Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd t/as Benex Pipeline

What is the Nature of the Judgment Entered 27 April 2021?

Save for s 43, as the contest was argued, the statutory purpose of Part 4 SOP Act (ACT) is, for present purposes, the same as that for the like legislation in New South Wales and in Queensland. I make no reference to legislation of other states because decisions of those other states were not referred to in argument.
The statutory purpose is to achieve a prompt interim resolution of disputes and payment of monies, all without prejudice to the parties' rights at law; such that the legislation intends to give an entitlement to progress payments, and to provide a mechanism to ensure that disputes concerning the amount of such payments are resolved with the minimum of delay. Thus, the legislation provides for a speedy but interim determination and enforcement of disputes arising out of construction contracts through the service of payment claims and payment schedules, and adjudications, leading to an entitlement to payment. Enforcement of the parties' entitlements by way of judgment, and, ultimately, if necessary, by execution, is provided for in the statutory regime; but, the parties' contractual rights, to be determined in the ordinary way in litigation, are not affected.
An essential aspect of the statutory regime is that the rights created under it are enforceable as if there had been a final determination by a court, save only for the fact that they do not create res judicata or issue estoppels: TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118 at [78]. In TFM v Decon Australia, at [81]-[82], the New South Wales Court of Appeal observed that s 32 of the New South Wales SOP Act, the equivalent of s 38 of the ACT SOP Act, alters the quality of the judgment, and that a Court will, cautiously, intervene "in order to prevent the interim rights created by the Act from being made permanent." See also, McDonald v MAK Constructions and Building Services Pty Ltd [2024] NSWCA 63 at [53]-[54].
To my understanding, the crux of the present dispute is to be resolved largely in consequence of Mossop J's judgment which found that the Determination was reached by the Adjudicator with jurisdictional error, for which error it was subsequently quashed; and that the judgment itself is an administrative judgment obtained as a step in the statutory regime.
The parties joined in informing the court that there is no authority on the question of whether or not a judgment, such as the judgment in this case entered on 27 April 2021, obtained on the filing in Court of a Determination pursuant to the regime under Part 4 of the SOP Act (ACT) (or the SOP Act of any other state), may be set aside, in circumstances of the judgment having been entered in accordance with that regime at the time.
Assuming that to be the case, there is instruction in the case law, to which I will come.
S 27 of the SOP Act (ACT) relevantly provides: 1. An adjudication certificate may be filed as a judgment for a debt, and may be enforced, in any court of competent jurisdiction. 2. … 3. … 4. If the respondent starts a proceeding to have the judgment set aside, the respondent - 1. is not, in the proceeding, entitled - 1. to bring any cross-claim against the claimant; or 2. to raise any defence in relation to matters arising under the construction contract; or 3. to challenge the adjudicator's decision; and 1. is required to pay into the court as security the unpaid part of the adjudicated amount pending the final decision of the proceeding.
Neither party argued that s 27(4) was of present application. As already recounted in the earlier chronology, the Adjudicator's decision and the Determination were quashed by orders of Mossop J in the ACT Supreme Court on 26 November 2021. In Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2), Mossop J, pursuant to the SOP Act (ACT) Part 6, s 43, determined the Determination to have been infected by jurisdictional error.
Accordingly, there is no adjudicator's decision for the purposes of s 27(4).
As an administrative decision, the Determination, and the judgment in this Court obtained on the filing of the Determination, has only such force and effect as is given to it by the SOP Act pursuant to which it was made. The SOP Act should not be construed as giving rise to an implication which gives the Determination and the judgment greater force or effect than it would otherwise have unless that implication is strictly necessary: Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11, per Gaudron and Gummow JJ at [45]-[48].
The appealing observation is that, there being no Determination obtained in accordance with the statutory regime pursuant to which the judgment was obtained; then the Determination being now void and ineffective, it would ordinarily follow that the judgment is vulnerable to be set aside. However, the question or questions to which I directed the parties was or were: whether or not, in the present circumstances of the Determination having been quashed after the judgment was obtained, the Garnishee Order issued and the money obtained by the Plaintiff on payment by the CBA under the Garnishee Order, the judgment should be set aside and restitution in the form of repayment of the those monies be ordered as if the Determination and the judgment were void ab initio.
The Plaintiff took me to State of NSW v Kable [2013] HCA 26 to support its argument that the Determination and the judgment are not void ab initio and, therefore, the Plaintiff ought not be ordered to provide restitution. In my opinion, the Kable decision should be distinguished from the present case. In Kable, the High Court dealt with the judgment of a superior court ordering the imprisonment of an individual. Unlike here, the judgment there was not of the category of the Determination and the judgment obtained on 27 April 2021, that being a judgment by way of an administrative process: see the plurality at [20]-[22].
On the question of setting aside of the judgment, I offered the parties that the real question, as I perceived it to be, is: this being an administrative judgment entered in consequence of the regime under Part 4 SOP Act (ACT), does the statutory scheme imply that it is strictly necessary that persons affected by the administrative decision should not have access to this Court for the purposes of the Defendant's Notice of Motion to set it aside?: a reference to Bhardwaj at [48]. Counsel for the Defendant responded that there is nothing in Part 4 and specifically in s 27 that gives rise to such an implication.
The Defendant referred to Brodyn Pty Ltd t/as Time Cost and Quality v Davenport & Anor [2004] NSWCA 394. In Brodyn, according to the generally equivalent regime under Part 3 of the SOP Act (NSW), judgment was entered prior to an order being obtained in the Supreme Court of New South Wales in the nature of certiorari quashing the Adjudicator's determination on grounds that the relevant payment claim was invalid and that there had been a denial of natural justice. The primary judge considered that certiorari was available if the payment claim was not valid, but refused relief in the exercise of his discretion because it could not result in setting aside the s 25 judgment (equivalent of s 27 SOP Act (ACT)). The New South Wales Court of Appeal held that the primary judge erred in the exercise of his discretion and that a District Court judgment constituted by the filing of a Determination can be set aside on appropriate grounds. At [41], Hodgson JA (Mason P and Giles JA agreeing) determined that an Order of the Supreme Court quashing the Determination or declaring it to be void could itself support the setting aside of the judgment. And that, 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 the meaning of s 25(4) (equivalent of section 27(4) SOP Act (ACT)) because the wording of the subsection assumed that there was a determination which was challenged. At [42], Hodgson JA (Mason P and Giles JA agreeing) determined that, in the absence of an order quashing the Determination or declaring it void, the Defendant to the judgment could seek to have it set aside on the ground that there never was a determination. His Honour identified such a ground as "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".
In my opinion, those are the circumstances here, given the determination of Mossop J in Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2), confirmed in the ACT Court of Appeal, special leave to the High Court refused. And in Brodyn, at [61]: "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) [equivalent of s 27(4)(a)(iii) SOP Act (ACT)] to do so on the basis that there is in truth no adjudicator's determination."
In my opinion, and consistent with those principles explained in Brodyn's case, there is nothing in s 27 or otherwise in Part 4 SOP Act (ACT) giving the necessary implication that the statutory scheme contemplated the entry of judgment and enforcement of the judgment debt in circumstances of the judgment having been obtained by way of filing, in this Court, a Certificate of Determination, the Adjudication and the Determination being so infected as to have been determined to have been obtained irregularly by jurisdictional error. In my opinion, the consequence of those circumstances in the present case is that, in truth, there is no Determination and the statutory regimen was, in that regard, not fulfilled when the Certificate of Determination was filed to obtain the judgment.
Put simply, the judgment obtained on 27 April 2021 is not the specie of administrative judgment contemplated by the SOP Act.
For these reasons, I make an Order in accordance with [1] of the Defendant's Notice of Motion, save that pursuant to UCPR r 36.15 (the parties agreed UCPR r 36.16 in the Notice of Motion was a typographical error of no consequence) the judgment obtained 27 April 2021 be set aside.

Consequence of the Judgment having been Set Aside

During oral argument, the Plaintiff focused mainly on its opposition to the Defendant succeeding in the orders for restitution, effectively sought in [2] and [3] of the Defendant Notice of Motion and upon the Plaintiff's argument that the Defendant's Notice of Motion should be permanently stayed as an abuse of process because it seeks to reopen and relitigate matters already determined by McCallum CJ in Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 7) [2023] ACTSC 292. A component of the Plaintiff argument is that the Garnishee Order was valid at the time of its issue because the subsisting judgment was then supported by the Adjudication Determination, it having not been then quashed: Plaintiff Written Submission 20 March 2024 (MFI 2) at [1]-[5].
In Go Electrical Pty Limited v Class Electrical Services Pty Limited [2013] NSWSC 517, Hammerschlag J (as his Honour then was) delivered an ex tempore judgment, the core facts being relevantly similar to those in the present case. There had been a Determination under the SOP Act (NSW), a judgment entered pursuant to s 25 of the NSW Act and the payment over of money responding to a Garnishee Order, before orders were made in the Supreme Court, without opposition, setting aside the judgment and the enforcement process. The consent orders were entered on commencement of proceedings by summons to quash the Determination. The remaining issue was whether the money obtained by payment under the Garnishee Order should be repaid. The argument put against restitution, in that form, was that a s 459E Creditor's Statutory Demand, under the Corporations Act 2001 (Cth) had been issued, claiming the judgment debt accompanied by an affidavit attesting that the Plaintiff had supplied the Defendant with goods and attesting the balance owing by the Defendant after deducting an amount claimed against the Plaintiff on the basis of alleged losses. The Defendant had commenced proceedings seeking under ss 459G and 459H of the Corporations Act that the statutory demand be set aside. In other words, there were competing claims between the Plaintiff and the Defendant concerning goods sold and losses suffered. The statutory demand proceedings were fixed to be heard only 2 weeks after his Honour's judgment of 30 April 2013.
Hammerschlag J found it to be well-established that the reversal of a judgment on appeal entitles the successful Appellant to recover any monies paid under the reversed judgment and that in that context of appeal in a superior court from a determination of an inferior court, it has no jurisdiction to withhold relief by way of recovery of monies paid. His Honour cited for that general principle, Production Spray Painting & Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659 at 661-662. His Honour also observed that, in the appeal context, UCPR r 51.54 should be seen as requiring the Court to make appropriate restitutionary orders and that the rule does not confer a discretion to refrain from making orders for repayment, for example, pending a retrial of the proceedings: at [11]-[13].
With reference to UCPR r 36.15, pursuant to which rule the Defendant proceeds in the present case, in Go Electrical, Hammerschlag J said that in the circumstance of the judgment having been irregularly obtained in that it was based on a void Adjudication Determination which was ultimately quashed, equivalent principles as in the context of appeal pursuant to UCPR r 51.54 should apply. His honour reasoned: "The Court has inherent power to make orders necessary and ancillary to an order (whether under Pt 36 or otherwise) setting aside a judgment.": at [16]. In my opinion, this statutory Court has that equivalent power, by implication, of its exercise of power to set aside the judgment under UCPR r 36.15. When the question of this Court's implied power to order restitution by repayment consequent of the judgment being set aside was raised, no submission was made to the contrary.
In response to the Plaintiff's argument here, the Defendant pointed to Hammerschlag J's rejection in Go Electrical of the argument that ordinary restitutionary principles applied against the ordering of repayment of money because, such repayment would provide unjust enrichment to the Defendant in circumstances of their competing claims in the soon to be determined statutory demand proceedings. His Honour reasoned: "The plaintiff's submissions are manifestly unsustainable. I do not consider that the Court has a discretion to refuse relief in circumstances where the plaintiff has obtained payment based on a judgment in turn based on a void adjudication determination which has been quashed. The entire consideration for the payment has failed and a common money count lies…". Further, his Honour reasoned that the proposition that there would be a set-off was also unsustainable because the Defendant was forced to make payment based on a judgment which had been set aside: at [17]-[23].
During argument, I directed the parties to Coshott Family Pty Ltd v Lyons [2022] NSWCA 216. In that decision, Kirk JA (with whom Meagher JA & Griffiths AJA agreed) emphasised that, in order for the Appellant there to obtain restitution, the Appellant had to establish a qualifying or vitiating factor. With reference to David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48 at [20], Kirk JA observed: The respondent in that case argued that "a plaintiff should be required to prove that retention of the moneys by the recipient would be unjust in all the circumstances before recovery should be granted" (at 378). That argument was rejected. The plurality stated as follows at 379 (citations omitted): "it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. As this Court stated in Westpac Banking Corporation: 'In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment.' … The respondent's submission that the appellants must independently prove 'unjustness' over and above the mistake cannot therefore be sustained. The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust."
At [22], his Honour , after recounting a long line of authority establishing that some qualifying or vitiating factor was required to be shown in order to make out a claim for money had and received, stated "The presence of such a factor goes to establish that money the defendant received is held to the use of the plaintiff so as to found a claim to restitution."
Applying the above referred to principles in the present case, I reject the Plaintiff's argument that I should refrain from ordering relief by way of repayment of the money obtained under the compulsion of the Garnishee Order on the basis that the Plaintiff has claims yet to be determined in the Federal Court proceedings which the parties contest on the basis of the construction contract and external to their rights under the SOP Act. On those principles, I also reject an argument, to which I will come later in these reasons, where the Plaintiff put that, for general considerations, it would be unjust to order restitution. In that submission, the Plaintiff fails to identify a qualifying or vitiating factor, whereas the Defendant relies on the irregularity of the judgment, it having been obtained on the procedural and administrative filing of the Determination which has been quashed.
The Defendant relied also on BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394. In that decision, between [62] and [68], the Court referred to application of the Bhardwaj case in the context of the "pay now, argue later" nature of the SOP regime Queensland. That same nature of scheme applies here. At [70], the Court referred to protection of the administrative judgment so obtained, provided by the scheme. Like provisions are ss 26 and 27 SOP Act (ACT), and 24 and 25 SOP Act (NSW). But, that protection is only by strict compliance with the provisions of the Act. At [71], the Court reasoned "once a court determines that a decision of the type in question is affected by jurisdictional error, the decision cannot give rise to legal consequences" and at [72] that, consequent of jurisdictional error, the Determination had no legal effect. At [77], the Court found that the Determination gave no entitlement to payment of any part of the Adjudication amount, as the party in the position of the Defendant here, had no obligation to pay it and, having paid it, had a right to recover it.
I return to the Plaintiff argument that this Court should not, in the exercise of its discretion, order restitution in the form of repayment of the monies, not just because it would provide unjust enrichment and cause the Plaintiff harm in circumstances of the parties having conducted themselves, now for nearly 3 years, on the basis of the monies having been paid and there being presently, at interlocutory stages, the Federal Court proceedings in which they seek final determination of their rights under the construction contract; but also because it would be an abuse of process, the issue of restitution having already been litigated and determined in the ACT Supreme Court, including as finally determined by McCallum CJ in Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 7). In relation to the first of those bases, I repeat what I earlier observed of the principles stated in Coshott Family Pty Limited v Lyons and the David Securities case. Broad notions of unjustness are not the basis for restitutionary relief.
The Defendant, as a first position, on the basis of the authorities of the Brodyn and Go Electrical cases, to which I just referred, says that this Court does not have a discretion but, in accordance with principle, must order that repayment. The Defendant's second position is that, should there be a discretion, the Court would refuse the stay sought by the Plaintiff in its Notice of Motion.
My determination is that the order for repayment, in accordance with principle, should be made. Should I be wrong, I now turn to consideration of whether or not, in the exercise of discretion, I would make that order in any event.
My first, and it is a fundamental, response to the Plaintiff argument, is that I do not agree that McCallum CJ determined the question of restitution on the same basis as is under present consideration. This is because, her Honour was careful to observe that she was not considering the Defendant's entitlement to restitution on the basis of the judgment having been set aside. At [22], she expressly identified that matter. That being so, at [34]-[38] her Honour identified the broad unifying principle of "unjust enrichment" including where "injustice lies in the non-voluntary conferring of an incontrovertible benefit, the non-voluntariness arising on grounds such as mistake, duress, undue influence or total failure of consideration". Her Honour expressly observed that the amount the Plaintiff received under the Garnishee Order was not paid by mistake, under duress or as a result of undue influence and nor was there a total failure of consideration. And, again, distinguishing the point made by the Plaintiff in the present, contest at [38] "Furthermore, so long as the judgment obtained in the District Court remains in force, it cannot be said that Harlech has been unjustly enriched."
In any event, the Chief Justice's decision was interlocutory. There has been a change of circumstance now that the judgment is to be set aside on the Defendant's Notice of Motion seeking that order. For those reasons, in my opinion, the present contest is not an abuse of process by relitigating an identical question which has been determined by a Court of competent jurisdiction. Just as the Chief Justice considered the claim for restitution, having found a change of circumstances, she determined the question contrary to the earlier determination of Elkaim J. I proceed likewise in this application.
The Plaintiff argued that it was both an abuse of process and a matter otherwise for consideration in the Court's exercise of discretion whether or not to order restitution, that both before Elkaim J and Mossop J, in those separate Hearings, Counsel for the Defendant expressly elected to and refrained from seeking to set aside the judgment before seeking restitutionary relief. The Plaintiff argued that the Defendant should not be permitted to do so now.
I found this argument unconvincing on many bases, but in particular on the basis that it was not correct, as the Plaintiff submitted, to say that the Defendant now tries to undo that which the Supreme Court of the ACT has done. In the Supreme Court of the ACT, the Defendant did not ever claim restitution in the circumstance of the judgment having been set aside. In addition, as a practical matter, in that Court the Defendant principally proceeded to quash the Determination, a result in which it was ultimately successful. The practical and logical order of events required that determination to be made before the application, such as is the Defendant's present application, to set aside the judgment.
The Determination having been obtained under the SOP Act (ACT), the Supreme Court of the ACT was the appropriate forum for seeking of that primary determination. A point not canvassed in argument in this contest is that, had the Defendant sought to seek declarations or injunctive relief toward quashing or restraining the Determination in this Court, it may not have been an exercise in the convenient forum and may have required relief not obviously within the jurisdiction of this Court. In my opinion, the course chosen by the Defendant in the Supreme Court ACT proceedings, is not good reason to exercise a discretion not to order restitution now.
The Plaintiff submits that s 38(3) ousts the power to order restitution because it provides an exclusive source of that power. That is, that restitution can only be ordered under final relief in the Federal Court proceedings. In my opinion, s 38(3) is not in those terms and to so construe it would be contrary to the reasoning of Hammerschlag J to which I have referred in the Go Electrical case, and which reasoning I have respectfully adopted.
I accept the further submission of the Defendant that the SOP Act should not be found to intend to bind the process in this foreign jurisdiction.
Finally, I come to s 124A CPA. The section provides that "The court may, at any time on the application by a judgment debtor, vary or suspend the making of payments by the judgment debtor under a garnishee order, or order the total amount paid by the judgment debtor under the garnishee order to be repaid, if the court is satisfied that it is appropriate to do so". The Defendant says that the Court's power to make the order follows on the basis of principle for an order for restitution, to which I have referred, and that s 124A is an additional statutory power specific to the consequence of the Garnishee Order in circumstances of the judgment being set aside. The Plaintiff says that s 124A, being an express power, means that the general power is not available.
In my opinion, it is not required that I determine that contest; but, were I required to do so, the general power to order restitution on the basis of principle to which I have referred prevails, and s 124A is not exclusive. I accept the Defendant submission, but, in any event, s 124A puts beyond contest this Court's power to order that the total amount paid by the Defendant to the Plaintiff under the Garnishee Order be repaid.
For the above-stated reasons, the Defendant is entitled to an Order that the Plaintiff pay to the Defendant the sum of $196,428.79 together with interest pursuant to s 100 of the CPA calculated to run from 7 May 2021 to the date of this Order.
I make the following Orders: 1. The judgment entered 27 April 2021 be set aside. 2. The Garnishee Order entered 6 May 2021 be set aside. 3. The Plaintiff pay the Defendant $196,428.79 together with interest calculated in the agreed sum of $32,860.32, to run from 7 May 2021 to the date of this Order, pursuant to s 100 CPA. 4. The Plaintiff Notice of Motion filed 19 May 2024 be dismissed. 5. The Plaintiff pay the Defendant's costs on the usual basis.

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