Supreme Court of WA|2008-04-17|Before: Mr J, Beech J

O'DONNELL GRIFFIN PTY LTD -v- JOHN HOLLAND PTY LTD [2008] WASC 58 (17 April 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : O'DONNELL GRIFFIN PTY LTD -v- JOHN HOLLAND PTY LTD [2008] WASC 58

JOHN HOLLAND PTY LTD, MACMAHON CONTRACTORS PTY LTD and MULTIPLEX CONTRACTORS PTY LTD trading as RAILLINK JOINT VENTURE

Building and construction - Payment dispute - Security of payment legislation - Determination by adjudicator under Construction Contracts Act 2004 (WA) - Application for leave to enforce as a judgment of the Supreme Court - Principles governing the exercise of discretion to grant leave

1 The plaintiff applies for leave pursuant to s 43 of the Construction Contracts Act 2004 (WA) to enforce a determination under that Act in the same manner as a judgment of this court.

2 The defendants (RLJV) are the main contractor for what is termed the package 'A' works of the South West Metropolitan Railway.

3 The plaintiff (ODG) is a subcontractor to RLJV. The subcontract dated 14 February 2005 (the Subcontract) was for a lump sum of $89,796,678.93 (excluding GST) and, in broad outline, it required ODG to supply and install electrical equipment and systems for the supply of power to trains, signalling systems and communications systems.

4 The Subcontract included provisions for progress payments.

5 Monthly progress claims have been made by ODG since no later than 2006. Each month a payment certificate was issued by the Subcontract Superintendent of RLJV.

6 On 25 October 2007, Mr van Zijl, project manager of ODG, wrote to Mr Cormac Brady, the Subcontract Superintendent of RLJV, enclosing ODG's progress claim for October 2007. The progress claim was for an amount of approximately $22.5 million excluding GST.

7 Mr Brady, as Subcontract Superintendent, issued a payment certificate on 7 November 2007. That payment certificate assessed ODG as being entitled to $589,533.70 (exclusive of GST) for the month of October 2007.

8 In December 2007, ODG applied, pursuant to s 26 of the Construction Contracts Act, for an adjudication of its payment claim in respect of the October progress payment.

9 Mr Roger Davis was appointed as adjudicator. The adjudicator determined (the Determination) that RLJV is liable to pay ODG $14,515,018.30, together with interest on that sum from 29 November 2007. Interest is to be calculated at the rate set out in Pt A, item 39 of the Subcontract, namely, the bank bill swap reference rate for 90 days as published in the Australian Financial Review. The adjudicator determined that payment of the money referred to should be made by RLJV within seven days, namely on or before 21 January 2008.

10 ODG and RLJV entered into an agreement dated 22 January 2008 by which ODG agreed not to enforce payment of the sum the subject of the Determination until 16 February 2008.

11 On 4 March 2008, ODG commenced these proceedings seeking leave pursuant to s 43(2) of the Construction Contracts Act to enforce the Determination in the same manner as a judgment or order of this court, and seeking that judgment be entered for ODG in terms of the Determination.

(a) on a proper construction of the Construction Contracts Act, leave will be granted under s 43(2) unless the respondent to an application establishes a ground upon which leave should be refused;

(b) none of the matters relied upon by RLJV justify the refusal of leave; and

13 The Construction Contracts Act does not expressly identify the matters relevant to whether leave should be granted under s 43(2). Consequently, in exercising the power to grant leave, regard must be had to the context, objects, purpose and policy of the legislation, so far as these may be discerned from the legislation and relevant secondary materials. I start with an outline of the salient features of the Construction Contracts Act.

14 The Construction Contracts Act has, as its long title suggests, two primary objects. The first, dealt with in Pt 2, relates to the content of construction contracts. Division 1 of Pt 2 prohibits or modifies certain provisions in construction contracts. Division 2 of Pt 2 implies provisions in construction contracts about certain matters if there are no written provisions about those matters in the contracts. The second primary object of the Act is to provide a means for adjudicating payment disputes arising under construction contracts. That is dealt within Pt 3 of the Act. These proceedings concern that second aspect of the Act.

15 Section 25 permits any party to a construction contract to apply to have a payment dispute adjudicated under Pt 3 of the Act.

16 A payment dispute arises (among other things) if a contractor is not paid its payment claim or has such claim rejected or disputed: s 3 and s 6.

17 A payment claim may be a claim for payment by the contractor or by the principal: s 3.

18 Section 26 sets out the process for commencing adjudication of a payment dispute. An application must be made within 28 days after the dispute arises.

19 Section 27 sets out the process for responding to an application for an adjudication of a payment claim.

20 Section 30 provides that the object of an adjudication of a payment dispute is to determine the dispute fairly and as quickly, informally and inexpensively as possible. The explanatory memorandum for the Bill says, in reference to s 30, that the adjudicator is expected to balance the need for precision with the need for a rapid outcome.

21 Section 31 prescribes short time limits for an adjudicator to make a determination. The time limit for the making of a determination can be extended only with the consent of all parties.

22 Section 31(2)(a) provides that the adjudicator must dismiss the application without making a determination of its merits if any of s 31(2)(a)(i) to s 31(2)(a)(iv) apply. Otherwise, by s 31(2)(b), the adjudicator must determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment or to return any security, and if so, determine the amount to be paid or returned; any interest payable on it; and the date on or before which the amount is to be paid.

23 Section 32 sets out matters relating to the procedure applying to an adjudication.

24 Section 36 sets out the requirements for the content of a determination. An adjudicator must give reasons for the determination: s 36(d).

25 By s 38, an appointed adjudicator's determination is binding on the parties to the construction contract under which the payment dispute concerned arose even though other proceedings relating to the payment dispute have been commenced before an arbitrator or other person, or a court or other body. The explanatory memorandum describes this section as 'a key provision in this Act that ensures money continues to flow in the contracting chain, even though the claim for payment is disputed under the contract'.

26 Section 39(1) provides that a party who is liable to pay an amount under a determination must do so on or before the date specified by the determination.

27 By s 39(2), unless the determination provides otherwise, interest at the rate prescribed under s 142 of the Supreme Court Act 1935 (WA) is to be paid on such of the amount as is unpaid after the date specified in the determination.

28 By s 40, if the principal pays an amount in accordance with a determination by an adjudicator, the payment is taken to be an advance towards the total amount payable under the contract by the principal to the contractor. The explanatory memorandum states that this section is to ensure that a payment made as part of a determination is part of the total contract sum and is not a separate payment in addition to contractual rights.

29 Section 41 provides that if an adjudicator makes a determination, the adjudicator cannot subsequently amend or cancel the determination except with the consent of the parties, and a party to the dispute may not apply subsequently for an adjudication (under Pt 5 of the Act) of the dispute.

30 Division 5 sets out the rights a successful claimant has to enforce payment of a determination. Division 5 contains two sections: s 42 and s 43.

31 Section 42 permits a contractor to give the principal notice of intention to suspend the performance of the contractor's obligations in circumstances where the principal has not paid in accordance with a determination made. The explanatory memorandum says that this provision provides some incentive to ensure prompt payment, and gives the claimant protection if it stops work.

32 Section 43(2) provides that:

A determination may, with the leave of a court of competent jurisdiction, be enforced in the same manner as a judgment or order of the court to the same effect, and if such leave is given, judgment may be entered in terms of the determination.

33 'Court of competent jurisdiction' is defined in s 43(1) to mean, in relation to a determination, a court with jurisdiction to deal with a claim for the recovery of a debt of the same amount as the amount that is payable under the determination. Accordingly, in respect of the Determination, this court is a court of competent jurisdiction.

34 Section 45 is in the following terms:

(1) This Part does not prevent a party to a construction contract from instituting proceedings before an arbitrator or other person or a court or other body in relation to a dispute or other matter arising under the contract.

(2) If other such proceedings are instituted in relation to a payment dispute that is being adjudicated under this Part, the adjudication is to proceed despite those proceedings unless all of the parties, in writing, require the appointed adjudicator to discontinue the adjudication.

(3) Evidence of anything said or done in an adjudication is not admissible before an arbitrator or other person or a court or other body, except for the purposes of an application made under section 29(3) or an appeal made under section 46.

(4) An arbitrator or other person or a court or other body dealing with a matter arising under a construction contract -

(a) must, in making any award, judgment or order, allow for any amount that has been or is to be paid to a party under a determination of a payment dispute arising under the contract; and

(b) may make orders for the restitution of any amount so paid, and any other appropriate orders as to such a determination.

35 The explanatory memorandum states that s 45(1) allows a complex claim to be fully and properly considered in parallel with an adjudication under the Act. Section 45(4) is said to allow for 'payments on account' made through adjudication under the Act to be allowed for or modified in arbitration or litigation.

36 Section 46(1) allows a person aggrieved by a decision under s 31(2)(a) to apply to the State Administrative Tribunal for a review of that decision. By s 46(3), except as provided by s 46(1), a decision or determination of an adjudicator on an adjudication cannot be appealed or reviewed. The explanatory memorandum describes this provision as a key provision in the Act to prevent appeals being used to delay payment.

37 The introduction to the explanatory memorandum for the Bill included the following:

The Act provides a rapid adjudication process that operates in parallel to any other legal or contractual remedy. The rapid adjudication process allows an experienced and independent adjudicator to review the claim, and where satisfied that some payment is due, make a binding determination for money to be paid.

Its primary aim is to keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes. The process is kept simple, and therefore cheap and accessible - even for small claims.

38 In the course of the Second Reading Speech, the Minister the Hon A J McTiernan MLA said as follows:

When a party to a construction contract believes it has not been paid in accordance with the contract, the Bill provides a rapid adjudication process that operates in parallel to any other legal or contractual remedy. The rapid adjudication process allows an experienced and independent adjudicator to review the claim and, when satisfied that some payment is due, make a binding determination for money to be paid. The rapid adjudication process is a trade-off between speed and efficiency on the one hand, and contractual and legal precision on the other. Its primary aim is to keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes. The process is kept simple, and therefore cheap and accessible, even for small claims. In most cases the parties will be satisfied by an independent determination and will get on with the job. If a party is not satisfied, it retains its full rights to go to court or use any other dispute resolution mechanism available under the contract. In the meantime, the determination stands, and any payments ordered must be made on account pending an award under the more formal and precise process.

39 The following features of the statutory scheme seem to me to be of particular relevance:

(a) The procedure for determination by an adjudicator is intended to be quick, informal and inexpensive: s 30, s 31, s 32.

(b) A determination is binding on the parties even though other proceedings relating to the substantive dispute between the parties are on foot: s 38.

(d) A determination is, with very limited exceptions, final: s 41, s 46.

(e) The substantive dispute (if any) will be determined by other means (such as arbitration or litigation) involving a comprehensive process, and payments made pursuant to a determination are to be taken into account and dealt with in the resolution of the substantive dispute: s 38, s 40, s 45.

40 The object of the scheme is, as described in the explanatory memorandum and Second Reading Speech, to 'keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes'.

41 The plaintiff submitted, and the defendants accepted, that the scheme of the Construction Contracts Act was such that on an application under s 43(2) for leave to enforce a determination, it was for a defendant to point to circumstances which justified a refusal to grant leave. Absent such circumstances, leave will be granted. I accept that submission. In my opinion, the statutory scheme gives rise to a predisposition in favour of a grant of leave. A determination is binding (s 38) and gives rise to a liability to pay (s 39).

42 The language of s 43(2) of the Construction Contracts Act is substantially identical to the language of s 33 of the Commercial Arbitration Act 1985 (WA) which provides that:

An award made under an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect, and where leave is so given, judgment may be entered in terms of the award.

43 There may be a question as to whether the use in s 43(2) of the Construction Contracts Act of the language of the Commercial Arbitration Act engages the principle of statutory construction that when Parliament enacts words which have been judicially construed, Parliament may be taken to have intended them to bear the meaning already judicially attributed to them: Re Alcan Australia Ltd; ex parte Federation of Industrial, Manufacturing & Engineering Employees [1994] HCA 34; (1994) 181 CLR 96, 106. However, the parties did not rely upon that principle. It was submitted by the plaintiff, and accepted by the defendants, that given the substantially identical language of the two sections, the principles respecting the exercise of discretion under s 33 of the Commercial Arbitration Act were of valuable assistance in the exercise of discretion under s 43(2) of the Construction Contracts Act. I accept that submission.

44 In Cockatoo Dockyard Pty Ltd v Commonwealth of Australia [No 3] (1994) 35 NSWLR 689, Rolfe J discussed the principles regarding s 33 of the Commercial Arbitration Act 1984 (NSW) (which is in identical terms to s 33 of the Commercial Arbitration Act 1985 (WA)). At 694 - 696, his Honour said as follows:

In my opinion s 33 of the Act does not provide another method whereby a party may call in question the award of an arbitrator and, although perhaps under another guise, provide the court with the power to reverse what the arbitrator has done ...

In my opinion, s 33 is not a dispute resolving provision referring a matter the subject of arbitral proceedings to the court. It provides a summary procedure whereby awards may be enforced 'in the same manner as a judgment or order of the court to the same effect', and allows judgment to be entered in terms of the award. In the context of the Act that cannot, in my opinion, mean the court is given power under s 33 to reconsider whether the award should have been made and, if for some reason it concludes that it should not, to refuse to enforce the award.

Prima facie, and so much was conceded by Mr Bennett, a party with the benefit of an award can seek to enforce it by resort to s 33. It is necessary for a party resisting an order under s 33 to establish a reason why the award should not be enforced. A reason may be that the court considers the award is arguably vitiated by appealable error, or by other circumstances making it susceptible of being set aside in accordance with the provision of the Act. In other words it may well be an appropriate exercise of the court's discretion not to grant leave if an application for leave to appeal is on foot or if an application has been made to set aside [the] award, for example, on the ground of misconduct. However unless an attempt is being made to have the award set aside I have difficulty envisaging other circumstances in which the discretion can be exercised. Certainly I do not regard s 33 as a 'back door' method of appealing against an award insofar as it constitutes a decision by the arbitrator how he should exercise his discretion. The discretion given does not include, in my opinion, an ability to re-visit the way in which the arbitrator exercised his discretion where, otherwise, his discretion is not subject to attack in accordance with the Act. A contrary conclusion would, I believe, be totally at odds with the obvious intention and philosophy of the Act.

45 Various aspects of these passages have been applied in decisions in this court: Diploma Construction Pty Ltd v Windslow Corporation Ltd [2005] WASC 74 [7] - [9], [17]; Doric Building Pty Ltd v Marine and Civil Construction Co Pty Ltd [2005] WASC 155 [64] - [65]; Premium Grain Handlers Pty Ltd v Elite Grains Pty Ltd [2005] WASC 103 [8] - [9]; Devaugh Pty Ltd v Lamac Developments Pty Ltd [2000] WASC 314 [14], [16]; Miles v Palm Bridge Pty Ltd [2001] WASC 113 [7].

46 The Commercial Arbitration Act contains specific provisions for a party to an arbitration to seek leave to appeal against an arbitrator's award (s 38) or to apply to set it aside (s 42). Where a party has an arguable application under either or both of those sections, this will often, if not generally, be a strong ground to decline to grant leave to enforce the award: Cockatoo Dockyard (694 - 696); Doric Building [65]; Devaugh [15]; Diploma Constructions [17].

47 Beyond the statutory provision for appeals or setting aside awards, an application for leave does not provide another method for a party to an arbitration to call the arbitrator's award into question: Cockatoo Dockyard (694 - 696); Diploma Constructions [9]. In my opinion, the same observation may be made of the grant of leave to enforce an adjudicator's determination. An application for leave to enforce an arbitrator's determination is not an occasion to revisit the correctness of the decision made by the adjudicator, or to open up the merits of any underlying dispute(s) between the parties. The adjudicator's decision determines only whether a payment must be made pending the determination (by agreement, arbitration or litigation) of any substantive dispute. The substantive dispute is, as it is expressed in the Explanatory Memorandum, 'sidelin[ed]' by the adjudication process. See also s 30. The evident purpose of the adjudication process would be defeated if an application for leave to enforce a determination permitted a review of the correctness of the adjudicator's determination.

48 The grounds for appeal or judicial review of an arbitrator's determination are very limited: s 46. While that makes the task of a party seeking to resist enforcement of an adjudicator's determination more difficult, in my opinion it does not detract from the application of the principles stated by Rolfe J in the context of an application under s 43(2) of the Construction Contracts Act.

49 In this case, there is no evidence of any attempt to appeal or otherwise challenge the Determination.

50 It is convenient to summarise the reasons given by the adjudicator for the Determination, before considering the matters raised by the defendants in opposition to this application.

51 The adjudicator's reasons for making the Determination need to be understood in the context of the terms of cl 37 of the conditions of the Subcontract. It was cl 37 which made provision for progress payments. Clauses 37.1 and 37.2 are in these terms:

The Subcontractor shall claim payment progressively in accordance with Item 37.

An early progress claim shall be deemed to have been made on the date for making that claim.

Each progress claim shall be given in writing to the Subcontract Superintendent and shall include details of the value of WUS done and may include details of other moneys then due to the Subcontractor pursuant to provisions of the Subcontract.

The Subcontract Superintendent shall, within 14 days after receiving such a progress claim, issue to the Main Contractor and the Subcontractor:

(a) a progress certificate evidencing the Subcontract Superintendent's opinion of the moneys due from the Main Contractor to the Subcontractor pursuant to the progress claim and reasons for any difference ('progress certificate'); and

(b) a certificate evidencing the Subcontract Superintendent's assessment of moneys due from the Subcontractor to the Main Contractor pursuant to the Subcontract.

If the Subcontractor does not make a progress claim in accordance with Item 37, the Subcontract Superintendent may issue the progress certificate with details of the calculations and shall issue the certificate in paragraph (b).

If the Subcontract Superintendent does not issue the progress certificate within 14 days of receiving a progress claim in accordance with subclause 37.1, that progress claim shall be deemed to be the relevant progress certificate.

The Main Contractor shall within 21 days after receiving both such certificates, or within 35 days after the Subcontract Superintendent receives the progress claim, pay to the Subcontractor the balance of the progress certificate after deducting retention moneys and setting off such of the certificate in paragraph (b) as the Main Contractor elects to set off. If that setting off produces a negative balance, the Subcontractor shall pay that balance to the Main Contractor within 21 days of receiving written notice thereof.

Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUS has been carried out satisfactorily. Payment other than final payment shall be payment on account only. (italics in original)

52 The adjudicator gave attention to the provision in cl 37.2 that the progress certificate to be issued by the Subcontract Superintendent was to evidence the Subcontract Superintendent's opinion of the moneys due from the main contractor to the subcontractor pursuant to the progress claims and reasons for any difference (my emphasis). The adjudicator found that, with a number of exceptions, the certificate issued by the Subcontract Superintendent in relation to the October claim did not evidence the Subcontract Superintendent's reasons for the differences between the sums claimed and the amounts assessed as payable: [13] - [18] of the adjudicator's reasons.

53 The adjudicator rejected contentions by RLJV that they were not required to comply strictly with the requirements of condition 37.2 on grounds of agreement by conduct, estoppel and waiver [19] - [20].

54 The adjudicator found that ODG was entitled to rely upon the deeming provision in the third paragraph of cl 37.2, with respect to those items for which the Subcontract Superintendent failed to give reasons, for the difference between the amount claimed and the amount assessed [27].

55 The adjudicator then proceeded on the basis that RLJV was entitled to have items in certain categories deducted from its liability.

56 The adjudicator calculated the various deductions allowed. He determined that RLJV was liable to pay ODG $14,515,018.30.

57 In the defendants' written submissions, four matters were said to justify the refusal of the grant of leave. However in oral submissions, senior counsel for the defendants relied upon one only of those matters. I will deal briefly with the other matters referred to in the written submissions, before turning to the matter relied upon in oral submissions.

58 First, the defendants submit that the court should be cautious about according the status of a judgment of the court to a determination made under the Construction Contracts Act in circumstances where the adjudication leading to the determination 'did not involve an assessment of the merits of the claims by the subcontractor'. In support of that contention it was submitted that a judgment of the Supreme Court is final and conclusive of the rights of the parties necessarily decided by the judgment. That latter proposition is no doubt true in a general sense. However, it is not apposite to a judgment entered pursuant to s 43 of the Construction Contracts Act. It is, in my opinion, clear from the statutory scheme that a determination by an adjudicator does not involve any final determination of the parties' rights and obligations. To the contrary, the statutory scheme is that the adjudicator's determination is without prejudice to the parties' ultimate rights and obligations.

59 Further, it is not clear what is meant by the defendants' submission that the Determination did not involve 'an assessment of the merits' of ODG's claims. It may refer to the fact that the adjudicator made his determination on the basis that (on his construction of cl 37.2) the deeming provision in the third paragraph of cl 37.2 operated so as to give rise to a liability, on behalf of RLJV, which meant that he did not need to and did not determine 'the merits' of the Subcontract Superintendent's opinion as to what money was due. This approach does not give rise to any ground upon which the court would decline to enforce the Determination. It was not part of the adjudicator's function to determine the merits of the substantive dispute between the parties. In the context of an adjudication of a payment dispute, the merits means no more than whether, in the events that had happened, one party to a construction contract was liable to make a payment to the other party. That is what the adjudicator determined. (For the reasons explained earlier, whether the adjudicator erred in making his determination does not arise as a question upon an application for leave to enforce the determination.)

60 The first matter raised by the defendants does not afford any basis to decline to grant leave, or give rise to any factor in favour of a refusal of leave.

61 Secondly, the defendants submit that because they had already paid amounts exceeding the amount payable under the Subcontract, the moneys the subject of the Determination cannot be paid by RLJV 'on account of' the total amount payable, as is contemplated by the statutory scheme. I accept that the statutory scheme is for payment pursuant to a determination to be made on account: s 40. However, whether the amount payable under the Subcontract, as varied and performed, has or has not been exceeded, is a matter evidently in issue between the parties. It is one of the substantive matters which will be required to be determined in any ultimate proceedings between the parties (if the parties are not able to resolve the dispute themselves). Thus, the amount correctly due under the Subcontract is a matter yet to be determined. Until that occurs, payment pursuant to the Determination would, consistently with s 40, be an advance towards the total amount payable. If, as RLJV contends, the amount paid is found to exceed the total amount properly payable, then orders will be made under s 45(4) for the repayment or restitution of the amount so paid.

62 RLJV's second point does not assist it in its opposition to ODG's application for leave.

63 Thirdly, the defendants submit that the adjudicator erred in determining that the rejection by the Subcontract Superintendent of a claim comprising part of the moneys the subject of the Determination, gave rise to a dispute for the purposes of s 26 of the Act. The defendants submit that that finding amounted to an error of jurisdiction and that, in circumstances where there is no right of review for such an error under the Act, the Determination should not be enforced. Both parties proceeded upon an assumption that the Act excluded review of a determination by an adjudicator on the ground that the adjudicator acted without jurisdiction. For the purposes of this application I am content to adopt that assumption. On that basis, consistent with the approach in Cockatoo Dockyard and Diploma Construction, any alleged error not subject to appeal or review is not a ground to exercise the discretion to decline to grant leave under s 43(2).

64 That brings me to the matter relied upon by the defendants in oral submissions.

65 The defendants point to the fact that they have claims against ODG, in an amount exceeding the amount the subject of the Determination, and that those claims are the subject of an adjudication due to be determined no later than 24 April 2008. The defendants submit that those circumstances justify the refusal of a grant of leave pending the imminent determination of the other claims, or an adjournment of the application for leave until after 24 April 2008.

66 Mr Brady's affidavit establishes the following matters. On 25 January 2008 ODG issued its progress claim for January 2008, claiming an amount exceeding $50 million. On 1 February 2008 Mr Brady issued payment certificates under cl 37.2(a) and (b) of the Subcontract. He assessed that ODG was entitled to nil in relation to the January claim because a negative balance was shown. He issued a certificate pursuant to cl 37.2(b) stating that ODG owed RLJV the sum of almost $16 million (excluding GST) for January 2008. On 22 February 2008, RLJV gave notice that it was electing to set off the moneys owed by ODG to RLJV under the cl 37.2(b) certificate given in February. On 22 February 2008 RLJV issued an invoice to ODG in the sum of almost $16 million (excluding GST), payable on 14 March 2008. Payment was not made. On 20 March 2008 RLJV lodged and served an application for adjudication pursuant to s 26 of the Construction Contracts Act in respect of its claim for almost $16 million.

67 It is common cause that the adjudicator appointed in respect of this latter application is Mr Scott Ellis and that the determination by Mr Ellis is due no later than 24 April 2008.

68 The defendants point to the fact that their claim is for an amount exceeding the amount the subject of the Determination; that adjudication of their claim is imminent; and that if they succeed before Mr Ellis and leave were to be granted to enforce Mr Ellis' determination as a judgment, the two judgments arising from the two determinations could be set off one against the other. I accept the last of those propositions: Derham R S, The Law of Set Off (3rd ed, 2003) [2.78].

69 The defendants submit that the two limbs of the definition of 'payment claim' in s 3 of the Act mean that payment claims by the principal and payment claims by the contractor cannot be the subject of the same determination. I do not accept that proposition. The Act allows for simultaneous determinations of more than one payment claim: s 32(4).

70 In any event, it seems to me that the scheme of the Act supports the view that, at least generally, each payment claim should be determined and paid separately. That construction is consistent with the object of the Act to 'keep the money flowing ... by enforcing timely payment'. The prospect of more than one payment dispute within a given construction contract is obvious as would, I think, have been apparent to Parliament. Yet the Act does not mention the existence of another payment claim, or an impending adjudication of another payment dispute, as an impediment or qualification to the obligation to make a payment the subject of a determination. Neither s 37 nor s 38 is qualified by reference to other payment claims or payment disputes.

71 In this case, it could not safely be assumed that the Determination and the impending determination by Mr Ellis will be the last determinations by adjudicators of payment claims between these parties in respect of the Subcontract. Indeed, there is reason to think the position may be otherwise. Mr Brady's evidence is that ODG has commenced an adjudication application relating to ODG's claim for progress payment for December 2007. Mr Brady's affidavit (which was sworn on 1 April 2008) does not reveal the result of that application. Further, his affidavit reveals that on 25 February 2008 ODG issued its progress claim for February 2008 claiming an amount exceeding $50 million. Mr Brady issued a progress certificate on 10 March 2008 assessing that ODG was entitled to nil. The affidavit is silent as to whether an application for adjudication in respect of ODG's February claim has also been commenced.

72 The prospect of other and further determinations between these parties in respect of the Subcontract militates against finding that the imminent determination by Mr Ellis is a ground to decline to grant leave. Mr Ellis' determination may not be the endpoint at which a final accounting can be done in respect of the parties' liabilities under determinations by adjudicators. The material before me does not enable any such endpoint to be identified.

73 The defendants submitted that if leave were granted to enforce the Determination, they would then immediately apply for a stay of execution of the judgment (or as it is now described, for a suspension order: Civil Judgments Enforcement Act 2004 (WA), s 15) pending the determination by Mr Ellis. As I understood it, that was said by the defendants to be a factor in favour of declining to grant leave to enforce the Determination. I do not accept that the prospect of an application by the defendants for a stay of execution or suspension order constitutes a factor in favour of refusing to grant leave to enforce the Determination. Arguably, it may work against the defendants' argument in this respect. It might be said that the potential availability of an application to stay or suspend execution of the judgment means that there is no necessity to refuse to grant leave to enforce the Determination. The interests sought to be protected in respect of the impending determination are, it might be said, able to be sufficiently protected by the court's power to make a suspension order. (That is not to say anything as to whether a suspension order would be granted. That can be determined only when and if such an application were made, on the evidence then adduced on such an application.) As to the circumstances in which counterclaims may be a ground for a stay of execution or suspension order see, for example, State Bank of Victoria v Parry [1989] WAR 240, 246.

74 For these reasons, the impending determination by Mr Ellis is not, in my opinion, a sufficient reason to decline to grant leave to enforce the Determination.

75 None of the matters relied upon by the defendants are, alone or in combination, a sufficient reason to decline to grant leave to enforce.

76 Consequently, all matters pointed to by the defendants having been rejected, I find that leave should be granted to enforce the Determination.

77 It was common cause that the form of the judgment should reflect the respective liabilities to ODG under the Subcontract of the three joint venturers comprising RLJV. The liability of each joint venturer is several, in the proportions of their interests specified in cl 1.2(x), being:

The judgment should be in a form that states the individual several liability of each defendant.

78 The amount of the judgment will need to accommodate the interest accrued since 21 January 2008. I will hear from the parties in that regard and generally as to the orders flowing from these reasons.

Arbitration Act 1985

Arbitration Act 1984

Judgments Enforcement Act 2004

O'DONNELL GRIFFIN PTY LTD -v- JOHN HOLLAND PTY LTD [2008] WASC 58 (17 April 2008)

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Judgment (108 paragraphs)

O'DONNELL GRIFFIN PTY LTD -v- JOHN HOLLAND PTY LTD [2008] WASC 58 (17 April 2008)

Legislation Cited (5)

Cases Cited (2)