[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
. .
[2]
Judgment
PAYNE JA: By notice of motion dated 14 February 2018, the applicant Probuild Constructions (Aust) Pty Ltd (Probuild), sought an order staying the enforcement of orders 2 and 3 made by this Court on 23 December 2016 in Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2016] NSWCA 379. The orders made by the Court were:
"1. Allow the appeal and set aside the orders made in the Equity Division on 15 June 2016.
2. In place thereof, order that the summons filed on 29 February 2016 be dismissed and that the plaintiff (Probuild Constructions (Aust) Pty Ltd) pay the costs of the first defendant (Shade Systems Pty Ltd) in the Division and the costs of the second defendant (Doron Rivlin) on a submitting basis.
3. Order that the first respondent pay the appellant's costs in this Court and the costs of the second respondent, the latter to be assessed on a submitting basis."
The stay of orders 2 and 3 was sought pending the outcome of separate proceedings commenced in 2017 by Probuild against Shade Systems Pty Ltd (Shade Systems) in the Equity Division. Terms of the stay were suggested as being that Probuild be ordered to pay the amount assessed as payable under the costs order into Court. In the alternative, Probuild's motion sought to have this matter remitted to the Equity Division so that the question of the costs orders made by this Court be dealt with as part of case management of those proceedings.
The matter came before me in the referrals list on 26 February 2018. Another dispute between the parties was addressed on that day and I delivered judgment on those questions on 28 February 2018: Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33; Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2018] NSWCA 34. In what follows, familiarity with those reasons is assumed.
Pursuant to directions made by me on 28 February 2018, Probuild filed an affidavit sworn by Mr Stulic on 2 March 2018 and written submissions also dated 2 March 2018. Shade Systems filed written submissions on 9 March 2018 with the intention that this motion be determined on the papers.
The current position is that Certificates of Determination of Costs under s 70 of the Legal Profession Uniform Law Application Act 2014 (NSW) have issued in relation to both sets of costs orders in the amounts of $181,792.54 (Court of Appeal costs) and $72,371.76 (trial costs). On 9 February 2018, Probuild lodged applications for review of those determinations pursuant to s 83 of the Legal Profession Uniform Law Application Act and pursuant to s 86 of that Act "the operation of [each] determination is suspended". The review process is currently underway.
The Equity Division proceedings, which concern Probuild's claim for liquidated damages from Shade Systems, are next listed for directions on 23 March 2018.
Probuild principally submitted that if it was successful in the Equity Division proceedings, it would then be able to raise the judgment obtained there as a set-off against its liabilities under the costs orders made in this Court on 23 December 2016. Accordingly, Probuild submitted that this Court should intervene to prevent a "race" between the Equity Division and the ongoing process of assessment of the costs payable under the costs orders made by this Court. It was submitted that Derham, The Law of Set-Off Oxford University Press (2010) at 2.92-2.93 and the decision of the Court of Appeal in Schofield v Church Army [1986] 1 WLR 1328 (EWCA) provided authority for the grant of a stay and a relevant analogy to the present case.
I reject at the outset Probuild's alternative application for this matter to be remitted to the Equity Division. This motion involves two costs orders made by this Court. It is prima facie appropriate that any application for a stay of orders made by this Court be determined by this Court. There is no reason for that prima facie position not to be adopted here. Remitting this matter to the Equity Division would only cause further delay and costs in a matter where the legal costs of the administrative law proceedings long ago outstripped the amount at issue in those proceedings.
I have reached a clear view that Probuild's application for a stay should be rejected. Whilst I have a discretion to order a stay or remit the matter to the Equity Division, neither the passages in Derham nor the decision in Schofield relied upon by Probuild provide any support for the exercise of that discretion in its favour here.
In Schofield the Court of Appeal was concerned with a case where a tribunal had found an employee to be unfairly dismissed and awarded compensation. That award had been registered in the County Court and a garnishee order had issued. Separate proceedings had been issued by the employer against the employee in the High Court. The Court of Appeal held that money paid into the County Court under the garnishee order should remain in the County Court pending determination of the High Court proceedings. That was because, as Derham points out at 2.93, there were "special circumstances" within the meaning of RSC Ord 47 r 1 present. Those "special circumstances" were that the tribunal had no jurisdiction to entertain the appellant's allegation of theft as a counterclaim to the respondent's claim of unfair dismissal.
The present case is quite different. In Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 the plurality explained that the object of the Building and Construction Industry Security of Payment Act 1999 (NSW) is "to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services" (at [4]). The Security of Payment Act creates an entitlement that is "determined informally, summarily and quickly, and then summarily enforced without prejudice to the common law rights of both parties which can be determined in the normal manner" (at [44]). Where (as in the present case) it is contended that an adjudicator has made an error of law within jurisdiction, resulting in a progress payment that is excessive, the dispute may be resolved through civil proceedings under the construction contract. If necessary, a restitutionary order can be sought. The risk that the party placed at an advantage by an underpayment or overpayment may later become incapable of meeting such an order is a risk that is assigned to the other party (at [51]) (emphasis added).
That is the position concerning Shade Systems' rights pursuant to the Security of Payment Act. The present application, of course, concerns the costs of the unsuccessful administrative law proceedings conducted by Probuild. The question of a stay in relation to the payment of those costs raises different issues to those raised by the question of a stay of rights created by the Security of Payment Act addressed in my principal decision. Those issues are formidable in circumstances where, as Shade Systems correctly submits, Probuild's asserted right in the Equity Division proceeding does not give rise to an equitable set off as it is not bound up with or go to the root of Shade System's right to its costs under the orders of this Court: HP Mercantile Pty Ltd v Dierickx [2013] NSWCA 479 at [136] per Emmett JA (with whom Beazley P and Meagher JA agreed on this point).
Although in form what Probuild has sought is a stay, the effect of the order is little different from a freezing order, sought to prevent the costs paid in successfully defending itself being reimbursed to Shade Systems and, potentially, dissipated in advance of the Equity Division proceedings being concluded. Such an order is a drastic remedy and was not designed to require a defendant to provide security as a condition of being allowed to defend the action: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [51]; Frigo v Culhaci [1998] NSWCA 88 (at p 6) per Mason P, Sheller JA, Sheppard AJA). In Finn v Carelli [2007] NSWSC 261 Brereton J said:
"5 It is important to bear in mind that the jurisdiction to make orders of this type was never intended simply to enable a plaintiff or judgment debtor to obtain security for its judgment in advance of execution, but was firmly founded on the jurisdiction of the Court to prevent abuses of its process by preventing a defendant or judgment debtor from embarking on a course of conduct which would have the effect of defeating the Court's jurisdiction. It also needs to be borne in mind that the mere fact that a judgment may not be satisfied for reasons of impecuniosity does not mean that there is an abuse of process. Indeed, it has been pointed out on several occasions that the prospect of impending insolvency is not a reason to grant a Mareva injunction [Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545, 558]." (Emphasis added).
That principle, drawn from the freezing order cases, is relevant to the exercise of my discretion here, where in substance, if not in form, Probuild seeks an order akin to a freezing order about Shade Systems' costs. As I have earlier found, Shade Systems' current financial position is precarious. Nevertheless, I do not regard that matter as weighing strongly in favour of the grant of the orders sought by Probuild. There is no abuse of process in Shade Systems being reimbursed for the costs expended in defending Probuild's unsuccessful attempt to obtain administrative law relief.
Further, a critical consideration weighing strongly against the grant of a stay is the undertaking given to the High Court as a condition of the grant of special leave that it would not seek to disturb the costs orders made by this Court. The possibility that Probuild might seek a stay of the present kind, effectively depriving Shade Systems of its costs until the completion of separate litigation, may have been material to the terms of any grant of special leave by the High Court. While, perhaps, what is now sought by Probuild concerning Shade Systems' costs is not directly inconsistent with the undertaking which Probuild gave, it is certainly contrary to the spirit of that undertaking.
The Court's overriding concern is to ensure that litigation is resolved in a timely fashion and in accordance with the framework constituted by ss 56 - 60 of the Civil Procedure Act 2005 (NSW). Section 58(1) requires the Court, in considering whether to make any order of a procedural nature, to seek to act in accordance with the dictates of justice. That includes the effect of s 56 and s 57 of the Civil Procedure Act (s 58(2)(a)) as well as such matters as the Court considers relevant as set out in s 58(2)(b). The latter matters include the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction: s 58(2)(b)(vi).
The time has come for Probuild's failed administrative law challenge to come to an end. The matter has occupied the Equity Division, a five member bench of this Court and the High Court of Australia. The costs of Probuild's unsuccessful cases were determined by this Court and no reason has been shown that Shade Systems should not now be entitled to be reimbursed for the costs expended in successfully defending itself. This is the fourth judgment I have written following from the three motions filed by the parties after the decision of the High Court was given. It is not in the interests of the timely disposition of litigious disputes for this matter to be permitted to go on any longer.
I refuse Probuild's application for a stay of the Court's earlier costs orders or, in the alternative, to remit this matter to the Equity Division. For the reasons given above, such an order would not be in the interests of justice. The order of the Court is that the motion filed by Probuild Constructions (Aust) Pty Ltd dated 14 February 2018 is dismissed with costs, such costs to include the costs of preparation of the submissions filed by Shade Systems on 20 March 2018.
[3]
Application for amendment to earlier judgment
In Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33 I said the following at [24]-[25]:
"[24] The judgment in Brodyn v Davenport is a relatively early consideration by this Court of the Security of Payments Act. At the relevant passage ([85]), Hodgson JA identifies the existence of the discretion to grant a stay, and notices that "the policy of the Act that progress payments be made would be a discretionary factor weighing against such relief". This observation is consistent with later authority I will address below. Hodgson JA also explains, particularly at [88], that it would be desirable that issues concerning stays be dealt with as case management issues in proceedings brought to obtain a final resolution of the rights of the parties. Whilst I do not doubt that general principle, this case is very different. It has now been conclusively determined that the progress payment the subject of dispute should have been made by Probuild to Shade Systems in early 2016. The funds the subject of these motions were paid into Court at the end of 2016 pursuant to an order of the Court of Appeal pending the outcome of the High Court's decision and as a condition of the grant of a stay. That decision of the High Court has now been given. It is appropriate that, sitting in the Court of Appeal, I deal now with the consequences for the parties of the Court's order otherwise being spent.
[25] It is also a factor strongly in favour of my determining this question now that (with the possible exception of the belated approach to Hammerschlag J after the High Court had delivered its judgment) Probuild has taken no step in any proceedings over a number of years to obtain a stay of the kind Hodgson JA was addressing. The High Court has now pronounced its orders and published its reasons. I accept, as Shade Systems submitted, that if the stay in effect now sought by Probuild had been agitated before the special leave hearing, special leave may not have been granted, except on terms. This delay by Probuild is an additional reason for me to deal with this issue now."
Subsequent to delivery of that judgment and in the course of written submissions dealing with the issue addressed earlier in this judgment, Probuild submitted that the phrase "over a number of years" was incorrect. It submitted that, at most, I should have found that there was a cumulative period of about 12 months where Probuild could theoretically have sought an injunction in private law proceedings restraining the enforcement of the determination made under the Building and Construction Industry Security of Payment Act 1999 (NSW).
I am content that I have jurisdiction to correct paragraph [25] of my reasons. Whilst I appreciate the force of Shade Systems' submission that Uniform Civil Procedure Rules 2005 (NSW) r 36.16 was not engaged by a motion filed by Probuild, I am of the view that a sufficient application was made in Probuild's written submissions within 14 days of the date of entry of the earlier orders and this is an appropriate case pursuant to s 14 of the Civil Procedure Act to dispense with the requirements of that rule to allow me to consider a variation to the terms of the earlier judgment: Hancock v Arnold (No 2) [2009] NSWCA 19 at [9]-[12]. In so concluding I agree with Shade Systems' submissions that it is entitled to the costs of preparing the additional submissions filed on 20 March addressing the issue raised by Probuild in its earlier submissions. Those submissions were necessary because of the way this issue was raised by Probuild. I have addressed those costs in the order made dismissing the motion filed on 14 February 2018.
The point being made in paragraph [25] of my reasons flowed from my finding that it had now been conclusively determined by the High Court that the progress payment the subject of dispute should have been made by Probuild to Shade Systems in early 2016. That is, a timely application by Probuild for relief of the kind being addressed by Hodgson JA in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394, would have been made in early 2016.
It is true, as Probuild submitted, that in the events which actually occurred following commencement of its administrative law challenge to the determination, during the period between 15 June 2016 and 23 December 2016, Probuild had the benefit of the decision of Emmett AJA setting aside that determination. It is also true that the orders of Basten JA made on 23 December 2016 had the effect that Shade Systems could not obtain access to the funds paid into Court unless and until it was successful in the High Court of Australia.
It remains the case, however that the administrative law challenge mounted by Probuild failed and the progress payment should have been made by Probuild to Shade Systems in early 2016. It remains the case that Probuild had taken no step, prior to the notice of motion filed in September 2017, in any proceedings to obtain an order of the kind Hodgson JA was addressing in Brodyn v Davenport.
Having reflected on Probuild's submissions, however, I have concluded that the words "over a number of years" provide an incorrect impression about my reasoning process. The words used tend to suggest a criticism of Probuild's representatives which was not my intention. In addition, the parenthetical phrase "(with the possible exception of the belated approach to Hammerschlag J after the High Court had delivered its judgment)" is an overstatement and should be amended to say "(with the exception of the motion filed in September 2017 in the Equity Division)".
For those reasons I will amend the judgment on Caselaw to delete the words "over a number of years" and make the change to the parenthetical phrase identified above. I do not regard additional amendments to the original decision to further describe the consequences of the actual administrative law challenge undertaken by Probuild as necessary or desirable. The changes I will make to the terms of my earlier decision do not cause me to doubt the correctness of that decision or my subsequent decision to refuse to stay the orders made.
The order of the Court on Probuild's separate application is:
1. pursuant to s 14 of the Civil Procedure Act dispense with the requirements of Uniform Civil Procedure Rules 2005 (NSW) r 36.16 and make the amendments to paragraph [25] of Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33 identified in paragraph [25] of these reasons.
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: 21 March 2018