HIS HONOUR: The plaintiff, as builder, and the defendant, as principal, were parties to a construction contract apparently made in December 2010. Under that contract, the plaintiff undertook to design and construct on a "turnkey" basis a large mixed uses development at Mascot. The plaintiff's obligations included not just the construction work I have described, but ancillary and preparatory matters such as procuring development consent and the like.
It is the defendant's case that practical completion under that contract occurred no later than September 2014. Thereafter, there was a 12-month defects liability period. The contract provided that any final claim was to be made within a month of expiry of the defects liability period: that is to say, in October 2015.
On the defendant's case, the relevant date in October 2015 is the last reference date under the contract.
The plaintiff served a payment claim in November 2016. The defendant says that this occurred outside the 12-month period provided in s 13(4)(b) of the Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Act").
I should mention at this stage that the plaintiff says practical completion did not occur until January 2016, and thus that the payment claim made in November 2016 was within time. It is a little difficult to follow that argument, unless the payment claim relied on a reference date anterior to the suggested date of practical completion. However, since nothing presently arises out of that (except to note the existence of a factual dispute as to the date of practical completion) I shall take that question no further.
The defendant provided a payment schedule. The dispute thereby constituted went to adjudication. The adjudicator, Mr Smithies, concluded that the plaintiff was entitled to be paid a sum of almost $11 million which, with interest under the contract, somewhat exceeded $11 million. His reasons and determination were made available to the parties on 6 January 2017. It appears to be common ground that the five business days referred to as the "relevant date" in s 23 of the Act expired on 13 January 2017.
On that date, the defendant commenced proceedings in this court, seeking either a declaration that the determination was void or, alternatively, relief quashing it.
The defendant (as I will continue to call the principal) did not at any time seek an undertaking from the plaintiff (as I will continue to call the builder), an undertaking that it would not seek to enforce its rights under the determination, either until the dispute could be resolved or without giving notice, or some equivalent form of de facto stay. Nor did the defendant move in this court for an order restraining the plaintiff from recovering judgment or enforcing its rights under any such judgment.
However, on 13 January 2017, the defendant's solicitors served their client's process under cover of a letter which, after referring to the documents forwarded by way of service, noted that the matter had been set down for a directions hearing on 3 February 2017 and stated:
"We are instructed that if your client seeks an order at that directions hearing that our client lodge the amount of the adjudication determination with the Supreme Court until a judgment is issued on our client's summons, our client will not object to that order being made."
The defendant received no response to that letter, although there was some communication before the directions hearing in relation to orders that should be made.
The plaintiff procured an adjudication certificate, and filed it in this court, together with a notice of motion seeking a garnishee order, on 17 January 2017. The affidavit in support of the notice of motion deposed to the fact, as required by the rules, that the judgment had not been stayed, that there was no instalment order in place, and that the full amount of the judgment debt remained unpaid. Some 10 days later, on 27 January 2017, the court made the garnishee order. It was addressed to the National Australia Bank. It has been served on that bank. The bank has paid the amount in question, in excess of $11 million, to the plaintiff.
When the matter was before the court on 3 February 2017 and the parties were discussing the orders to be made, the plaintiff's counsel advised the defendant's legal representative that "the horse had bolted" because judgment had been recovered, a garnishee order issued, and the amount garnisheed had been paid. At 7.35pm on that night, documents making good those propositions were forwarded to the defendant's legal representatives.
The defendant today seeks an order either that the amount paid to the plaintiff under the garnishee order be repaid to the plaintiff (so that it may be paid into court pursuant to s 25(4)(b) of the Act), or that it be paid directly into court by the plaintiff; or in the alternative to those payments, that the plaintiff swear and file an affidavit setting out, in effect, what has happened to the money. The plaintiff opposes the making of those orders.
The defendant's case is that it has a statutory entitlement (which in its submissions was called a "right") to make an application under s 25(4) of the Act. As the Court of Appeal said in Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2016] NSWCA 379 at [53], s 25(4):
assumes an entitlement for a respondent (though not a claimant) to have a judgment based on an adjudication certificate set aside.
The paragraph continued to observe - if I may say so, respectfully, correctly - that the section appeared not to:
…anticipate such a proceeding prior to filing the certificate.
To the reason given for that observation, I would add that it is difficult to see how an application could be made to set aside a judgment that in fact had not yet been recovered.
That is somewhat beside the point, because, as has been recognised in many judgments at first instance over the last 12 years and more, a respondent to an adjudication determination who claims that the determination is infected by what I will call "reviewable error" may obtain interlocutory injunctive relief restraining the applicant from acting on the determination in its favour by filing an adjudication certificate as a judgment for a debt. Numerous cases recognise, further, that if the certificate has been filed, enforcement of the resulting judgment may be restrained.
The defendant's case, having asserted existence of its statutory entitlement or right, is that if the orders sought are not made, it will effectively be deprived of the benefit of that right. Thus, it seeks the relief to which I have referred.
The plaintiff's case is simple. The judgment has been given. It has been satisfied by payment. Whatever rights the defendant has left are those rights, recognised in particular by s 32 of the Act, to litigate on a final basis the question of who owes what to whom under the construction contract. As was submitted in reply for the defendant, that argument appears to assume that the defendant's rights or entitlement under s 25(4) have become spent.
This is not the occasion for a lengthy and learned (or other) judgment on the proper construction of the Act and the nature of the entitlements or rights conferred by sections such as s 25(4). To my mind, it is a case that requires application of the principle that one who seeks equitable relief (and that is what the defendant seeks in this case) should move promptly.
In the present case, although the defendant was made aware on 6 January 2017 that at least in the adjudicator's view it owed the plaintiff $11 million, it took no step to restrain the plaintiff) from enforcing that determination. It did not seek any undertaking from the plaintiff not to file the certificate, or not to do so without giving some prior written notice. In circumstances where the letter of 13 January 2017 serving the process in the second proceedings (in which the defendant principal was plaintiff) referred to payment into court, it might have been thought that some such undertaking would have been sought. It was not.
It may be accepted that in the ordinary way parties should not rush into court unless there is some good reason to do so. In the present case, the defendant had no basis for thinking that the plaintiff would not seek to enforce its rights under the determination. It had not asked the plaintiff not to do so; and, as could be imagined, the plaintiff had not volunteered not to do so.
In those circumstances, I have some difficulty in seeing why this court should now interfere to grant the relief the defendant seeks.
There is a well recognised jurisdiction to restrain enforcement of adjudication determinations where, firstly, there is evidence of a substantial basis of challenge to the determination (on a ground that the courts recognise as being available) and, secondly, there is reason for thinking that if such a challenge is made and succeeds, the applicant may not enjoy the fruits of its success because the respondent will be unable to repay the adjudicated amount. I am prepared to accept that the cases establishing those propositions might justify the making of an application on that basis even where the adjudicator's determination has been enforced in the way it has been enforced in this case. But in the present case, there is no evidence to suggest that the plaintiff, if called upon, would not be able to repay the $11 million.
One of the submissions put for the defendant was that it was incumbent on the plaintiff to notify the court, when it sought the issue of a garnishee order on 17 January 2017, that the defendant had commenced its own proceedings seeking to set aside the determination and, by those means, to challenge the basis of the judgment that had been recovered. I am not sure that this is correct. It is, of course, true to say that applications for the issue of a garnishee order are made ex parte. It is also true to say that the issue of a garnishee order involves an exercise of the court's coercive power, in aid of judgments recovered in it.
But an application for what is essentially an administrative decision, to issue a garnishee order, is not to be equated with an ex parte application to a judge seeking injunctive or equivalent relief. The material that is to be put before the court on an application for issue of a garnishee order is specified in the rules. I do not understand why it is incumbent on an applicant for a garnishee order to do more. I am, of course, prepared to accept that there may be circumstances where, notwithstanding the requirements of the rules, it could be seen to have been in bad faith to procure the issue of a garnishee order, so that the court might set it aside accordingly. But the circumstances of this case seem to me to fall well short of any such bad faith.
In all the circumstances, accepting as I do that there may be a legitimate basis for impugning the adjudicator's determination (that is to say, accepting that there is a serious question to be tried as to the validity of the determination), my view is that on discretionary grounds, for the reasons I have sought to indicate, the application for interlocutory injunctive relief should be refused.
Accordingly, I order that the notice of motion filed in court today be dismissed with costs.
[3]
Postscript
After I gave oral reasons and made the order just set out, Mr Christie of Senior Counsel, who appeared with Mr Kremer of Counsel for the defendant, pointed out (correctly) that I had confused the chronology of events set out at [7] and following above. Mr Christie accepted, properly, that the confusion would have no impact on my conclusion. Accordingly, I have corrected what I said.
[4]
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Decision last updated: 15 February 2017