To recover an amount by reason of a counterclaim in an
adjudication under WA's Construction Contract Act, the
respondent must initiate a separate adjudication.
A recent decision by Justice Beech of the Western Australian
Supreme Court in Alliance Contracting Pty Ltd v James  WASC
212 has clarified the operation of section 31(2)(b) of the
Construction Contracts Act 2004 (WA) (CCA). Under
that section, the adjudicator has the power to determine whether
"any party" to a payment dispute is liable to make a
The Court was asked to clarify whether the adjudicator had the
power to determine a net payment in favour of the respondent where
the respondent had not commenced a separate adjudication to advance
Facts: power of adjudicator to make a determination?
Tenix and Alliance were the parties to a subcontract, under
which Tenix engaged Alliance to undertake construction work of the
Karratha waste water treatment plant.
Pursuant to the contract, Alliance issued a final claim after
Tenix certified practical completion. Tenix rejected Alliance's
final claim by issuing a final certificate. That certificate
certified a net amount due from Alliance to Tenix.
Alliance did not file an application for adjudication in
relation to Tenix's rejection of its claim. Instead, it
rejected Tenix's final certificate by giving Tenix a notice of
dispute and refusing to make a payment. Tenix subsequently
submitted an adjudication application, seeking payment by Alliance
of the full amount claimed in the final certificate.
The adjudicator considered the parties' submissions,
including Alliance's counter claims. Despite finding that Tenix
owed Alliance a net sum of money, the adjudicator concluded that,
in his construction of s 31(2)(b) of the CCA, he did not have
jurisdiction to order a payment from Tenix to Alliance, and that
the adjudication amount was nil since no balance was otherwise
found in favour of Tenix.
Alliance applied for judicial review of the determination on the
ground of jurisdictional error, and for an order to force Tenix to
make a payment to it for the amount the adjudicator found in its
Decision: meaning of "any party"
Justice Beech found that:
The determination by an adjudicator of whether "any
party" to a payment dispute is liable to make a payment, is
limited to determining whether the recipient of the payment claim
is liable to make a payment in respect of that payment claim.
While the merits of the counter claim from the recipient of a
payment claim will be considered in determining whether the
recipient of the payment claim is liable to make a payment, the
counter claim itself is a separate payment claim the objection of
which constitutes a separate payment dispute (although the two
claims are factually overlapping and intertwined).
Neither party applied for an adjudication of the payment claim
constituted by Tenix's rejection of Alliance's final
Accordingly, he dismissed Alliance's application.
Implications: initiate a separate adjudication
This judgment confirms that while a respondent is entitled to
submit a counterclaim as a defence in a CCA payment dispute, a net
outcome in its favour does not make the respondent entitled to a
payment from the applicant in the same proceeding. In order to
recover an amount by reason of the counterclaim, the respondent
must initiate a separate adjudication.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
Persons listed may not be admitted in all states and
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Council announced planning policies to encourage more inner suburban retirement village and aged care development.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).