Chan v Wood and Kai Design & Construction Pty Ltd [2013] ACTSC 228

2. The principal issue in this case is whether or not the plaintiff intended to live in the house at the time when she contracted to have it constructed by the second defendant. If she did then the contract is not one to which the SOP Act applied and hence an adjudication under that Act occurred in circumstances where there was no jurisdiction for it to occur.

3. The second defendant also contends that whatever her actual intention, there is an estoppel which prevents the plaintiff from asserting that she intended to live in the house on the property and hence prevents her from asserting that the adjudicator lacked jurisdiction.

4. In my view, for the reasons that I set out below, the plaintiff has established that, as at the date she entered the construction contract, she intended to live in the house upon its completion. Further, the plaintiff is not estopped from establishing that intention in these proceedings. Therefore the adjudicator lacked jurisdiction under the SOP Act and the plaintiff is entitled to relief.

5. The parties are in general agreement as to the law to be applied.

6. Section 9(2)(b) of the SOP Act provides that the Act does not apply to:

a construction contract for carrying out residential building work if a resident owner is a party to the contract, to the extent that the contract relates to a building or part of a building where the resident owner lives or intends to live.

7. If the construction contract is one to which the Act does not apply then a party to the contract does not have a statutory entitlement to make a payment claim under the Act or to make an adjudication application in relation to a payment claim that has not been paid in full. If the Act does not apply then an adjudicator has no jurisdiction to make an adjudication decision.

8. A person's intention to live in a building is a jurisdictional fact which must objectively exist in order for an adjudicator to have jurisdiction under the SOP Act: Cardiacos v Cooper Consulting & Construction Services (Aust) Pty Ltd [2009] NSWSC 938 at [5].

9. Because it is a jurisdictional fact the Court is required to make its own assessment of the existence of that fact and in doing so it is not bound by the material before the adjudicator: Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135 at 148-150.

10. The intention that enlivens s 9(2)(b) of the SOP Act is the person's intention at the time of entry into the construction contract: Cardiacos at [33]; see also RJ Neller Building Pty Ltd v Ainsworth [2008] QCA 397; [2009] 1 Qd R 390 at [25]. While the second defendant suggested that an alternative interpretation might be that it was the intention at the time of the carrying out of the particular construction work, it did not suggest that in the present case there was any evidence of a change in intention between the date of contract and the date of the construction works and hence I proceed on the basis that the intention as at the date of contract is the relevant intention.

11. There is no requirement under the Act for an intending resident owner to communicate his or her intention to a builder in order to enliven s 9(2)(b): Cardiacos at [41].

12. If the adjudication is undertaken without jurisdiction then the Court has power in its supervisory jurisdiction to make orders addressing that lack of jurisdiction: Pines Living Pty Ltd v O'Brien & Anor [2013] ACTSC 156 at [26]- [29]; Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393. The second defendant made a submission that the Court did not have power to make a prerogative order to the effect of a writ of certiorari but it did accept that the Court could make a declaration which, in the present case, would achieve the same result. It is not, at this stage, necessary to resolve the issue raised by the second defendant's submission.

13. Therefore, if the plaintiff had, as she alleges, an intention to live in the relevant property, the SOP Act did not apply, the adjudicator had no jurisdiction to make the decision that he did and relief should be granted.

14. The plaintiff, Ling Chan, is married to Mr Wai Man Mi. Mr Mi is known as Raymond and I will refer to him by that name.

15. There are four properties which are relevant to the proceedings:

(a) 38 Marie Pitt Street, Franklin, the property where the plaintiff and her husband live;

(b) 6 Isaacson Street, Franklin ("the Franklin Property");

(c) 41 Cassilda Street, Harrison ("the First Harrison Property");

(d) 87 Ormiston Circuit, Harrison ("the Second Harrison Property").

16. The plaintiff and her husband acquired the Franklin Property prior to March 2011.

17. The First Harrison Property and the Second Harrison Property were acquired by the plaintiff and her husband respectively as a consequence of entering a government land ballot conducted by the Land Development Agency ("LDA"). On 29 March 2011 the plaintiff participated in the "Harrison Four 2011 Ballot" conducted by the LDA and was allocated the First Harrison Property. The next day her husband, Raymond also participated in the Harrison Four 2011 Ballot and was allocated the Second Harrison Property. There is an issue, which goes to the plaintiff's and her husband's credibility, as to whether or not they were separated at the time they participated in these ballots. I will return to this issue below.

18. On 10 November 2011 the plaintiff and her husband entered into a building contract for the construction of a residential dwelling on the Franklin Property. The building proposed on the property was a substantial one, being a two-storey construction with approximately 350 m² of floor area in addition to a triple garage.

19. On 24 April 2012 the Crown Lease over the First Harrison property commenced. On 28 May 2012 the Crown Lease over the Second Harrison Property commenced.

20. On 28 May 2012, a Stop Work Notice was issued in relation to the construction at the Franklin Property. The Stop Work Notice was issued because it emerged that, because of its design, the building proposed for the property was not exempt from the requirement for development approval which had not been obtained. Notwithstanding that it was more than six months since the contract for that property had been signed, only earthworks and drainage had been completed at that point.

21. Almost two months later on 24 July 2012 the plaintiff's husband Raymond lodged a development application in relation to the Franklin Property in an attempt to regularise the position of the proposed development on that property.

22. Shortly after, on 4 August 2012, the director of the second defendant Zheng Kai Li provided Raymond with a quote for the construction of the Second Harrison Property. Mr Li was known to the plaintiff and her husband as Kai and I will refer to him by that name. On 8 August 2012 he provided the plaintiff with a quote for the First Harrison Property.

23. On 13 August 2012 the plaintiff signed an application for discounted land rent in relation to the First Harrison Property. That application was received by the ACT Revenue Office on 27 August 2012. Land rent is a concept established under the Land Rent Act 2008 (ACT). The Land Rent Act permits the grant of leases for certain single residential blocks that require the payment of more than nominal rent. The effect of the scheme is to reduce the initial cost of acquiring the land for the construction of new single residential dwellings. As part of the scheme, applications may be made by certain persons for the payment of land rent at a discounted rate. This is referred to as discounted land rent.

24. On 6 September 2012 development approval was granted by the ACT Planning and Land Authority (ACTPLA) in relation to the Franklin Property but the Stop Work Notice remained in force.

25. On 14 September 2012 the plaintiff's application for discounted land rent was approved and a letter sent confirming that on 19 September 2012.

26. On 19 September 2012 the plaintiff signed a contract with the second defendant for the construction of the house on the First Harrison Property and on the same date her husband also signed a contract with the second defendant for the construction of a house on the Second Harrison Property.

27. In November 2012 the Stop Work Notice was revoked and construction recommenced on the Franklin Property. In November 2012 the slab for the Franklin Property was poured.

28. In April 2013 the second defendant issued an invoice for the First Harrison Property, being a claim for the "lock-up" stage of the development of $70,280. There was then a dispute about the quality of the construction work and whether or not the building had in fact reached lock-up stage. A Dispute Notice was sent by the plaintiff on 19 April 2013.

29. On 30 May 2013 the second defendant terminated the contract for the First Harrison Property. A payment claim under the SOP Act was sent by solicitors for the second defendant to the plaintiff on 17 June 2013. On 30 June 2013 the plaintiff accepted the second defendant's repudiation of the contract for the First Harrison Property. A payment schedule was provided in response to the payment claim on 1 July 2013.

30. On 10 July 2013 the second defendant made an adjudication application under the SOP Act in relation to the First Harrison Property. On 1 August 2013 the first defendant made an adjudication decision. In the decision the adjudicator found that $70,280 was payable as at 1 July 2013 and required the plaintiff to pay 100% of the adjudication fees. The decision was served on the plaintiff on 6 August 2013.

31. Although the issue of whether or not the plaintiff intended to live in the property was raised in the submissions of the parties before the adjudicator, because "no supporting documentation or evidence of an independent nature" was provided to support the plaintiff's claims, the adjudicator found that the plaintiff was not a resident owner under the Act and that s 9(2)(b) did not apply.

32. The plaintiff commenced the current proceedings on 16 August 2013.

33. The plaintiff's originating application did raise an issue as to whether the receipt by the adjudicator of some submissions from the second defendant relating to the issue of the plaintiff's intentions gave rise to a denial of procedural fairness. However by the time of closing submissions the parties recognised that the resolution of the jurisdictional fact question would be determinative of the outcome of the case and hence the procedural fairness issue could be put to one side.

34. The plaintiff and her husband gave evidence that, as at the date when she entered the contract with the second defendant they each intended to reside at the First Harrison Property. The plaintiff said that although, prior to the Stop Work Notice being issued, she had intended to live at the larger Franklin Property, when the Stop Work Notice was issued she changed her mind and decided to live at the First Harrison Property. The evidence did not extend to explaining whether this was to be an interim measure or a permanent change of plans.

35. The second defendant challenges this and submits that as at the date of entry into the contract for the First Harrison Property she did not have that intention. The second defendant's contention was that the plaintiff's stated intention to reside at the property was invented by the plaintiff only after the dispute arose in relation to the construction of the house at the First Harrison Property and the plaintiff and her husband became aware that by claiming an intention to reside in the property the plaintiff might avoid the application of the SOP Act.

36. The plaintiff's evidence on this point was that when, in November 2011, her husband entered into the building contract for the Franklin Property it was their intention to live in it when it was completed. Following the issue of the Stop Work Notice she abandoned plans to live at the Franklin house and she decided instead to live at the First Harrison Property. On 27 August 2012 she applied to the ACT Revenue Office for discounted land rent for the First Harrison Property. On 19 September 2012 she entered into the building contract for that property. She said that following the issue of the Stop Work Notice, Raymond dealt with the obtaining of approval for the house on the Franklin Property which was required by the notice and that he did not talk to her about that approval except to say that it could take a long time. At the time she thought that after approval was obtained it might take one or two years to finish the house on the Franklin Property.

37. Raymond's evidence was that prior to the Stop Work Notice, his intention was to live at the Franklin Property and that following the Stop Work Notice he took responsibility for obtaining development approval, discussing what was required with a certifier. In August 2012 he had a discussion with his wife and said that the process might take a long time. By 22 August 2012 he was aware that ACTPLA proposed to make a decision on the application he had lodged by 25 September 2012. The development approval was in fact granted on 9 September 2012. He knew that after the grant of development approval a building approval needed to be obtained before the Stop Work Notice could be revoked. He could not recall whether he told his wife that development approval had been granted. He understood that the house on the Franklin Property might take, once it started, six to twelve months to build.

38. When the contracts for the two Harrison properties were negotiated between him and Kai, he asked Kai to increase the price of the Second Harrison Property and reduce the price of the First Harrison Property because he could get a better tax advantage from having a higher proportion of the construction cost on his property since he earned a substantially higher income than his wife. Thus, although the prices were quoted at $227,840 and $232,403.50, the contract prices were $200,800 and $252,800. He said that he told Kai that, of the two Harrison properties, he should treat the First Harrison Property as the priority and that Kai told him that the First Harrison Property could be finished within three months or before Christmas. He denied that it was possible for him and his wife to continue to live in their current house at 38 Marie Pitt Street because, he said, it was not affordable for them to maintain four properties and they needed to sell the current one. He denied that he could have sold either of the Harrison properties because he said that would be contrary to the obligations under the land rent lease, they would have to pay capital gains tax and he needed the Second Harrison Property as a negatively geared investment.

39. The plaintiff points to the following factors as strongly suggesting that the plaintiff intended to live at the First Harrison Property.

(a) The construction of the house on the Franklin Property had been delayed. The issue of the Stop Work Notice further delayed the process while development approval was obtained. Given that it was a large two-storey property the Court should infer that it would take more time to build than the single-storey property to be built on the First Harrison Property.

(b) The plaintiff's husband gave evidence that he told Kai that the First Harrison Property was the priority and Kai had said prior to entry into the construction contract it could be completed within three months or before Christmas 2012.

(c) Moving from their home at 38 Marie Pitt Street in Franklin to the First Harrison Property would be advantageous for tax reasons as the sale of their current home would not attract capital gains tax.

(d) The sale of the property at 38 Marie Pitt Street in Franklin would have reduced their holding costs. The plaintiff's husband gave evidence that he and the plaintiff would not be able to afford to keep all their current properties when the First Harrison Property was finished.

(e) The apportionment of the construction costs between the two Harrison properties meant that there was a tax advantage for Raymond (although that advantage would have been available whether or not they moved to live in the First Harrison Property).

(f) Although the house on the First Harrison Property would be substantially smaller than that proposed for the Franklin Property it was slightly larger than the house in which they were living at 38 Marie Pitt Street.

40. The second defendant challenges the truthfulness of the plaintiff's and her husband's evidence about their intentions. It does so on the basis of transactions between them and the LDA which, the second defendant submits, reflect poorly on their credit. I will deal with that issue separately at paragraphs [42]-[50].

41. Further it submits that the following factors indicate that the plaintiff did not in fact have an intention to live at First Harrison Property.

(a) The second defendant points to the significant differences between the attractiveness of the Franklin Property when compared with the First Harrison Property as being indicative of the fact that it was unlikely that the plaintiff would have chosen to live in the First Harrison Property. In particular it points to the following matters:

• (i) The house on the First Harrison Property was to be considerably smaller and cheaper than the Franklin house. The house on the Franklin Property was 350 m² compared to approximately 160 m² for each of the two Harrison houses. The cost of the house on the Franklin Property was $500,000 versus $200,800 for the house on the First Harrison Property.
• (ii) The plaintiff has three children aged, as at the date of the contract, 7, 10 and 15 years. The plaintiff's evidence was that one of the features of the design of the Franklin house was that it was a larger house to accommodate herself, her husband and the three children.
• (iii) The Franklin house included a triple garage and upstairs "retreat" area as well as obtaining views of Parliament House.
• (iv) There was no evidence from the plaintiff of any feature of the house on the First Harrison Property that made it appealing to her, nor was there any attempt to explain why the house on the First Harrison Property was chosen over the other as the new family home.

(b) The second defendant points to the similar manner in which the two Harrison houses were dealt with as suggesting they were both treated as investment properties rather than one as an investment and one as an intended residence. It points to the following matters:

• (i) The contracts for both the First Harrison Property and the Second Harrison Property were signed at the same time and on the same day.
• (ii) Both Harrison properties were of similar design and construction.
• (iii) It was unlikely that the plaintiff had her stated intention when approval of the house on the Franklin Property had been given two weeks prior to the plaintiff signing the construction contract for the First Harrison Property (even though at that stage the Stop Work Notice had not been lifted). It submits that the plaintiff's denial of knowledge of the development approval was not credible.
• (iv) The evidence about there being some need to move out of their current house at 38 Marie Pitt Street was limited.

42. The second defendant's attack on the credibility of the plaintiff was based on documentation relating to her participation in the land ballot to acquire the First Harrison Property. In her affidavit she had said that she and her husband intended to live at the Franklin Property upon its completion. She said that she had abandoned that intention following the issue of the Stop Work Notice in May 2012. She said that she decided instead to live in the house to be constructed on the First Harrison Property.

43. That position appeared to be inconsistent with documentation which she had completed for the purposes of the land ballot conducted by the LDA. The land ballot was for blocks in the Harrison Four 2011 Ballot conducted by the LDA. As part of that process an officer of the LDA completed a Block Selection Checklist. That checklist indicated that the plaintiff had confirmed that the application was for a "land rent lease" and that she was to be an owner occupier as opposed to an investor or builder. It recorded that a photocopy had been taken to prove the plaintiff's identification and address. It indicated that she had selected block 4 in section 155. On the files of the LDA was a photocopy of her driver's licence which indicated that it had originally been issued to her at her 38 Polilight Street Dunlop address, the address at which she and her husband lived prior to moving to 38 Marie Pitt Street Franklin, but that that address had subsequently been changed to 7 Olga Masters Street Franklin. That latter address was the address of her sister, Bing Chen. Included in the form was the following: "Do you or any of the Applicant(s) or a "Related Party" to you or any of the Applicant(s) have any other blocks "On Hold" for a Land Rent Lease?". The ticked answer is "No". "Related party" is defined on the form to include a spouse and "On Hold" is defined to cover the situation where an application has been accepted by the LDA for a Land Rent Lease or contracts have been exchanged with the LDA for the grant of a Land Rent Lease.

44. The application for a land rent lease included a statutory declaration that the information in the application was true and correct. That declaration was made by the plaintiff on 29 March 2011 before a lawyer, Hong Teo.

45. A similar Block Selection Checklist was completed in relation to the block allocated to the plaintiff's husband. That block was selected on 30 March 2012, the day after the block selection by the plaintiff. The checklist indicated that Raymond had confirmed that it was to be a land rent lease and that he was an investor rather than an owner occupier or builder. The document included the same question as the plaintiff's document concerning having other blocks "On Hold" and he answered that question "No". The statutory declaration was witnessed by the same lawyer, Hong Teo on 30 March 2011.

46. When cross-examined about these two applications the plaintiff gave evidence that she was unaware of the application made by her husband. She said that between February and April 2011 she had been separated from her husband and lived with her sister at the address shown on her driver's license. She said that the reason for their separation was that she wanted to find a job and her husband wanted her to stay at home. There was no satisfactory explanation of how both parties, if living separately and not acting in a coordinated fashion, happened to be the successful applicants in a land ballot for the same estate conducted on two successive days by the LDA. Nor was there any explanation of what appears from the documents, namely, that they were both assisted by the same lawyer in preparing their applications for a land rent lease.

47. Raymond also denied knowledge that the plaintiff was making an application in her name. When asked whether he knew that his wife was also making an application in the same ballot he denied any such knowledge. When asked when he discovered that his wife had made an application in the same ballot he appeared to make a claim for privilege against self-incrimination but that claim was not pursued. He said that he knew that she had made an application by about the middle of 2011. There then appears in the transcript the following:

So it's just - you're saying it's pure coincidence that you and your wife applied in the Harrison ballot at the same time?---Yes, a lot of - I can say that, I can say that, but a lot of people are doing that during that time, yes.

48. He denied on three occasions discussing with his wife applying for a block in the ballot at Harrison.

49. The evidence of the plaintiff and her husband's evidence in relation to participation in the land ballot for their respective blocks was unsatisfactory. Although it was not explicitly suggested to either witness that their statutory declarations were false, or that there was some other impropriety in their applications for land rent leases or in the information that they provided to the LDA it appeared that there was considerable anxiety on the plaintiff and on her husband's part as to those issues and the evidence appeared to be treated as though it might give rise to such issues. The evidence of the plaintiff and her husband about separating for a period of two months at that time and each happening to make applications for land in the same ballot without any knowledge of the other's intention appeared to me, particularly having regard to the manner in which the plaintiff's husband gave evidence, to be unreliable. It is more likely that the approach taken by the plaintiff and her husband was designed to obscure the fact that they were related parties applying for two blocks in the same ballot. However, the evidence about precisely what were the conditions upon participation in the land ballot process was not complete and the evidence before me does not demonstrate that there was any impropriety or would have been impropriety even if the plaintiff and her husband were living at the same address. The plaintiff's statutory declaration about whether or not a related party had a block "On Hold" was correct in that when the declaration was made her husband did not have any other block on hold. Raymond's declaration to that effect may or may not have been correct depending on whether or not the plaintiff's application had, at that stage been submitted to and accepted by the LDA. The evidence does not disclose whether or not the application had been accepted as at 30 March 2011. The terms of the application itself indicate that there were various conditions which needed to be considered in determining whether or not to accept the application. Those included whether or not the applicant or a Related Party had more than five blocks of land "On Hold" for the right to the grant of a land rent lease. The evidence does not disclose whether at the time when Raymond made his statutory declaration that process had been completed in relation to the plaintiff's application.

50. The second defendant submits that the evidence relating to the land ballot reflects on the credibility of the plaintiff and her husband. As a consequence it contends that their evidence as to their intention as at the date of entry into the contract for the construction of the house on the First Harrison Property should not be accepted.

51. Ultimately, the issue turns on whether or not I accept the evidence of the plaintiff and her husband that the plaintiff intended, at the point when the contract was entered into, to reside in the house on that property.

52. Even if I assume, adversely to the interests of the plaintiff and her husband, and consistently with the anxiety about this issue demonstrated in their evidence, that the declaration made by Raymond to the LDA was not correct and that the evidence given about a separation was the result, at best, of a contrived arrangement that would facilitate the grant of two leases to members of the same family, I am not satisfied that I should reject the plaintiff and her husband's evidence about her intention at the time when she entered into the construction contract for the First Harrison Property. There are essentially three reasons why I am satisfied that the plaintiff's evidence should, on the balance of probabilities, be accepted.

53. First, notwithstanding my concerns about the evidence given by her and her husband in relation to the transactions with the LDA in March 2011, both have given evidence on oath of their intention as at September 2012.

54. Second, the stated intention to move into the First Harrison Property rather than the Franklin Property makes some sense having regard to the following circumstances:

(i) the issue of the Stop Work Notice which disrupted plans to move into the house on the Franklin Property;

(ii) the fact that even though there was progress in relation to obtaining the development approval at the time that the contract was entered into, there were still additional processes that needed to be undertaken in order to permit the Stop Work Notice to be removed and hence construction to continue;

(iii) the fact that the First Harrison Property could be built more quickly than the house on the Franklin Property;

(iv) the fact that the use of the First Harrison Property would maintain the Second Harrison Property as a negatively geared investment for Raymond, the higher income earner (although that is a circumstance consistent also with an intention to reside at the Franklin Property);

(v) the potential that residing in the house on the First Harrison Property would permit the sale of the current residence at 38 Marie Pitt Street in a manner which did not attract capital gains tax and hence permit the plaintiff and her husband to reduce their liabilities.

55. Third, although there is no corroboration of the plaintiff's change of intention by anyone other than her husband, there is some corroboration in the application for discounted land rent signed by the plaintiff on 13 August 2012. That document includes the following question: "Will at least one lessee occupy the property as his/her principal place of residence?". In answer to that question the "Yes" box has been ticked. The plaintiff also records in that form the names and dates of birth of her three dependent children. The document includes a declaration that the information in the form and any attachments is true and correct. The letter approving the application dated 19 September 2012 indicates amongst other conditions that one of the lessees must reside in the property once a Certificate of Occupancy has been issued and that all lessees will be required to confirm their eligibility by 30 September each year by completing of the "Annual Review for Discounted Land Rent Form".

56. There was nothing in the evidence to suggest that the plaintiff's intention might have changed between the date when she completed the land rent form (13 August 2012) and the date when she signed the building contract (19 September 2012). The real issue, as I understand it, was whether or not she was not telling the truth when she completed that form. Prima facie the land rent form is consistent with her evidence under oath. I do not consider it likely that, even if the plaintiff had been a party to a scheme to obtain two blocks rather than one from the LDA in the ballot process in March 2011, that fact would provide a basis for disregarding the discounted land rent form as evidence corroborative of her stated intention in August and September 2012. Whether or not she was successful in her application for discounted land rent she would have still been required to pay land rent, discounted or otherwise. The amount that she would save by paying discounted land rent was relatively modest. At the date in question the relevant statutory instrument under the Land Rent Act 2008 provided that discounted land rent was 2% of the unimproved value of the parcel of land under the lease: see Taxation Administration (Amounts Payable - Land Rent) Determination 2012 (No 1). The standard land rent was 4%.

57. As the letter dated 19 September 2012 indicated, the availability of discounted land rent was subject to review each year. Failure to reside in the property would be obvious and, even if it might have remained undetected until the first review in September 2013, could not be continued unless there was an ongoing course of flagrant deception under the Land Rent Act. It is unlikely that the plaintiff would have made such a false declaration of intention when the potential gain from doing so was of limited quantum and duration and where it would have required an ongoing and readily detectable flagrant breach of the law in order to maintain it for any significant length of time. Even having regard to the unsatisfactory nature of the plaintiff and her husband's evidence as to what occurred in March 2011 and the impression that I got that Raymond, in particular, was keenly attuned to the opportunities for financial gain, I do not accept that the application for discounted land rent was false in so far as the applicant declared that she intended to live in the property. Therefore I consider that it is a contemporaneous record which corroborates the plaintiff and her husband's evidence.

58. My conclusion is that, subject to the further issue of estoppel to which I will turn next, the plaintiff has established that she intended to live in the house on the First Harrison Property when she entered into the building contract for its construction.

59. It therefore becomes necessary to determine the second defendant's claim that the plaintiff is estopped from asserting that, as at the date upon which she entered into the contract for the First Harrison Property, her intention was to live in that house.

60. The second defendant submits that in the present case Raymond communicated to Kai that the plaintiff intended to live in the Franklin Property. Kai was never told of any change from the intention to live in the Franklin Property. His evidence was that when the construction contracts for each of the Harrison properties were entered into, it was his understanding that the plaintiff and her family intended to reside at the Franklin Property upon its completion. The second defendant submits that Kai relied upon this understanding or, in the language of estoppel, assumption, in two respects. First, it submits that there was a special arrangement in relation to the Franklin contract in that the payment stages were arranged so that $400,000 out of the $500,000 construction cost only needed to be paid at the completion of the project. Second, it submits that the second defendant relied upon the assumption in making the adjudication application on the basis that the house on the Franklin property was the intended family home. Implied in that submission is the proposition that the application for adjudication would not have been made and costs not incurred if the second defendant had not made the assumption that the Franklin Property and not the First Harrison Property was intended to be the site of the family home. The second defendant therefore asserts that the plaintiff is estopped from contending that her intention was to reside in the First Harrison Property at the point when she entered into the building contract by reason of an estoppel in pais.

61. Estoppel in pais is a common law estoppel which prevents a party from an unjust departure by that party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations: Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 at 674-675. It is an essential condition for the existence of such an estoppel that the other party has acted in reliance upon the assumption and would suffer a detriment if the assumption was not adhered to: Grundt at 674; Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 at 413. The effect of an estoppel in pais is that the rights of the parties are determined by reference to the assumed state of affairs rather than the actual state of affairs as might otherwise be established by the evidence: Waltons Stores at 415-416. The distinction between a common law estoppel in pais and an equitable promissory estoppel is that the common law estoppel relates to an assumption of fact whereas an equitable estoppel may apply to a statement about future intention. An assumption of fact may include a presently existing intention: Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305 at 324.

62. I am not satisfied that an estoppel in pais or, for that matter, some other species of estoppel that would prevent the plaintiff from establishing her actual intention can be made out.

63. I accept that when the contract for construction of the house on the Franklin Property was entered into it was the intention of both the plaintiff and her husband to live in it when it was completed. I also accept that, having regard to the evidence of Kai and Raymond, prior to the contract for the construction of the house on the Franklin Property, Raymond referred to it has their "family home". However the intention of the plaintiff and her husband changed later as a consequence of the unanticipated delays involved with the completion of the house due to the absence of development approval and the issuing of the Stop Work Notice. In the present proceedings the plaintiff is not seeking to deny the fact of her intention at the time the contract relating to the Franklin Property was entered into. She simply says that it changed later. Because estoppel in pais covers statements of intention only to the extent that they are existing facts rather than representations about future conduct, and in the present case the plaintiff is not seeking to deny the fact that, at the time of entering the contract for the house on the Franklin Property she and her husband intended that they live there, it is hard in these circumstances to see how a common law estoppel could arise.

64. However, the claim of estoppel (common law or otherwise) could not succeed because the evidence does not establish that Kai relied in any relevant way upon any statement about whether or not the Franklin Property was to be the "family home". Such reliance was not deposed to and appears inconsistent with what the second defendant did.

65. The staging of the payments under the contract for the house on the Franklin Property was apparently favourable to the plaintiffs. However the evidence was not clear why the payments were structured in that way or how the overall price had taken into account the staging of the payments. There was evidence that Kai knew the plaintiff and her husband because they attended the same church and were considered to be family friends. An inference could be drawn that their previous association had something to do with the entry into the contract but Kai gave no evidence as to how or why the payments came to be structured in this way. The evidence of Raymond does not permit anything more than speculation as to the various commercial or non-commercial factors that may have resulted in the particular payment structure agreed to in the contract. There was certainly not sufficient evidence to make a finding that the payments would have not been structured that way had it not been the case that the plaintiff intended to live in that house.

66. Further, the evidence does not establish any reliance by the second defendant upon the assumption that the house on the Franklin property was to be the "family home" when in 2013 the second defendant sought an adjudication under the SOP Act. Kai gave no direct evidence to that effect. There was, however, evidence that even in relation to the house on the Franklin Property, which Kai understood was intended as the "family home", the second defendant issued a payment claim explicitly identified as a claim under the SOP Act. The evidence does not disclose what happened to this payment claim. However, rather than disclosing reliance upon any representation as to the plaintiff's intention, this course of conduct of the second defendant indicates that the process under the SOP Act was invoked despite rather than in reliance upon any representations made by the plaintiff or her husband.

67. Further, if the second defendant did, in fact, rely upon the statements about the house on the Franklin Property being intended to be family home, reliance upon those statements after the issue of the Stop Work Notice for the purposes of proceeding under the SOP Act would have been unreasonable. In order to found an estoppel reliance must be reasonable: Standard Chartered Bank v Bank of China (1991) 23 NSWLR 164 at 180-181 and the authorities referred to therein; Waltons Stores at 397, 406; Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 506. The effect of the Stop Work Notice had the effect of substantially delaying the commencement and completion of construction of the house on the Franklin Property. It would not, in those circumstances, be reasonable for the second defendant to rely upon statements made in April 2011, when in mid-2012 there had been a substantial delay in the construction of the dwelling and the Stop Work Notice was still in effect. People's intentions do change and, if the matter was of any significance to the second defendant, then it was not reasonable to rely upon the statement without checking whether it continued to remain accurate in the light of the changed circumstances.

68. In those circumstances an estoppel cannot be established. It is therefore not necessary to address the difficult question of the relationship between any such estoppel and a jurisdictional fact. In particular, it is not necessary to decide whether a party may be estopped from contending that a jurisdictional fact does or does not exist so as to have the effect of expanding the jurisdiction of a statutory decision-maker.

69. The plaintiff has established the fact necessary for the exclusion provided for by s 9(2) of the Act to operate. Therefore the SOP Act did not apply and the adjudicator did not have jurisdiction to make the decision that he did. As a consequence, the plaintiff is entitled to succeed. Having regard to the second defendant's submission as to the availability of certiorari and the apparent agreement between the parties that a declaration will be sufficient I will, at this stage, make a declaration that the adjudication decision on 1 August 2013 was made without jurisdiction and is of no effect. In the event that the plaintiff takes the view that more is necessary or there are any issues that need to be resolved by order of the Court relating to the security provided by the plaintiff to the second defendant pending determination of the proceedings, I will reserve liberty to apply within 14 days in relation to any further or other order that is necessary in order to finally resolve the matter. In relation to costs, my prima facie view is that the appropriate order is that costs (including reserved costs) follow the event although I will give the parties the opportunity to make further submissions on the issue if that is necessary.

1. The Court declares that the adjudication decision made by the first defendant dated 1 August 2013 was made without jurisdiction and is of no effect.
2. The plaintiff is granted liberty to apply within 14 days in relation to any further or other order necessary to give effect to the Court's decision.
3. Unless any party notifies my associate by email within 14 days of the making of these orders that it wishes to be heard in relation to costs, the second defendant is to pay the plaintiff's costs of the proceedings including reserved costs as agreed or assessed.

I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master Mossop.