The plaintiff, Parkview Constructions Pty Limited ("Parkview"), seeks interlocutory relief to restrain the First Defendant, Total Lifestyle Windows Pty Limited trading as "Total Concept Group" ("Windows"): (i) from applying for an adjudication certificate from the Australian Building and Construction Dispute Resolution Service (also referred to as "DRS") under the Building and Construction Industry Security of Payments Act 1999 (NSW), ("the Act"), in respect of an adjudication determination of Kenneth Spain, the Second Defendant, dated 9 December 2016; and (ii) from filing any adjudication certificate that may have been obtained as a result of that determination by Mr Spain, or seeking to enforce or rely upon it.
Mr M. Christie SC and Mr D. Weinberger of counsel appear for the Plaintiff instructed by Salim Rutherford lawyers. Mr D. Savage QC and Mr M. Bland appear for the First Defendant instructed by Justin Matthews of QBM Lawyers of Queensland. The Second Defendant filed a submitting appearance and did not appear in the proceedings. The matter came before the Court in its Duty Vacation List this morning, after proceedings commenced last week, were referred into this list by McDougall J.
These two contracting parties are in a dispute that undoubtedly arises under the Act. There is no issue that the construction work the subject of their mutual contractual relations is caught by the Act. Nor is there any other dispute about the application of the Act. The Second Defendant is appointed by an authorised nominating authority under the Act, DRS, as an adjudicator under the Act from time to time.
In May 2015 Parkview as head contractor entered into a sub-contract with Windows for the design, supply and installation of glazed windows and doors at the Woolooware Bay town centre project in Captain Cook Drive, Woolooware. The subcontract commenced on 18 May 2015 and the works were to be completed by 14 December 2015.
On 11 October 2016, while the works were still not complete Windows issued a payment claim for $607,433.86 (inclusive of GST) under the Act. On 25 October 2016 Parkview served a payment schedule under the Act for nil dollars. Parkview contends that 2 days later, on 27 October 2016, that Windows abandoned the works and the site without any entitlement to do so. Windows disputes that it was without justification for ceasing work.
The history of the adjudication of this matter may be shortly summarised. It is not in dispute that Parkview did not make payment in accordance with Windows' payment claim and its schedules. Parkview's contention is that Windows filed and served an application for adjudication of the claim under s 22 of the Act based upon its payment claim on 10 November 2016.
During the adjudication Mr Spain, the adjudicator, concluded he was not able to have regard to a submission filed by Parkview in reaching his determination in the adjudication, on the grounds that the submission was not filed within time in accordance with s 20 of the Act.
The adjudicator's conclusion depends upon a factual finding that Windows' adjudication application had been filed on 9th November, and that therefore the 5 business day limit for filing a response provided for by the Act, s 20 had been exceeded, and that as a result s 21(2) of the Act commanded him to disregard the out of time submission in reaching his certificate of determination..
The adjudicator was satisfied that Parkview's adjudication response was served on 17 November 2016. He found that as the adjudication application had been served pursuant to s 17(5) of the Act on Parkview on 9 November 2016, that Parkview's adjudication response was due to be served on the DRS on 16 November 2016: that is within 5 business days of service of the adjudication application. As was served one day later on 17 November, it was out of time.
The adjudicator followed the logic of this factual finding, and concluded that he could not take Parkview's submission into account. Accordingly based only on Windows' adjudication materials he determined an adjudicated amount in the sum of $539,634.24 (including GST), an amount less than Windows' claim.
As Mr Savage of senior counsel for Windows rightly pointed out to the Court, there was compelling evidence before the adjudicator to found the adjudicator's determination that that service of the adjudication application occurred on 9 November, not 10 November. An Australia Post tracking certificate for the letter indicates that delivery took place on 9th November at 3.12pm rather than on 10th November. Indeed the adjudicator founded his conclusion as to the date of service on this Australia Post tracking document, the effect of which was confirmed in Australia Post's subsequent correspondence upon Windows' enquiry.
The evidence the other way is an affidavit, of Mr Chris McGrath, the solicitor for Parkview. Mr McGrath's affidavit annexes Windows' covering letter addressed to Parkview dated 8 November 2016, referring to the submission of the adjudication application to DRS and enclosing for Parkview a copy of the full application on a USB drive and declaring that "a hard copy of the application will also be sent by courier to your office and should arrive later this week".
Once this 8 November 2016 letter came into the possession of Parkview, someone stamped it "RECEIVED - 10 NOVEMBER 2016". Mr McGrath further deposes to the fact that Ms Jenny David, the company secretary of Parkview informed him that Parkview had received Windows' letter at Parkview's usual place of business in Pyrmont on 10 November 2016. Mr McGrath says that Parkview was served with folders comprising the hardcopy of the adjudication application on 11 November 2016 at its Pyrmont offices.
This material from Mr McGrath is not of high probative quality but it is acceptable for an interlocutory application such as this. This material is consistent with two hypotheses: (1) that employees of Parkview may have received adjudication application on November 10th and stamped it as received that same day; and (2) this material is also consistent with the possibility that the adjudication application may have been received on the 9th, consistently with the Australia Post certificate, but only discovered and stamped by Parkview's employees on the 10th.
Mr Savage of Senior Counsel was somewhat critical of the quality of the evidence Parkview advanced on this interlocutory application to show there was a serious question to be tried. There was no clear explanation from Parkview as to why better evidence was not available, from its own employees such as Ms Jenny David, even on an interlocutory application, as there certainly appeared to have been sufficient time for such evidence to be gathered and presented the Court.
If at a final hearing Parkview does establish that the adjudication application under s 22 was served on the 10th and not the 9th, then Parkview has an excellent case that the adjudicator denied it procedural fairness. On the other hand, if it turns out that the adjudicator's decision, consistent with the Australia Post certificate is right, then Parkview has few other cogent arguments to challenge the adjudicator's determination.
Another argument Parkview now deploys to answer Windows' case that the adjudication application was served on the 9th is that because it was served in the form of a USB stick; it was not a delivery of an application "in writing" as is required by s 17(3)(a) of the Act.
Mr Weinberger, of counsel for Parkview, referred the Court to the Interpretation Act 1987 (NSW), s 21 which relevantly provides as follows:
"'writing' includes printing, photography, photocopying, lithography, typewriting and any other mode of representing or reproducing words in visible form."
Mr Weinberger submitted that delivery of the USB stick was not delivery of the adjudication application "in writing", because the USB stick delivered was not readily able to be read at the time it was delivered.
But the adjudicator himself dealt very effectively with that issue. He said that the words, "writing" are part of an inclusive definition and may be construed in the Interpretation Act to include documents which may only be legible, or seen, or read once they are taken out of a folder, or out of an envelope. It does not seem to be a very great distance from that situation by analogy to the USB stick here, which only needs to be attached to a computer USB port before its contents can be read.
Mr Savage SC of counsel for Windows sought to counter this argument using the Electronic Transactions Act 2000 (NSW) ("the ET Act"), s 8(1), which provides as follows:
"8 Writing
(1) If, under a law of this jurisdiction, a person is required to give information in writing, that requirement is taken to have been met if the person gives the information by means of an electronic communication, where:
(a) at the time the information was given, it was reasonable to expect that the information would be readily accessible so as to be useable for subsequent reference, and
(b) the person to whom the information is required to be given consents to the information being given by means of an electronic communication."
But the application of the ET Act seems to be of doubtful relevance here. Section 8 of the ET Act seems to require consensual cooperation on the part of the communication recipient (in this case, Parkview), to the communication of the item to it electronically. Evidence of that consent is not yet clearly established here.
But it seems to me that the real question for any final hearing here turns on the factual issue of the date of service of the adjudication application. The Court asked the parties whether this was an interlocutory or final hearing at the beginning of this proceeding. They both said that given today's busy list, and the state of the evidence that it was an interlocutory hearing. It being an interlocutory hearing, some degree of latitude is given to plaintiffs in relation to the quality of the evidence they advance.
Mr Savage SC's argument is effective to a considerable degree: evidence could have been obtained for Parkview, namely from the employee Ms Jenny David responsible for recording receipt of the covering letter on 10 November, could have been produced but has not been made available. But that is not uncommon on interlocutory applications. No doubt it can be said that there was an opportunity between last week and today for that employee to be found, and for evidence put on from her. But that has not occurred.
The relevant law governing this case comprises two sets of legal considerations: one is the application of the Act and the other is the general principles that apply to the grant of interlocutory injunctions.
Firstly, as to the application of the Act, Mr Savage, of Senior Counsel, for Windows, took the Court to statements that Keane JA (as his Honour then was), made about the operation of the Building and Construction Industry Payments Act 2004 (Queensland), in RJ Neller Building Pty Limited v Ainsworth [2009] 1 Qd R 390 ("Neller"), in a passage since approved in the New South Wales Court of Appeal in Chase Oyster Bar Pty Limited v Hamo Industries Pty Limited (2010) 78 NSWLR 393; [2010] NSWCA 190 at [207], as applicable to provisions of the equivalent New South Wales legislation, the Act:
"[207] The Security of Payment Act operates to alter, in a fundamental way, the incidence of the risk of insolvency during the life of a construction contract. As Keane JA said, of the not dissimilar Queensland statute, the Building and Construction Industry Payments Act 2004 (Qld), in RJ Neller Building Pty Ltd v Ainsworth [2008] QCA 397 at [40], the statute "seeks to preserve the cash flow to a builder notwithstanding the risk that the builder might ultimately be required to refund the cash in circumstances where the builder's … inability to repay could be expected to eventuate". It followed, his Honour said, that the risk of inability to repay, in the event of successful action by the other party, must be regarded as one that the legislature has assigned to that other party. The same is true of the regime established by the Security of Payment Act."
The thrust of this statement is that the intent of the legislative scheme of the Act is that there should be payment to contractors, and that the risk of any incapacity of contractors to repay those moneys should be borne by owners.
On an application such as this one, that general policy of the legislation must also be considered with the generally applicable legal principles about the grant of interlocutory injunctions.
In deciding whether or not to grant an interlocutory injunction the Court must consider whether there is a serious question to be tried and then whether the balance of convenience and questions of hardship and related factors warrant the grant of an interlocutory injunction. First, the plaintiff must prove a serious, not a speculative, case which has a real possibility of ultimate success and that property or other interests might be jeopardised if no interlocutory relief is granted: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed 2014, LexisNexis Butterworths) at [21-350] ("Equity Doctrines and Remedies"), discussing the requirements of the Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618 prima facie case test. Put another way, the plaintiff must show a sufficient likelihood of success to justify the preservation of the status quo pending the trial: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 at [70] - [71].
Then, it becomes a matter of analysing if in all the circumstances of the case, considering the balance of convenience and issues of hardship the Court should nonetheless exercise its discretion by declining to issue an interlocutory injunction: Equity Doctrines and Remedies at [21-350]; and see also Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 and Beese v Woodhouse [1970] 1 WLR 586. Other factors to which the Court will have regard include the adequacy of damages, the possibilities of alternative remedies, whether there has been any laches or delay, the strength of the grounds of defence suggested by the defendant, what, if any, undertakings the defendant is prepared to give, but hardship and balance of convenience are very important: Equity Doctrines and Remedies [21 - 375]. If any infringement of a plaintiff's right between writ and hearing would be properly compensated in damages, that fact alone can, but not must, be a ground for declining an injunction: McCarty v Council of the Municipality of North Sydney (1918) 18 SR (NSW) 210.
Very little has been said in this case about the balance of convenience. Parkview offers to pay the full amount the subject of a possible adjudication certificate into Court and gives the usual undertaking as to damage. Other than this the Court has been asked to take general notice of the possibility that Windows may be unable to repay the funds, if they were paid to it in accordance with a filed certificate, which was later set aside. No specific evidence is before the Court to suggest Windows' financial position is precarious.
In this case, it does seem to me that there is a serious factual issue to be tried. It is a simple issue, but one which will have decisive consequences for each side depending on how it is decided. If Parkview does succeed in showing that delivery of this application to it occurred on the 10th November, then it has a strong prospects of success. If on the other hand the adjudicator's determination is upheld as a matter of fact, then Windows has sound chances of success, notwithstanding the alternative legal arguments that have been deployed.
The reality is that at this time of the year, in this list, in these circumstances, the parties have said to the Court that they cannot, by adducing evidence from Parkview's employees as upon a final hearing, now try the question of when this delivery occurred. I find this is a serious question to be tried at a later final hearing, and so the first part of the Beecham Group test is made out: Beecham Group v Bristol Laboratories Pty Ltd (1968) 118 CLR 618.
As to the balance of convenience, of course I take into account the policy and operation of the Act. But in my view, the appropriate course in this case is for directions to be given for these proceedings to be rapidly prepared for hearing and for it to be a made a condition of the grant of interlocutory relief that the funds in question, the subject of the determination be paid into Court. And that is the course I will take.
In my view the balance of convenience favours the payment of these funds into Court rather than their payment to Windows in accordance with the filed adjudication certificate. This is principally because the factual issue in the case is so simple that it can very quickly be readied for hearing on both sides and be heard very early in the new term. The case will probably only take a few hours and is likely to be able to be heard in February 2017.
With that in mind any prejudice to Windows from payment into Court is not likely to be substantial and the sum will be secured to Windows by reason of the payment into Court. The detailed directions below give effect to the Court's intent to ensure the parties co-operate in preparing this matter for hearing during the Court's vacation.
The costs of this application should be the successful parties' costs in the cause.
[2]
Conclusion and Orders
Upon the plaintiff giving the usual undertaking as to damages, the Court orders that:
1. On the plaintiff paying the sum of $570,420.80 in to Court by 30 December 2016, the first defendant be restrained, until further order, from:
applying for an adjudication certificate from Australian Building & Construction Dispute Resolution Service or any other authorised nominating authority under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) in respect of the adjudication determination of Kenneth Spain dated 9 December 2016;
filing any adjudication certificate that may have been obtained from Australian Building & Construction Dispute Resolution Service or any other authorised nominating authority under the Act) in respect of the adjudication determination of Kenneth Spain dated 9 December 2016 as a judgment of any Court of competent jurisdiction;
seeking to enforce or rely upon the adjudication determination of Kenneth Spain dated 9 December 2016.
1. The defendants are to serve a Technology and Construction List Response by 30 December 2016.
2. The plaintiff to file and serve any evidence upon which it relies by Monday, 16 January 2017.
3. The first defendant to file and serve any evidence upon which it relies upon by Wednesday 1 February 2017.
4. The matter be listed for directions on 3 February 2017.
5. The costs of this application will be the successful party's costs in the proceedings.
6. Fix 9.30am before the Registrar in Equity on Tuesday, 31 January 2017 for the return of subpoenas.
7. Liberty to apply.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 20 January 2017
Parties
Applicant/Plaintiff:
Parkview Constructions Pty Limited
Respondent/Defendant:
Total Lifestyle Windows Pty Ltd
Legislation Cited (6)
Building and Construction Industry Security of Payments Act 1999(NSW)