Whether the superintendent’s final certificate trumps the adjudication certificate

Martinek Holdings Pty Ltd v Reed Construction (Qld) Pty Ltd

His Honour Justice Keane JA, with whom the Chief Justice and Her Honour Justice Holmes JA concurred, dismissed the appeal by Martinek.

The factual matrix and surrounding legislation is concisely summarised by Keane JA as follows:

 [2] An adjudication decision made under the Building and Construction Industry Payments Act 2004 (Qld) (“the Payments Act“) on 17 September 2009 in favour of the respondent (“Reed”) has been converted into an adjudication certificate and judgment of the Supreme Court pursuant to s 30 and s 31 of the Payments Act. The appellant (“Martinek”) seeks to have that judgment set aside or permanently stayed.
[3] Under the adjudication decision, Martinek was obliged to pay Reed $919,634.91 in respect of Reed’s progress payment claim number 25 for work on the construction of the Rivage Development in Mackay. But on 24 September 2009, the superintendent under the contract for the work issued the superintendent’s final certificate in respect of Reed’s progress claim number 25. The superintendent’s final certificate was issued pursuant to cl 37.4 of the contract.
[4] By virtue of the superintendent’s final certificate, an amount of $72,027.27 was due to Martinek by Reed after taking into account the superintendent’s assessment of Reed’s claim at $664,902.03 and deducting $730,381.37 for moneys due to Martinek for rectification of defects in the work.
[5] On 30 September 2009, pursuant to cl 42.1 of the contract, Reed served a notice of dispute in relation to the superintendent’s final certificate.
[6] Martinek commenced proceedings in the Trial Division of the Supreme Court contending that the final certificate issued by the superintendent under the contract trumps the adjudication decision by establishing the final position of the parties under the contract. On this basis Martinek argues that Reed may not pursue the inconsistent rights which would otherwise be available to Reed under the Payments Act. It was common ground between the parties at first instance and in this Court that the resolution of this issue turns on the interpretation of cl 37.4 of the contract. Before turning to a discussion of the contract, it is desirable to give a brief summary of the relevant provisions of the Payments Act.

[7] The Payments Act is intended to ensure that those who carry out construction work are entitled to claim and recover progress payments.[1] To that end the Payments Act establishes a procedure for the making and adjudication of progress claims.[2] Where a claim for a progress payment is disputed, it is decided by an adjudicator appointed under the legislation.[3] The other party must pay the adjudicated amount to the contractor, and if it fails to do so, the contractor may obtain an adjudication certificate which may be filed as a judgment for a debt and enforced in a court of competent jurisdiction.[4]
[8] By virtue of s 99 of the Payments Act, it is not permitted for parties to a construction contract to agree that the Payments Act shall not apply, but s 100 of the Payments Act ensures that the adjudication of progress claims does not prevent the parties from finally resolving their entitlements inter se under the contract in a court or otherwise in accordance with law.

The dispute involved the construction in particular of clause 37.4 of the contract between the parties and whether the superintendant’s final certificate operated to ‘trump’ the adjudication decision.

Clause 37.4 – Final payment claim and certificate:

Within 28 days after the expiry of the last defects liability period, the Contractor, shall give the Superintendent a written final payment claim endorsed ‘Final Payment Claim’ being a progress claim together with all other claims whatsoever in connection with the subject matter of the Contract.

Within 42 days after the expiry of the last defects liability period, the Superintendent shall issue to both the Contractor and the Principal a final certificate evidencing the moneys finally due and payable between the Contractor and the Principal on any account whatsoever in connection with the subject matter of the Contract.

Those moneys certified as due and payable shall be paid by the Principal or the Contractor, as the case may be, within
7 days after the debtor receives the final certificate.

The final certificate shall be conclusive evidence of accord and satisfaction, and in discharge of each party’s obligations in connection with the subject matter of the Contract except for:

a. fraud or dishonesty relating to WUC or any part thereof or to any matter dealt with in the final certificate;

b. any defect or omission in the Works or any part thereof which was not apparent at the end of the last defects liability period, or which would not have been disclosed upon reasonable inspection at the time of the issue of the final certificate;

c. any accidental or erroneous inclusion or exclusion of any work or figures in any computation or an arithmetical error in any computation; and

d. unresolved issues the subject of any notice of dispute pursuant to clause 42, served before the 7th day after the issue of the final certificate.”

 

 His Honour determined in respect of the decision at first instance:

 [11] In the proceedings below, Martinek argued that the superintendent’s final certificate operated to supersede the adjudication decision.[5] Reed argued that the superintendent’s final certificate gave Martinek a contractual right to payment of $72,027.27 but it did not produce a final settling of accounts which was apt to subsume or supersede the adjudication decision. In this regard, Reed relied particularly (though not exclusively) on the terms of cl 37.4(d) of the contract.
[12] The learned primary judge upheld Reed’s contention. Her Honour concluded:[6]

“… Once a dispute in compliance with the contract has occurred in respect of the Final Certificate it cannot be said that the Final Certificate has finality so as to bring into play the allowance provisions in s 100 of the Payments Act. The Adjudication Decision stands until the final position has been reached between the parties.”

His Honour concluded:

 [20] In my respectful opinion, on the proper construction of cl 37.4, it is only the moneys certified as due and payable by a certificate unqualified in its effect by the fourth paragraph of cl 37.4 that give rise to a right to payment in accordance with the third paragraph of cl 37.4. Because the effect of the superintendent’s certificate is qualified in this way, it can give rise to no right in Martinek under the contract which is apt to trump the effect of the adjudication decision.

 

Brisbane Barrister – David Cormack

Read more in respect of  time limits under the Building and Construction Industry Payment Act 2004 (QLD) at Brisbane Lawyers Rostron Carlyle in accordance with their terms and conditions of use.

Related Posts

Recent Comments

    Categories