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

1. [1]

   GLEESON JA: I agree with Payne JA.

2. [2]

   PAYNE JA: These proceedings arose out of two adjudications under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOP Act”) involving two separate contracts between the same parties. The adjudications obliged the head contractor (Qube RE Services (No.2) Pty Ltd (“Qube”)) to pay $71 million in total to the sub-contractor (Martinus Rail Pty Ltd (“Martinus”)). The proceedings before the primary judge, Parker J, involved a complaint by Qube that each of the adjudications was affected by jurisdictional errors. The primary judge upheld a number of complaints of jurisdictional error and set aside the affected parts of the adjudications, relying upon s 32A of the SOP Act. Martinus appealed against the findings of jurisdictional error. Qube cross-appealed against the findings of the primary judge where his Honour had not found jurisdictional error.

Overview

1. [3]

   As I will explain in detail, the policy of the SOP Act is to ensure that a contractor who carries out construction work for a principal receives progress payments for carrying out that work. The risk that the contractor might not be able to refund moneys ultimately found to be due to the principal after a successful action under the contract is a risk which is assigned to the principal. The SOP Act creates an entitlement that is to be determined informally, summarily and quickly, and then summarily enforced without prejudice to the rights of both parties to the construction contract which can be determined in due course: Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [44] (Kiefel CJ, Bell Keane, Nettle and Gordon JJ); R J Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390; [2008] QCA 397 at [39]-[40] per Keane JA (discussing the equivalent Queensland statute, the Building and Construction Industry Payments Act 2004 (Qld)). It was confirmed by the High Court in Shade Systems that judicial review of an adjudicator’s determination is available, but only for jurisdictional error on the part of the adjudicator.

2. [4]

   There was no debate in the present case about the correct identification by the primary judge of the legal principles to be applied in finding an adjudication under the SOP Act to be affected by jurisdictional error. What was controversial was the application of those principles and, in particular, the inferences the primary judge drew about the internal reasoning processes of the adjudicator.

3. [5]

   The adjudicator in the present case was faced in this case with over 15,700 pages of material. Over 5000 pages were contained in Qube’s Adjudication Response. The adjudicator expressly stated that he had considered Qube’s Payment Schedule together with all submissions, including relevant documentation, that had been properly made by Qube in support of the Payment Schedule: at [145]. The adjudicator returned to this issue, and repeated that in making his adjudication he had considered all submissions that, in his view, had been duly made by Qube:

4. [6]

   Despite the adjudicator’s 550 pages of reasons explaining how the adjudicator had taken Qube’s submissions and relevant documentation into account, Qube advanced challenges to 37 separate components of the adjudications as comprising jurisdictional error, on the principal basis that the adjudicator had “failed to consider” some matter contained in Qube’s Adjudication Response.

5. [7]

   The primary judge inferred that the adjudicator had failed to consider a number of matters contained in Qube’s Adjudication Response and thus had fallen into jurisdictional error for the purposes of s 22(2) of the SOP Act. As I will explain in detail, I have concluded that Qube failed to prove that the adjudicator failed to consider the matters complained about by Qube for the purposes of the SOP Act. Further, I am not satisfied that any of the grounds of Qube’s notice of contention are made out nor that Qube has established any of the grounds of its cross-appeal. It follows that the appeal should be allowed and the cross-appeal dismissed.

6. [8]

   Finally, the primary judge refused to stay the orders that his Honour made until the determination of the underlying arbitration proceedings, which have now been commenced. His Honour was correct to do so. The clear policy of the SOP Act is to “pay now, fight later”. The grant of a stay until the end of the arbitration would be contrary to the statutory purpose of the SOP Act. The primary judge was correct to refuse to grant a stay until the determination of the underlying arbitration proceedings. Leave to appeal that order should be refused.

7. [9]

   The contracts in question related to an infrastructure development in Moorebank known as the Moorebank Intermodal Terminal Project which is being carried out by a Commonwealth government business enterprise named National Intermodal. The contract between National Intermodal and Qube is known as the “Development and Operation Deed”.

8. [10]

   The two sub-contracts at the heart of this case between Qube and Martinus 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”).

9. [11]

   At the heart of the dispute are delays which occurred on the project. Martinus claimed that it was not responsible for the delays and that Qube was liable for additional costs caused by those delays. Martinus claimed that necessary designs were delivered late or were otherwise inadequate and that Qube failed to give access to the site, in some cases by more than a hundred days after the originally scheduled date, causing Martinus to incur substantial additional costs.

10. [12]

    The administration of the contracts took place under the direction of a superintendent appointed by Qube (the “Superintendent”), Mr Marshall of Rail Planning Services Pty Limited.

11. [13]

    Martinus’s Payment Claims under the SOP Act for the period up to 31 May 2023 were determined in August 2023 by an adjudicator, Mr Stapleton. The adjudicated amount in favour of Martinus was $11.1 million. That amount was paid by Qube and is not the subject of dispute in these proceedings.

12. [14]

    In August 2023, Qube issued formal notices invoking the show cause procedure required for termination of the contracts. On 25 September 2023, Qube issued formal notices of termination for cause. On the same date, Qube issued formal notices of termination for convenience to take effect if the terminations for cause proved to be invalid. It is common ground that the contracts were terminated on 25 September 2023.

13. [15]

    Martinus’s Payment Claims under the contracts for the period up to 31 August 2023 were determined in November 2023 by Mr Stapleton. The adjudicated amount in favour of Martinus was $4.6 million. That amount was also paid by Qube and is not the subject of dispute in these proceedings.

14. [16]

    In early December 2023, 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 moneys which Qube said should not have been allowed in the adjudications before Mr Stapleton.

15. [17]

    Following the issue of the notices of dispute, Martinus applied under the Commercial Arbitration Act 2010 (NSW) for an injunction restraining Qube from calling on the bank guarantees provided as security for Martinus’s obligations under the contracts. Rees J dismissed the application: Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2023] NSWSC 1550. Although the injunction was refused, Qube did not call on the bank guarantees until 8 February 2024.

16. [18]

    The Payment Claims which resulted in the proceedings below were made on 8 February 2024, in ignorance of the call by Qube on the same day of the bank guarantees. On 22 February 2024, Qube lodged a Payment Schedule in relation to each Payment Claim. Qube alleged that under each contract it was owed money by Martinus. The scheduled amounts were credits in favour of Qube of $1.4 million for the INTS Contract and $1.4 million for the ISRA Contract.

17. [19]

    Qube elected not to put its Payment Schedules in a format which corresponded with the items in Martinus’s Payment Claims. Instead, Qube adopted its own methodology and format. This made it difficult to understand Qube’s position on a number of issues.

18. [20]

    On 7 March 2024, Martinus made Adjudication Applications seeking payment of $104.1 million under the INTS Contract and $33.3 million under the ISRA Contract. Martinus complained that the form of Qube’s Payment Schedules made it difficult to understand what Qube was saying. The Adjudication Applications were referred to another adjudicator, Mr Tuhtan. On 15 March 2024, Qube provided its Adjudication Response. Qube said then, and repeated in this Court, that the Payment Schedules were not difficult to understand.

19. [21]

    The adjudicator ultimately concluded that the Payment Schedule was difficult to comprehend, and that Qube had not explained its reasons for rejecting each of Martinus’s claims. As I will explain, that conclusion was not only open to the adjudicator, but was clearly correct.

20. [22]

    The adjudication proceedings before Mr Tuhtan were complex, protracted and costly. Mr Tuhtan delivered his Adjudication Determinations on 22 July 2024. He determined that payments should be made by Qube of $63.1 million 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.

21. [23]

    The dispute resolution clause in the contracts provided for an elaborate dispute resolution process. On 2 February 2024, Qube gave notices pursuant to 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 resolution. On 27 March 2024, while the adjudication proceedings were pending, Qube issued formal notices of referral to arbitration under the contracts. On 26 July 2024, four days after delivery of the adjudicator’s determinations, Qube served notices of arbitration under the rules of the Resolution Institute, the body responsible for the arbitration under the contracts.

22. [24]

    Under the SOP Act the time for payment of the adjudicated amounts was 29 July 2024. Qube did not pay the adjudicated amounts by the due date and the commencement of the proceedings below followed soon after.

23. [25]

    There were three proceedings before the primary judge. The first two proceedings (2024/278963 and 2024/278984) were commenced by Martinus to enforce payment of the adjudicated amounts under the SOP Act (which I will call “the first and second enforcement proceedings”).

24. [26]

    Adjudication certificates were filed on 30 July commencing the enforcement proceedings. On 31 July 2024, judgments were entered, pursuant to s 25 of the SOP Act. For the INTS Contract the judgment amount was $66.087 million. For the ISRA Contract the judgment amount was $7.595 million.

25. [27]

    On 5 August 2024, Qube filed its own proceedings (2024/286961) seeking to set aside the determinations on the grounds of alleged jurisdictional errors on the part of the adjudicator.

26. [28]

    On 9 August 2024, the following orders of remaining relevance were made by Ball J:

    1. (1)

       ORDER that execution of the judgments entered in these proceedings is stayed until further order provided that:

    2. (2)

       ORDER that immediately on Qube’s compliance with order 1b, the bank guarantees provided to the court on 7 August 2024 are to be released to Qube.

    3. (3)

       ORDER that the stay of execution contained in order 1 ceases upon the end of the Hearing referred to in order 4 below.

    4. (4)

       ORDER that:

27. [29]

    As envisaged by Ball J’s orders, the primary judge heard the proceedings together on 4, 5 and 6 September 2024 and promptly delivered reasons and made orders on 26 September 2024. The orders made 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.

28. [30]

    The orders made 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.

29. [31]

    The orders made 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.

30. [32]

    As I have said, the primary judge’s first judgment was delivered on 30 September 2024: Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd (No 2) [2024] NSWSC 1223 (the “September judgment”). This decision did not, however, deal with all of the claims made in the proceedings. Following a further hearing on 18 and 21 October 2024, the remaining claims were determined on 15 November in Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd (No 3) [2024] NSWSC 1483 (the “November judgment”).

31. [33]

    The orders made in the November judgment 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 the judgment entered in proceedings 2024/278963 on 31 July 2024 is varied by changing the ”Claim amount” to $18,165,684.76 and the ”TOTAL” amount to $18,165,684.76.

    3. (3)

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

    4. (4)

       Order that the judgment entered in proceedings 2024/278984 on 31 July 2024 is varied by changing the ”Claim amount” to $7,447,619.38 and the ”TOTAL” amount to $7,447,619.38.

    5. (5)

       Vary order 6 made on 26 September 2024 such that it reads:

    6. (6)

       Vary order 7 made on 26 September 2024 such that it reads: Upon the Plaintiff:

    7. (7)

       The Plaintiff is to pay the First Defendant’s costs of the challenges to the components of the INTS and ISRA Determinations on which it was unsuccessful and/or not pressed, insofar as those costs were additional and incurred solely in respect of those challenges, and otherwise the First Defendant is to pay the Plaintiff’s costs of the proceedings.

32. [34]

    The orders made in the November judgment in the first enforcement proceedings were:

    1. (1)

       The judgment debtor is to pay the judgment creditor’s costs of the notice of motion filed 31 July 2024 (including as subsequently amended) insofar as those costs are solely referrable to the issues raised in this proceeding.

    2. (2)

       Order that the judgment entered in these proceedings on 31 July 2024 is varied by changing the ”Claim amount” to $18,165,684.76 and the ”TOTAL” amount to $18,165,684.76.

33. [35]

    The orders made on in the November judgment in the second enforcement proceedings were:

    1. (1)

       The judgment debtor is to pay the judgment creditor’s costs of the notice of motion filed 31 July 2024 (including as subsequently amended) insofar as those costs are solely referable to the issues raised in this proceeding.

    2. (2)

       Order that the judgment entered in these proceedings on 31 July 2024 is varied by changing the ”Claim amount” to $7,447,619.38 and the ”TOTAL” amount to $7,447,619.38.

34. [36]

    In the September judgment and the November judgment, the primary judge, having found jurisdictional error, also set aside the order requiring Qube to pay 100% of the adjudicator’s fees and expenses for that determination. The practical effect of that order was that each side was responsible for 50% of the adjudicator’s costs.

35. [37]

    The notice of appeal attacks the primary judge’s findings of jurisdictional error. The notice of contention and notice of cross-appeal address virtually all of the remaining issues which were before the primary judge. Rather than summarising the contents of the September judgment and the November judgment at this stage, I will address the relevant findings in those judgments when dealing with the notice of appeal, notice of contention and notice of cross-appeal.

Grounds of appeal

1. [38]

   On 22 November 2024, Martinus filed an amended notice of appeal which contained 11 grounds of appeal:

Grounds of cross-appeal

1. [39]

   On 25 November 2024, Qube filed an amended notice of cross appeal:

Notice of contention

1. [40]

   Qube also relied upon an amended notice of contention:

2. [41]

   I will first address the issues raised by the notice of appeal and notice of contention before moving to the issues raised by the notice of cross-appeal.

3. [42]

   Qube also moved upon an application for leave to appeal from the refusal of a stay pending the outcome of the arbitration referred to at [23] above. Rather than take up space in what is already a lengthy judgment, I will address the relevant principles and authorities when dealing with the application for leave to appeal.

Identifying jurisdictional error under the SOP Act

1. [43]

   The concept of “jurisdictional error” was explained in the joint reasons of three members of the High Court in Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123; [2018] HCA 34 per Kiefel CJ, Gageler and Keane JJ (footnotes supplied):

2. [44]

   In LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2024) 98 ALJR 610; [2024] HCA 12, six members of the High Court returned to the topic of jurisdictional error and explained (footnotes supplied):

3. [45]

   As I will explain, there is a long and consistent history identifying what is or is not jurisdictional error in the context of the SOP Act. There was no challenge, by either party, to these established principles. Rather, Qube sought to dilute the application of established principles by references to the relatively large quantum of the claim and the fact that the adjudicator in this case sought and obtained extensions of time from the parties. I do not accept Qube’s submission that the quantum of the claim or the fact that the adjudicator in this case sought and obtained extensions of time effectively undermines the operation of those established principles. The High Court has made clear that in cases under the SOP Act, the risk of non-jurisdictional errors of law, including errors with “serious consequences”, is a risk allocated to the principal, in this case Qube. In Shade Systems, Kiefel CJ, Bell, Keane, Nettle and Gordon JJ said (footnotes supplied):

4. [46]

   Section 8 of the SOP Act provides a right to progress payments for construction work. Section 3 of the SOP Act provides:

5. [47]

   The critical provisions for the purposes of this appeal are found in Part 3 of the SOP Act. As is well known, a claimant must first serve a Payment Claim detailing the claimed amounts. Section 13 provides:

6. [48]

   The recipient of the Payment Claim must then file and serve a Payment Schedule, which identifies which amounts in the Payment Claim it accepts as payable, and if the scheduled amount is less than the claimed amount in the Payment Claim, explains why the recipient of the Payment Claim is withholding payment. Section 14 provides:

7. [49]

   Section 14(2)(b) makes clear that what a Payment Schedule must do is indicate the amount of the payment, if any, that the respondent proposes to make. It is open to a respondent to include in a Payment Schedule any amount it chooses. That amount becomes the “scheduled amount”. It is well settled that it is a matter for an adjudicator and not the Court on judicial review to construe the Payment Schedule.

8. [50]

   If the recipient of the Payment Claim does not, relevantly, pay the scheduled amount, the consequences are provided for in ss 15 and 16 respectively which, in essence, provide remedies including that the maker of the Payment Claim may recover the scheduled amount as a debt due to the claimant, in any court of competent jurisdiction.

9. [51]

   If the amount identified in a Payment Schedule is less than the claimed amount the maker of a Payment Claim may make an “Adjudication Application”: s 17(1)(a)(i). The Adjudication Application identifies the Payment Claim and the Payment Schedule and contains any relevant submissions that the maker of the Payment Claim would like to make. The eligibility and appointment of adjudicators are provided for in ss 18 and 19. The respondent to the Adjudication Application may then lodge an Adjudication Response containing their submissions. Section 20 of the SOP Act provides:

10. [52]

    As I will explain in greater detail, s 20(2B) is an important provision for the determination of the present case.

11. [53]

    Section 21(3) provides that an adjudicator is to determine an Adjudication Application “as expeditiously as possible”.

12. [54]

    Section 22 provides:

13. [55]

    Section 32 of the SOP Act is, as explained by the High Court in the passage from Shade Systems quoted at [45], a critical provision when seeking to identify errors made by an adjudicator which are non-jurisdictional:

14. [56]

    Finally, s 32A is another provision to which I will return:

15. [57]

    It is well established that the purpose of the legislative scheme established by the SOP Act is best served by restricting the scope of intervention by the courts: Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393; [2010] NSWCA 190 at [55] per Spigelman CJ. As this Court held in Ceerose Pty Ltd v A-Civil Aust Pty Ltd (2023) 112 NSWLR 225; [2023] NSWCA 215 at [179], it is quite unrealistic in the context of the time sensitive and document heavy adjudication process required under the SOP Act to require an adjudicator, lest he or she commit jurisdictional error, to treat minutely with repetitive arguments or repetitively reject what is essentially the same contention. The adjudicator’s findings with respect to matters of fact, within jurisdiction, are unreviewable. Further, there being no review for errors of law on the face of the record, the adjudicator’s determination of legal issues will also be unreviewable unless jurisdictional error is established: Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2018] NSWCA 339 at [15].

16. [58]

    In Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 42; [2004] NSWCA 394 at [53], Hodgson JA (with the agreement of Mason P and Giles JA) identified a number of basic and essential requirements of the Act, which included the following:

17. [59]

    Hodgson JA then identified certain “more detailed requirements: for example, s.13(2) as to the content of payment claims” at [54] as to which he said that “the reasons given above for excluding judicial review on the basis of non-jurisdictional error of law justify the conclusion that the legislature did not intend that exact compliance with all the more detailed requirements was essential to the existence of a determination”: at [55].

18. [60]

    In Downer Construction (Australia) Pty Ltd v Energy Australia (2007) 69 NSWLR 72; [2007] NSWCA 49, Giles JA explained at [87]-[89] that great care must be taken by the Court in conducting a judicial review of an adjudication under the SOP Act not to slip impermissibly into merits review. Determination of the parameters of the Payment Claim is a matter for the adjudicator, and a reasonable but erroneous decision by the adjudicator is not a jurisdictional error. The scope and nature of the Payment Claim will often be elucidated and evaluated with the benefit of the adjudicator’s specialised knowledge. Care must be taken in addressing a complaint of a failure by an adjudicator to consider the matters to which s 22(2) refers to ensure that the Court does not impermissibly impose the Court’s opinion about the correct outcome as the determinant of the adjudicator’s jurisdiction.

19. [61]

    In Icon, this Court explained that it is within the jurisdiction of the adjudicator to act upon their understanding of the contractual obligations and of the content of a Payment Claim and Payment Schedule. In Icon, this Court dealt with a similar issue to one which arises in the present case. The head contractor in that case asserted that the adjudicator had awarded amounts which were not the subject of the Payment Claim. The primary judge in Icon identified the ground in the following terms, referring to the head contractor as the Principal, quoted on appeal at [20]:

20. [62]

    The argument ultimately accepted by the primary judge in Icon, was (as quoted at [21]):

21. [63]

    The Court in Icon concluded at [33] that an adjudicator has not fallen into jurisdictional error by addressing a dispute between the parties in relation to what were described as “backcharges”. There was a dispute to be resolved by the adjudicator, notwithstanding that the “backcharges” identified in the Payment Schedule in that case were not part of the Payment Claim as served. This Court reversed the primary judge, finding that the Payment Claim as served and adjudicated upon identified the construction work, as required by s 13(2)(a). It was not deficient in that respect. The dispute was as to the calculation of the value of that work, which was the task vested in the adjudicator. The respondent on that case had put the calculation of the value of that work in issue in the Payment Schedule by purporting to apply “backcharges” to reduce the amounts which had been claimed in the Payment Claim.

22. [64]

    As I will explain, in the present case Qube introduced the sum secured by the bank guarantees by deploying those sums in the Payment Schedules to reduce the amounts which had been claimed in the Payment Claim. In doing so, Qube introduced to the dispute to be resolved by the adjudicator an issue about the calculation of the value of the work claimed by Martinus in the Payment Claim, notwithstanding that restitution of the sum paid out by reason of the guarantees was not part of the Payment Claim as served by Martinus.

23. [65]

    In Ceerose this Court held:

24. [66]

    The obligation imposed on the adjudicator by s 22(2) of the SOP Act and the manner of proof of a failure to discharge that obligation are at the heart of the present case. Section 22(2) of the SOP Act provides that in determining an Adjudication Application, the adjudicator is to consider certain identified matters only. The concept of “consideration” is not obscure. Nevertheless, the duty to “consider” has given rise to an extensive history of judicial exegesis, which I examined in Ceerose and will not repeat here, save to the extent necessary to address arguments made in the present case.

25. [67]

    At [62]-[68] in Ceerose, I referred to the practical problem for a party challenging the internal processes of an adjudicator under the SOP Act; that is to identify a basis on which it could be concluded that consideration of a submission the adjudicator considered to have been “duly made” did not occur. It is clear that the failure to identify a particular claim or response in reasons will not of itself demonstrate that the adjudicator failed to consider it. Reasons are not necessarily, or even usually, a comprehensive statement of all aspects of a decision-maker’s thinking. Even judicial reasons, which are expected to be more comprehensive and detailed than those of an administrative decision-maker, are not required to deal with all the evidence or all the submissions. A process of selection is undertaken as a necessary part of the process.

26. [68]

    The scope of the adjudicator’s reasons reflects the practical circumstances under which the adjudicator is operating. Section 21(3)(a)(ii) of the SOP Act requires the adjudicator to determine an Adjudication Application “as expeditiously as possible and, in any case … within 10 business days after ... the date on which notice of the adjudicator’s acceptance of the application is served on the claimant and the respondent”. One of the matters which the adjudicator is to consider is the “adjudication response” filed by the respondent to the claim. The Adjudication Response may be lodged five business days after receiving a copy of the application, or two business days after receiving notice of the adjudicator’s acceptance of the application, whichever is later: s 20(1). Thus, unless time is extended by the parties, the adjudicator may have as few as eight business days to determine the application by reference to the Adjudication Response. Even in this case, where extensions of time were sought and granted, the adjudicator addressed thousands of pages of evidence and submissions in a relatively short time frame. In accordance with the statutory scheme in the SOP Act, the adjudicator was entitled to spend more time on some items within a claim than on others. I reject the respondent’s contention that the significance of the deadlines the SOP Act imposes on an adjudicator that I referred to in Ceerose is of less weight here because the adjudicator “had about 19 weeks to deliver the adjudications”. As I have said, the adjudicator here received more than 15,700 pages of material. These materials were addressed in a relatively short time frame.

27. [69]

    Where there is an absence of reference to a particular submission or contention, there are a range of possible explanations, only one of which is that the material was not considered. Even assuming the submission had been misunderstood, the facts mistaken or the law wrongly identified, that would explain absence from the reasons of something expected to be addressed, but not lack of consideration. The duty to consider a submission is different from a duty to deal with it correctly, whether in law or in fact. An unreviewable error may explain why the reasons do not advert to a particular matter. Often it will be equally likely that an adjudicator who does not refer in reasons to a particular matter mistook the facts or misunderstood the contractual provision or the legal principle to be applied, as that he or she did not consider the factor at all. In those circumstances, a complaint of failure to consider will not be proven. Jurisdictional error is not established in such a case. As I concluded in Ceerose about claims that an adjudicator has fallen into jurisdictional error by failing to consider a matter required by s 22(2) of the SOP Act:

28. [70]

    Section 22(5) of the SOP Act is also important in the present case. The section relates, inter alia, to a clerical mistake, an error based on an accidental slip or omission or a material miscalculation of figures by an adjudicator. The SOP Act recognises that such errors may occur in the course of an adjudication and provides a means to address those errors. The recognition by the SOP Act of these matters, and the provision of a remedial provision, tells against a conclusion that, for example, a material miscalculation of figures by an adjudicator amounts to a jurisdictional error.

29. [71]

    In addressing the notice of contention in the present case, procedural fairness is an important topic. As I said in Ceerose at [43]-[51], conventionally, procedural fairness has two limbs, namely the bias rule and the “hearing rule”. The bias rule is not relevant in the present case. The “hearing rule” does not necessarily require a hearing, but rather requires that the decision-maker afford a party an opportunity to address material likely to affect adversely that party’s interests or expectations. A breach of that duty is not concerned with the manner in which the decision-maker has processed the material and should, in principle, be addressed separately.

30. [72]

    Section 22 of the SOP Act contains two separate mandates. First, s 22(1) identifies the matters which the adjudicator “is to determine”; secondly, s 22(2) identifies the matters which the adjudicator “is to consider”, a formulation which covers five matters which are the “only” matters to be considered. The statute distinguishes between that which the adjudicator must determine and that which he or she must consider. Failure to determine the three matters set out in s 22(1), if required to do so to resolve a particular claim, would likely constitute jurisdictional error. Compliance with s 22(2) is less readily so characterised. Further, s 22(2) does not address the question of procedural fairness in the sense of the steps which the adjudicator must take to allow a party to address adverse material. Failure to comply with s 22(2) is not helpfully characterised as procedural unfairness, but rather as failure to comply with a mandatory statutory obligation, the scope of which will be identified on quite a different basis.

31. [73]

    As I said in Ceerose at [51], because procedural fairness is concerned with the conduct of the adjudicator towards the parties, once it is established what fairness requires in a particular case, the question of compliance will be readily determined by the objective facts, being primarily the communications, or lack of them, between the adjudicator and the parties. By contrast, as I have explained, the question whether the adjudicator has considered a matter for the purposes of s 22(2) will involve an inquiry into the private processes of decision-making, and even the mental processes of the adjudicator. While those processes may be revealed by the reasons required to be given under s 22(3), those reasons will not necessarily demonstrate a negative proposition, namely a failure to consider a particular matter required to be considered simply because it is not referred to in the reasons.

32. [74]

    In Demex Pty Ltd v McNab Building Services Pty Ltd (2023) 113 NSWLR 282; [2023] NSWCA 261, this Court said:

33. [75]

    The unreasonableness ground of judicial review is no longer limited to what is in effect an irrational, if not bizarre, decision – which is to say one that is so unreasonable that no reasonable person could have arrived at it: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [68] (Hayne, Kiefel and Bell JJ). In Judicial Review of Administrative Action and Government Liability by M Aronson, M Groves and G Weeks (Thomson Reuters, 6th ed, 2017) at [6.450], it is suggested, in my view correctly, that Li “invites a qualitative assessment of the impugned discretionary decision, but it does not allow an appeal to the judicial review judge’s subjective sense of reasonableness”.

34. [76]

    In Li, French CJ said:

35. [77]

    The plurality in Li, Hayne, Kiefel and Bell JJ, held that the legislature is taken to intend that a discretionary power, statutorily conferred, will be exercised reasonably: at [63]; see also Attorney-General for the States of New South Wales v Quin (1990) 170 CLR 1 at 36; [1990] HCA 21; Kruger v The Commonwealth (1997) 190 CLR 1 at 36; [1997] HCA 27; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; [1999] HCA 21 at [126]; Minister for Immigration and Citizenship v SZIAI (2009) 83 ALJR 1123; [2009] HCA 39 at [15]. Their Honours continued in Li:

36. [78]

    Gageler J said (footnotes supplied):

37. [79]

    Considerable care is warranted in addressing a complaint of judicial review on the ground of legal unreasonableness, lest the review for jurisdictional error slide impermissibly into merits review. There is usually a high threshold for a conclusion that a power has been unreasonably exercised as a matter of law: Ismail v Minister for Immigration, Citizenship and Multicultural Affairs (2024) 98 ALJR 196; [2024] HCA 2 at [25]; Minister for Home Affairs v DUA16 (2020) 271 CLR 550; [2020] HCA 46 at [26]; Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [11], [52], [89] and [135].

38. [80]

    These principles of judicial restraint in finding jurisdictional error on the basis of legal unreasonableness apply even more stringently in addressing an adjudicator’s decision made under the SOP Act. As I have said, under the SOP Act, it is for the adjudicator to determine the content and scope of the Payment Claim and the Payment Schedule, including the scope and content of the dispute between the parties: John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2007] NSWCA 19 at [57]; Downer at [86]; Joye Group Pty Ltd v Cemco Projects Pty Ltd [2021] NSWCA 211 at [12]; Ceerose at [80], [100]-[106]; Icon at [13]-[19], [27]-[32].

Notice of Appeal Ground 1

1. [81]

   Martinus’s Payment Claim was set out in a conventional way on a spreadsheet identifying each separate integer of the claim and providing references to where the material supporting the claim could be located. The claim identified as “CN-420” was described in the INTS Payment Claim as “Resequencing – Vehicle Management Plan (VMPO)”. The last column of the CN-420 Payment Claim, which was headed “Martinus comments/notes”, stated that:

2. [82]

   Appendix 6F was headed “Variation Claim” and stated that Martinus was directed to vary the Works under Contract (“WUC”) as a result of the delayed, altered and interrupted site access provided by Qube. Appendix 6F identified Martinus’s CN-420 claim as based on cll 32.1, 36.1 and 36.3A of the INTS Contract.

3. [83]

   Clause 32.1 of the INTS Contract provided:

4. [84]

   Clauses 36.1 and 36.3A of the INTS Contract provided:

5. [85]

   In the INTS Payment Schedule, Qube disputed the claim in whole. Importantly, however, in its Payment Schedule, Qube made no reference to cl 32.1.

6. [86]

   In the INTS Adjudication Application, Martinus addressed each of the reasons relied on by Qube in the INTS Payment Schedule for denying liability to pay the Payment Claim. Qube addressed CN-420 at [10.97]-[10.153] of the Adjudication Response.

7. [87]

   The adjudicator set out and addressed CN-420 at [1331]-[1397] of the INTS Determination. The adjudicator specifically identified each of the reasons relied upon by Qube in its Payment Schedule to deny the payment in whole in relation to CN-420:

8. [88]

   The adjudicator expressly dealt with each of the reasons for withholding payment given by Qube in the INTS Payment Schedule:

   1. (1)

      at [1354]-[1362], the adjudicator addressed Qube’s argument that the works were not variation works;

   2. (2)

      at [1363]-[1370], the adjudicator addressed Qube’s argument that there is a time bar under cl 36.3A;

   3. (3)

      at [1371]-[1384], the adjudicator addressed Qube’s argument that the works were works under contract; and

   4. (4)

      at [1385]-[1397], the adjudicator addressed Qube’s argument that Martinus had not substantiated the quantum of its claim.

9. [89]

   The adjudicator clearly addressed each of the complaints made by Qube in its Payment Schedule and rejected them. Having considered and rejected each of the reasons Qube gave in the INTS Payment Schedule about CN-420, the adjudicator allowed the claim at [1397].

10. [90]

    In these circumstances, it is difficult to see what room there was to conclude that the adjudicator had not “considered” a submission “duly made” in Qube’s case. The essence of the primary judge’s finding was that, in addressing CN-420, the adjudicator had failed to consider two arguments Qube developed in the Adjudication Response about the proper operation of cl 36.1 of the INTS Contract and an argument that Martinus was contractually responsible for the works the subject of CN-420.

11. [91]

    In the September judgment, the primary judge stated:

12. [92]

    Respectfully, these passages begin at the wrong point in the analysis. The correct starting point is the content of Qube’s Payment Schedule. Qube could not include in its Adjudication Response any reasons for withholding payment unless those reasons have already been included in its Payment Schedule: s 20(2B) of the SOP Act. It is not correct that the adjudicator was under an obligation to explain why he did not expressly deal with every argument contained in Qube’s 500 page Adjudication Response, lest he fall into jurisdictional error. The primary judge said in the September judgment:

13. [93]

    An assessment of how “weighty” Qube’s submission in its Adjudication Response was constituted an error. The weight to be accorded to a submission is a matter for the adjudicator. An attempt on judicial review limited to jurisdictional error to assign “weight” to submissions made to an adjudicator is to invite impermissible merits review by the Court opining whether the arguments are, in the opinion of the Court and based on the Court’s construction of the issues, of “substance”. An attempt by a Court to assign relative “weight” to submissions made to an adjudicator runs the risk of applying an intensity of review of decisions made by adjudicators under the SOP Act inconsistent with the decisions of this Court I have summarised above.

14. [94]

    The two arguments that the primary judge found had not been considered by the adjudicator were set out as follows in the September judgment:

15. [95]

    I do not agree that the primary judge’s conclusion about Qube’s argument being of “apparent substance” told in favour of a finding of jurisdictional error. As I explained in Ceerose, a Court on judicial review assessing arguments for their “apparent substance” invites an impermissible merits review. It bears repeating that the scheme of the SOP Act provides that an adjudicator’s findings with respect to matters of fact are within jurisdiction and unreviewable. Further, there being no review for errors of law on the face of the record, an adjudicator’s determination of legal issues will also be unreviewable unless jurisdictional error is established.

16. [96]

    The primary judge’s ultimate conclusion about CN-420 was expressed thus:

17. [97]

    The adjudicator did not fall into jurisdictional error. This is for two reasons. First, even assuming that there was no reference to the matters identified by Qube in the adjudicator’s decision, I am not satisfied that it was established that the adjudicator failed to consider any submission he regarded as “duly made”. Jurisdictional error was not established. Secondly, the arguments actually made by Qube in the Payment Schedule were in fact addressed by the adjudicator.

18. [98]

    The adjudicator correctly identified CN-420 as a claim by Martinus under both cll 32.1 and 36.1 of the INTS Contract. The adjudicator found that Qube had issued directions under cl 32.1 and found that Martinus had a separate and distinct right to payment under that clause.

19. [99]

    This conclusion might be incorrect as a matter of law, but that is not to the point in a judicial review alleging jurisdictional error. The correct construction of the contract was a matter for the adjudicator. The adjudicator’s decision is valid even if he misconstrued the contract.

20. [100]

    Contrary to the conclusion of the primary judge that the adjudicator had failed to consider Qube’s argument about cl 36.1, the adjudicator found that Qube had issued variation orders (“VO”s) for the purposes of cl 36.1:

21. [101]

    Findings about these issues were a matter for the adjudicator. It may be, on a correct understanding of the INTS Contract, the adjudicator’s conclusions were incorrect. It may be, properly analysed, that the adjudicator misunderstood some of the legal submissions made to him. It does not follow that Qube established that the adjudicator failed to consider a submission duly made and thus fell into jurisdictional error.

22. [102]

    Critically, the adjudicator considered and dealt with every reason in the Payment Schedule that Qube advanced to reject the Payment Claim. I do not accept that a failure to refer expressly to a particular submission drawn from the Adjudication Response provided a sufficient basis to conclude that the adjudicator had fallen into jurisdictional error. As I explained at some length in Ceerose, the fact that a particular submission was not referred to, at best, might raise a question about what inference should be drawn from that matter. This case is far removed from the type of case I was referring to in Ceerose where jurisdictional error may be inferred. That is because the adjudicator in this case expressly dealt with every matter raised by Qube in the Payment Schedule. The adjudicator was obliged to deal with Qube’s reasons included in its Payment Schedule. This he did. If a submission travelled outside the matters raised in the Payment Schedule, it was irrelevant and inadmissible: s 20(2B) of the SOP Act.

23. [103]

    Qube cannot, by pointing to the detail of a submission made in the Adjudication Response, elevate that submission above the identified reason for non-payment it gave in its Payment Schedule. That is, it cannot be correct that a new matter was properly raised in the Adjudication Response which has not been the subject of Qube’s Payment Schedule. If the adjudicator considered but failed to grasp the subtlety of a submission made in Qube’s Adjudication Response as falling within a reason advanced by the Payment Schedule, that was an error within the adjudicator’s jurisdiction.

24. [104]

    It was not a jurisdictional error for the adjudicator to fail to repeat in his already lengthy adjudication every matter addressed in the Adjudication Response. It was a matter for the adjudicator to determine the extent to which specific submissions needed to be referred to. The adjudicator addressed each of the matters raised by Qube in its Payment Schedule. The adjudicator may or may not have been correct in his understanding of the relationship between the detail contained in the Adjudication Response and the reason for non-payment provided in the Payment Schedule. Any error, if there be error, was an error within jurisdiction.

25. [105]

    Qube’s argument in the Adjudication Response at [10.111] that cl 36.1 of the contract applied such that a variation occurred only when the Superintendent issues a written direction takes the matter no further. The adjudicator found that there were written directions given by Qube at [1331]-[1332], [1346], [1351] and [1361]-[1362]. Those findings were sufficient to address Qube’s argument that cl 36.1 required written directions. Contrary to submissions made in this Court about the form a variation order must take, Qube did not make any submission to the adjudicator that a variation order must take a particular form. It was not an error, let alone a jurisdictional error, for the adjudicator to not set out any further detailed reasoning about the operation of cl 36.1.

26. [106]

    As to Qube’s argument that the CN-420 works were part of the WUC on the proper construction of the contract, the adjudicator found that he was not satisfied that those works were within the contractual scope:

27. [107]

    It may or may not be correct that Martinus was contractually responsible for the works the subject of CN-420. That is not to the point. Any error, assuming there be an error, was not a jurisdictional error. It was a matter for the adjudicator to determine whether the CN-420 works were part of the WUC. This task the adjudicator undertook. Jurisdictional error was not established.

28. [108]

    In concluding at [1372] that “the respondent provides no further explanation in the Payment Schedule [nor] provides any reference to the part of the contract that supports that assertion” (being the assertion that CN- 420 works form part of the WUC), the adjudicator was correct. It was not an error, let alone a jurisdictional error for the adjudicator so to conclude. As I have explained, the adjudicator was correct to focus on the content of Qube’s Payment Schedule. Qube was not permitted to add reasons for withholding payment in its Adjudication Response beyond those given in its Payment Schedule. The conclusion of the primary judge at [146] of the September judgment that it was of “particular significance” for the adjudicator to conclude as he did, was an error.

29. [109]

    The onus of establishing jurisdictional error was on Qube. Qube was required to establish that the adjudicator had, in fact, failed to consider submissions he found were duly made. The absence of specific reference in the adjudicator’s reasons to a particular submission in the Adjudication Response does not establish that those submissions were not considered.

30. [110]

    The adjudicator dealt with all of the matters raised by Qube in the Payment Schedule and that it was appropriate in those circumstances for the adjudicator not to address additional reasons which, as a matter of law, could not travel beyond the reasons given in the Payment Schedule, each of which was squarely addressed.

31. [111]

    Finally, there was a clear independent basis for the adjudicator’s decision. That was that CN-420 should be allowed under cl 32.1. Qube did not in its Payment Schedule respond to Martinus’s claim under cl 32.1. The adjudicator may or may not have been correct about the construction of cl 32.1 and its effects in this case. The construction of the contract, however, was a matter for the adjudicator. Even if the construction adopted was not correct, it was not a jurisdictional error for the adjudicator so to conclude. It follows that even if the adjudicator had fallen into error, that error was not material as there was an unchallenged independent basis for the adjudicator’s decision.

32. [112]

    I reject Qube’s submission, made in this Court, that cl 32.1 was not relied upon by the adjudicator as an independent basis for Martinus’s claim. As I have found, the adjudicator plainly did so rely. A resequencing direction causing additional cost can properly be described as “variation”. In any event, the proper understanding of the INTS Contract was a matter for the adjudicator. Qube advanced no argument to the adjudicator in its Payment Schedule that characterisation of the work as WUC bore upon the cl 32.1 claim. I reject the submission made in this Court to the contrary. As to the extent to which a mark-up was applied to cl 32.1 claims, that was a matter for the adjudicator to determine. I reject Qube’s submission that the adjudicator’s conclusion “sits uneasily” with the application of the mark-up to “variations”. Whether or not that observation is correct, it was within the adjudicator’s jurisdiction to decide whether a mark-up should be applied to cl 32.1 claims and the quantum of that mark-up.

33. [113]

    I do not agree with the primary judge at [149] of the September judgment that the adjudicator ran together his reasoning on cll 32.1 and 36.1 in such a way as to cast doubt on the adjudicator’s conclusion that cl 32.1 was an independent basis that Martinus was entitled to succeed on CN-420. The primary judge’s reasoning at [150] of the September judgment about temporary works was a proposition not advanced by Qube. It was not an error, let alone a jurisdictional error, for the adjudicator to reach the conclusion that he did.

34. [114]

    For these reasons, I would allow ground 1 of the appeal.

Notice of Contention Ground 1

1. [115]

   By notice of contention ground 1, Qube asserts that the primary judge’s conclusion about CN-420 was correct for the additional reason that the adjudicator’s decision was made in circumstances where there was a denial of procedural fairness, in that no argument was ever put forward by Martinus that the relevant directions were “deemed to be variation orders” or were variation orders “for all intents and purposes”.

2. [116]

   Qube’s complaint should be rejected. The adjudicator did not rely upon a “deeming” of something to be a variation order as Qube’s submitted. Reading the adjudicator’s reasons fairly, as the cases make clear should be the approach adopted, the adjudicator concluded that Qube’s resequencing directions were variation orders within the meaning of cl 36.1:

3. [117]

   The adjudicator’s subsequent reference to “deemed variation orders” at [1367] is plainly a reference to what the adjudicator had already concluded at [1362]. As Demex makes clear, only if there has been a substantial denial of procedural fairness by an adjudicator will there be jurisdictional error under the SOP Act. The SOP Act provides for a “rough and ready” process (Chase Oyster Bar at [208]), not intended readily to be held invalid on judicial review.

4. [118]

   Martinus had, from the beginning, advanced the submission that the directions given by Qube were variation orders within the meaning of cl 36.1. Whether they were or were not was a matter within the jurisdiction of the adjudicator to determine. I reject Qube’s submission that there was any denial of procedural farness.

5. [119]

   I would reject ground 1 of the notice of contention.

Notice of Appeal Ground 2

1. [120]

   Ground 2 of the notice of appeal, to the extent it refers to CN-420, contains an error. The parties were content to address this ground on the basis that it was intended to address CN-277.5.

2. [121]

   Item 2B of the INTS Payment Claim claimed extension of time delay costs for an Extension of Time (“EOT”) identified as EOT 34. The claim was identified as CN-277.5. The basis of the claim was identified at “ItemRef4” and “Appendix 8” of the Payment Claim.

3. [122]

   The contractual basis for this claim was cl 34.9 of the INTS Contract which addressed an entitlement to costs incurred by Martinus as a direct result of delay the subject of an extension of time (subject to a daily cap of $80,000). In the INTS Payment Schedule, these claims were disputed by Qube (in Appendix 4 and Appendix D). In Appendix D, at 1.8 Qube asserted that the costs claimed by Martinus were inconsistent across its supporting documentation and that Martinus had not demonstrated its costs because the INTS Contract had already been terminated and Martinus paid most of its entitlements.

4. [123]

   Martinus addressed the EOT 34 claim CN-277.5 in [804]-[876] of its Adjudication Application. Martinus addressed each of the reasons advanced by Qube in the Payment Schedule for not paying Martinus’s claim. In its Adjudication Response at [857]-[870] Qube contended that Martinus had not established that it had actually incurred costs as a result of the delay and advanced a range of reasons for non-payment which were not contained in Qube’s Payment Schedule.

5. [124]

   The adjudicator addressed this claim at [1990]-[2021] and addressed quantum issues at [2017]-[2020]:

6. [125]

   The primary judge concluded that the adjudicator fell into jurisdictional error in relation to the determination of quantum:

7. [126]

   The submissions made by Qube allegedly not referred to are obscure. Qube in its submissions in this Court refers to Appendix D. In the relevant part of Appendix D under the heading “lack of substantiation of costs claimed” Qube asserted that Martinus’s claimed costs were inconsistent across its supporting documentation (1.8.2) and that Martinus had not demonstrated its costs as the INTS Contract had been terminated and most preliminaries already paid (1.8.4). The adjudicator dealt with these submissions.

8. [127]

   I am unable to accept that the adjudicator fell into error in making the findings he did, much less that any error was a jurisdictional error. The inference I draw is that the adjudicator, having considered all the material relevant to CN-277.5, was persuaded by Martinus’s explanation contained in Appendix 8 of its CN-277.5 claim as to proof of its delay costs. The adjudicator plainly rejected, as he was entitled to, Qube’s contention that there was a “lack of substantiation of costs claimed”. It was not necessary for the adjudicator specifically to record Qube’s submission in any greater detail. Whether the adjudicator was satisfied that Martinus had substantiated the costs it claimed was a matter for the adjudicator and not the Court on judicial review for jurisdictional error.

9. [128]

   No breach of the obligation to consider submissions “duly made” provided by s 22(2) of the SOP Act was established. It follows that ground 2 of the notice of appeal should be allowed.

Notice of Contention Ground 2

1. [129]

   Notice of contention ground 2 asserts that the primary judge should have concluded that the adjudicator’s decision about CN-277.5 was legally unreasonable. I do not agree. Qube does not address the fundamental principle that legal unreasonableness must be judged by reference to the scheme of the statute under which the decision was made: Li at [67].

2. [130]

   The essence of the adjudicator’s determination was that the INTS Contract was terminated on 25 September 2023: at [2003]. Prior to termination of the contract, a condition precedent for an EOT was that it was notified within 14 days. That time bar did not survive termination. For delay events occurring after about 11 September 2023, no time bar was applicable. By reason of s 13(4)(b) of the SOP Act, Martinus was entitled to make a claim for delay damages after termination: at [2010]-[2013].

3. [131]

   That construction may have been “contestable” as the primary judge observed, but his Honour correctly found that the adjudicator’s reasoning was not “in some way alien to the Act”. It was a matter for the adjudicator to construe the contract and apply the SOP Act, including s 13(4)(b).

4. [132]

   Finally, to the extent it was pressed, I reject Qube’s attempt to recharacterise this question as a jurisdictional fact. It is not correct that the validity of a Payment Claim turns on whether the correct amount is calculated. Authority has long held that an adjudicator does not commit a jurisdictional error by misapplying ss 9 and10 of the SOP Act. In John Holland, Hodgson JA (with whom Beazley JA agreed) said at [39] that the adjudicator’s jurisdiction is to determine the amount of the progress payment in accordance with ss 9 and 10 of the Act. In Transgrid v Siemens Ltd (2004) 61 NSWLR 521; [2004] NSWCA 395 at [34] (Hodgson JA, Mason P and Giles JA agreeing), this Court said even if the “amount calculated in accordance with the terms of the contract” were, on the true construction of s 9(a) and of the contract, the amount certified by the Superintendent, a decision to the contrary by the adjudicator would be a mere error of law, and not such as to render the determination invalid. If it be the case that, on the true construction of the contract, there could be no entitlement to a progress payment in respect of a variation not approved in writing by the Superintendent, the inclusion of such a progress payment would likewise be an error of law, and not a matter which would render the determination invalid.

5. [133]

   I would reject notice of contention ground 2.

Notice of Appeal Ground 3

1. [134]

   At the outset of consideration of this ground it should be acknowledged that Mr Giles SC, who appeared in this Court for Qube, accepted in his oral submissions that the primary judge had fallen into the errors Martinus alleged in relation to this ground. Qube’s written and oral submission in this Court were thus directed to their notice of contention.

2. [135]

   Despite that concession, given that this issue is by far the largest in terms of quantum, I will nevertheless explain this aspect of the dispute between the parties. Ground 3 addressed the issue of whether Qube had validly terminated for cause (as Qube asserted) or, instead, had terminated for convenience (as Martinus asserted). If the adjudicator concluded that Qube terminated for convenience, Martinus had a contractual entitlement to payments such as demobilisation costs and other wasted costs. Martinus pursued these costs in its Payment Claim as CN-522.

3. [136]

   Qube asserted in the Payment Schedule that Martinus had no entitlement to these payments because Qube had terminated for cause. This question depended principally on the validity of one of two show cause notices which, in turn, depended on whether there was a “substantial breach” of contract within the meaning of cl 39.2 of the INTS Contract.

4. [137]

   The critical show cause notice was described by the primary judge as the “Directions Show Cause” Notice. The Directions Show Cause Notice was founded on an alleged failure to comply with directions issued by the Superintendent under cl 20 of the INTS Contract. The primary judge found that the adjudicator failed to consider submissions made by Qube about what his Honour called the “construction question”: September judgment at [235] and [237].

5. [138]

   Qube issued the Directions Show Cause Notice on 29 August 2023. The two asserted failures to comply with the Superintendent’s directions related to:

   1. (1)

      A direction given on 28 July 2023, in respect of supply and placement of bottom ballast; and

   2. (2)

      A direction given on 14 August 2023, in respect of the commencement of the pre-building of turnouts.

6. [139]

   An initial problem with the primary judge’s finding that the adjudicator had fallen into jurisdictional error in failing to consider Qube’s submissions, is that the Directions Show Cause Notice had nothing whatever to do with what the primary judge described at [223] of the September judgment as a “direction to Martinus to remove its building materials from part of the site known as the LOGOS area” nor with “a direction to Martinus to provide details of its subcontracting arrangements”. These matters were not relied on by Qube in relation to its Directions Show Cause Notice case. Rather, these matters were relied upon only by Qube in submissions as evidence of an alleged repudiation at general law. As I have said, in this Court, Qube did not seek to defend the reasoning of the primary judge on this point.

7. [140]

   In its Adjudication Response, Qube made submissions about a “Failure to Comply with Directions – Interface” 6.125-6/127. These submissions related to what the primary judge called the “LOGOS area direction” but did not relate to the Directions Show Cause Notice. The primary judge apparently misunderstood that. His Honour said:

8. [141]

   Qube did not make submissions to the effect that any failure to comply with the “LOGOS Area direction” was a “substantial breach” within the meaning of cl 39.2 of the INTS Contract. Qube did submit that “as noted above, a disagreement as to the basis for a direction does not entitle Martinus to ignore a direction issued by the Superintendent, or otherwise excuse performance of its obligations under the Contracts”. The primary judge interpreted those remarks as a reference back to an earlier part of Qube’s submissions where Qube had made submissions about the meaning of “substantial breach” within the meaning of cl 39.2 of the INTS Contract.

9. [142]

   The construction question referred to in the September judgment directed attention to the meaning of cl 39.2 of the INTS Contract:

10. [143]

    The adjudicator addressed the validity of the Directions Show Cause Notice as follows:

11. [144]

    It was within the adjudicator’s jurisdiction to construe the contract. The adjudicator concluded that:

    1. (1)

       the alleged failures to comply with directions identified by Qube in the Directions Show Cause notice could not be categorised as a substantial breach within the meaning of cl 39.2; and

    2. (2)

       breach of a direction given by a superintendent under cl 20 could not constitute a substantial breach within the meaning of cl 39.2 permitting termination.

12. [145]

    There was no reason in those circumstances for the adjudicator to repeat submissions made by Qube about alleged breaches of other directions given by the Superintendent, or submissions about what in general may amount to “a substantial breach”, lest he fall into jurisdictional error.

13. [146]

    The primary judge’s conclusion that the adjudicator had fallen into jurisdictional error was not correct. His Honour proceeded from the incorrect understanding that the Qube submissions allegedly not taken into account were relevant to the issue of the Directions Show Cause Notice. As Mr Giles SC accepted in oral address:

14. [147]

    The adjudicator’s construction of the INTS Contract rendered it unnecessary further to consider the meaning of “substantial breach”. On the adjudicator’s construction, a failure to comply with a direction given by the Superintendent cannot constitute a substantial breach. Whether that conclusion is correct or not as a matter of construction, it was not a jurisdictional error for the adjudicator so to conclude. Qube’s submissions pointing to other alleged substantial breaches by failure to comply with directions given by the Superintendent were irrelevant on the adjudicator’s construction of the INTS Contract. It was not an error, let alone a jurisdictional error, to fail to record each of those submissions.

15. [148]

    The submissions relied upon by the primary judge to find jurisdictional error were not relied upon by Qube in respect of the Directions Show Cause Notice. The adjudicator was not compelled to interpret Qube’s submissions in the way the primary judge interpreted them, lest he fall onto jurisdictional error. The adjudicator discharged his statutory function. It was sufficient for the adjudicator to record his construction of the contract. He was not obliged to identify reasons for rejecting alternative constructions.

16. [149]

    There was no breach of s 22(2) of the SOP Act giving rise to jurisdictional error. Notice of appeal ground 3 should be allowed.

Notice of Contention Ground 3

1. [150]

   Notice of contention ground 3 is dense, to the point of impenetrability. Notice of contention ground 3 contains five sub-grounds:

   1. (1)

      The first relates to a further allegation the adjudicator failed to consider submissions “duly made” in relation to substantial breaches relied upon by Qube;

   2. (2)

      The second complains about an alleged breach of procedural fairness by the adjudicator in making “an apparent finding” that the “Program Show Cause Notice” was not a valid notice;

   3. (3)

      The third complains that the adjudicator failed to consider submissions duly made by the first respondent with respect the limits of recovery under cl 40A of the Contracts;

   4. (4)

      The fourth complains that the adjudicator’s decision was unreasonable and irrational and thus infected by jurisdictional error, in that the adjudicator determined to treat the claim as a “variation” and thus apply a 45.31% mark up to the claimed costs;

   5. (5)

      The fifth is a further complaint of unreasonable and irrational decision making by the adjudicator determining that Martinus was entitled to amounts under cl 40A of the INTS Contract in respect of the costs of “unfixed materials” and failing thereafter to reconcile those claims with other amounts claimed and awarded in respect of related contract works items, leading, it was alleged to a situation where Martinus “practically” would be paid twice.

2. [151]

   Despite the breadth of the notice of contention, Qube’s written and oral submissions were largely directed to a matter which was not the subject of any one of these five sub-grounds – an alleged failure by the adjudicator to address Qube’s alleged entitlement to terminate “for cause” at common law. No application was made by Qube to amend the notice of contention. Mr Giles SC also accepted that the primary judge failed to deal at all with Qube’s argument about an alleged entitlement to terminate “for cause” at common law in his reasons.

3. [152]

   Qube’s submission about the Court’s function in these circumstances was encapsulated in the following exchange:

4. [153]

   I reject Qube’s submission. This point, error by the primary judge and the absence of any notice of contention, was clearly flagged by Martinus long prior to the two day appeal hearing in this Court. It is common ground that the primary judge did not determine the issue that Qube now wishes to agitate. In the absence of a notice of contention it is not open to Qube to submit in this Court that the “adjudicator simply dismissed each of Qube’s contentions as to termination pursuant to cl 39.4 and then proceeded to deal with the termination for convenience claim”, thereby ignoring Qube’s repudiation at general law case. Qube should not be permitted to rely in this Court on a contention that the primary judge should have upheld a complaint of jurisdictional error on the basis of an argument that his Honour did not deal with at all. To permit Qube to advance such an argument now would be unfair to Martinus.

5. [154]

   Even if I am wrong about this conclusion, I am not persuaded that Qube established that the adjudicator failed to consider a submission duly made by Qube. This is because Qube accepts that the adjudicator considered Qube's case about each of the “show cause” notices at [1594]-[1641]. Qube accepts that the adjudicator accepted Martinus’s case about each of those notices. It appears that in so doing the adjudicator also addressed and rejected Qube's case that Martinus’s conduct gave rise to a repudiation at general law. For example, at [1639], when addressing the Directions Show Cause notice, the adjudicator found that he was not satisfied that a particular individual was empowered to “take any repudiatory conduct” on behalf of Martinus. I am not satisfied, even on the contingent basis I am dealing with this complaint, that the adjudicator failed to consider a submission duly made by Qube about repudiation at common law.

6. [155]

   It is now necessary to consider each of the five sub-ground arguments raised by Qube under the ground 3 of the notice of contention.

7. [156]

   As to the first sub-ground, Qube complains that the adjudicator erred in finding that the Program Show Cause Notices lack detail sufficient to enable Martinus to understand them. I do not agree. The adjudicator was entitled to come to the conclusion he did. It is, with respect, obvious that if Qube wished to rely upon a show cause notice to justify a termination for cause, Qube would need adequately to state the alleged breaches and give Martinus an opportunity to remedy those breaches. Martinus complained at some length about the absence of sufficient detail in the various notices. The adjudicator’s findings that the notices lacked sufficient detail were well open. No failure to consider submissions duly made has been shown.

8. [157]

   As to the second sub-ground, Qube complains that the finding of a want of “examples or particulars” was not a point which was made by Martinus in the Adjudication Application. Since Martinus had not disputed the show cause notices on the basis that they were inadequate, Qube alleged that the adjudicator erred by deciding on that basis. This was said to give rise to an issue of procedural fairness. Again, I do not agree. Clause 39.3(b) requires that a show cause notice must “state” the “alleged substantial breach”. The notice must require Martinus to remedy the breach: cl 39.3(c). It was plainly open to the adjudicator to find that where Qube sought to rely on a show cause notice to justify a right of termination, he was entitled to consider whether the notice met the requirements of cl 39.3 and in particular, whether the notice adequately stated the breaches and afforded Martinus an opportunity to remedy the alleged breaches. In any case, Martinus had complained at length that the show cause notices lacked detail. It was open to the adjudicator to observe that the show cause notices lacked particulars. Qube was not denied procedural fairness by the adjudicator so concluding.

9. [158]

   As to the third sub-ground, that “the adjudicator failed to consider submissions duly made by the first respondent with respect the limits of recovery under clause 40A of the Contracts”, Qube complains that the adjudicator did not reveal how he “squares the express right under cl 40A as somehow being a variation, the rights of which are specifically laid out in a different clause of the contract”. The alleged violence to the language of the contract was said to demonstrate legal unreasonableness.

10. [159]

    Qube’s argument on this sub-ground is labyrinthine. Qube complains that the adjudicator found that Martinus was entitled to amounts under cl 40A in respect of the costs of “unfixed materials” where he did not thereafter reconcile those claims with other amounts claimed and awarded in respect of related contract works items.

11. [160]

    I do not agree with Qube’s complaint. The construction adopted by the adjudicator may be incorrect, but he was not required to “square” to Qube’s satisfaction the various rights under the Contract lest he fall into jurisdictional error. I am not satisfied that the adjudicator’s reasoning was in some way legally unreasonable.

12. [161]

    As to the fourth sub-ground, the adjudicator’s conclusion that Martinus was entitled to apply a margin of 45.31% to works consequential on Qube’s termination was not legally unreasonable. The adjudicator was entitled to characterise the work as a variation to the initial scope caused by Qube’s conduct. The adjudicator accepted, as he was entitled to, Martinus’s argument at [1670] that post termination work was outside the scope of the contract.

13. [162]

    As to the fifth sub-ground, in respect of unfixed materials, the adjudicator accepted Martinus’s claim on the basis that no valid reason was given by Qube in the Payment Schedule for withholding payment:

14. [163]

    The conclusion reached by the adjudicator was not legally unreasonable. If it were necessary to decide, the adjudicator was also entitled to conclude that it followed from Qube’s own assessment that there was still ballast onsite which needed to be taken from the stockpile post termination. That reasoning was not inconsistent with a conclusion that Martinus had achieved a completion of over 100% in the supply of ballast.

15. [164]

    I reject notice of contention ground 3.

Notice of Appeal Ground 4

1. [165]

   Under the INTS Contract, Qube held security in the form of unconditional bank guarantees. On the same day as the Payment Claim was made, Qube called on and converted security in a total of $7,029,849.50. Martinus did not make a claim in relation to the bank guarantees in its Payment Claim. In the Payment Schedule, however, Qube deployed the converted security of $7,029,849.50 by adding $7,029,849.50, derived from the call on the bank guarantees, to the adjusted contract price, which it called the “Superintendent’s revised contract value”. The amount of $7,029,849.50 was then applied by Qube to effect claimed set-offs in section 6 of the INTS Payment Schedule. The primary judge explained [241] that Qube calculated the “set offs” by first claiming $5.4 million in payments it had made to contractors who had replaced Martinus on site, on the basis that Qube (having terminated for cause) was entitled to recoup those amounts. Secondly, Qube “set off” $2.1 million which it had paid on account.

2. [166]

   In the adjudication application, Martinus accepted that the $2.1 payment on account should be deducted by the adjudicator from the amounts determined to be payable but disputed claims for payments totalling $5.4 million made by Qube for:

   1. (1)

      amounts claimed by Qube associated with John Holland;

   2. (2)

      amounts claimed by Qube associated with Vaughan Civil;

   3. (3)

      amounts claimed by Qube associated with Mainland Civils;

   4. (4)

      amounts claimed by Qube related to Reversal of an account payment; and

   5. (5)

      amounts claimed by Qube associated with Additional consultants.

3. [167]

   In Qube’s Payment Schedule, the alleged “set-offs” totalled $7,493,553.26. Once the security was applied against these claims, the residual of the claims asserted by Qube against Martinus in the Payment Schedule was $463,703.76; that is, despite Qube receiving security in the sum of $7,029,849.50, by reason of these additional claims (framed as “set-offs”), Qube was asserting it was entitled to $7,493,553.26 from Martinus and that even after the amount of the guarantee was accounted for, Qube was entitled to an additional $463,703.76 from Martinus. Qube referred to this amount as an additional deduction under Item 4A of its Payment Schedule.

4. [168]

   The adjudicator addressed the bank guarantee issue at [2042]-[2090]. The adjudicator rejected Qube’s argument that he lacked jurisdiction to determine whether this was properly before him. In the adjudicator’s view:

   1. (1)

      Qube had elected to account for the proceeds of the bank guarantees as an amount added to the adjusted contract sum by the Payment Schedule:

   2. (2)

      Qube had terminated for convenience and not for cause and at the time of termination Martinus obtained the right to the return of the security:

   3. (3)

      Qube was not entitled to retain the proceeds of the security because Martinus did not owe Qube any money under the contract.

   4. (4)

      There was no need to reverse the call on the bank guarantee as the adjudicator would simply consider the adjusted contract price identified in the Payment Schedule when determining the adjudicated amount:

5. [169]

   The adjudicator did not allow a claim for the reversal of the call on the bank guarantee. Rather, the adjudicator recognised that in its Payment Schedule Qube had identified an “adjusted contract price” and had added as a positive integer the sum of $7,029,849.50 being the amount of the call on the guarantees.

6. [170]

   The primary judge concluded there were two distinct jurisdictional errors. First, his Honour found that the adjudicator had fallen into jurisdictional error by awarding to Martinus a sum by way of restitution of the proceeds of the bank guarantees when no such claim had been included in Martinus’s Payment Claim. Secondly, the primary judge found that the adjudicator fell into jurisdictional error by not considering Qube’s submissions “duly made”.

7. [171]

   Qube contends that the primary judge was correct to construe what it had done in its Payment Schedule as he did in the September judgment:

8. [172]

   Qube submitted that this approach cohered with what Basten JA had said in Icon at [25]. Qube contended that the present case does not involve any error of the kind which this Court found in Icon. I do not agree.

9. [173]

   As I have explained at 61-64] by reference to the decision in Icon, in the present case Qube introduced the converted security in a total of $7,029,849.50 by deploying it in the Payment Schedule as an amount added to the adjusted contract sum. In doing so, Qube introduced to the dispute to be resolved by the adjudicator an issue about the calculation of the value of the work claimed by Martinus in the Payment Claim. It is not to the point that Martinus did not make a claim in restitution for $7,029,849.50 in its Payment Claim. Qube was the party who was asserting that the value of Martinus’s claim should be reduced by reason of “set-offs” greater than the sum of the value of the guarantees. Further, and contrary to Qube’s case, the adjudicator did not award any amount by way of restitution, rather, the adjudicator resolved a dispute about the value of the claim Martinus had made. The adjudicator did so by taking onto account the “adjusted contract price” introduced to the dispute by Qube in its Payment Schedule.

10. [174]

    The “dispute propounded by the parties” which the adjudicator was empowered by the SOP Act to determine was that which arises after both the Payment Claim and the Payment Schedule have been considered.

11. [175]

    In Ceerose, this Court explained that the position taken by the respondent in its Payment Schedule necessarily affected the adjudicator’s task. There is nothing in the SOP Act which expressly or impliedly prohibits an adjudicator from recognising the fact that in a Payment Schedule the contract price could be adjusted upwards even if that upwards adjustment was not the subject of the Payment Claim. So much follows from the terms of ss 13 and 14 of the SOP Act which I have set out at the outset. Further, there is nothing in the SOP Act which prohibits the adjudicator from accepting or rejecting deductions claimed in a Payment Schedule. It is well established that an adjudicator can consider accepting or rejecting such deductions even if they are not the subject of a Payment Claim: see Icon at [33], [35] and [36]. Even if the adjudicator was incorrect, the scope of the dispute identified by the Payment Claim and Payment Schedule was a matter for the adjudicator. The decision of this Court in Icon is governing. The meaning of the Payment Claim and the Payment Schedule were matters falling within the jurisdiction of the adjudicator.

12. [176]

    The second jurisdictional error found by the primary judge in relation to the bank guarantees was an alleged failure to consider Qube’s submissions about the first instance decision in Australia Avenue and the “point about the form of the Schedule”:

13. [177]

    The first instance decision in Australia Avenue was overruled in Icon. No jurisdictional error was established in allegedly failing to consider that overruled first instance decision. In respect of the form of the Payment Schedule, I have earlier rejected the primary judge’s characterisation of what the adjudicator did and was entitled to do. It is an impermissible incursion into the role of the adjudicator to construe the Payment Schedule as having “only set off” $463,703.76. The adjudicator was entitled to act on his understanding that Qube itself had added $7,029,849.50, derived from the call on the bank guarantees to the adjusted contract price, which Qube called the “Superintendent’s revised contract value”, before allegedly applying “set-offs” (being additional claims made by Qube) in a greater amount. There was no error in the adjudicator so concluding. Much less was any jurisdictional error established.

14. [178]

    I would uphold ground 4 of the notice of appeal.

Notice of Appeal Ground 6

1. [179]

   This issue concerned Martinus’s claim for what the INTS Contract defined as “preliminaries”. The INTS Contract set out a contract price for preliminaries of $31,405,498.73, but did not identify when that amount became payable. There had been a dispute between the parties in a prior adjudication as to when preliminaries were to become payable, which had been resolved essentially on the basis that preliminaries should become payable “from day to day, on a ‘straight line’ basis, from the beginning of the contract to the original date for practical completion”: November judgment at [9].

2. [180]

   The INTS Payment Claim included a claim for preliminaries of $30,334,965.30. This was a claim for 96.59% of the total contract price for this item: see INTS Determination at [203].

3. [181]

   In the INTS Payment Schedule, Qube said the following under the heading “Preliminaries (Qube)”:

4. [182]

   In the INTS Payment Schedule, Qube also addressed specific sub-items in respect of the Preliminaries claim. The primary judge focused on four of these items: 1.1.4, 1.2.1, 1.2.2 and 1.7.3. The relevant parts of the Payment Schedule are set out in the November judgment at [12]. One of the items objected to (1.2.1) set out the following: “Time based calculation, please refer to column AJ-AL, row 13-18”. The reference to a “time based calculation” was understood by the primary judge to be a reference to the question of whether these preliminaries should be valued on a straight line basis. Item 1.2.1 was of some significance for the primary judge because in the INTS Adjudication Application Martinus asserted that a time-based method was not appropriate: see November judgment at [13].

5. [183]

   It is important to first note the adjudicator’s observation at [154]. Having referred to this Court’s decision in Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; [2009] NSWCA 69 (which held that adjudication determinations attracted the doctrine of issue estoppel), the adjudicator said:

6. [184]

   The adjudicator addressed preliminaries at [197]-[213] of the INTS Determination. The adjudicator, after referring to what Qube had said in the INTS Payment Schedule, said:

7. [185]

   The adjudicator then said:

8. [186]

   Qube’s case was that this reasoning disclosed a failure to deal with the “dispute between the parties”: November judgment at [18]. The primary judge effectively accepted that argument, concluding that this reasoning involved error, being a “fail[ure] to deal with the four items in question” (being items 1.1.4, 1.2.1, 1.2.2 and 1.7.3) and a failure to “consider Qube’s objections to them”: November judgment at [31]. The primary judge treated the scope of the “dispute” between the parties as if it was a matter for objective determination by the Court.

9. [187]

   What the adjudicator was required to consider, however, was, relevantly, the Payment Claim and Payment Schedule as interpreted by him. The adjudicator interpreted the Payment Schedule as asserting that preliminaries should be valued at 96.07% complete (rather than the figure of 96.59% complete asserted by Martinus). The interpretation of the Payment Schedule was a matter for the adjudicator. Having so interpreted the Payment Schedule, the adjudicator accepted what he understood to be Qube’s position i.e. that preliminaries should be valued at 96.07% complete. The adjudicator interpreted the Payment Schedule as not advancing any other reason for withholding payment in respect of preliminaries. That was a conclusion open to the adjudicator.

10. [188]

    The reasons excerpted by the adjudicator appeared under the heading “Preliminaries (Qube)” and were plainly understood by the adjudicator to be Qube’s sole reasons for rejecting Martinus’s Payment Claim in respect of preliminaries.

11. [189]

    The reasons which his Honour concluded that the adjudicator overlooked were inconsistent with the previous adjudicator’s determination. The previous adjudicator had held that preliminaries were to be valued on a straight line basis. In the items relied on by his Honour, Qube was seeking to contend that the items should be valued on a different basis. The adjudicator found that he was bound to adopt the conclusions of the previous adjudicator because of, inter alia, Dualcorp in this Court. There was no reason to expect the adjudicator would or should in those circumstances say any more about Qube’s argument that various items should be valued on a different basis.

12. [190]

    The primary judge also found that there was a “simple arithmetical” error in the adjudication and this was a jurisdictional error because it “cannot have been intended that an award would be binding if affected by such an error”: November judgment at [49]-[51]. His Honour characterised this as having “no reason” to award the amount which was awarded: November judgment at [51].

13. [191]

    The proposition that a mathematical error is jurisdictional is not correct. A mathematical computation is a finding of fact. Findings of fact are matters for the adjudicator: Icon at [13]-[15] (Basten JA, Meagher JA agreeing at [35], Leeming JA agreeing at [36]); Iskra v MMIR Pty Ltd [2019] NSWCA 126 at [39]-[40] (Gleeson JA, Bathurst CJ agreeing at [1], Payne JA agreeing at [55]).

14. [192]

    The mathematical error was incorrectly characterised as an absence of a “reason”, when, at most, it was an incorrect reason.

15. [193]

    I would uphold ground 6 of the notice of appeal.

Notice of Contention Ground 5

1. [194]

   By notice of contention ground 5, Qube contends that the finding the subject of appeal ground 6 also involved a denial of procedural fairness or was legally unreasonable.

2. [195]

   As to the alleged claim of legal unreasonableness, it is no doubt correct, as Qube says, that the decision of an adjudicator is not “unreviewable” for jurisdictional error. This conclusion does not assist Qube here. The adjudicator’s interpretation of the Payment Claim and Payment Schedule was clearly open to him. It was a decision far removed from one affected by jurisdictional error as being legally unreasonable.

3. [196]

   As to the alleged denial of procedural fairness, it is no doubt correct that the adjudicator accepted that he was bound to act in accordance with authority which the adjudicator understood to include Dualcorp. It was not a denial of procedural fairness for the adjudicator to act upon his understanding of the law. The adjudicator here was not bound to raise with Qube whether it wished to challenge any binding authority of this Court, including Dualcorp, before acting upon that authority. It would be antithetical to the objects of the SOP Act to require adjudicators so to act and to provide, in effect, a running commentary on the legal conclusions they proposed to draw. There was no denial of procedural fairness.

4. [197]

   I would reject notice of contention ground 5.

Notice of Appeal Ground 7

1. [198]

   This issue concerned a claim for additional design management resources (CN-421) because of a failure on the part of Qube to provide designs adequately and promptly. In the INTS Payment Claim, Martinus claimed $6,127,988.62. Qube scheduled $0 in its Payment Schedule. The adjudicator ultimately allowed $2,932,040.48.

2. [199]

   The primary judge concluded that the adjudicator erred by failing to consider “parts of the Payment Schedule and submissions where [certain] quantum objections were identified and developed”: November judgment at [65].

3. [200]

   The precise material referred to appears to be sections of a document entitled “CN-421 – Additional Design Management Resources” (“CN-421 Document”), which appeared about 500 pages into Qube’s INTS Payment Schedule: see November judgment at [57]-[58]. The primary judge inferred that the material was not considered by the adjudicator. This was because the adjudicator said that Qube had not provided an explanation as to why it disputed certain design and commercial manager resources claimed by Martinus, whereas the primary judge considered that, at paragraph 2.28 of the CN-421 Document, criticism was made of the claim for design resources.

4. [201]

   Jurisdictional error was not established in this instance. The adjudicator correctly recorded what appeared in Qube’s INTS Payment Schedule under the heading “Reasons for Withholding Payment” in respect of CN-421. Those reasons did not include a specific objection to the claim for the three designers. There was thus no error in the adjudicator’s statement that there had been no explanation by Qube about why it was not paying these claims. The adjudicator understood the entirety of Qube’s reasons for withholding payment in respect of CN-421 to be those set out at [1401]:

5. [202]

   The adjudicator was entitled to understand the complaint at 2.28 of the CN-421 Document to be directed to a different issue – entitlement – because it challenged whether there was an entitlement to additional designers at all. The adjudicator concluded that there was an entitlement to additional designers at [1439]. The primary judge did not perceive error in the adjudicator’s determination of entitlement (as distinct from quantum).

6. [203]

   It may be that the adjudicator misunderstood the CN-421 Document and the scope of any additional reasons given by Qube beyond those he quoted at [1401]. I do not, however, infer that the adjudicator had not considered Qube’s submission. This is because he excerpted large portions of it at [1402]. Even assuming the adjudicator misunderstood the document, he considered it. That is not jurisdictional error.

7. [204]

   I would allow ground 7 of the appeal.

Notice of Appeal Ground 8

1. [205]

   This issue concerned a claim for certain additional labour costs arising from delayed and deficient signal design. Martinus claimed $672,217.54. Qube scheduled $0 in its Payment Scheule. The adjudicator allowed the claimed amount.

2. [206]

   His Honour concluded that the adjudicator fell into jurisdictional error in that he did not consider the two objections to this claim set out in the INTS Payment Schedule:

   1. (1)

      that Martinus has failed to substantiate or provide evidence of the costs allegedly incurred; and

   2. (2)

      that Martinus has used incorrect rates in its calculations.

3. [207]

   The primary judge found that Qube’s reasons for scheduling $0 in respect of this claim in the Payment Schedule should have been understood as being contained in a document located approximately 500 pages into the Payment Schedule which repeated a contention that there had been a failure to substantiate costs and also said that “the costs claimed are preliminary time-related costs and are not direct costs of a variation to which the 45.31% markup applies”: see November judgment at [69].

4. [208]

   I do not agree that jurisdictional error was established. Qube’s objections were each set out at [1458], where the adjudicator explained that Qube provided the following reasons for withholding payment:

5. [209]

   The adjudicator plainly understood that he had dealt with all of Qube’s reasons for withholding payment in respect of CN 422.

6. [210]

   The first reason referred to at [1458] found by the primary judge not to have been considered was that there was a failure to substantiate the claim. The adjudicator in fact dealt with this issue at [1471]. The adjudicator found that a “sufficient breakdown” was provided by Martinus to Qube. That, in context, was a finding that there was substantiation of Martinus’s claim, and a rejection of Qube’s submission.

7. [211]

   I reject Qube’s submission, made in this Court, that it was an error, let alone a jurisdictional error, for the adjudicator to fail to understand the difference between a “sufficient breakdown” of costs claimed and a “substantiation” of costs claimed. To read an adjudicator’s reasons as Qube suggests is to do so with an eye attuned to error. That approach to judicial review of the decision of an adjudicator under the SOP Act has repeatedly been rejected.

8. [212]

   The second reason referred to at [1458] (also relied on by the primary judge) was that Martinus had used incorrect rates. Qube’s complaint was apparently that Martinus had claimed direct costs, when it should only have claimed time-related costs. That contention was expressly considered and rejected by the adjudicator at [1470].

9. [213]

   I reject Qube’s submission, made in this Court, that jurisdictional error in failing to consider a submission “duly made” may be discerned by comparing the adjudicator’s finding at [1470] with that made at [1466]. It may that the adjudicator considered but failed to appreciate some complexity in Qube’s arguments, now repeated in in this Court. Such an error, if be an error, was not jurisdictional.

10. [214]

    In neither instance was it correct to conclude that it was established that the adjudicator had failed to consider a submission “duly made” by Qube.

11. [215]

    I would allow ground 8 of the notice of appeal.

Notice of Appeal Ground 9

1. [216]

   This was a claim for additional costs arising from wet weather, CN-451. In respect of this item, Martinus claimed $73,263.83. Qube scheduled $0. The adjudicator allowed the claimed amount.

2. [217]

   It is clear from [1523]-[1525] of the adjudicator’s determination that the adjudicator’s reasons for allowing the claimed amount were that, first, in the INTS Payment Schedule Qube’s reasons for withholding payment in respect of CN-451 were directed to a different claim, CN-437. Secondly, Qube did not provide any reasons for withholding payment for the purposes of the SOP Act.

3. [218]

   The primary judge stated that Qube’s Adjudication Response (cf the Payment Schedule) contained reasons regarding CN-451 that the adjudicator was obliged to consider. The primary judge inferred that the adjudicator did not do so: November judgment at [96]-[100].

4. [219]

   I am unable to agree with this conclusion. It was a matter for the adjudicator to construe Qube’s Payment Schedule and, having construed it, to form a view as to what (if any) valid “reasons” for withholding payment were given by Qube in that Payment Schedule. If the adjudicator was of the view that no valid reasons for withholding payment were given in the Payment Schedule, the adjudicator was obliged to decline to consider any further submissions about CN-451 contained in the Adjudication Response: s 20(2B) of the SOP Act.

5. [220]

   Qube failed, in terms, to respond to CN-451 in the INTS Payment Schedule. It was not an error, let alone a jurisdictional error, for the adjudicator to conclude as he did. I reject Qube’s submission, made in this Court, that despite the absence of any reference in Qube’s Payment Schedule to CN-451, the adjudicator was required to interpret the Payment Schedule by reference to a large number of “contextual matters” found outside Qube’s Payment Schedule, and to conclude that reasons for Qube not paying CN-451 were to be found in Qube’s Payment Schedule response to another claim, CN-437. The error in the primary judge’s reasoning was to proceed on the basis that it was for the Court to interpret the Payment Schedule and to conclude what submissions were “duly made”. These were matters for the adjudicator.

6. [221]

   I would allow ground 9 of the appeal.

Notice of Contention Ground 6

1. [222]

   By notice of contention ground 6, Qube submitted that it was legally unreasonable for the adjudicator to treat “obvious typographical errors in the Payment Schedule as entitling him to disregard the first respondent’s adjudication response”. Qube contended that the adjudicator was required to overlook the errors made by Qube in its Payment Schedule.

2. [223]

   I reject Qube’s submission. I have set out the principles for determining legal unreasonableness in the context of the SOP Act above at [75]-[80]. The adjudicator’s decision was not legally unreasonable. The adjudicator was not required to fix mistakes made by Qube in its Payment Schedule, lest he fall into jurisdictional error.

3. [224]

   Qube also submitted that the way that the adjudicator dealt with the submissions involved a denial of procedural fairness. I disagree. I have addressed the principles relating to procedural fairness in the context of the SOP Act above at [71]-[75]. There is no procedural unfairness in reading Qube’s Payment Schedule in the terms in which it was expressed. There was no denial of procedural fairness.

4. [225]

   I would reject ground 6 of the notice of contention.

Notice of Appeal Ground 10

1. [226]

   This ground raises essentially the same issue as was raised by ground 9. This issue involved a claim for additional costs incurred in addressing stormwater pit design cost issues arising from design changes issued by Qube. The claim was identified by Martinus as CN-299. Martinus claimed $96,842.89. Qube’s Payment Schedule referred to a different claim, CN-377, and scheduled $0 as owing. Qube gave no reasons in the Payment Schedule for disallowing CN-299. The adjudicator allowed the claimed amount.

2. [227]

   The primary judge found that the adjudicator, having concluded that Qube’s Payment Schedule did not give valid reasons (because it responded to CN-367 rather than CN-299), should nevertheless have gone on to consider the contents of the Adjudication Response:

3. [228]

   I am unable to agree. It was for the adjudicator to interpret the Payment Schedule and decide what submissions were and were not duly made within the meaning of the SOP Act. The adjudicator plainly understood that Qube had not provided a reason for non-payment of Martinus’s claim CN-299 in its ISRA Payment Schedule. It was not an error, let alone a jurisdictional error, for the adjudicator so to conclude. Qube had failed to refer to CN-299 in the ISRA Payment Schedule. There was no error in the adjudicator’s conclusion at [746] of the ISRA Determination:

4. [229]

   I would allow appeal ground 10.

Notice of Contention Ground 7

1. [230]

   Ground 7 of the notice of contention should be rejected, for essentially the same reasons as notice of contention ground 6:

   1. (1)

      The adjudicator’s decision was not legally unreasonable. The adjudicator was not required to fix mistakes made by Qube in its Payment Schedule, lest he fall into jurisdictional error.

   2. (2)

      There is no procedural unfairness in reading Qube’s Payment Schedule in the terms in which it was expressed. There was no relevant denial of procedural fairness.

Notice of Appeal Ground 11

1. [231]

   This issue involved a claim for costs associated with termination of intertrack drainage. Martinus claimed $70,760.13 in the ISRA Payment Claim – CN-353. Qube scheduled $24,744.82. In the Adjudication Application, Martinus reduced this claim to $35,956.70: see ISRA Adjudication Application at [711].

2. [232]

   The adjudicator understood that Martinus had in fact only reduced its claim to $60,701.52, being the sum of the claimed amount ($35,956.70) and the scheduled amount ($24,744.82): ISRA Determination at [771]. The adjudicator awarded that amount: ISRA Determination at [776].

3. [233]

   The primary judge appears to have concluded in the November judgment that there was jurisdictional error either on the basis that the adjudicator had awarded more than the claimed amount or on the basis that there was a mathematical error:

4. [234]

   I do not agree:

   1. (1)

      As to the first possible basis for the finding of jurisdictional error, the interpretation of the Payment Claim and the Adjudication Application were matters for the adjudicator. Errors of the kind made here were errors within jurisdiction.

   2. (2)

      As to the second possible basis for the finding of jurisdictional error, a mistake in calculation of the kind made by an adjudicator is an error of fact and not a jurisdictional error.

5. [235]

   I would allow appeal ground 11.

Notice of Contention Ground 8

1. [236]

   Ground 8 of the notice of contention should be rejected. It was not contended by Qube that the amount here in issue (a little more than $24,000) was outside the amount claimed by Martinus in the ISRA Payment Claim. Whilst the adjudicator misunderstood the detail of the claim, it was not a denial of procedural fairness for the adjudicator to determine that the sum claimed was derived by the addition of two amounts identified in the submissions he considered were “duly made”. The adjudicator’s error was an error within jurisdiction.

2. [237]

   Further, it was not legally unreasonable for the adjudicator to determine that the sum claimed was the derived by the addition of two amounts identified in the submissions “duly made”. This approach reflects the fact that the SOP Act provides for a “rough and ready” process (Chase Oyster Bar at [208]), not intended readily to be held invalid on judicial review.

3. [238]

   I would reject notice of contention ground 8.

Notice of Appeal Ground 5

1. [239]

   I will deal with ground 5 of the appeal and ground 4 of the notice of contention, which address the issue of costs, together and out of order.

2. [240]

   The adjudicator required Qube to pay the whole of the costs of the INTS Adjudication and the ISRA Adjudication. The adjudicator had a discretion to determine the apportionment of costs between Qube and Martinus: s 29(3) of the SOP Act. The adjudicator apportioned 100% of the costs to Qube.

3. [241]

   Where there is jurisdictional error in the determination of an adjudicated amount, s 32A of the SOP Act gives the court the power to set aside a determination of costs: Ceerose at [187]. Section 32A is a remedial power which arises once jurisdictional error has been found. Section 32A assumes that parts of a determination have been “affected” by jurisdictional error and parts not so “affected”.

4. [242]

   Naturally enough, given that his Honour had found jurisdictional error in a number of respects, his Honour understood that he was exercising the power given by s 32A of the SOP Act. As I have found, however, the adjudicator did not fall into jurisdictional error in any of the respects identified. It follows that the s 32A(2) power was not enlivened. No separate complaint was made by Qube about alleged jurisdictional error in the costs determination. Accordingly, I would uphold ground 5 of the notice of appeal.

Notice of Contention Ground 4

1. [243]

   Ground 4 of the notice of contention takes Qube no further. That ground asserts that by reason of the success of the earlier grounds of the notice of contention Qube would be entitled to have the primary judge’s costs determination upheld. As I have rejected those earlier grounds of the notice of contention, ground 4 of the notice of contention should also be rejected.

Cross-appeal Ground 1

1. [244]

   Cross-appeal ground 1, relating to the INTS adjudication, arose out of design variations made by Qube. Variation orders were issued by the Superintendent which specified figures which the Superintendent considered Martinus was entitled on account of the design variations.

2. [245]

   Martinus claimed to be entitled to a greater amount and made a Payment Claim (CN-521) for the value of work allegedly attributable to the variation. 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 already been made.

3. [246]

   The content of the dispute was explained in the following paragraphs in Martinus’s Adjudication Application:

4. [247]

   The adjudicator found Qube’s Payment Schedule to be “incomprehensible”.

5. [248]

   CN-521 was included in the INTS Payment Claim in the amount of $23,528,069.85. The INTS Payment Claim incorporated by reference three further documents setting out the basis of the claim: “INTS_VO54, VO55 & VO61 Summary”, “MITD_INTS – Design Change Variation Detailed Cost Breakdown & Claimed Progress” and “Appendix 1 – Progress Mark Ups”.

6. [249]

   Qube’s INTS Payment Schedule addressed CN-521 in several places. The Payment Claim had a line item addressing CN-521, which stated:

7. [250]

   A similar point was made by Qube in other parts of the INTS Payment Schedule.

8. [251]

   Qube did not provide, in relation to CN-521, any document which directly responded to Martinus’s claim. Rather, Qube asserted that Martinus’s claim should be measured against “INTS and ISRA works within INTS and ISRA Payment Schedule 15”.

9. [252]

   Of course, Qube was free to adopt whatever methodology and format it wished to adopt in its Payment Schedule responding to Martinus’s Payment Claim. Having chosen, however, to rely on a non-responsive and confusing array of cross-references in the Payment Schedule (including references to both the INTS and ISRA Contracts), Qube cannot now reasonably complain that the adjudicator found the Payment Schedule to be incomprehensible. I have concluded that the adjudicator’s description of the Payment Schedule was a fair one.

10. [253]

    Qube’s approach was to respond to a Payment Claim made about an aspect of the INTS Contract by assessing it partly under the INTS Contract and partly under the ISRA Contract. Qube’s choice to address both contracts in this way made the Payment Schedule difficult, if not impossible, to understand properly.

11. [254]

    In a separate part of Qube’s Payment Schedule, Qube included by cross-reference a lengthy spreadsheet. The spreadsheet contained a column entitled “Valuation of VO-54, 055 and 063 (Changes in Quantities and Rates)”. The spreadsheet contained no discernible or intelligible means of reconciling anything in the spreadsheet directly against Martinus’s claim in CN-521. Despite the assistance of experienced Senior Counsel on this appeal, Qube’s real case on this issue remains elusive.

12. [255]

    Martinus addressed CN-521 in the INTS Adjudication Application at [592]-[697]. When addressing what Qube had said in the INTS Payment Schedule, Martinus said:

13. [256]

    In section G.2, to which Martinus had referred at [615], Martinus said:

14. [257]

    Martinus also asserted that the format adopted in the INTS Payment Schedule was contrary to what had been an agreed format. Martinus said:

15. [258]

    Qube’s contention that it was an error for the adjudicator to observe that Martinus “asserts that it does not understand the Respondent’s assessment of CN-521” must be rejected. Martinus expressly submitted that Qube’s approach “made it difficult for Martinus to understand” Qube’s assessments (at [569]) and caused “confusion” (at [639]).

16. [259]

    It was clearly open to the adjudicator to find that the INTS Payment Schedule was not comprehensible.

17. [260]

    In the Adjudication Application, Martinus also separately addressed an assertion by Qube that it had approached the manner of assessment in the way that it had because the proper analysis of CN-521 was that it comprised a claim for a “remeasurement” rather than a claim for a “variation”: see [621]-[633].

18. [261]

    Echoing the confusing way Qube addressed CN-521 in the Payment Schedule, in the Adjudication Response, Qube made a number of seemingly internally inconsistent claims:

    1. (1)

       At [3.3] and [3.20], Qube contended that CN-521 was beyond the scope of the Payment Claim, an assertion which is of no continuing relevance (being one of a handful of issues not sought to be relitigated by Qube on appeal).

    2. (2)

       At [10.3], Qube identified CN-521 as a “variation” claim for $23,528,069.85. This presentation of the issue was contrary to Qube’s Payment Schedule allegation that CN-521 should, in some way, be allocated across various contract works, and not treated as a variation.

    3. (3)

       At [10.59]-[10.96], under the heading “IFC Design Changes and the Design Change Variation”, Qube advanced a submission that Martinus had miscalculated the amount scheduled in respect of CN-521. According to this claim by Qube, the correct scheduled amount was $14,500,650.55, of which $12,130,541.36 was attributable to the INTS Contract: see at [10.64]. In support of that contention, Qube referred to “the Final Payment Schedules” (at [10.64]), but gave no reference to any part of the Payment Schedules where that figure was identified.

19. [262]

    At [10.64], Qube submitted that its Payment Schedules were not difficult to understand or misleading. Clearly, Qube understood that Martinus was submitting that Qube’s INTS Payment Schedule was difficult to comprehend. I reject Qube’s submission that there was any denial of procedural fairness involved in the adjudicator’s finding that the Payment Schedules were difficult to understand and misleading.

20. [263]

    The adjudicator addressed CN-521 at [1543]-[1575]. The adjudicator analysed the key parts of the INTS Payment Claim, the INTS Payment Schedule, the INTS Adjudication Application and the INTS Adjudication Response at [1543]-[1548].

21. [264]

    The adjudicator noted that, although on the face of the INTS Payment Schedule Qube scheduled $0 against CN-521, by reference to the INTS Adjudication Response, Qube had apparently scheduled $12,543,894.84 against CN-521, albeit apportioned amongst various other items:

22. [265]

    The adjudicator noted the issue as to whether the contract was a remeasurable contract, and accepted Martinus’s position on that issue at [1551]-[1554]. The adjudicator then said:

23. [266]

    The adjudicator concluded:

24. [267]

    The essential parts of the adjudicator’s reasoning were:

    1. (1)

       The INTS Contract was not a remeasurable contract, and it was appropriate to separate contract works from variations, as Martinus had done: at [1552]-[1554].

    2. (2)

       Qube’s approach had led to uncertainty because the items in Qube’s INTS Payment Schedule could not be compared to, and were not directly referable to, Martinus’s Payment Claim: at [1560] and [1564].

    3. (3)

       Qube had not provided an explanation about how the quantities and rates applied to each separate component of the contract works against which CN-521 had been apportioned had been determined: at [1558], [1560] and [1564].

    4. (4)

       Properly understood, Qube’s the INTS Payment Schedule did not supply “reasons for withholding payment” in response to the claimed item within the meaning of s 14(3): at [1572].

25. [268]

    The primary judge considered Qube’s complaints in respect of CN-521 in the November judgment at [159]-[178]. At that time, Qube’s sole complaint was that CN-521 was affected by legal unreasonableness. As the primary judge correctly found, the threshold for finding that a decision was legally unreasonable is high. I have earlier addressed legal unreasonableness at [75]-[80].

26. [269]

    The primary judge concluded that the adjudicator’s interpretation of the Payment Schedule was a matter within the adjudicator’s jurisdiction and was not legally unreasonable:

27. [270]

    Qube puts its case in cross-appeal ground 1 about jurisdictional error in three ways. Two are complaints about an alleged denial of procedural fairness and the third is legal unreasonableness. Each is, in substance, a different label for the same complaint, arising from Qube’s contention about the adjudicator’s interpretation of the INTS Payment Schedule and conclusion that it did not relevantly set out “reasons” within the meaning of s 14(3) of the SOP Act.

28. [271]

    I reject Qube’s contention that the adjudicator reached a decision on a basis not put by the parties. What the adjudicator found was that Qube’s approach was “uncertain as it cannot be compared to the claim”: at [1564]. That was what Martinus had submitted in the INTS Adjudication Application at [568]-[569], [615]-[616], and [649]. Qube was not denied procedural fairness. The point Qube complains about was clearly taken by Martinus.

29. [272]

    Qube adopted an approach in its Payment Schedule where it did not respond directly to the Payment Claim, but instead used its own format and methodology. The differences between the amount claimed and the amount that Qube proposed to be paid could not readily be understood. Qube ought reasonably to have been aware that that adjudicator might conclude that Qube’s Payment Schedule could not readily be comprehended. Qube both had, and availed itself of, an opportunity to deal with that point in its Adjudication Response. There was no denial of procedural fairness.

30. [273]

    Qube also contends that the adjudicator constructively failed to exercise jurisdiction because the adjudicator failed to resolve the dispute raised by the parties’ submissions. The phrase “constructive failure to exercise jurisdiction” is, of course, a label which is merely descriptive of jurisdictional error: Ceerose at [46] and the cases there referred to. The substance of Qube’s complaint is that there was a denial of procedural fairness because of the failure to consider a substantial, clearly articulated argument. There is a risk with this type of argument that claims about failure to address matters can shade into claims about arguments being resolved incorrectly because misunderstood, or not really grappled with, which tends towards merits or appellate review: M1 v R1 [2024] NSWCA 256 at [65] (Mitchelmore JA, Leeming JA agreeing at [1], Price AJA agreeing at [122]); see also Secretary, Department of Education v Dawking [2024] NSWCA 4 at [90]-[97] (Gleeson JA, Mitchelmore JA agreeing at [100], Kirk JA agreeing at [101]).

31. [274]

    Qube’s argument is simply another way of contending that the adjudicator’s construction of the Payment Schedule was erroneous. That argument fails. At the risk of repetition, it is for an adjudicator to decide the dispute which he or she understands has been propounded by the parties. An adjudicator’s decision is not affected by jurisdictional error because a Court, for itself, concludes that a different dispute had been propounded by the partes. If this were not so, it would subvert clear authority arising under the SOP Act that an adjudicator can decide whether submissions are “duly made”. Qube’s complaint is premised upon an assertion that certain submissions were “duly made”, in circumstances where the determination of which submissions were “duly made” was a matter for the adjudicator. I would reject this second aspect of Qube’s complaint.

32. [275]

    Finally, Qube contended that the adjudicator’s conclusion was legally unreasonable. I reject Qube’s assertion that legal unreasonableness has been established. The adjudicator’s understanding of the dispute was open to him. The primary judge correctly rejected this complaint.

33. [276]

    Cross-appeal ground 1 should be rejected.

Cross-appeal Ground 2

1. [277]

   Cross-appeal ground 2 concerned contract works variations 2.1-2.6, 2.8-2.9, 2.11, 2.14-2.15 and 2.17. These components of the adjudication concerned twelve contract works items for which Martinus claimed to be entitled to variation payments. The adjudicator allowed the claim but applied some deductions. The primary judge explained that because the adjudicator adopted the same reasoning to deal with the claims as he adopted for CN-521 (cross- appeal ground 1), the complaint made by Qube could be rejected on the same basis. Qube accepts that ground 2 should fail if it fails on ground 1. Qube’s acceptance that this ground falls with ground 1 is sufficient to dispose of this ground.

2. [278]

   The reasons why Qube’s case should be rejected can be exposed by taking item 2.1 as an example. The Payment Claim addressed item 2.1 under four line items, 2.1, 2.1.1, 2.1.2 and 2.1.3. In respect of item 2.1, Qube said in its Payment Schedule:

3. [279]

   Qube then addressed this claim by reference to 41 separate line items. Qube elected not to respond in any comprehensible way to the detail of Martinus’s Payment Claim. Qube’s decision to introduce a large number of new items into the Payment Schedule ultimately made it difficult, if not impossible, for the adjudicator properly to understand Qube’s position. The adjudicator had to seek to transfer amounts across and between claims. For example:

4. [280]

   Qube addressed this issue at [7.1]-[7.21] of the INTS Adjudication Response. It, in effect, responded by incorporating its case on CN-521:

5. [281]

   The adjudicator addressed this claim at [214]-[236]. The adjudicator concluded that:

   1. (1)

      Qube’s Payment Schedule did not “respond” or “directly respond” to Martinus’s Payment Claim: at [217] and [225].

   2. (2)

      the INTS Payment Schedule did not “provid[e] sufficient explanation of each of the new items”: at [217].

   3. (3)

      Qube had not “provided sufficient explanation for [him] to understand how each of the … new entries relate to any claimed item in the [INTS] Payment Claim”: at [219].

   4. (4)

      Qube had not “explained why the scheduled amount is less than the claimed amount”: at [229].

6. [282]

   These were each correct statements of fact. They do not disclose error, let alone jurisdictional error. The problems which Qube introduced into the INTS Payment Schedule in respect of CN-521 repeated themselves throughout. Qube did not clearly respond to the INTS Payment Claim. Qube introduced multiple new line items. Qube failed to give any intelligible explanation about those new line items. It was open for the adjudicator, within the proper exercise of his jurisdiction, to reach the conclusions he did.

7. [283]

   His Honour addressed these claims as follows in the September judgment:

8. [284]

   No error has been shown in the primary judge’s conclusions about this issue.

9. [285]

   Qube determined to reply to Martinus’s Payment Claim in a non-responsive way. Respectfully, after a full hearing in the Court of Appeal with experienced Senior Counsel on both sides, I remain unsure of the points Qube was seeking to make. Much less am I critical of the adjudicator for allegedly misunderstanding Qube’s reasons for rejecting Martinus’s claim.

10. [286]

    Qube was aware that Martinus was asserting that Qube’s Payment Schedule was difficult to understand. It was a matter for the adjudicator to accept or reject the parties’ contentions on that issue. The primary judge’s reasons for rejecting the substance of ground 1 apply equally to ground 2.

11. [287]

    The outcome of the cross-appeal in respect of the INTS Determination should equally apply to the analogous claims that arose in respect of the ISRA Determination, being each of the claims entitled “Contract Works” and enumerated 1 to 9 (inclusive) in the Amended List Statement. These claims were variously dealt with by the adjudicator at [200]-[611] of the ISRA Determination by applying substantively the same reasoning as that applied to the analogous claims in the INTS Determination.

12. [288]

    I would reject ground 2 of the cross-appeal.

Cross-appeal Ground 3

1. [289]

   Cross-appeal ground 3 was contingent on the success of the first two grounds of cross-appeal. Given my findings on those issues, cross-appeal ground 3 must also fail.

Qube’s application for leave to appeal

1. [290]

   Qube applied for a stay of the proceedings pending a final determination of the arbitration referred to at [23]. The primary judge refused to grant that stay. Qube seeks leave to appeal from the decision of the primary judge.

2. [291]

   The essential debate between the parties was whether Qube was entitled to a stay given what it submitted were financial difficulties faced by Martinus, such that there was a risk that if Qube was successful in the final arbitration, Martinus could not repay the sum it obtained under the SOP Act. The primary judge said in the September judgment:

3. [292]

   As the High Court explained in Shade Systems, the policy of SOP Act is to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments for carrying out that work and supplying those goods and services. The SOP Act is intended to provide a speedy and effective means of ensuring cash flow to builders and trade subcontractors from the parties with whom they contract. The SOP Act creates an entitlement that is to be determined informally, summarily and quickly, and then summarily enforced without prejudice to the common law rights of both parties which can be determined in due course.

4. [293]

   The risk that a contractor might not be able to refund moneys ultimately found to be due to a developer after a successful civil action by the developer under the contract is a risk which, as a matter of policy in the SOP Act’s commercial context, has, prima facie, been assigned to the developer: see R J Neller approved in Shade Systems and followed on numerous occasions in this Court.

5. [294]

   As the High Court further explained in Shade Systems at [51] (per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ) about circumstances where contractual proceedings contemplated by s 32 of the SOP Act conclude that a payment made pursuant to the SOP Act should, on the correct construction of the contract, not have been made if necessary, a restitutionary order can be sought. The risk that the party placed at an advantage by an underpayment or overpayment may later become incapable of meeting such an order is a risk that is assigned to the other party.

6. [295]

   The conclusion that the policy of the Act is to place the risk of insolvency on the developer/principal contractor is further underlined by s 32B which was introduced in 2018:

7. [296]

   In Kennedy Civil Contracting Pty Ltd (Administrators Appointed) v Richard Crookes Construction Pty Ltd; In the matter of Kennedy Civil Contracting Pty Ltd [2023] NSWSC 99 at [34], Ball J, in a passage approved by this Court in Ceerose, said that the purpose of s 32B is to deny the benefits of the legislation to companies in liquidation and not otherwise. In Colbran, in the matter of PBS Building Pty Limited (Administrators Appointed) [2023] FCA 276, Halley J said, in a passage also approved by this Court in Ceerose, dealing with a claimant subject to a deed of company arrangement (DOCA):

8. [297]

   These matters lend weight to the conclusion that there is a heavy burden on a party who seeks injunctive relief or a stay pending the outcome of proceedings contemplated by s 32 on the basis that a payment may become unrecoverable due to the possible or even likely insolvency of the payee at a later date. Considerable caution should attend the grant of such an injunction or a stay, as to do so may detract from the primary purpose of the SOP Act.

9. [298]

   In the present case, Qube sought closely to analyse financial statements and management accounts produced by Martinus. Qube complained that the primary judge had wrongly failed to draw inferences adverse to Martinus by reason of what was an asserted lack of explanation of how the amount claimed by Martinus “was recorded in the accounts”. Secondly, Qube complained that the primary judge “wrongly thought that Martinus was profitable. Thirdly, Qube complained that Martinus’s financial position meant that this “put Qube at considerable risk of non-recovery, so as to render any interim payment one which was, in practical terms, final”. Fourthly, Qube complained that the primary judge wrongly discounted the evidence of Qube’s expert, Mr Cairns, as addressed to the wrong question. Qube submitted that the primary judge should have considered what Mr Cairns “sought to extract from the underlying financial information”. Fifthly, Qube submitted that the sum of money it was required to pay, compared to other cases in which a stay had been refused, meant that “the quantum of the amount which is required to be paid if a stay is not granted is a material integer when the discretion of the Court falls to be exercised”. Finally, Qube submitted that the significance of the purposes of the SOP Act “do not loom large in the same way as in many of the cases”, because Qube had already terminated the Contracts.

10. [299]

    I would refuse leave to appeal. My reasons for rejecting the detail of Qube’s submissions may be summarised as follows:

    1. (1)

       Qube contends that that “Martinus had already accounted for, at least, a significant part of the amounts the subject of the adjudication applications”. That proposition was not established by the evidence. Qube analysed the FY 23 audited accounts of Martinus and asserted they showed that “there were real doubts about Martinus’s profitability”. “Real doubts” about Martinus’s profitability do not establish a proper basis for the stay sought by Qube. The onus was on Qube to establish that a stay should be granted, and the onus was a heavy one. It was not for Martinus to establish that it was profitable. Thus, even if it were correct as Qube submits that it was “clear that the notion that Martinus was profitable is wrong, or at least not established”, it would not follow that the primary judge erred in refusing to grant a stay.

    2. (2)

       Qube’s second point largely overlaps with its first. The gist of the submission is that, although the primary judge concluded at [355] that Martinus was “trading profitably at present”, if one assumed that Qube did not owe any money at all to Martinus under the relevant contracts, then Martinus would not be profitable. The primary judge’s observation at [356] was a statement of fact. Martinus is trading profitably. Qube does not establish that a finding of fact is wrong by asserting that if the facts were different the finding of fact would have been different.

    3. (3)

       Qube’s third point was that Martinus’s evidence demonstrated that it “had experienced difficulty in making payments of less than $1 million”. That submission should be rejected. What the relevant witness for Martinus, Mr Brunsdon, said was that Martinus had elected to spread redundancies over a period as, if they were all paid at once, “that would have a significant detrimental effect on Martinus’s cashflow”. That is a statement of the obvious. Attempts to manage cash flow do not establish an inability at some point in the future to provide restitution, should restitution be ordered.

    4. (4)

       Qube’s fourth point was that their expert, Mr Cairns, had allegedly identified a “trend” whereby Martinus “increased its indebtedness over time and was borrowing in order to fund its operations”. There was no error in the primary judge assessing Qube’s expert evidence by reference to “the question which confronted the Court when considering whether to grant a stay”. His Honour correctly concluded that Mr Cairns’ evidence did not establish a sufficient risk of inability to provide restitution in the future. The height of Mr Cairns’ evidence was that he was unable to say whether Martinus was presently at “risk of insolvency”.

    5. (5)

       Qube’s fifth point was that the primary judge failed to take into account that, as a result of his Honour’s rulings, Martinus would be entitled to an interim payment of around $30 million. The risk of prejudice to Qube was said to be “affected by the quantum of money the subject of the adjudication determination”. That submission is without merit. The primary judge’s reasoning was expressly directed to whether payment by Qube to Martinus now would convert the interim payment to Martinus into a final one. Qube did not establish a sufficient risk that any payments it is required to make to Martinus under the SOP Act would be rendered final regardless of any future order for restitution in Qube’s favour.

    6. (6)

       Qube’s sixth point was that the fact that the contracts had been terminated prior to the Payment Claims meant that the statutory policy of the SOP Act was less important. I do not agree. The purpose of the SOP Act is to ensure cashflow to contractors, whether or not they remain parties to an existing construction contract. Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; [2019] NSWCA 11 stands for the proposition that there is an entitlement to a progress payment under the SOP Act even if there is no expectation of future performance under the relevant construction contract. If Qube’s position was correct, it would subvert the policy of the SOP Act. A company in Qube’s position could immunise itself from a Payment Claim by terminating the contract. The SOP Act gives an express right to serve a Payment Claim after termination: see s 13(1C). In this case, there is no less need for cashflow because time has passed since the work was done, and the SOP Act expressly permits claims to be served within 12 months of work being completed: s 13(4) of the SOP Act.

11. [300]

    The primary judge did not ask the wrong question, nor did his Honour apply the wrong test. His Honour correctly identified the relevant legal principles and appreciated that a balancing exercise was called for. In that balancing exercise, it was permissible to consider whether final rights would be frustrated, as his Honour did. The primary judge did not find that a stay was available only when insolvency has been demonstrated. It is clear that a mere risk of insolvency is ordinarily insufficient to justify a stay. No House v The King error was shown.

12. [301]

    Finally, even if House v the King error had been established, and I were called upon to re-exercise the discretion, I would refuse a stay.

13. [302]

    The stay sought is contrary to the policy of the SOP Act. There is no basis for concluding that there is a sufficient risk that Qube will be unable to recover from Martinus any amounts ordered to be paid as restitution following a final award. The fact that the sums are relatively large does not change this conclusion. The highest Qube puts it is that there is “significant doubt” about Martinus’s ability to repay. “Significant doubt” does not justify a stay of the kind sought.

14. [303]

    The relevant jurisdiction engaged is the interlocutory power of the Court to prevent frustration of a future award (or judgment). The statutory policy of the SOP Act is that a contractor has a right to immediate cash flow, to be used in the ordinary course of business, despite the risk that a future award (or judgment) may not be satisfied. In this respect, it is important to note, as this Court has said, that s 32 is concerned with the legal rights of the parties, and “does not speak to the practical effect upon them”: TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118 at [84] (Bell P, Macfarlan and Leeming JJA). Section 32B now also makes it clear that, while a company in liquidation lacks rights under Pt 3 of SOP Act, there is no intention that companies otherwise proven to be in financial distress lack such rights. Once the nature of the jurisdiction invoked is properly identified, and the policy of the SOP Act clearly understood, it is clear that a “significant doubt” about the ability to meet an award in the future is insufficient to award a stay.

15. [304]

    Leave to appeal should be refused.

Conclusion and proposed orders

1. [305]

   For the foregoing reasons I propose the following orders:

   1. (1)

      Appeal allowed.

   2. (2)

      Cross-appeal dismissed.

   3. (3)

      Summons seeking leave to appeal dismissed.

   4. (4)

      Set aside:

   5. (5)

      Vary order 6 of the orders made on 26 September 2024 (as varied by order 5 made on 15 November 2024) in proceedings 2024/286961 by deleting the words on and from the words “on terms” in that order.

   6. (6)

      Vacate order 7 of the orders made on 26 September 2024 (as varied by order 6 made on 15 November 2024) in proceedings 2024/286961 (interlocutory regime pending appeal).

   7. (7)

      Order that Qube’s summons filed 5 August 2024 in proceedings 2024/286961 is dismissed with costs.

   8. (8)

      Order Qube to pay Martinus’s costs of the appeal, the cross-appeal and the application for leave to appeal.

2. [306]

   GRIFFITHS AJA: I agree with Payne JA.