lengthy written submission with attached witness statements and other supporting documents. The principal supporting document was a statutory declaration of Mr Mitchell Corrigan. Mr Corrigan is a civil engineer specialising in the management of large infrastructure projects. He was Martinus’ project manager for the Contracts until July 2023. In his declaration, he gave a lengthy description and explanation of Martinus’ claims.

77. [106]

    Qube’s adjudication responses were likewise prepared by its solicitors, and consisted of lengthy written submissions together with supporting witness statements and other evidentiary material. Among the witness statements were ones from Mr Marshall, the Superintendent, and one from Mr Simon Barney. Mr Barney is a Qube executive who had management responsibility for the administration of the Contracts.

78. [107]

    On 24 March, having obtained his first extension of time (see [20] above), the Adjudicator made a request for supplementary submissions pursuant to s 21(4)(a) of the Act. Under the heading “new jurisdictional issues” the request stated:

79. [108]

    Martinus was invited to “make submissions about new jurisdictional issues (only) raised for the first time in the response or new reasons for withholding payment not stated in the payment schedule” and Qube was invited to “reply to the claimant’s submissions (only)”.

80. [109]

    The invitation was taken up by Martinus which provided supplementary written submissions on 28 March addressing what were described as “new jurisdictional issues”. Qube duly responded on 5 April.

81. [110]

    The description of jurisdictional issues raised by Qube in its response as having been “new”, and “only” raised “for the first time”, was somewhat tendentious. Qube was contending that Martinus, in its adjudication applications, had advanced claims which fell outside the payment claims initially made. Ex hypothesi such contentions could only be raised in the adjudication responses. But no point was taken about the Adjudicator’s decision, in effect, to give Martinus a right of reply on these points. Further supplementary submissions were provided at the request of the Adjudicator, the latest in July (I describe these in some detail later in the judgment).

82. [111]

    The reasons for both adjudication determinations listed Qube’s adjudication response, and the supporting statements, as having been received by the Adjudicator. But a recurring complaint by Qube in the proceedings was that, so Qube asked me to infer, the Adjudicator had failed to consider this material (and later submissions). Counsel produced an aide memoire of references in the adjudications which showed that there were no other references in the Adjudicator’s reasons to the statements of Mr Marshall or Mr Barney (or indeed any other Qube witness). Counsel contrasted this with numerous mentions of Mr Corrigan’s statement, and indeed those of other Martinus witnesses.

83. [112]

    In the end, I did not understand that counsel for Martinus disputed that this was correct on a factual level. Of course, what inferences could be drawn from it was a matter of argument and I deal with it below.

84. [113]

    This challenge arose out of a claimed variation under the INTS Contract resulting from the resequencing of part of the works. Martinus alleged that the resequencing resulted in an increase in the costs associated with providing temporary access to the site, resulting from the construction of temporary “haul roads” and the provision of concrete barriers for safety purposes.

85. [114]

    The amount claimed was $9.5 million, which was entirely disputed by Qube. The Adjudicator upheld the claim and awarded the full amount in the INTS determination.

86. [115]

    The INTS Contract defined “work under the Contract” or “WUC” as meaning:

87. [116]

    Clause 32 of the Contract dealt with the programming of the works. Clause 32.1 provided (emphasis added):

88. [117]

    The relevant variation provisions of the Contract were clauses 36.1 and 36.3A:

89. [118]

    On 10 October, Qube formally notified Martinus that the access date for part of the site was to be deferred from early November to 30 June the following year. At the end of March, a further formal direction was given bringing the access date forward from 30 June to 26 May, with some limited access available from 5 May.

90. [119]

    Five months later, on 31 August, (after the Show Cause Notice had been issued but before formal termination of the Contract on 25 September), Martinus formally gave notice for the purpose of cl 36.3A of the Contract that, in its opinion, the relevant work involved a variation which should have been the subject of a Variation Order. The amount claimed was $1.1 million. The claim was rejected by the Superintendent on 18 September.

91. [120]

    On 8 February this year, Martinus sent Qube a further notice renewing the variation claim. The new variation claim was, I assume, incorporated by reference into Martinus’ INTS payment claim which was lodged on the same date. It was expressed to be made in accordance with cll 32.1, 36.1 and 36.3A. The amount claimed was $14.2 million.

92. [121]

    In rejecting the claim, Qube’s payment schedule referred to an accompanying response document and summarised the grounds for refusal. Among the summary grounds identified in the schedule were:

    1. (1)

       “the works which are the subject of the Initial CN 420 Claim and the Updated CN 420 Claim do not constitute a variation under the Contract”;

    2. (2)

       “the Contractor failed to submit CN 420 in accordance with clause 36.3A of the Contract and therefore has no entitlement to claim for any additional time or cost arising out of or in any way connected with the alleged directions or delay in the provision of site access”;

    3. (3)

       “in the event CN 420 is not time barred (which is denied), the construction and location of the Haul Road, site access roads and associated infrastructure works form part of WUC and remain the responsibility of the Contractor”;

    4. (4)

       “there is no causal link between alleged directions or delay in the provision of site access and the alleged construction and relocation of the Haul Road, additional site access roads and associated infrastructure works”.

93. [122]

    The response document began with a summary which identified the grounds for rejection of the claim in substantially the same terms as had been used in the payment schedule. The document then went on to set out a detailed argument in support. It described the new variation claim as a claim under cll 36.1 and 36.3A. The arguments addressed the application of those clauses.

94. [123]

    Martinus reduced its claim to $9.5 million in the adjudication application. The submissions in the application addressed the claim at length, summarising Qube’s grounds of objection and inviting the Adjudicator to reject them. One point made in the submissions was that Qube’s grounds for rejecting the claim did not refer to cl 32.1.

95. [124]

    In its adjudication response, Qube replied to Martinus’ application submissions in detail. In particular, Qube made the following submissions in support of the contention that the works were not a “variation”:

96. [125]

    As to the argument about WUC, Qube stated:

97. [126]

    In his reasons, the Adjudicator quoted Qube’s summary grounds for refusing the application from the beginning of the supporting document which accompanied the payment schedule. He then summarised Martinus’ argument and stated:

98. [127]

    The Adjudicator then addressed Martinus’ reliance on cl 32.1:

99. [128]

    The Adjudicator then addressed cl 36.1 (emphasis added):

100. [129]

     The Adjudicator dealt with the argument under cl 36.3A as follows (emphasis added):

101. [130]

     The Adjudicator addressed Qube’s argument that the works were part of the WUC very briefly:

102. [131]

     The Adjudicator continued:

103. [132]

     Counsel for Qube submitted that it was clear that the Adjudicator had failed to deal with the arguments advanced by Qube in its adjudication response. The Adjudicator said that he had read the payment schedule but did not mention having reviewed the submissions in Qube’s adjudication response. His reasons did not refer to those submissions or to any of the factual material which accompanied them although they did refer to, and quote from, evidence from Martinus to which Qube was responding.

104. [133]

     Counsel invited me to infer from the form of the reasons that the Adjudicator never in fact considered the points made in the adjudication response on this issue, or the supporting evidence marshalled by Qube, at all. In particular, counsel highlighted [1372], which, the submission ran, would not have taken the form which it took if the Adjudicator had considered the response. Counsel submitted that the Adjudicator had failed to comply with s 22(2)(b) and this was a jurisdictional error.

105. [134]

     Counsel also seized on the Adjudicator’s finding that the “direction” was “to all intents and purposes” a variation, or a “deemed” variation, under cl 36.1. Counsel submitted that no such argument had been put by Martinus and, accordingly, there was a denial of procedural fairness. Furthermore, the reasoning did not disclose any logical or rational basis for the conclusion that the “direction” could be effective for the purpose of cl 36.1. Both of these errors were said to be jurisdictional.

106. [135]

     Counsel for Martinus submitted that the Adjudicator’s reasons showed that he had “engaged with” the grounds advanced by Qube in the payment schedule for rejecting the claim. In passing, counsel noted that Qube had not, in its response, addressed the cl 32.1 basis for the claim. In any event, none of the complaints made by Qube, even if they demonstrated error, disclosed a jurisdictional error. This was for two reasons. First, the alleged errors were not jurisdictional in nature, as a matter of law. Second, they lacked materiality, without which they could not be jurisdictional.

107. [136]

     Consideration of Qube’s submissions: There is nothing in the Adjudicator’s reasons which demonstrates affirmatively that he considered the submissions in Qube’s response to Martinus’ claim (or the supporting evidence referred to in those submissions). The question is whether I can infer from this that he did not in fact consider those submissions. This is essentially a factual question. In answering it, I must consider alternative possibilities which might explain why, having considered the submissions, he nevertheless did not refer to them.

108. [137]

     In this regard, the tight timetables under which adjudications normally operate are relevant. Counsel for Qube emphasised, however, that in the present case the Adjudicator had 19 weeks to consider the application, and, having regard to the fees he charged, he can have done little else over that period. Counsel submitted that in the circumstances, this factor was of little weight.

109. [138]

     Counsel for Martinus did not agree. They argued that the content of the obligation of natural justice in the particular case was to be determined by reference to the Act, and not the circumstances of the particular case.

110. [139]

     I do not accept this argument. The nature of the obligation is, I accept, constrained by the terms of the Act. But this does not go very far. While in general the Act provides for tight timetables, it also provides for extensions.

111. [140]

     The true rule is that the degree to which consideration may be expected is constrained by the amount of time available. But for the purpose of drawing an inference about the facts of a particular case, it is necessary to have regard to the facts of that case. In my view, it would be absurd to suppose that the Court would take the same approach to the drawing of the relevant inference where an adjudicator was dealing with a single claim involving a single issue as it would if that same issue arose in another adjudication involving twenty other claims each involving multiple issues.

112. [141]

     In the present case, there were no doubt many claims and issues for consideration. But the issue currently in question was an important one. I see no reason to think that the time pressures on the Adjudicator were so extreme as to prevent him from dealing with Qube’s submissions or explaining why he did not consider it necessary to do so.

113. [142]

     Similar reasoning applies to the point made by the Court of Appeal in Ceerose about the value (absolute and relative) of the claim. The claim under consideration by the Adjudicator was worth $9.5 million, which was significant in both absolute and relative terms.

114. [143]

     Another possibility suggested is that a submission may not have been referred to because the adjudicator considered that it did not justify a response or that it did not, because of other findings or conclusions, arise. But the plausibility of that explanation depends upon the nature of the submission. The more extensive the submission is, and the weightier it appears to be, the less likely the explanation becomes.

115. [144]

     The Adjudicator effectively accepted that cl 36.3A was not available; it was unnecessary to go into Qube’s submissions in any detail on that point. But that was not so for the argument about cl 36.1, or for the argument that Martinus was contractually responsible for the works the subject of the claim.

116. [145]

     In my view, these arguments from Qube were arguments of apparent substance. In particular, Martinus’ proposition that a “Variation Order” could be created for the purposes of cl 36.1 without the Superintendent signing a formal order under the Contract was a surprising one. Qube’s arguments were relevant to issues which the Adjudicator addressed in his reasons. I find it difficult to accept that the Adjudicator would, if he had considered those arguments, felt that they were so inconsequential that they did not call for mention.

117. [146]

     Of particular significance, in my view, is what the Adjudicator said at [1372]. Even if it was correct to say that there was no supporting evidence in the payment schedule, there was in the adjudication response. It was not suggested that Qube’s submissions in the response were not “duly made”. Similarly, Qube’s response submissions did go into the contractual position, contrary to the point the Adjudicator seems to have been making in [1375]. I agree with counsel for Qube that it is highly unlikely that the Adjudicator would have expressed himself in this way if he had considered the submissions.

118. [147]

     Naturally I have hesitated, when the Adjudicator was required to consider Qube’s submissions, to draw the inference that he did not do so. Nevertheless I find myself driven to that conclusion. It is the most straightforward explanation for why the submissions were not referred to in the Adjudicator’s reasons and, in my opinion, the most probable.

119. [148]

     This brings me to materiality. Counsel for Martinus pointed out that the Adjudicator made findings in his reasons about cl 32.1. As we have seen, Martinus appeared to have asserted that this was, or at least might be, an independent basis for sustaining the claim. If so, the suggestion was, any failure to consider Qube’s submissions on cl 36.1 was not material.

120. [149]

     An initial difficulty, however, is that I do not think it is clear that the Adjudicator reasoned along these lines. In theory, there was a clear distinction between a variation of the works to be performed under the Contract, which was the subject of cl 36.1, and a direction to change the sequence in which those works were to be performed, which was the subject matter of cl 32.1. But the Adjudicator’s reasoning (for instance at [1362], [1367] and [1373]) seemed to run the two concepts together.

121. [150]

     In fairness to the Adjudicator, the apparently clear distinction may break down where temporary works are involved. But if that was so, it is hard to see why there should be some independent right to claim for such works under cl 32.1 which would avoid the mechanisms, and the time limits, in cl 36.1 (to say nothing of the termination of the Contract in the meantime).

122. [151]

     A second difficulty is that Qube’s point that the construction of the works in question were always Martinus’ under the Contract was not just an answer to the claim for a variation under cl 36.1. It was, at least arguably, an answer to the claim under cl 32.1. What Qube’s witnesses seemed to be saying was that, as a matter of fact, Martinus’ obligation had always been to construct such roads on the site as were required by the exigencies of the work, and that the delay in access had made no practical difference to that obligation. If correct, that undermined the notion that a direction as to access was necessarily a direction about the sequencing of the works for the purposes of cl 32.1.

123. [152]

     What this means is that, if the Adjudicator had considered the submissions, he might have come to a separate conclusion on whether cl 32.1 justified the claim (assuming, for the sake of argument, that he did in fact reach such an independent conclusion.

124. [153]

     I have found the question of materiality a finely balanced one. On the one hand, the point was clearly made in the application that Martinus was relying on cl 32.1, and Qube in its response failed to address that point expressly. But at the same time, although the Adjudicator referred to other points raised by Martinus, he did not refer to that one. If it was a factor in his thinking, it is surprising that he did not say so.

125. [154]

     Furthermore, it was perfectly clear that Qube was fighting the claim tooth and nail. Whether or not it expressly referred to cl 32.1, Qube’s position was clearly that it had no obligation to pay. Counsel for Martinus did not submit that it would not have been open to Qube, having regard to the terms of its payment schedule, to oppose a claim under cl 32.1.

126. [155]

     In these circumstances, I think that the answer must be found in the High Court’s statement of the materiality principle in LPTD. What needs to be demonstrated is the possibility, not the being “fanciful or improbable” of a different outcome, and this test is “not demanding”.

127. [156]

     In applying the test, I am obliged not to “assume the functions” of the decision maker. In particular, I should not proceed on the basis that the Adjudicator was predisposed to reject or put aside Qube’s submissions and the evidence on which they were based. Rather, I should proceed on the assumption that the Adjudicator was trying to do his best, within the confines of the time allowed and the need to deal with all of the claims in issue, to resolve the claim according to what Martinus’ legal entitlements truly were on the evidence as a whole.

128. [157]

     In my judgment, applying this test, the failure to consider Qube’s submissions was material. I think that if the submissions had been considered there is a real possibility that the Adjudicator could have seen matters differently and rejected Martinus’ claim. Jurisdictional error is established.

129. [158]

     Other grounds of challenge: Given the conclusion I have just reached, I do not find it necessary to decide whether the references in the Adjudicator’s reasons to the directions being “deemed” directions or “directions” “for intents and purposes” for the purposes of cl 36.1 impermissibly introduced a new point into the adjudication which had not been the subject of notice, or prior dispute between the parties. Nor is it necessary to go into the complaints about the logic and rationality of the Adjudicator’s reasoning.

130. [159]

     This component of the INTS adjudication arose out of design variations by Qube. Variation Orders (VOs) were issued by the Superintendent which specified figures to which the Superintendent considered Martinus was entitled on account of the variations. Martinus claimed to be entitled to more and issued a formal claim (numbered CN-521, as already mentioned) for the value of work allegedly attributable to the variation.

131. [160]

     The total amount to which Martinus claimed to be entitled was $20.5 million, but in the payment claim Martinus acknowledged credits for allowances which had been made. The Adjudicator allowed the full amount claimed, but made some deductions from the amount awarded.

132. [161]

     In Martinus’ payment claim, CN-521 was shown as a single line item, but the spreadsheet contained a reference to supporting documents which accompanied the payment claim. Those supporting documents contained detailed information and calculations to support the alleged entitlement under CN-521.

133. [162]

     Qube’s answer to CN-521 was one of those items in the payment schedule which did not marry up with the payment claim. The spreadsheet did however contain a row referring to CN-521. That row contained a notation indicating that the quantum for the relevant VOs was disputed. It further stated that as part of the schedule, the Superintendent had assessed the value of the claim and “further details of the superintendent’s approach to the assessment works which are the subject of CN-521” were contained in a supporting document, identified as Appendix C.5.

134. [163]

     It appears that the difference between the parties about how to format payment claims and schedules had first arisen before the Contracts were terminated. According to submissions made by Martinus in its adjudication application, Qube’s approach, which was described as a “blended schedule”, was a departure from the approach used on the previous payment claim and a reversion to a practice which had been followed earlier. Martinus criticised the approach as “incoherent”. In its adjudication response, Qube defended its approach and pointed out that a reconciliation had been provided.

135. [164]

     The Adjudicator’s decision to allow Martinus’ claim in full was based on a perceived deficiency in Qube’s payment schedule. In his reasons, the Adjudicator quoted from Martinus’ submissions. He stated that, in its submissions, Martinus “asserts it does not understand [Qube’s] assessment of CN-521”.

136. [165]

     The Adjudicator’s conclusion was:

137. [166]

     The Adjudicator continued:

138. [167]

     Counsel for Qube submitted that, in saying that Martinus was alleging it could not understand the payment schedule, the Adjudicator had made a fundamental mistake about what was in issue, which had led to the adjudication miscarrying on this point. Counsel acknowledged there had been a complaint about the use of a “blended schedule”. But, they submitted, this had not led to any misunderstanding about the nature of the issue at stake in Qube’s response.

139. [168]

     In particular, counsel referred to the following paragraphs in Martinus’ submission in support of the application (emphasis added):

140. [169]

     In the following paragraphs of the submissions, Martinus urged the Adjudicator to reject the grounds summarised in [605].

141. [170]

     Counsel for Qube submitted that these submissions showed that Martinus clearly understood the grounds advanced by Qube for rejecting the payment claim. The Adjudicator had confused a lack of understanding of the content of the schedule with a lack of understanding of the reasons for adopting the format which had been used. It followed that the conclusion in [1572] that Qube had failed to provide reasons for withholding payment was simply not open.

142. [171]

     Counsel for Qube accepted that the Court was bound by the decision in Icon to proceed on the basis that it was a matter for the Adjudicator to determine, as a matter of interpretation, the nature and extent of Qube’s response, in its payment schedule, to Martinus’ payment claim. But counsel submitted that this did not extend to a determination which was “legally unreasonable”.

143. [172]

     Equally, in counsel’s submission, the supposed misunderstanding by the Adjudicator had resulted in an effective failure to consider the reasons advanced for refusing the claim, contrary both to s 22(2) and the obligation to afford Qube natural justice. Whichever way this was put, it amounted to a jurisdictional error.

144. [173]

     Counsel for Martinus did not accept that the Adjudicator had been guilty of the error alleged. Counsel submitted that the Adjudicator’s reasons showed that he had considered the substance of Qube’s response in the payment schedule. If there was an error, it was an error in the way the schedule had been understood by the Adjudicator, which was not a jurisdictional error.

145. [174]

     The proposition that, where the payment schedule does not advance any reason for refusing a claim, it is open to the Adjudicator to accept the amount claimed rather than verify it independently, was confirmed by the Court of Appeal in Ceerose at [82], Payne JA stated:

146. [175]

     In principle, it is difficult to see why, so long as Qube responded logically and comprehensively to the claim made by Martinus, it should have been obliged to do so using the same format as Martinus had used in its payment claim. Ordinarily, one would think, while that might make things more difficult for the Adjudicator, it would not allow the response to be ignored. And on the face of it, the allegation that Martinus was unable to understand the payment schedule appears contestable.

147. [176]

     But the Adjudicator did say in his reasons that he himself had found the schedule incomprehensible. Once it is accepted that the interpretation of the payment claim and the payment schedule, and thus the determination of the scope of the dispute for the purposes of the Act, was a matter for the Adjudicator, the scope for judicial review is greatly reduced.

148. [177]

     It may be accepted that, like any other decision of the Adjudicator on the merits, there is a possibility that a decision by an adjudicator of this type could be subject to review on the grounds of “legal unreasonableness”. But I do not think that this has been demonstrated in the present case. Qube’s allegation is simply an allegation of an ordinary error in reasoning. It is not an allegation of decision-making alien to an adjudicator’s function under the Act.

149. [178]

     It may be that the Adjudicator failed to address, or address fully, the grounds of rejection advanced in Qube’s payment schedule. But if so, that still gave him an unreviewable justification for not addressing consequential submissions by Qube and meant that there was no jurisdictional error in failing to address such submissions. This challenge fails.

150. [179]

     These components of the adjudication concerned twelve contract works items for which Martinus claimed to be entitled to variation payments. The Adjudicator allowed the full amounts claimed but again applied some deductions.

151. [180]

     In each case, the Adjudicator adopted the same reasoning to deal with the claims as he adopted for CN-521. Indeed, the same paragraphs (including quotations from the case law) appear to have been copied and pasted into the relevant parts of the adjudication.

152. [181]

     In oral submissions, counsel for Qube indicated that the determinations were challenged on the same grounds as the CN-521 determination and did not address the items individually. In these circumstances, I proceed on the basis that the reasons I have given for rejection of the challenge concerning CN-521 apply equally to these claims.

153. [182]

     This component of the adjudication concerned a claim for delay costs under the INTS Contract as a result of a claimed extension of time. Martinus claimed the contractual maximum of $80,000 per day for 71 days ($5.7 million). In its payment schedule, Qube rejected the claim completely. The Adjudicator awarded $80,000 per day for 13 days, a total of $1.0 million.

154. [183]

     The applicable provision of the INTS Contract was cl 34. It relevantly provided:

155. [184]

     The claim the subject of the adjudication was based on further delay allegedly attributable to events which had already been the subject of two delay claims, one made on 8 May last year and the other on 4 September last year. Those earlier claims had been the subject of the adjudications which took place in the second half of last year and Martinus had been successful. The claim in the present adjudication concerned additional costs allegedly resulting from the ongoing effect of the late delivery of certain drawings, referred to as “IFC drawings”.

156. [185]

     The present claim was not made until 8 February this year. In the payment schedule, Qube took the point that this was after the termination of the Contract. Qube contended that the right to make the claim did not survive termination. Qube also denied that any costs covered by cl 34.9 had been incurred.

157. [186]

     The Adjudicator’s reasons for partially upholding the extension claim were:

158. [187]

     The reasons given by the Adjudicator for allowing the full amount claimed, up to the contractual limit, for the period for which the claim was successful were:

159. [188]

     Counsel for Qube submitted that the reasons advanced by the Adjudicator for concluding that Martinus was entitled to an extension of time for the 13 days from 12-25 September were, at best, incoherent. On the one hand, the Adjudicator expressly accepted that Martinus had no right to make claims under the contract after 25 September. Yet he accepted that Martinus could make a claim for delay costs under the Contract for that period. In counsel’s submission, the Adjudicator failed to give sufficient, or really, any, reasons for this. Alternatively, the determination was “legally unreasonable”.

160. [189]

     So far as the quantum issue was concerned, counsel pointed to the bare statement by the Adjudicator that he was “persuaded” that Martinus had made out its claim. In its response, Qube had made detailed submissions on the quantum issues which referred to various witness statements and an expert report. The Adjudicator did not refer to these at all. In counsel’s submission, I should infer that he had not considered them.

161. [190]

     Counsel for Martinus responded that Qube’s complaints were no more than assertions of error within jurisdiction and did not even prima facie raise any contention of jurisdictional error. They submitted that the Adjudicator had considered and “engaged in detail” with Qube’s submissions, accepting them to some extent (that is, as to the EOT claim for the period from 12 September). Just because he had not referred to particular submissions, did not mean that any inference could be drawn that he had not considered them.

162. [191]

     Entitlement issue: The Adjudicator’s decision to uphold the extension of time claim for the period from 12 to 25 September was essentially the result of his understanding of the effect of s 13(4) of the Act. That understanding is certainly contestable. The enactment, in its terms, apparently deals with the timing of payment claims, not extension of time claims. If its effect was to “preserve” an entitlement to make an extension of time claim for the purposes of the Contract after 11 September, it is difficult to see why it would not equally have preserved such an entitlement for the period prior to 11 September.

163. [192]

     But in my view, if the Adjudicator’s reasoning was in error, it did not rise to the level of “legal unreasonableness”. It would be only an unreviewable error of law on the face of the record: see [94] above. Again, I do not think that the allegation of error reaches the level where it can be said that the Adjudicator’s reasoning process was in some way alien to what is required under the Act.

164. [193]

     Quantum issue: Qube’s challenge here covers a different type of alleged jurisdictional error, namely a failure to consider submissions made by Qube. In considering this ground I will follow the same approach as I did when considering the challenge to the decision on variation CN-420.

165. [194]

     It is of course clear that the Adjudicator was obliged, if he was to uphold the claim, to find that Martinus had incurred additional costs attributable to the relevant delaying event for each of the days for which the EOT was allowed, and that each day’s costs exceeded $80,000. It was not enough simply to identify the existence of some ongoing effect. It is equally clear that, so far as Qube was concerned, this was in dispute, and had been addressed by Qube in their submissions to the Adjudicator.

166. [195]

     The Adjudicator did not refer to those submissions in his reasons. Again, the question is whether that justifies an inference that he did not consider them.

167. [196]

     Again, counsel for Martinus did not, in my view, advance any persuasive reason for declining to draw the inference. On the face of it, the submissions were relevant. The amount involved was significant in absolute terms, if not large in a relevant sense. I do not think that I should infer that the Adjudicator had no time to deal with it. If he thought that for some reason he did not have to, he could readily have said so.

168. [197]

     Again, I draw what seems to me to be the natural and straightforward inference on the probabilities, namely that for some reason the Adjudicator overlooked Qube’s submissions. I did not understand materiality to be in dispute. In my view, jurisdictional error is established.

169. [198]

     Termination for convenience claims were made by Martinus, and allowed, under both Contracts. As already mentioned, the threshold question was whether Qube validly terminated the Contracts for cause. There were some separate challenges to some of the specific costs allowed which were not addressed by counsel in their oral submissions. I will return to these later.

170. [199]

     The terms of the relevant contractual clauses and of the show cause notices were the same in each case. In accordance with the parties’ wishes, the Adjudicator dealt with the questions as to the validity of the termination notices under both Contracts in the INTS reasons. The same approach was taken in the proceedings before me. For convenience I will refer to the notices in the singular even though the Adjudicator’s reasons refer to them in the plural.

171. [200]

     Three separate show cause notices were issued by Qube and relied upon to support the validity of the purported termination for cause. Two of those are relevant for the present proceedings.

172. [201]

     In the first notice, Qube alleged breaches of Martinus’ obligations under the Contract not to depart from the “Approved Delivery Program” and to proceed with the works with due expedition. This notice was referred to as the “Program Show Cause Notice”. The other notice relied on failure by Martinus to comply with directions from the Superintendent. This was referred to as the “Directions Show Cause Notice”.

173. [202]

     Each notice, if valid and not complied with, was a sufficient justification to allow Qube to have terminated the Contract for cause. The notices were addressed separately by the Adjudicator and in the parties’ arguments before me.

174. [203]

     Program Show Cause Notice: Clause 39 of the INTS Contract relevantly provided (emphasis added):

175. [204]

     The Program Show Cause Notice relevantly stated:

176. [205]

     The “Approved Delivery Program” referred to in the notice was dealt with in cl 32.2 of the INTS Contract, which provided (emphasis added):

177. [206]

     The argument from counsel for Qube focused on the following paragraphs of the Adjudicator’s reasoning in the INTS determination:

178. [207]

     Counsel for Qube submitted that this reasoning failed to address the real issue between the parties concerning the validity of the termination. Counsel referred in particular to the following passages from Qube’s adjudication response (emphasis original):

179. [208]

     In counsel’s submission, the issue between the parties was clear. At the time Qube issued the Show Cause Notice, the most recent approved delivery program had been issued in September 2022, almost a year before. There was no dispute that there had been departures from that program. The debate was about whether such departures were justified.

180. [209]

     Counsel for Qube submitted that the quoted passage from the Adjudicator’s reasons disclosed error in two ways. Counsel’s first point was that the Adjudicator had failed to deal with the real issue, namely justification of the delay. Instead, using a process which counsel described as “invented formalism”, the Adjudicator had focused on the existence or otherwise of the delay, which was a non-issue. Secondly, counsel for Qube submitted that the repeated statement that Qube had provided “no examples or particulars” of its allegations was simply wrong.

181. [210]

     In support of the second point, counsel for Qube referred to the statement from Mr Barney (see [106] above) which accompanied Qube’s adjudication response. The statement included a table showing, from month the month, how the date for practical completion had blown out. Mr Barney also described, in detail, correspondence from Qube to Martinus in the period leading up to the issue of the Show Cause Notices complaining about delays with particular items of work and asserting that the delays were interfering with the completion of the work program.

182. [211]

     Counsel also referred me to passages in an expert report from Mr Bradley Giller which likewise accompanied Qube’s response. In those passages, Mr Giller reviewed the “baseline” program issued by Martinus in June 2022, and subsequent programs between May and September 2023. He concluded, by reference to specific items of work, that specified elements of the programs could not have been achieved as planned in the baseline program and had not in fact been achieved.

183. [212]

     At the beginning of Qube’s response on termination, the Adjudicator had been invited to read both the statement and the report (among other statements and documents). But neither of them was referred to in the relevant part of the Adjudicator’s reasons. Again, counsel asked me to infer that the Adjudicator had not considered them. In counsel’s submission, this amounted to jurisdictional error.

184. [213]

     Counsel for Martinus disputed that any error had occurred. Counsel submitted that the Adjudicator would have been in no doubt that there had been a delay in the date for practical completion; the question before the Adjudicator was: who was to blame? In this context, it was understandable that the Adjudicator found no need to refer to Mr Barney’s statement. Furthermore any error which might have occurred was not jurisdictional.

185. [214]

     Counsel pointed out that cl 39.2, unlike some other clauses of building contracts which depend upon a good faith determination by the principal, required the existence of breaches in fact. Counsel further submitted that, as a matter of construction, cl 39.3 had to be interpreted so that particulars were given of the alleged breaches. Otherwise, it would be impossible for Martinus to be able to rectify them.

186. [215]

     Counsel submitted that these points were well understood by the Adjudicator, referring, in particular, to a paragraph in his reasons which appears shortly before the dispositive reasoning which I have quoted above:

187. [216]

     Counsel submitted that the statement that there was a lack of “examples or particulars” in [1612], [1614], [1616] and [1618] should be understood as a reference back to this argument.

188. [217]

     Whether the terms of the Contract were such as to require a cl 39.3 notice to contain “examples or particulars” of the alleged breaches, and whether the notices failed to do so, were both contestable questions. In terms, cl 39.3 required only that the notice should “state” the breaches in question and “state” that Martinus was required to remedy or overcome the breach, and the date and time by which it had to do so. While there may be an argument that, implicitly, as a matter of fairness to Martinus, it had to be told enough to know what it had to do to comply with such a notice, the Program Show Cause Notice at least did arguably provide sufficient information.

189. [218]

     It may be accepted that the Adjudicator did not refer in his reasons to Qube’s submissions about the delay in progress of the works and the lack of a current Approved Delivery Program. But evidently he thought it unnecessary to do so because the Show Cause Notice was invalid. That was the critical finding for present purposes.

190. [219]

     The language in the dispositive paragraphs of the Adjudicator’s reasons is ambiguous insofar as it refers to Qube not having “provided” particulars or examples. Qube’s reading is that “provided” means “provided in its submissions in the adjudication”. Martinus’ is that it means “provided in the Program Show Cause Notice”.

191. [220]

     It is true, as counsel for Qube pointed out, that the wording of the dispositive paragraphs is not a very accurate paraphrase of the submission by Martinus recorded at [1609]. But on balance, I think Martinus’ interpretation is preferable. I am unwilling to interpret the reasons so as to create a complete non sequitur.

192. [221]

     As I have already said, the interpretation which I have attributed to the Adjudicator, by way of somewhat inaccurate paraphrase of Martinus’ submissions, is certainly contestable. Those submissions in turn were not rigorously tied to the language of cl 39.3. But I was not referred to any submissions by Qube to the Adjudicator concerning the interpretation of that clause. It follows that there was no failure to take account of submissions on the relevant question.

193. [222]

     It follows that the Adjudicator’s reasoning, at most, involved an erroneous interpretation of cl 39.3 of the Contract. For reasons already given, this complaint does not disclose jurisdictional error. The challenge to this part of the Adjudicator’s decision on the termination issue fails.

194. [223]

     Directions Show Cause Notice: This Notice picked up the failure to comply with two directions made by the Superintendent which had not been (or at least had allegedly not been) complied with. One was a direction to Martinus to remove its building materials from part of the site known as the “LOGOS area”. The other was a direction to Martinus to provide details of its sub-contracting arrangements in accordance with (or purportedly in accordance with) a term of the Contract.

195. [224]

     The power of the Superintendent to give directions was set out in cl 20:

196. [225]

     A critical question was whether the failure to comply with these directions was a “substantial breach” of the contract. The relevant parts of the definition of substantial breach have already been set out at [203] above.

197. [226]

     In Martinus’ application, it presented arguments about the significance of the breaches (or the alleged breaches) concerning the LOGOS area (application [517]-[522]) and sub-contracting arrangements (application [501]-[515]). In its response, Qube replied (6.130-6.132 6.125-6.127).

198. [227]

     It is sufficient to refer to Qube’s submissions on the LOGOS area direction. The submissions stated (emphasis original):

199. [228]

     The emphasised portion referred back to an earlier part of the submissions where Qube presented its argument on failure to comply with another direction (not here relevant). That earlier argument included:

200. [229]

     The Adjudicator’s reasons on this issue were again brief. He set out cl 20 of the Contract and continued:

201. [230]

     Counsel for Qube pointed out that, in his reasons, the Adjudicator made no reference to the submissions of Qube (or Martinus for that matter) concerning the LOGOS area direction or the sub-contracting arrangements direction. Nor did he refer to the submissions by Qube on the nature of a “substantial breach” for the purposes of the Contract. Counsel submitted that this was a further instance of the Adjudicator failing to have regard to Qube’s submissions, and gave rise to a jurisdictional error.

202. [231]

     Counsel for Martinus again submitted that, in his reasons, the Adjudicator had addressed the relevant grounds for termination. Any error in his reasoning was not a jurisdictional one.

203. [232]

     It is apparently common ground that the Adjudicator did not refer to the submissions in question in his reasons. The question, again, is what inference I should draw from that.

204. [233]

     As with the alleged breaches which underpinned the Program Show Cause Notice, after the Adjudicator decided that the Directions Show Cause Notice was invalid it was unnecessary to refer to Qube’s (or Martinus’ submissions) on the merits of the breach allegations. Again, whether the Notice satisfied the requirements of the Contract was the critical question for present purposes.

205. [234]

     Again, the Adjudicator’s construction of the Contract was a contestable one. Effectively, he was saying that the only remedy which Qube had for breach of the Superintendent’s direction, no matter how important to the carrying out of the works, and no matter how contumacious, was for Qube to undertake that task itself under cl 20 (and how would that be done if it required the cooperation of Martinus?). It is notable that, at [1636], the Adjudicator stated that failure to comply could not be categorised as any of the substantial breaches listed in cl 39.2, ignoring the provision of the chapeau which stated in terms that the list was not exhaustive.

206. [235]

     So far as the Adjudicator’s actual decision is concerned, all that this discloses is an arguable error of law on the face of the record, which would not be jurisdictional. But (and this is the difference between the Directions Show Cause Notice and the Program Show Cause Notice) Qube made submissions on the construction question which are not referred to in the Adjudicator’s reasons on that question.

207. [236]

     Again, the issue was an important one and Qube’s submissions were apparently weighty. I do not find it plausible to suppose that the Adjudicator lacked the time to address the submissions, or felt that he did not need to do so on some ground which is not disclosed in his reasons. Again, I draw what seems to me to be the straightforward and natural inference that, on the balance of probabilities, the Adjudicator did not consider the submissions in question.

208. [237]

     Obviously, if the Adjudicator had formed a different view on the construction question, there would still have been a debate about whether the failure to comply with the directions involved a breach which was sufficiently serious to amount to a “substantial breach” for the purpose of cl 39.2. To say the least, it is far from certain whether Qube would have prevailed on that question. But because of the Adjudicator’s approach, it never had the opportunity. In my view, the test of materiality is satisfied.

209. [238]

     This component of the adjudication represents the proceeds of the bank guarantees which were called on (or “encashed”) by Qube on 8 February after the refusal of the injunction last December. The security obligations were summarised by Rees J at J1 [15]-[18]. For present purposes, it is only necessary to refer to cl 5, which relevantly provided:

210. [239]

     As already noted, the bank guarantees (which totalled $7.0 million) were called on 8 February, the same day Martinus’ payment claimed was lodged. The call was actually made before Martinus lodged the claim, but Martinus was not aware of that until afterwards. The claim therefore made no reference to the call and included no claim to have the monies “returned” (I use the term “return” in inverted commas because, once the monies had been “encashed”, the remedy was not to have the guarantees reinstated by the bank, but rather a claim for restitution directly from Qube as the party receiving the proceeds of the security: Allianz Australia Insurance Ltd v Probuild Constructions (Aust) Pty Ltd [2023] NSWCA 56).

211. [240]

     In its payment schedule, Qube allowed a credit against Martinus’ claims in the sum of $0.5 million. This was described on the summary page as “Defective/Incomplete Works/Contra-Charges/Termination for Cause/BGs”. The amount was calculated as follows.

212. [241]

     First, Qube claimed payments it had made to contractors who had replaced Martinus on the site, on the footing that Qube was contractually entitled, having terminated for cause, to recoup these amounts. The amounts paid to the contractors which were claimed totalled $5.4 million. Secondly, Qube added the sum of $2.1 million which it had paid voluntarily (as counsel described it, in “in good faith”) on account. Third, Qube credited against these claims the $7.0 million which had been received from calling on the bank guarantees. Each of these components of the calculations appeared in the spreadsheet which was attached to the payment schedule.

213. [242]

     In its adjudication application, Martinus accepted that the $2.1 million payment on account “should be deducted from amounts determined by the Adjudicator to be payable” but disputed the claim for payments to the replacement contractors on the ground that Qube’s purported termination for cause was invalid, and that Qube had no right to recoup the payments based on a termination for convenience.

214. [243]

     In addition, Martinus made a claim for the proceeds of the bank guarantees. The claim was developed in section L of the application. It was based on an argument concerning the effect of the accounting undertaken by Qube in the payment schedule:

215. [244]

     In advancing this claim, Martinus was concerned to escape from a problem apparently created by the recent first instance decision in Acciona Infrastructure Projects Australia Pty Ltd v EnerMech Pty Ltd [2023] NSWSC 1565. Martinus’ submissions dealt with that decision as follows:

216. [245]

     Martinus’ submission concluded:

217. [246]

     As already noted, in its response, Qube submitted that some of Martinus’ claims were outside the Adjudicator’s jurisdiction. Qube accepted that in general the Adjudicator had jurisdiction “to make a decision pursuant to s 22 of the Act”. But Qube submitted that the Adjudicator’s jurisdiction did not extend to four nominated claims. These included the bank guarantee claim.

218. [247]

     After dealing with the formal matters in part 1 and 2 of its response, Qube addressed jurisdictional matters in part 3. In support of this general contention, Qube developed an argument based on cases where further particulars are provided in support of the application to which the principal has had no opportunity to respond, thus denying the principal natural justice: John Holland v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258 at [22]-[25], [41]; Minister for Commerce v Contrax Plumbing [2004] NSWSC 823 at [57]. Qube’s conclusion was that the Adjudicator had no jurisdiction with respect to the specified claims and should not deal with them. If, nonetheless, the Adjudicator considered he had jurisdiction, the Adjudicator should give Qube natural justice by considering its submissions in response.

219. [248]

     Qube’s general jurisdictional argument was not really apposite to the bank guarantee claim. But it did address the jurisdictional aspect of that claim separately as part of section 9 of its submissions, which dealt with its off-set claim generally. Qube made the following submissions:

220. [249]

     When responding to the Adjudicator’s invitation to address jurisdictional issues raised by Qube’s adjudication response (see [108]-[109] above), Martinus responded both to the general jurisdiction argument and the specific bank guarantee argument. On the bank guarantee argument, Martinus referred the Adjudicator back to its submissions on this argument in its adjudication application.

221. [250]

     Qube’s supplementary submissions in response began:

222. [251]

     The submission then went on to refer to the Icon decision:

223. [252]

     The further submission then made an additional point:

224. [253]

     In early July, the Acciona decision at first instance was reversed by the Court of Appeal: EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd [2024] NSWCA 162. The Adjudicator invited further submissions from the parties on the significance of the appeal decision.

225. [254]

     The Adjudicator’s request stated:

226. [255]

     Martinus duly provided submissions in answer to the Adjudicator’s invitation. In its submissions, Martinus took the opportunity to restate its earlier position:

227. [256]

     The submissions continued:

228. [257]

     Qube’s submissions in response began (emphasis original):

229. [258]

     In s 3 of the submissions, Qube repeated the point in greater detail and then went on to explain why the issue in the adjudication was different. Qube first repeated the point that Martinus had expressly accepted that it had made no claim for the return or reversal of the monies called under the guarantees. For this reason, the decision in EnerMech was irrelevant. In fact, it was a “distraction to the real issue for determination” for the Adjudicator.

230. [259]

     The submissions then went on to explain why:

231. [260]

     The submission continued:

232. [261]

     Qube then went on to refer the Adjudicator to its April submissions, restating them in detail, including the reference to Icon, at [25]. It ended:

233. [262]

     In his reasons on the issue, the Adjudicator first dealt with Martinus’ position:

234. [263]

     The Adjudicator continued:

235. [264]

     The Adjudicator then returned to the payment claim:

236. [265]

     After referring to the argument in the payment application at [913] and following (and repeated in the further submissions made in July 2024), the Adjudicator referred to the payment schedule:

237. [266]

     The adjudicator next addressed the jurisdiction issue:

238. [267]

     After referring to s 22, and the appeal decision in EnerMech, the Adjudicator continued:

239. [268]

     The Adjudicator then referred again to the appeal decision in EnerMech, emphasising the entitlement of an adjudicator to determine disputes raised in the payment schedule.

240. [269]

     The Adjudicator continued (emphasis original):

241. [270]

     The first point taken by counsel for Qube was that the Adjudicator had, in substance, upheld a claim by Martinus for reimbursement of the bank guarantee monies as a consequence of the Adjudicator’s conclusion that Qube had not been entitled to terminate for cause. Counsel submitted that no such claim had been included in Martinus’ payment claim (as Martinus’ submissions and the Adjudicator’s reasons acknowledged) and was therefore not available in the adjudication.

242. [271]

     Counsel for Qube acknowledged what the Court of Appeal said in Icon, especially at [26], quoted above, and of course accepted that it is binding on the Court. But they argued that the present case is distinguishable. In Icon, the dispute was about the interpretation of the payment claim. In the present case, there is no such dispute. Everyone agrees that a claim for restitution of the bank guarantee proceeds was not included in Martinus’ payment claim.

243. [272]

     It followed, in counsel’s submission, that there was nothing in the payment schedule relevant to respond to. The suggestion in the Adjudicator’s reasons that the payment schedule contained some sort of freestanding acknowledgment of the liability under the restitution claim was therefore simply wrong. As the summary page of the payment schedule made clear, the set-off amount claimed by Qube was only $500,000. The $7 million figure was simply a reduction in the quantum of the set-off claim.

244. [273]

     Counsel also relied on remarks recently made by Ball J in Binah Constructions Pty Ltd v PTMG Pty Ltd [2024] NSWSC 872. The question in the case was whether the contractor’s payment claim included a claim for payment of a previously unpaid determination. His Honour said (at [13]-[17], emphasis added):

245. [274]

     It followed, in counsel’s submission, that it was not open to the Adjudicator to uphold the restitution claim when that claim had only been made for the first time in Martinus’ adjudication application.

246. [275]

     Counsel also submitted that, even if the availability of the restitution claim was characterised as a matter of interpretation for determination by the Adjudicator, the adjudication had still miscarried on this point. Counsel pointed out that the arguments summarised above were put to the Adjudicator most clearly in Qube’s supplementary submissions. The Adjudicator dealt with the point in a single sentence, in which he said he did not agree with Qube’s jurisdiction contention. He did not refer to Qube’s arguments and, counsel submitted, I should infer that he had not considered them.

247. [276]

     Finally, counsel submitted that if the Adjudicator did in fact conclude that the restitution claim was included in the payment claim, or was otherwise available for determination in the adjudication, that conclusion was “legally unreasonable” and a jurisdictional error was disclosed on that basis also.

248. [277]

     Counsel for Martinus did not accept that the effect of the Icon decision was confined to the proposition in [26] that there would be no jurisdictional error if, in substance, the dispute was a dispute as to the interpretation of the payment claim or the payment schedule. Counsel submitted that the decision was not distinguishable, and that what Ball J said in Binah went too far.

249. [278]

     As to the other grounds of challenge, counsel again submitted that the Adjudicator had addressed Qube’s arguments and any challenge to his reasoning did not disclose a jurisdictional error.

250. [279]

     Scope of adjudication: The Adjudicator’s reasons show that he awarded to Martinus a sum by way of restitution of the proceeds of the bank guarantees on the ground that, as a consequence of his finding on the termination issue, Qube had no right to retain that sum. The problem is that, as the Adjudicator repeatedly acknowledged, no such claim had been included in Martinus’ payment claim.

251. [280]

     Contrary to the Adjudicator’s statements at [2065] and following, Qube did not, in its payment schedule, add the bank guarantee proceeds to the amount for which it was liable under Martinus’ payment claim. What Qube actually did was to claim a set-off of $500,000. The credit for the bank guarantee proceeds was a credit allowed by Qube in calculating the amount of the set-off claimed. It was in no way an acknowledgment of some freestanding liability to Martinus.

252. [281]

     There is a clear distinction, as a matter of law, between advancing a claim and resisting a claim brought back against oneself by way of set-off. The scope of Martinus’ payment claim could not be expanded because of the way in which Qube calculated its set-off.

253. [282]

     The point can be illustrated by considering what would have happened if Qube had not made the allowance in Martinus’ favour in its payment schedule, but had instead claimed the whole $7.5 million. In that event, all Martinus could have done would have been to try to deploy the credit as a reduction of the set-off. That might have led to an argument about whether Qube, given the terms of the Contract, was obliged to allow the bank guarantee proceeds against its delay damages claim, or could enforce the claim fully by way of set-off and retain the funds against some other claimed liability of Martinus. But on any view, Martinus would only have been entitled to a credit to the extent that Qube’s termination losses claim succeeded. The set-off claim could only be reduced to zero; it could not be reduced to a negative number and then added back onto Martinus’ claim.

254. [283]

     The wording of the Adjudicator’s final conclusion at [2090] is perhaps suggestive. The Adjudicator did not, as might have been expected, say that he was upholding a claim by Martinus. To say that would have clearly exposed the problem that no such claim had been included in the payment claim. Instead, he said only that he would “consider” the amount.

255. [284]

     Another aspect of the problem is illustrated by what the Adjudicator said about s 16(2) of the Act, at [2067] and [2068]. He seems to have treated his conclusion that Qube was obliged to pay the proceeds of the bank guarantees back to Martinus by way of restitution as a statutory debt of some sort.

256. [285]

     Of course, this did not mean a thing if that claim for restitution was not included in Martinus’ payment claim. But I think it was unsound anyway.

257. [286]

     The Adjudicator had of course determined for the purpose of the adjudication that the purported termination for cause was invalid. But this finding did not bind the parties outside the adjudication proceedings. Qube would only have been required to pay the bank guarantee proceeds over to Martinus under s 16(2) if an action for debt had been brought in a court of competent jurisdiction. If that had happened, it would have been for the court, not an adjudicator (ex hypothesi there would of course have been no adjudication) to determine, as a matter of construction of the payment schedule, whether Martinus was entitled to judgment.

258. [287]

     Incidentally, this illustrates the validity of the point made by Qube about the earlier judgment of Rees J. Her Honour may not have had a restitution claim before her (that was the subject of the arbitration). But in awarding the proceeds of the bank guarantees to Martinus, the Adjudicator did indeed nullify her Honour’s decision.

259. [288]

     As to whether judicial review is available, I agree that the facts of Icon are distinguishable. The Court of Appeal’s decision proceeds on the basis that the “backcharges” were claims by the principal against the contractor introduced by the principal by way of set-off. In the present case, the bank guarantee proceeds were a separate credit allowed by the principal against its set-off claim. The distinction is, I think, effectively recognised in Icon at [25].

260. [289]

     Counsel for Martinus drew attention to the broader statement in Icon at [26] about an adjudicator’s authority to determine the construction of the payment claim and the payment schedule. But, again, I do not think that broader language applies to this case either. Clearly, no question of the construction of the payment claim arose. Nor, I think, was there any argument about the construction of the payment schedule in the relevant sense. Martinus’ argument to the Adjudicator was that the payment schedule had some effect quite independent of the claims advanced by Martinus in its payment claim.

261. [290]

     Counsel argued that the distinction drawn in Binah by Ball J, between an error in the interpretation of a payment claim or payment schedule on the one hand, and an error in determining a claim not validly before him on the other, was, on analysis, unsustainable. I do not agree, and I do not think Icon goes so far.

262. [291]

     In my view, the award of the bank guarantee proceeds went beyond the scope of the adjudication proceedings. It was not an adjudication “of the payment claim” by Martinus. Jurisdictional error is established.

263. [292]

     Consideration of Qube’s submissions: In considering this ground of alleged jurisdictional error, I apply the principles which I have applied concerning earlier alleged errors of the same type. Essentially, again, it is a question of fact, to be determined as a matter of inference from the reasons, whether or not the Adjudicator considered Qube’s submissions on this claim in accordance with the requirements of s 22(2).

264. [293]

     The Adjudicator described Qube’s argument on jurisdiction at [2071]. He identified two points in the argument. One was that he had no jurisdiction to decide whether Qube was entitled to have recourse to the bank guarantees. The other was that he had no jurisdiction to award the bank guarantee proceeds to Martinus.

265. [294]

     Exactly where the Adjudicator obtained this description from is not clear from the reasons. It is not clear to me that Qube actually argued the first point. Qube’s submissions did refer to the judgment of Rees J, but in a way which appears to me to be merely illustrative of the second point.

266. [295]

     I will nevertheless accept, for present purposes, that [2071] derived from s 9 of Qube’s adjudication response. But the Adjudicator did not, in [2071], or in his subsequent reasons, paraphrase what the second point actually was, nor did he paraphrase or quote from the supplementary submissions from April and July which developed that point further. The question is whether he considered Qube’s submissions on the point.

267. [296]

     Of particular importance was the argument based on [25] of Icon which pointed up to the difference between what had been considered legitimate in that case and what Martinus was attempting in the present case. This reference appeared in both the April and July submissions. In the July submissions, it was coupled with a reminder to the Adjudicator that in fact, on its face, the schedule only claimed a set-off of $500,000.

268. [297]

     Again, the starting point is that the Adjudicator did not say anything in his reasons which indicated that he considered Qube’s submissions. In particular, there was no reference to Icon. And there was no reference to the point about the form of the schedule.

269. [298]

     Again, it is theoretically possible that the Adjudicator might have analysed the submissions but decided that it was so unsound as not to require a response. But again, the apparent strength or weakness of the argument should be taken into account when considering the likelihood of that having happened. I have already said that I consider the argument, in substance, to be correct. But even if I am wrong in that view, it was one which plainly merited serious attention.

270. [299]

     Counsel for Martinus pointed out that both parties ultimately agreed in their July submissions that the Court of Appeal’s decision in EnerMech was not determinative of the bank guarantee issue, and indeed was not even relevant. Counsel suggested this as a possible explanation as for why the Adjudicator might not have considered Qube’s July submissions.

271. [300]

     I do not find this suggestion persuasive. Martinus’ submissions did not merely state that the EnerMech decision was irrelevant. Rather, Martinus took the opportunity to restate its submissions and to place the EnerMech decision in that context. Qube adopted a similar approach. Rather than simply agreeing that EnerMech was irrelevant to the issue, Qube’s submissions sought to illustrate that by developing and explaining what Qube’s argument was. This was an integral part of the conclusion that the issue before the Adjudicator was different form that in EnerMech.

272. [301]

     Qube had been invited to “reply” to Martinus’ supplementary submission and it did so, including by providing a reply to Martinus’ restatement of its argument. It was not suggested that the submission was not, in that regard, “duly made”.

273. [302]

     In these circumstances, for the Adjudicator to have decided not to analyse Qube’s submission on its merits might have led to a question about natural justice. But there is no reason to think that the Adjudicator did in fact make any such decision. If he had had that view, it would only have taken him a sentence to say it. It is notable that, instead of doing so, he went into the EnerMech decision in some detail. Evidently, he thought that the decision was worth referring to in the context.

274. [303]

     In my view, further speculation as to what the Adjudicator’s reasoning process might have been is unhelpful. The Adjudicator was presented with apparently weighty submissions, which, if accepted, would have defeated Martinus’ claim. He did not refer to those submissions in his reasons and upheld the claim. The natural and straightforward inference is that he did not refer to them. That is the inference which I draw on the balance of probabilities.

275. [304]

     For these reasons, I think jurisdictional error is also made out on this ground. It is not necessary to consider Qube’s other challenge based on “legal unreasonableness”.

276. [305]

     These proceedings were brought on for hearing urgently, and only two days were set aside. In the end, it took a further half day to complete the argument, which I was able to make available.

277. [306]

     Qube’s written submissions were extremely comprehensive and dealt with all of the items challenged. But when presenting the argument, senior counsel for Qube concentrated on only some of the challenges. Clearly, it would have been impractical to do otherwise, given the amount of time allotted for the hearing. At the end of his argument on the judicial review proceedings, he said that he had “tried to identify the high points”.

278. [307]

     I have now addressed all of the issues which were the subject of oral argument. I have upheld some, but not all, of Qube’s challenges. Even if all the remaining challenges were to succeed, I do not think it would be proper for me to accede to the request by counsel for Qube to set aside the adjudication determinations, and the judgments on which they are based, entirely. Rather, I should exercise the power under s 32A of the Act to set the determinations and judgments aside to the extent that Qube has succeeded on the challenged items. This will require further consideration by the parties in order to determine the precise numerical result for those items.

279. [308]

     What then I should I do about the challenges articulated by Qube in its written submissions which were not the subject of oral argument? To give them all an equivalent level of consideration as the ones which were the subject of argument would delay the delivery of judgment considerably.

280. [309]

     I have decided that the best course is to make orders now which deal, to the extent possible, with the matters that were argued. It may be that the parties can agree, based on my reasoning on the “high points” argued orally, that some or all of the other challenges should be resolved in the same way.

281. [310]

     If challenges still remain for resolution, then the convenient course may be, if there is an appeal, to dismiss the other challenges and allow them to be dealt with by the Court of Appeal. Alternatively, it might be possible to arrange a short supplementary hearing to deal with them. I will leave this in the first instance to the parties.

282. [311]

     The Adjudicator gave the following reasons for requiring Qube to pay the whole of the costs of the INTS Adjudication:

283. [312]

     The same reasons were given, and determination made, in the ISRA Adjudication.

284. [313]

     Counsel for Qube contended that this reasoning disclosed jurisdictional error on the basis that it was “legally unreasonable”. Counsel pointed out that the amount allowed in the adjudication was over $60 million less than Martinus had claimed. Counsel submitted that the Adjudicator appeared to have exercised his power so as to punish Qube for adopting what he had clearly seen as an overly legalistic approach to the task. This was not a proper basis for the award of costs.

285. [314]

     If it were a matter for me, I would have some sympathy with that submission. The Adjudicator’s task was to determine Martinus’ contractual entitlement to the sums sought in its payment claim. I do not see why insistence by Qube on compliance with the terms of the Contracts should necessarily be seen as “harsh”, or, even if so, that it is a reason to award costs, especially of the whole proceedings. But on the approach I have taken in this judgment, the complaint does not disclose jurisdictional error.

286. [315]

     But that is not the end of the matter. Section 32A gives the Court power to set aside an adjudication determination in part where the error in question “affects” a component of the determination only. It is well established that this power extends to a determination on costs: Ceerose at [87]-[106].

287. [316]

     It seems to me that the errors which I have identified do affect the Adjudicator’s determination on costs in this sense. On three items of the claim, Qube’s submission before the Adjudicator has been vindicated, at least in the sense that I have decided that the submission was one of substance which the Adjudicator should have, but did not, consider. Collectively these will result in a significant reduction in the determinations. As with the question of materiality, I do not think that one can assume that the Adjudicator had a preconceived view in favour of one party or the other. I therefore conclude that the Adjudicator’s decision, at least to the extent that it required Qube to pay 100% of the costs, could well have been different if he had not made the errors which I have identified.

288. [317]

     The power under s 32A, however, does not permit the Court to substitute its own decision, in the same way as it could by way of appeal from a discretionary decision. The power is limited to setting aside components of the adjudication to the extent “affected”. But at the same time, I do not think that it is either practicable or justified for the Court to try to ask what percentage of costs the Adjudicator might have awarded against Qube in the absence of the jurisdictional errors identified. In the circumstances, I think the proper course is to set aside the costs determinations made by the Adjudicator, leaving the costs to fall on the parties in equal shares, in accordance with the default position in s 29(2) of the Act.

Stay application

1. [318]

   Qube’s application to stay the enforcement proceedings (to the extent the adjudications were not set aside in the judicial review proceedings) was described in submissions as a “Grosvenor application”. Stays of this type originated with the decision of Einstein J in Grosvenor Constructions (NSW) Pty Limited (in administration) v Musico [2004] NSWSC 344. The basis for the application in that case, which was successful, was that if the adjudicated amount were paid over, the successful contractor would be unable to repay it.

2. [319]

   Einstein J recognised that the intention of the Parliament in enacting the Act was to establish a “pay first, argue later” regime. But this did not necessarily exclude the grant of a stay:

3. [320]

   In Veolia Water Solutions v Kruger Engineering [No 3] [2007] NSWSC 459, McDougall J adopted the principles stated by Einstein J as being generally applicable. He noted, however, that in any particular case the application of the principles and the balancing of the various considerations would require careful attention and, in particular, close analysis would be needed about the “extent or certainty of the risk or prejudice or damage if a stay is not granted”.

4. [321]

   Later in his judgment, McDougall J stated:

5. [322]

   In TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118, the Court of Appeal said at [89]:

6. [323]

   In A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144, the Court of Appeal reviewed these authorities. The Court referred to TFM as approving what McDougall J had said in Veolia at [39]. At [28], the Court also quoted [89] of TFM (quoted at [322] above) which cited Veolia at [75]. The Court then stated at [26] and [29]-[31]:

7. [324]

   In the present case, the application was similarly based on a concern that if payment of the adjudicated amounts were enforced, and Qube was ultimately successful in obtaining an order for restitution, Martinus would, or at least might, be unable to repay.

8. [325]

   The application was supported by evidence from a chartered accountant, Mr Martin Cairns. Mr Cairns produced two reports for the purposes of the proceedings. For the purposes of his first report, he was given financial information from Martinus. He summarised that information to illustrate historical trends, and also calculated liquidity ratios commonly used in the assessment of solvency. He expressed the opinion, however, that there was insufficient information for him to be able to express an opinion on whether there was a “risk of insolvency” for Martinus.

9. [326]

   Further information was obtained by way of notice to produce and Mr Cairns prepared a supplementary report. This did not, however, affect the conclusion which he had previously expressed that he was unable to say that there was a “risk to Martinus’ solvency”.

10. [327]

    When tendered, these reports were the subject of objection by counsel for Martinus. Counsel submitted that, having regard to the conclusions expressed by Mr Cairns, the reports were wholly irrelevant. The point was that the question for the Court was not whether there was a “risk of insolvency” (whatever that meant in the context) but rather whether Martinus would be unable to repay the adjudicated sums if it received them.

11. [328]

    I considered that counsel’s point as to the issue before me was well taken. Had the objection been confined to the opinions expressed by Mr Cairns, I would have upheld it. But the objection was to the reports as a whole and I considered that some of the other information in Mr Cairns’ report was relevant, or at least potentially relevant, to the question before the Court as to the degree of risk of non-repayment.

12. [329]

    Another chartered accountant, Ms Dawna Wright, had prepared a report for Martinus, responding to Mr Cairns’ first report. When the objection to Mr Cairns’ report failed, counsel for Martinus tendered Ms Wright’s report and she was briefly cross-examined on it.

13. [330]

    Ms Wright was briefed to respond to what Mr Cairns had said in his initial report. She did not undertake any enquiries of her own. Her opinion was that the questions asked of Mr Cairns were of no assistance in deciding whether, if it received payment, Martinus would be able to repay that payment at some time around the first half of 2026 (which was assumed to be the date by which the arbitration would be completed). She also said that in her opinion the information presented by Mr Cairns did not establish that that would be so or that Martinus was insolvent or subject to “a risk of insolvency”.

14. [331]

    There was no objection to Ms Wright’s report, but I very much doubt that it was, strictly speaking, admissible. I come back to this below.

15. [332]

    In argument, counsel for Qube referred me to evidence from Martinus in the adjudication which referred to its financial position. In support of a claim for redundancy costs, a Martinus executive said that the Moorebank project was Martinus’ biggest. He also said that Martinus staggered the redundancy payments to accommodate limits on its cashflow.

16. [333]

    Counsel also addressed on the trends in Martinus’ financial statements, which had been extracted by Mr Cairns in his reports. The financial statements initially summarised by Mr Cairns covered the period up to 30 June last year. Apparently the statements for this year have not been completed. In response to a notice to produce, Martinus produced current year management figures. These were included in Mr Cairns’ supplementary report.

17. [334]

    As analysed by counsel, the figures show that over the last few financial years Martinus has been profitable, but cashflow negative. Debt had been increasing, apparently so as to fund purchases of plant and equipment. Counsel also submitted that current ratios (the rate of payment to debtors and so on) have been tightening.

18. [335]

    Martinus’s formal financial statements were prepared on the basis that it brings to account revenue under contracts in accordance with generally accepted accounting principles, which require there to be a high degree of confidence that the monies will not have to be repaid. The management accounts for this year may not necessarily have been prepared on that basis. Counsel submitted that it was therefore impossible to say how much in the management balance sheet represents monies which had been claimed in the adjudication (bearing in mind that the Adjudicator awarded $60 million less than Martinus was claiming).

19. [336]

    According to counsel, it was therefore unclear whether, if Martinus were ordered to repay the amount awarded by the Adjudicator, that would wipe out Martinus’ shareholders’ funds. Together with the other evidence, counsel submitted that there was a sufficient risk to justify a stay.

20. [337]

    In response, counsel for Martinus took three points.

21. [338]

    First, counsel submitted that the decision in Grosvenor was no longer good law. Counsel submitted that amendments to the Act since that decision make its reasoning unsound in the present circumstances.

22. [339]

    Secondly, counsel submitted that expert evidence was required in order to conclude that there was a risk that Martinus would be unable to repay the monies if called upon to do so. Mr Cairns had expressed no opinion on the question and, accordingly, the application could not succeed.

23. [340]

    Finally, counsel submitted that it was necessary to show much more than a risk of inability to repay. What was required was a certainty, or, perhaps, something close to that. Counsel submitted that the evidence did not establish anything like that degree of risk in the present case.

24. [341]

    Counsel’s first point picked up on what the Court of Appeal said in A-Civil, at [29]-[31]. Counsel submitted that the enactment of s 32B was a statement from Parliament that unless a contractor was in liquidation it should receive the full benefit of the Act. It followed, according to the submission, that the Court could not (apart, perhaps, from a phoenixing case) grant a stay unless the contractor was in liquidation.

25. [342]

    There is no doubt that the enactment of s 32B underlines that the statutory process is available to companies under other forms of external administration which have not reached the point of formal liquidation. Accepting that this may make it harder to obtain a stay when the contractor is not in liquidation, I still think it by no means follows that a stay cannot be obtained unless that is so. That is for two reasons.

26. [343]

    First, the availability of the statutory procedure depends on the contractor company not being in liquidation at the time its payment claim is issued and not going into liquidation before its adjudication application is determined. Whether a stay is to be granted depends on the circumstances at the time that judgment has been obtained. Even if the standard statutory timetables are followed, it is always possible that circumstances could alter in the meantime. And as the facts of the present case show, it may happen that a longer period of time elapses between the commencement of the statutory procedure and the obtaining of judgment.

27. [344]

    The second point is related but broader. To adopt a rigid rule in dealing with a discretionary matter such as the grant of a stay is generally unwise. The Court needs to retain flexibility to deal with the variety of circumstances which may present themselves.

28. [345]

    This is especially so because the grant of a stay always involves, to some degree, a balancing exercise. One factor, not present in the present case, illustrates this. Suppose the contractor in question had no need for the money but the principal would be facing insolvency if required to pay. Suppose further that the outcome of the adjudication turned on a disputed question of construction and the principal had already commenced proceedings and obtained an expedited hearing in this Court. Can it be said that the Court would lack power to grant a stay in those circumstances?

29. [346]

    In my view, in accepting that there may be some circumstances falling short of liquidation (for example, phoenixing) counsel effectively acknowledged this problem in their argument. I therefore do not accept that because Martinus is not in liquidation, no stay can be granted.

30. [347]

    I turn now to counsel’s second preliminary point. In my view, there are two answers to it.

31. [348]

    The first, and fundamental, answer is that there is no absolute rule that if an issue is capable of being the subject of expert opinion evidence, a court is unable to make a finding without such evidence. It may be so for some scientific or medical questions. But in other cases, experience and common sense can provide a sufficient guide.

32. [349]

    For instance, if the value of a property is in issue, there may be evidence before the Court which enables the Court to make a finding of value, perhaps within a range, even if there is no expert report directly addressing the question. The Court may not be as confident in reaching the finding as it would be if assisted by expert evidence, but that is another matter. In the present case, even if I considered that the likelihood of repayment were a matter which was capable of being the subject of expert evidence, that would not exclude the possibility of the Court making its own finding on the question.

33. [350]

    I turn to the second answer. I have already indicated why I agree with the submission made by counsel for Martinus, in the course of objections, that the issue in the present case is not whether Martinus is insolvent within the meaning of the definition in the Corporations Act 2001 (Cth) (although, for reasons given below, I do not necessarily accept that this a proper subject for expert opinion). Nor is it that Martinus is subject to a “risk of insolvency” (whatever that means in the context). The Court is asked simply to make a determination on the likelihood or otherwise of Martinus being able to repay monies payable under the judgments in the enforcement proceedings. This is an ordinary factual issue. It is hardly the sort of question which can be answered definitively by any expert.

34. [351]

    Indeed, in my view, an expert opinion directly addressing the question would not even be admissible. That is because it would not involve the deployment of any specific expertise. It is hardly the sort of question which a chartered accountant would be required to answer in the course of practice. It involves an evaluative judgment based on the whole of the evidence, and bringing into account elements of common sense and general knowledge and experience.

35. [352]

    In saying this, I am not saying that evidence from an accountant is of no use on an application of the present type. A report may usefully bring together relevant information, such as the financial data assembled by Mr Cairns. An expert might also inform the Court on technical matters, such as an explanation of how particular insolvency ratios are calculated, which might inform the ultimate decision. But in my view, an opinion on the question is a matter for the Court and does not involve any further element of expertise.

36. [353]

    Counsel for Martinus, are, however, on stronger ground on their argument concerning the merits of the application. The Parliamentary intention is clear and the discretion must not be exercised in a way which would frustrate that intention. This means that the fact that a contractor company is at risk of insolvency cannot, of itself, justify the making of the order, since the Parliamentary intention is to place the risk of insolvency on the principal.

37. [354]

    Indeed, up to a point, the more financial difficulty the contractor is in, the less reason there is for granting a stay, as the more likely it will be that the grant of such a stay will result in the contractor being deprived of the cashflow which is needed to sustain its operations. It is only when insolvency becomes inevitable, or at least highly probable, that the dynamics reverse because of the possibility that an interim payment will effectively become final. No doubt it was considerations such as this which caused Payne JA, in Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33, to refuse a stay in a case where the contractor’s financial position was “precarious”.

38. [355]

    Nothing like that is present here. I have been troubled by the fact that Martinus has failed to produce any updated accounts, and it is unclear what effect the partial failure of its claims in the adjudication proceedings, coupled with a reversal of any judgment which is enforced, would have on Martinus’ balance sheet. But the arbitration proceedings have not even begun, and it is not suggested that they will fall to be determined this year, or perhaps even next year.

39. [356]

    In these circumstances, it simply becomes impossible to predict within pretence of accuracy what Martinus’ balance sheet will be at that point. Given that Martinus is trading profitably at present, and has a track record of profitability, I think the evidence falls far short of demonstrating that an order for payment of the money now would be likely to convert an interim payment into a final one because Martinus will be unable to pay if obliged to do so at some point in the future.

40. [357]

    For these reasons, the application to stay enforcement of the judgments obtained by Martinus until completion of the arbitration proceedings fails and will be refused. This will not, of course, affect the existing stay which will remain in place until after this judgment is delivered.

Orders

1. [358]

   On 26 September I provided a draft of the above reasons to the parties and listed the proceedings for the making of orders to reflect the conclusions reached so far. The parties agreed that it was open to me to make an order setting aside the affected adjudication and judgment to the extent that the challenges addressed in this judgment have succeeded, and that this would allow me to determine the other challenges later and then make further orders if warranted. I indicated that I would follow this course for the moment rather than dismiss the remaining challenges and leave them to the Court of Appeal, but the question will need to remain under review depending on the progress of the appellate proceedings.

2. [359]

   The orders made on 26 September in the judicial review proceedings were:

   1. (1)

      Order pursuant to s 32A of the Building and Construction Industry Security of Payment Act 1999 (NSW):

   2. (2)

      Order that determination of the Second Defendant (Adjudicator) made on 22 July 2024 to the effect that the Plaintiff is liable for the whole of the Adjudicator’s fees and expenses for adjudicating the INTS Determination is set aside.

   3. (3)

      Order that the judgment entered in proceedings 2024/278963 on 31 July 2024 is varied by changing the “Claim amount” to $22,925,489.49 and the “TOTAL” amount to $22,925,711.49.

   4. (4)

      Reserve the question of what further or other orders, if any, should be made in respect of the components of the claim not resolved by the Court’s principal reasons.

   5. (5)

      Direct the Plaintiff, by 8 October 2024, to serve on the Defendant and deliver to the Associate to Parker J a notice of all components of the claim, if any, which it does not consider to have been resolved by the Court’s principal reasons.

   6. (6)

      Order that the unconditional bank guarantees provided to the Court in compliance with order 1(b) of the orders made on 9 August 2024 be provided to the Plaintiff on terms that the First Defendant may not make a demand under the unconditional bank guarantee provided to the Court in compliance with order 1(b)(ii) of the orders made on 9 August 2024 in an amount exceeding the amount owing under the judgment referred to in order 3 of these orders as amended by that order.

   7. (7)

      Upon the Plaintiff:

   8. (8)

      Costs be reserved.

3. [360]

   The orders made on 26 September in the first enforcement proceedings were:

   1. (1)

      Order that the amended notice of motion filed 2 August 2024 is dismissed.

   2. (2)

      Costs be reserved.

   3. (3)

      Order that the judgment entered in these proceedings on 31 July 2024 is varied by changing the “Claim amount” to $22,925,489.49 and the “TOTAL” amount to $22,925,711.49.

4. [361]

   The orders made on 26 September in the second enforcement proceedings were:

   1. (1)

      Order that the amended notice of motion filed 2 August 2024 is dismissed.

   2. (2)

      Costs be reserved.