Birdon Pty Ltd v Houben Marine Pty Ltd

JUDGE: RARES J DATE: 20 OCTOBER 2011 PLACE: SYDNEY

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 Following delivery of the reasons for judgment and answers to the questions reserved in the special case, given by the Full Court in Birdon Pty Ltd v Houben Marine Pty Ltd [2011] FCAFC 126, Birdon filed an interlocutory application for orders that sought either the continuation of the injunctions granted on 20 May 2011 as extended and varied on 14 and 17 June 2011, or alternatively, that injunctions in those terms be remade in aid of its application for special leave to appeal to the High Court of Australia which was filed in that Court yesterday. 2 During the course of argument today, I raised with senior counsel for Birdon that it had failed to pursue an obvious potential remedy that had been at the heart of its original application in this Court. That was its claim that Houben Marine had acted in contravention of the norm of conduct in s 18 of the Australian Consumer Law in the way in which it brought about the adjudication proceedings, the broad nature of which was discussed in the reasons of the Full Court. If Birdon were to establish, on an interlocutory application, a prima facie case that Houben Marine had engaged, in trade or commerce, in conduct that was misleading or deceptive, or likely to mislead or deceive, it may be entitled to an interlocutory injunction under s 232 of the Law preventing the progression of the adjudication process. 3 Later, in the course of argument today, Birdon applied to amend its interlocutory application to add a claim for an interlocutory injunction under s 232 of the Law. It argued that it would suffer irrevocable prejudice if it were not granted an adjournment to allow it to make a cognate application on all three bases it now advances for interlocutory relief, pending the High Court dealing with its special leave application, and, if leave were granted, any appeal. 4 The present controversy arises because the Full Court's answer to question 5 was that the interlocutory injunctions previously on foot ought not be continued. The argument in the Full Court was confined to the Constitutional validity of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act). The Chief Justice and Buchanan J determined that, in all respects, that Act was valid and did not interfere with the institutional integrity or the jurisdiction of this Court. 5 Immediately following delivery of the Full Court's reasons and the pronouncement of its orders on 13 October 2011, Birdon applied orally for a continuation of the current injunctive regime pending it making an application for special leave. For the purposes of being able to determine its entitlement to such an order, I made directions on that day for the preparation of evidence and written submissions, so that any application could be determined on proper notice to Houben Marine and in a way in which the Court could be informed of the basis upon which it was to be pursued. As I have noted, Birdon only sought to change course today after I raised the question, going to the exercise of my discretion, as to whether it had other rights that might prevent the loss of the subject matter of the litigation in the High Court, as it was claiming, were an interlocutory injunction not granted. 6 No issue arose as to Birdon's claim for relief under the Law in the questions referred to the Full Court. That was because of the agreed fact that Birdon's invocation of this Court's jurisdiction under the Law and the Admiralty Act 1988 (Cth) was not colourable; that is to say, there was a bona fide basis upon which it claimed relief, without any acceptance as to the claim's strength or otherwise. In that sense, it is understandable that Birdon's attention may have been diverted from the opportunity to pursue other remedies so as to preserve its position pending a final hearing of its originating application. 7 Birdon argued that it would be exposed to some irreparable prejudice if the adjudication process were allowed to proceed and the adjudicator determined that some debt was due by it before it was able to bring an application for an injunction under s 232 of the Law. Birdon contended that the adjudication process would create a legal debt on which Houben Marine could commence proceedings, even if it did not seek to register the certificate as a judgment under s 25 of the Security of Payment Act. 8 Houben Marine asked, not unnaturally, that I give effect now to the answer to question 5 by the majority in the Full Court, namely, that the injunctions should not be continued. Counsel for Houben Marine offered an undertaking by his client to the Court that it would give 48 hours' written notice before seeking to register any adjudication certificate under s 25 of the Security of Payment Act, to avoid the need for a further injunction being granted if the current injunctions were not continued. 9 I am satisfied that Birdon genuinely seeks to formulate a claim for an interlocutory injunction now on the basis of rights it seeks to assert under ss 18 and 232 of the Law. At the moment, that claim does not seem to have been pleaded fully, although it is clearly part of the actual controversy in the substantive proceedings. Birdon is not presently ready to advance that claim. Indeed, its senior counsel asked for the matter to stand down until this afternoon. That was in order that he might be able to consider the affidavits that have already been filed, but which he had not brought to Court, on which he would put that argument. He also indicated that Birdon would only proceed ex parte later today. This would have meant that the proceedings may then have had to be adjourned to a later time for a contested interlocutory hearing.

APPLICABLE PRINCIPLES 10 It is necessary to have regard to the orderly administration of justice in considering whether to grant interlocutory relief in aid of an application for special leave to appeal to the High Court: Paringa Mining & Exploration Co plc v North Flinders Mines Limited (1988) 165 CLR 452 at 458 per Mason CJ, Brennan and Gaudron JJ. The jurisdiction of this Court, and the High Court, for this purpose is concurrent. The question for decision is whether or not the refusal of interim relief would render nugatory an appeal to the High Court, were special leave granted (Paringa 165 CLR at 459-460). The principles on which the High Court will grant such an injunction in aid of an application for special leave to appeal were also discussed in the much cited judgment of Brennan J in Jennings Construction Limited v Burgundy Royale Investments Pty Limited [No 1] (1986) 161 CLR 681 at 683-684. Similar considerations apply to an application for a stay, as Spigelman CJ noted in Minister for Local Government v South Sydney City Council (No 3) [2002] NSWCA 327 at [10]-[13]. These considerations were summarised by Ipp J, with whom Pidgeon J agreed, in the Full Court of the Supreme Court of Western Australia in Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79 at 85D as follows: "Generally speaking, the court will only stay proceedings when it is necessary to preserve the subject matter or integrity of the litigation or where refusal of a stay could create practical difficulties in the relief available to the High Court, or where there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed." 11 Under s 37M of the Federal Court of Australia Act 1976 (Cth) the Court must have regard to the overarching purpose of the civil practice and procedure provisions in that Act and the Federal Court Rules 2011 (Cth), to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. That purpose includes the just determination of all proceedings before the Court, the efficient use of judicial and administrative resources available for its purposes as well as the resolution of disputes at a cost proportionate to the importance and complexity of the matters in issue.

CONSIDERATION 12 As was noted during the proceedings before the Full Court and repeated before me today, the adjudication process involves a claim by Houben Marine for amounts in the order of $2 million. That process has been interrupted by the existing interlocutory injunctions for about five months. I have to balance the desirability of giving immediate effect to the recommencement of the adjudication process against the potential prejudice to Birdon in the event of an adjudication being made against it, before it has made a coherent presentation to the Court of all its claims for injunctive relief. 13 These proceedings are very much at a preliminary stage. This is not a situation where it could properly be concluded that Birdon has had a complete opportunity, or perhaps a sufficient one, to plead and articulate its entire case or that it is too late for it to seek a further amendment to its application for interlocutory relief. On the other hand, it is a case in which Houben Marine's substantive rights, having regard to the answer to question 5 given by the Full Court, should not now be interfered with on the basis that has previously been advanced by Birdon. 14 I am mindful that if I were to refuse to maintain the status quo for a short period, Birdon proposes to make further interlocutory applications possibly to, first, the High Court and, secondly, this Court, which, if made, will have an inappropriate impact on the orderly administration of justice. Birdon now wishes to have brought forward for consideration what it ought properly to have done as a result of the Full Court's answers to the questions when it filed its interlocutory application to seek relief pending the hearing of its application for special leave to appeal. Through no fault of its own, Houben Marine is likely to be subjected to a further interlocutory application by Birdon for an injunction later today if I were to deal now substantively with its interlocutory application as presently formulated and find against Birdon. 15 Houben Marine argued that the assessment of any prejudice to Birdon, were the adjudication process to proceed, should be deferred until the adjudicator has at least made a determination. It is conceivable that the adjudication will be for a small amount or none at all. And, Houben Marine points out that its proffered undertaking should enable Birdon's substantive rights to be protected, other than in respect of Houben Marine's own right to bring separate proceedings for debt based on the result of the adjudication. In that event, any such application would then be subject to judicial control rather than the procedure set out in s 25 of the Security of Payment Act. 16 Because Houben Marine accepted that the claim for relief under the Law is not colourable, I am of opinion that, on balance, and having regard to the principles that I have identified, particularly those in Paringa 165 CLR 452, I should grant a short adjournment. In Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, especially at 214-215 [100]-[103], Gummow, Hayne, Crennan, Kiefel and Bell JJ observed that justice cannot always be measured in money, and costs are no longer always adequate as compensation, even when recoverable on an indemnity basis. Delay and stress and are also factors to be considered. The history of this matter to date has suggested that a short delay would not be sufficiently detrimental to the administration of justice to warrant my refusing to accede to Birdon's application. However, I think I should do so on terms. Birdon should pay the costs of Houben Marine on an indemnity basis thrown away by its amendment to its interlocutory application and the costs of today in any event. That is because it ought to have brought its whole case forward before today following delivery of the Full Court's reasons and sought to ensure that the subject matter be preserved on the basis of its substantive claim for relief asserted in this Court. That relief could have been available, if the evidence sufficed, consistently with the reasons given by the Chief Justice and, although I dissented in the case, my understanding of what the Court of Appeal of the Supreme Court of New South Wales said in Bitannia Pty Ltd v Parkline Construction Pty Ltd (2006) 67 NSWLR 9: see Birdon [2011] FCAFC 126 at [75] and [108]-[109]. 17 For these reasons, I will grant leave to Birdon to amend its interlocutory application filed on 18 October 2011 on condition that it pay, on an indemnity basis, the costs of the first defendant thrown away by reason of the amendment and the costs of proceedings today. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.