Sometimes the law acts quickly, and sometimes excruciatingly slowly. I was asked by my chambers in London, Keating Chambers, the other day to approve a summary of the decision of the Supreme Court in Northern Territory in Department of Construction and Infrastructure v Urban and Rural Contracting Pty Ltd [2012] NTSC 22. I was counsel for the contractor who had applied for and got an adjudicator’s determination in its favour, and I won on the day, and in the long run. In the meantime, the reported decision would suggest that I had lost.

Here is how it all happened.

URC is a small family run contracting business, which does some work for the government of the Northern Territory. It put in a claim for some work, which was rejected by the superintendent under the contract. The Northern Territory operates the West Coast model of adjudication, and URC applied for adjudication accordingly. It succeeded, and when the relevant government department failed to pay the adjudicated amount, URC applied for the determination to be registered as a judgment, which it is entitled to do.

DCI then raised a technical objection, challenging the determination in the Supreme Court of the Northern Territory. They said that, although dispute in the ordinary sense of the word a dispute had plainly arisen by the time of the adjudication application, it was not a dispute within the meaning of the Construction Contracts (Security of Payments) Act (NT), because at that stage the money claimed was not due under the contract.

At that time, section 8 provided as follows:

Section 8             Payment dispute

A payment dispute arises if:

(a)        when the amount claimed in a payment claim is due to be paid under the contract, the amount has not been paid in full or the claim has been rejected or wholly or partly disputed; or

(b)        when an amount retained by a party under the contract is due to be paid under the contract, the amount has not been paid; or

(c)        when any security held by a party under the contract is due to be returned under the contract, the security has not been returned.

I appeared as counsel for URC in Darwin. That, of itself, is a slightly bizarre experience. Formal dress, in downtown Darwin, appears to consist, in the main, of wearing a sleeveless vest over the polyester shorts that most people seem to wear. Dressing up like a 17th-century cleric, with gown, tabs and bar jacket, seems somewhat inappropriate, even though the Supreme Court in Darwin is perfectly well air-conditioned.

The pressure was on. The owners and operators of URC were a young couple, entirely deserving, and the amount at stake was significant. Further, the wife was very pregnant at that time, and I found myself wondering about the possibility of her giving birth during the course of the hearing.

The hearing itself seemed to go well. It is probably one of the few legal cases where Lynne Truss’s book “Eats, Shoots and Leaves” was cited as an authority on the use and effect of the Oxford comma. My essential argument was that section 8(a) meant that a dispute arose either when the money was due and had not been paid, or alternatively when the claim to the money was rejected. As the argument progressed on the day, Justice Barr seemed to be attracted by the practical common sense of this argument and at the conclusion of the hearing I drew his attention to the fact that the court’s registry had declined to register the adjudicator’s decision as a judgment, on the basis that it was subject to a challenge. Justice Barr said that was quite wrong, and gave a direction that the court registry should immediately register the decision, on the basis that unless and until the court decided to the contrary, the decision was perfectly valid. He said that he would reserve judgment, and in the meantime, DCI paid the full amount of the adjudicator’s determination.

Rather to our surprise, when the reserved judgment came out some time later, Justice Barr appeared to have had a change of mind, and found that the adjudication was void, saying this:

9. The first defendant contends that, on the proper interpretation of s 8(a) of the Act, a “payment dispute” between the parties arose as soon as the payment claim was “rejected or wholly or partly disputed”, and that it was not necessary to wait until the date on which payment was due under the contract for a “payment dispute” to arise. The first defendant was therefore entitled to apply under s 27 of the Act to have the dispute adjudicated under the Act, and the adjudicator consequently had jurisdiction…

16        On my reading of s 8(a) of the Act, the introductory phrase “when the amount claimed in a payment claim is due to be paid under the contract” applies to and qualifies each of the described circumstances which then follow, namely, “the amount has not been paid in full” and “the claim has been rejected or wholly or partly disputed”.

20. …Therefore, even though there may be a rejection or dispute prior to the due date for payment, the “payment dispute” does not arise until the due date for payment.

Up until this point, it might be thought that the DCI was hardly acting as a model litigant, as it is obliged to do. Instead, it was apparently using this young couple to pursue a test case (to see if the Statute could be construed to defeat the intent of the legislators), and the result of the case was to throw the law into a state of some confusion. Under the West Coast model, there is a relatively short window of time within which the claimant has to make the adjudication application, and the effect of the decision was to introduce an added difficulty for claimants in picking a moment for the application that was neither too early nor too late. Which is not what was intended at all.

To its credit, however, the DCI (with some prompting, perhaps, from other agencies within the Northern Territory government) made no attempt to reclaim the money which had been paid pursuant to the adjudicator’s determination, and instead agreed to pay, and did pay, URC’s legal costs.

Furthermore, the combined effect of the Statute Law Revision Act 2011 and the Statute Law Revision Act 2014 has been to recast section 8 in order to reflect precisely the argument which I put before the court in the DCI v URC case itself. It now reads as follows: –

Payment dispute

A payment dispute arises if:

        (a)     a payment claim has been made under a contract and either:

            (i)     the claim has been rejected or wholly or partly disputed; or

            (ii)     when the amount claimed is due to be paid, the amount has not been paid in full; or

        (b)     when an amount retained by a party under the contract is due to be paid under the contract, the amount has not been paid; or

        (c)     when any security held by a party under the contract is due to be returned under the contract, the security has not been returned.

And so in the end, there were a number of happy outcomes. URC kept the money which had been awarded to them by the adjudicator. DCI ended up behaving as a model litigant. The legislation has been amended so that there is no longer any possibility of the somewhat absurd result of the case being repeated.

Further, when the baby was born (not happily whilst the court was sitting) he was given the name “Fenwick” as a middle name. His mother explained that this simply because they liked the name. Quite right too. As he grows up, I hope that the Territorians can be persuaded to recognise that the “w” is silent.