Sec 32 Effect of Part on civil proceedings
(1) Subject to section 34, nothing in this Part affects any right that a party to a construction contract :
(a) may have under the contract, or
(b) may have under Part 2 in respect of the contract, or
(c) may have apart from this Act in respect of anything done or omitted to be done under the contract.
(2) Nothing done under or for the purposes of this Part affects any civil proceedings arising under a construction contract , whether under this Part or otherwise, except as provided by subsection (3).
(3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract , the court or tribunal:
(a) must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or award it makes in those proceedings, and
(b) may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.
Sec 36 The Commercial Arbitration Act 1984 is amended as set out in Schedule 1.
9 The interim nature of the rights conferred by Pt 3 of the Act has been discussed in a number of decisions of this court, including by Burgin J in Paynter Dixon Constructions Pty Ltd v J F & C G Tilston Pty Ltd and Anor (2003) NSWSC 869 and by Einstein J in Brodyn Pty Ltd v Philip Davenport & Anor (2003) NSWSC 1019. I respectfully adopt what His Honour said in that case at paragraph 14:
"What the legislature has effectively achieved is a fast track interim progress payment adjudication vehicle. That vehicle must necessarily give rise to many adjudication determinations which will simply be incorrect. That is because the adjudicator, in some instances, cannot possible in the time available and in which the determination is to be brought down, give the type of care and attention to the dispute capable of being provided upon a full curial hearing. It is also because of the constraints imposed upon the adjudicator by s21 and, in particular, by s 21 (4A) denying the parties any legal representation at any conference, which may be called. But primarily it is because the nature and range of issues, legitimate to be raised, particularly in the case of large construction contracts, are such that it often could simply never be expected that the adjudicator would produce the correct decision. What the legislature has provided for is no more or no less than an interim, quick solution to progress payment disputes, which solution, critically does not determine the parties rights interce. Those rights may be determined by curial proceedings, the court then having available to it the usual range of relief most importantly including the right to a proprietor to claw back progress payments which it had been forced to make through the adjudication procedures. That claw back route expressly includes the making of restitution orders."
10 In this case, in her judgment, the Master quoted the following paragraphs from the judgment of Hodgson JA (with whom Mason P. and Giles JA agreed) in Brodyn Pty Ltd v Davenport & Anor (2004) NSWCA 394:
"Further, in my opinion an order of the Supreme Court quashing the determination or declaring it to be void could itself support the setting aside of the judgment. In my opinion, if the determination was quashed or declared void, reliance on there being no determination to support the judgment would not be to challenge the adjudicator's adjudication within s.25(4): this wording assumes that there is a determination which is challenged.
Indeed, even in the absence of such an order quashing the determination or declaring it void, the respondent could in my opinion seek to have the judgment set aside on the ground that there never was a determination. If for example a respondent could show that the document that was filed as being an adjudicator's determination was a forgery, that would not be challenging the adjudicator's determination. Similarly, in my opinion, if the respondent could show that for some other reason recognised in law a purported adjudicator's determination did not amount to an adjudicator's determination within the meaning of the Act, that would not be challenging an adjudicator's determination: this, as indicated above, assumes that there is such a determination to be challenged. Conceivably, the availability of that remedy could itself be a ground for refusing relief in the Supreme Court, on the basis that the same matter could more conveniently be relied on in an application to set aside the judgment; but that was not a matter relied on by the primary judge.
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Where the adjudicator's determination is void for one of the reasons discussed above, then until it is filed as a judgment, proceedings can appropriately be brought in a court with jurisdiction to grant declarations and injunctions to establish that it is void and to prevent it being filed. However, once it has been filed, the resulting judgment is not void. An application can be made to set aside the judgment; and as noted above in pars.[41] and [42], it is not contrary to s.25(4)(a)(iii) to do so on the basis that there is in truth no adjudicator's determination."
11 Following what was said by Hodgson JA in Brodyn, the Master held that the judgment in the Local Court is not void and "therefore the Respondent must seek an order in these current proceedings that the Local Court judgment be set aside", and indeed, such an order is sought in the Amended Summons. The Master did not consider the caveat referred to by Hodgson JA that such an application should in truth properly be made in the Local Court.
12 Concluding that, in any event, there was before her proceedings to have the judgment set aside, the Master concluded that s25 (4) (b) of the Act applied and that Ms Cooper was required to pay into court, as security, the adjudicated amount pending the final determination of the proceedings.
13 The Master, in her reasons, did not expressly deal with the question whether there should also be a stay of these proceedings until the amount to be paid by s25 (4)(b) is actually paid and, indeed, there is, I think some uncertainty as to the effect of the orders the Master did in fact make. The actual form of the first order, which she made, was "I make an order in accordance with paragraph 2 of the Second Defendant's Notice of Motion dated 25 February 2005". Paragraph 2 of the Second Defendant's Notice of Motion followed paragraph 1 in which the order sought was "pursuant to FCR Pt 13 r5 (1)(c) that the proceedings be dismissed (an order which I was informed from the bar table was not pressed before the Master). Order 2 as sought then read:
"2. Alternatively, that the proceedings be stayed until the First Respondent pays into the court as security the sum of $9,834.41 being "the unpaid portion of the adjudicated amount", within the meaning of s25 (4) of the Building and Construction Industry Security of Payment Act 1999, pending the final determination of these proceedings."
14 If by making an order in accordance with paragraph 2 of the Notice of Motion, the Master intended to order a stay of proceedings until the sum of $9,834.41 is paid into court, there seems to be an inconsistency with order 2, which seems to contemplate the question of whether or not there should be a stay was referred to the Registrar.
15 The Notice of Appeal from the Master as amended at the hearing before me, by consent, relied upon the following grounds:
"1. The Master erred in finding that the Plaintiff was a 'respondent' as defined in s4 of the BCISP Act 1999.
2. The Master erred in holding that the proceedings the Plaintiff has brought by way of summons in this court are 'proceedings pursuant to s25(4) of the BCISP Act 1999 to have the judgment set aside'.
3. The Master accordingly erred in finding that the Plaintiff was obliged to pay into this court as security the 'unpaid portion of the adjudicated amount' pursuant to s25(4)(b) of the BCISP Act 1999 and that the proceedings were stayed until that payment was made;
Particulars:
(i) the Master had no power to order that the 'adjudicated amount' be paid into this court as security pending the final determination of these proceedings;
4. The Master erred in not deciding whether this court retained a discretion to so otherwise order.
16 As to the first ground, no submission was addressed in support of it and there seems to me no basis upon which it could be concluded that Ms Cooper was not a respondent as defined in the Act, namely, a person on whom a payment claim was served. No issue was raised as to this.
17 In relation to the second ground, as I have indicated, the summons before this court expressly seeks an order that the judgment be set aside. Whether or not it is appropriate for Ms Cooper to seek that relief in this court is, I think, beside the point as it is in fact the relief which she seeks. It might well be otherwise if she merely contented herself with seeking a declaration that the adjudication was void.
18 In my opinion, Ms Cooper, having chosen to seek an order in this court that the judgment be set aside, there is no warrant for concluding otherwise than that she has commenced "proceedings to have the judgment set aside within s25 (4)". If the legislature had wanted to restrict the operation of s25 (4) to proceedings within the Local Court, itself, it could easily have said so. As matter of construction, in my view, the phrase 'commences proceedings to have the judgment set aside', should be given its natural meaning and should not be restricted as suggested by Ms Cooper.
19 In the result, in my opinion, the Master correctly concluded that the obligation imposed upon Ms Cooper to pay the judgment debt in the Local Court continues and, there being no stay in operation, the judgment presently may be enforced in the usual way with the qualification that any payment of the judgment now made by, or recovered from, Ms Cooper is to be paid into court and is to be held, pending the outcome of these proceedings.
20 It does not necessarily follow, however, that there should be a stay of these proceedings until payment is made. Although there is confusion, to which I have referred, arising out of order 1 made by the Master, on the face of it, it seems that she did not necessarily think that a stay should be granted and certainly s25 (4) of the Act does not, as it could have, provide that there should be a stay of the proceedings to have the judgment set aside. Indeed, given the limited circumstances in which it might be contemplated that a judgment would be set aside, namely, as pointed out by Hodgson JA in the passages quoted above, that the adjudication was void, there seems no reason in logic why there should be a stay.
21 In the result, I am not persuaded that it is appropriate to order a stay pending payment of the judgment debt and, to that extent, Ms Cooper is entitled to succeed in her appeal. Although not expressly sought in terms, Home Productions, in my opinion, is entitled to a declaration that by virtue of the operation of s25 (4) of the Act, Ms Cooper is required to pay into the Local Court at Parramatta the sum of $9,834.41, pending the final determination of these proceedings.
22 As to costs, in the result, both parties have been partially successful. Ms Cooper has failed in her argument that s25 (4) of the Act has no application to the situation and Home Productions has failed in its argument that it is entitled to a stay of these proceedings pending payment into the Local Court of the judgment debt. In those circumstances, I think it appropriate that the costs of the proceedings, both before the Master and before me, be costs in the summons.
23 Before parting with the matter, it is, I think, appropriate to observe that, in my opinion, there is little or no utility in these proceedings. In my opinion, they arise out of the misconstruction of what the Tribunal said in relation to the adjudication in its reason for decision on the jurisdiction issue. In my opinion, there can be no doubt, in light of the terms of the statute and the decisions upon it, that the Tribunal has full power to determine all issues between the parties and that it should be given the opportunity to do so, unless the parties can otherwise resolve their differences. The operation of s32 of the Act, particularly s3, will ensure that Ms Cooper receives appropriate credit for any amount paid by her into the Local Court at Parramatta. In the context of a dispute involving relatively small amounts of money, it is difficult to see the benefit which Ms Cooper would derive from a declaration or order invalidating the adjudication. However, that is a matter for her and her advisors.
24 I make the following declaration and orders.