Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd

Introduction 1On 3 May 2013 I published my reasons in this matter (Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd [2013] NSWSC 491). 2I have now heard argument as to what orders should be made to give effect to those reasons. In this judgment, I shall use the abbreviations as in my reasons of 3 May 2013. 3The Adjudicator made a determination under the Act that Anderson Street should pay Helcon a progress payment of $104,857.50. 4In making the Determination, the Adjudicator decided that: - (a)Anderson Street was not entitled to the Deduction; and (b)Helcon was entitled to the Variation. 5I have held that, in determining that Anderson Street was not entitled to the Deduction, the Adjudicator denied Anderson Street procedural fairness in breach of the rules of natural justice, and thereby committed jurisdictional error. 6In the Summons, Anderson Street seeks, amongst other things: - (a)a declaration that the Determination is void and of no effect; and (b)relief in the nature of certiorari setting aside or quashing the Determination. 7In a clear case of want or excess of jurisdiction, a prerogative writ will issue "almost as of right, although the court retains its discretion to refuse relief if in all the circumstances that seems the proper course": R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 194 per Gibbs CJ; followed in Solution 6 Holdings Ltd v Industrial Relations Commission of New South Wales [2004] NSWCA 200; (2004) 60 NSWLR 558 at [135] per Spigelman CJ; which in turn was followed in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393 at [269] - [272], per McDougall J. 8Similarly, the Court has a discretion as to whether to make an order in the nature of certiorari under s 69 of the Supreme Court Act 1970, even in the case of clear jurisdictional error. However, in the ordinary case, once there is a finding of jurisdictional error, an order in the form of certiorari will be made "almost as of right": Chase Oyster Bar at [275] per McDougall J. 9Although there were before the Adjudicator two discrete issues, namely Anderson Street's entitlement to the Deduction and Helcon's entitlement to the Variation, and although I have found jurisdictional error in respect of only one of those issues (the Variation), there is "but one Determination" (Emergency Services Superannuation Board v Davenport [2004] NSWSC 697 at [72] per McDougall J). I can only exercise my discretion by granting relief (by quashing the Determination) or not. There is no intermediate measure, such as declaring the Determination in part valid and in part void. As Hammerschlag J said in Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2007] NSWSC 1298 "there is... no notion of partial invalidity" of a determination (at [16] citing John Holland Pty Ltd v Roads and Traffic Authority of New South Wales [2007] NSWCA 19 at [55]: Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [91] and Lanskey Constructions Pty Ltd v Noxequin [2005] NSWSC 963). To the extent that Vickery J expressed a different conclusion in Asian Pacific Building Corporation Pty Ltd v Aircon Duct Fabrication Pty Ltd [2010] VSC 300 - under the heading "Conclusions and Orders" - I respectfully disagree. 10The discretion to refuse to grant a prerogative writ, or a corresponding statutory remedy, must be exercised judicially. One ground upon which the discretion may be exercised against granting relief is if "a more convenient and satisfactory remedy exists": see, for example, R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd (1949) 78 CLR 389 at 400 (in the context of the jurisdiction under s 75 of the Commonwealth Constitution) and Chase Oyster Bar at [284] (in the context of an application under the Act). 11In that regard, Mr Kalyk, who appeared for Helcon, drew my attention to the recent decision of BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd (No 2) [2013] QSC 67. That case was decided under the Queensland analogue of the Act in a similar situation to that before me. Applegarth J held that the adjudicator had committed jurisdictional error in respect of one, discrete, aspect of the matter. 12The party in the position of Helcon undertook to pay to the party in the position of Anderson Street that part of the fruits of the determination as was referrable to the aspect of the determination that the Court had held to be made in jurisdictional error. 13Applegarth J accepted that the giving of that undertaking was appropriate and sufficient to remedy the jurisdictional error. His Honour held that the order proposed: - "...represents a more convenient and satisfactory remedy for the jurisdictional error which I have found than the course of making a declaration that the decision is void, with or without an order for remitter with its associated costs and complexities." (at [47]) 14McDougall J adopted a similar course in Emergency Services Superannuation Board v Davenport [2004] NSWSC 697. In that case, his Honour observed that the grant of relief in the nature of prerogative relief is discretionary and continued: - "In the present case [the party in the position of Anderson Street] has succeeded on two of its challenges [to the determination], but failed on the third. The challenges... were to individual items within the Determination, not to the Determination overall. There is but one Determination. If I were to quash that Determination, [the party in the position of Helcon] would be deprived of the benefit of the entire Determination, including that portion which, as I have found, is not affected by reviewable error. In the present case, if I were to grant relief, it would be on condition that [the Anderson Street analogue] pay [the Helcon analogue] the unaffected amount of the Determination... in accordance with the Determination. If [the Anderson Street analogue] is not prepared to accept this condition then, in the exercise of my discretion, I would withhold relief." (at [72] - [73]) 15In this case, as I mentioned at [7] of my judgment of 3 May 2013, Anderson Street has paid into Court $115,000 to abide the determination of these proceedings. 16In those circumstances, Mr Kalyk submitted, by analogy with the reasoning of Applegarth J, that I should, as a matter of discretion, decline to make a declaration or order that the Determination is void on the basis that: - (1)there is paid out to Helcon, from the monies in Court, that part of those monies in Court as represents the amount determined by the Adjudicator to be due by Anderson Street to Helcon in respect of the Variation (being that aspect of the Determination not affected by jurisdictional error); and (2)there is paid out to Anderson Street the balance of the monies paid into Court (being the amount referable to the Adjudicator's determination that Anderson Street was not entitled to the Deduction, being the aspect of the Determination which is affected by jurisdictional error) be paid out to Anderson Street. 17I was initially attracted to this submission as it would have the effect, consistently with the observations of McDougall J in Emergency Services, of not depriving Helcon of that part of the Determination as was not affected by reviewable error. 18However, on reflection, I have come to the conclusion that in light of what fell from the Court of Appeal in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421, I cannot accept that submission. 19In Brodyn, Hodgson JA (with whom Mason P and Giles JA agreed) held that a determination made in breach of the rules of natural justice is void, and not merely voidable. 20In that circumstance, I cannot envisage an occasion where it would be appropriate to withhold relief in the nature of certiorari where a breach of natural justice has been made out (as Applegarth J appears to acknowledge in BM Alliance (No 2) at [29]). 21In light of Brodyn, I do not consider that the course that found favour with McDougall J in Emergency Services is now available (see Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd at [13] - [16]). 22Nor, in those circumstances can I see any basis upon which I would not accede to Anderson Street's submission that I should make a declaration that the Determination is void (assuming I have any discretion in relation to that matter: see Meagher, Heydon and Leeming, Meagher, Gummow and Lehane's Equity: Doctrines & Remedies, 4th ed (2002) at [19-155]). 23In any event, the situation before me is very different to that before Applegarth J in BM Alliance (No 2). In BM Alliance (No 2), the amount of the determination was $28,160,834.50. His Honour found that the adjudicator acted beyond jurisdiction in regard to a discrete aspect involving $4,345,377.42; that is only a little over 15 per cent of the total amount claimed. That jurisdictional error did not arise from any breach of the rules of natural justice (see his Honour's earlier decision in BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2012] QSC 346 at [37] - [57]). No jurisdictional error was found in respect of the balance of the determination, involving $23,815,457.08. In those circumstances, it is easy to understand why Applegarth J was attracted to the proposition that the claimant should, in effect, not be deprived of the balance (a significant sum indeed) merely because the adjudicator had committed jurisdictional error in respect of a relatively small proportion of the amount claimed. 24In this case, the total amount of the Determination was $104,857.50. Of that sum, $50,006.40 (a little under half) was in respect of the Deduction (which aspect of the Determination I have found to have been made in jurisdictional error) and the balance (a little over half) was in respect of the Variation (not affected by jurisdictional error). 25The high proportion of the Determination affected by jurisdictional error, and the relatively small amounts involved incline me against following the course adopted by Applegarth J and incline me towards following the usual course of granting Anderson Street the relief that the authorities state it is entitled to "almost as of right". 26A further factor weighing against following the course advocated by Mr Kalyk is the possibility (and I put it no higher than that) that a challenge be made to the payment to Anderson Street of part of the funds it paid into Court. 27In substance, what Mr Kalyk proposes is that Anderson Street pay to Helcon the amount of the Determination, but that Helcon (by agreeing to the payment to Anderson Street from the amount it paid in Court of the amount of the Deduction) repay to Anderson Street that amount. Were Helcon's financial position to deteriorate that course of events could be problematic. 28After I raised this possibility with counsel in argument, Mr Kalyk called Mr Brian Carpenter, a director of Helcon, who gave evidence as to Helcon's financial position. 29Mr Carpenter's affidavit evidence showed Helcon was incorporated on 3 July 2012 and that, according to its management reports, it made an operating profit of $269,740.29 for the nine-month period to 31 March 2013. That operating profit assumed "sales" of $1,718,678.34. In cross-examination, Mr Carpenter was shown Business Activity Statements submitted by Helcon to the Australian Taxation Office that showed "total sales" for the same period of $1,474,436.04; $244,242.30 less than shown in the management accounts. Mr Carpenter was not able to explain the difference, as another officer of Helcon prepared both documents. I hesitate to draw any firm conclusions from this discrepancy, save that it casts some doubt on the profit figure reported in the accounts. 30The management accounts reported a balance sheet surplus of $269,678.54 as at 31 March 2013 and, according to Mr Carpenter, Helcon has contracted or confirmed projects with a value in the order of $1.7 million. 31I do not draw from this evidence any suggestion that Helcon is insolvent. However, in these uncertain times, that position may change and the possibility of that occurring (which I accept may only be slight), and of the payment to Anderson Street being challenged, is a further factor weighing against departing from the usual practice. 32In those circumstances, I propose to grant the declaration and relief sought by Anderson Street. 33I make the following declaration and orders: - (1)Declare that the purported adjudication determination ("the Determination") made by the third defendant in relation to Adjudication Application No. 2013ADJT030 under s 22 of the Building and Construction Industry Security of Payment Act 1999 is void. (2)Order the first defendant to make application to the District Court of New South Wales to set aside the judgment entered on 1 March 2013 in respect of the Determination and to take no steps in enforcement of that judgment. (3)Order that the sum of $115,000 paid into Court by the plaintiff on 12 April 2013, and any interest earned thereon, be released to the plaintiff. (4)Order that the first defendant pay the plaintiff's costs of the proceedings. (5)Grant leave to the parties to apply in respect of the form of these orders.