The New South Wales Netball Association Ltd v Probuild Construction

Supreme Court of NSW|2015-09-07|Before: Stevenson J

ler SC with M J Smith (Plaintiff) M Christie SC with D Hume (First Defendant)

Solicitors: Sparke Helmore Lawyers (Plaintiff) Thomson Geer Lawyers (First Defendant) File Number(s): SC 2015/98613

Introduction

These proceedings arise out of a contract dated 22 April 2013 ("the Contract"), pursuant to which Probuild Constructions (Aust) Pty Ltd agreed to construct a building to be known as the "Netball Centre of Excellence" at Sydney Olympic Park for The New South Wales Netball Association Ltd.
The proceedings concern a purported determination ("the Determination") issued on 17 April 2015 pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Act") by the second defendant ("the Adjudicator") with respect to Payment Claim 24, served by Probuild on Netball on 2 March 2015. By Payment Claim 24, Probuild claimed $10,380,083.42. By her Determination, the Adjudicator determined that the relevant "adjudicated amount" for the purposes of s 22 of the Act was $124,599.23.
In the proceedings, both parties, in strident terms, complained of the opportunistic stance adopted by the other. Both are correct. In the course of the proceedings, each party has engaged in a volte face and now embraces a position contradictory to that adopted earlier.
Prior to the Determination, Probuild contended that Payment Claim 24 was valid, and that the Adjudicator had jurisdiction to deal with it. Probuild now adopts the opposite position and "admits" that Payment Claim 24 was not valid, that the Adjudicator had no jurisdiction to deal with it, and that the Determination is void.
On the other hand, in its List Statement filed on 2 April 2015 Netball asserted that Payment Claim 24 was the second claim that Probuild had made arising out of the same reference date under the Act, and thus invalid as contravening s 13(5) of the Act: for example see Allsop P (as his Honour then was) in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69; 74 NSWLR 190 at [14]. On that basis, Netball contended that the Adjudicator would have no jurisdiction to deal with Payment Claim 24 and that any purported determination by the Adjudicator in respect of Payment Claim 24 would be void. Netball no longer contends for that position. Indeed, on 25 May 2015 it sought, and was granted, leave to discontinue these proceedings (subject to prosecution of its Second Cross-Claim, to which I will return).
It is obvious why the parties have taken this course. The Adjudicator has (purportedly) determined that the amount due to Probuild under Payment Claim 24 was less than 2 per cent of the amount claimed. Little wonder that Probuild now seeks to eschew the Determination and that Netball seeks (for whatever it may be worth) to embrace it.

Matters that are common ground

There are two important matters that are common ground.
The first is that both Payment Claim 24, and an earlier payment claim made by Probuild on 5 January 2015, Payment Claim 23 (if it was a valid payment claim under the Act; a point no longer in contention, as I understand it), arose under the same reference date.
In my opinion, for the reasons I set out below, Payment Claim 23 was a valid payment claim for the purposes of the Act.
The second matter that is common ground is that at some time after the date for practical completion under the Contract (likely to be later this year or early next year), a further reference date will arise.

The claims now before the Court

The only relief now sought by Probuild is that in its Cross-Claim Cross-Summons, namely a declaration that the Determination is void or, alternatively, an order in the nature of certiorari pursuant to s 69 of the Supreme Court Act 1970 (NSW) quashing the Determination.
The only relief now sought by Netball is that in its Second Cross-Summons, namely damages for the costs it incurred in responding to Probuild's adjudication application arising from Payment Claim 24. Netball only seeks that relief if Probuild succeeds in obtaining the relief it seeks.

The background in more detail

On 5 January 2015, Probuild served Payment Claim 23 in which it claimed $3,993,404.37.
On 19 January 2015, Netball served on Probuild a payment schedule in which it contended, amongst other things, that Payment Claim 23 was "not a valid payment claim under the Act" for two reasons.
The first reason was that Payment Claim 23 had not been served on Netball in accordance with s 31 of the Act. Netball has not since repeated that contention. Mr Miller SC, who appeared with Mr Smith for Netball, accepted that it has been abandoned. The second reason was that Probuild had served Payment Claim 23 under cover of a document which referred to "our draft claim #23 for December 2014 for your review". Mr Miller accepted that this aspect of the matter had been left in an "enigmatic" state and that it appeared that Netball was merely seeking to clarify whether Probuild intended to rely upon that "draft" document. However that may be, the evidence adduced before me on behalf of Netball included an affidavit by its Chief Executive Officer, Ms Carolyn Campbell. Ms Campbell deposed that Probuild served Netball with Payment Claim 23 and made no reference to the "draft claim" document.
In those circumstances, I am satisfied that Payment Claim 23 was a valid payment claim for purposes of the Act.
Payment Claim 23 did not, however, proceed to adjudication.
Instead, on 2 March 2015, Probuild served Payment Claim 24. As I have mentioned, the amount claimed by Probuild in Payment Claim 24 was $10,380,083.42. That figure included all of the line items which comprised the $3,993,404.37 referred to in Payment Claim 23 as well as a significantly increased claim for "variations" (which were said to include disruption claims) and previously unclaimed delay costs.
On 16 March 2015, Netball served on Probuild its responsive payment schedule in which it stated that the scheduled amount was "nil". One of the contentions advanced by Netball to support that position was that Payment Claim 23 was valid. Netball thus abandoned its earlier contention that Payment Claim 23 was invalid. Indeed, it embraced the proposition that Payment Claim 23 was a valid payment claim, and contended that, as it related to the same reference date as Payment Claim 24, Payment Claim 24 contravened s 13(5) of the Act and was itself invalid.
On 31 March 2015, Probuild served on Netball an adjudication application in which it disputed Netball's contentions that the Payment Claim 24 was invalid and that, accordingly, the Adjudicator did not have jurisdiction to consider it. On two occasions in that adjudication application, Probuild stated, in terms, that Payment Claim 24 was valid.
Also on 31 March 2015, the Adjudicator accepted her appointment.
On 2 April 2015, Netball commenced these proceedings. It sought an injunction restraining the Adjudicator from adjudicating Payment Claim 24. In its List Statement, Netball stated that "the only issue that arises is the validity of [Payment Claim 24]" and contended that Payment Claim 24 was not valid "because it was served in contravention of s 13(5) of the Act" in circumstances where Probuild had "already served" Payment Claim 23 (which, as I have said, related to the same reference date and had not been withdrawn).
Ball J heard the application on 7 April 2015. In written and oral submissions to Ball J, Probuild submitted that Netball's "case based on s 13(5) is very weak" and that Probuild was likely to plead "estoppel, waiver and unconscionability" in respect of Payment Claim 23 "given that [it] did not proceed to adjudication".
Ball J refused to enjoin the adjudication process but restrained Probuild from enforcing any adjudication certificate until further order: The New South Wales Netball Association Ltd v Probuild Constructions (Aust) Pty Ltd [2015] NSWSC 408.
On 9 April 2015, Netball served its adjudication response. In that document, it repeated its contention that Payment Claim 24 was invalid for breach of s 13(5) of the Act and that, accordingly, the Adjudicator had no jurisdiction to determine the claim. It also responded to the various line items in Payment Claim 24 and contended that the "payment schedule amount" was nil.
On 10 April 2015, Netball filed an Amended Summons and List Statement which took account of Ball J's decision. In its List Statement, Netball contended that Payment Claim 23 was a valid payment claim for the purposes of the Act, that Payment Claim 24 contravened s 13(5) of the Act and that, in those circumstances, the Adjudicator would "fall into jurisdictional error if, in making any determination, she concludes that [Payment Claim 24] was valid and can be adjudicated upon".
On 17 April 2015, the Adjudicator issued her Determination.
The next business day, 20 April 2015, albeit in accordance with an agreed timetable, Probuild filed its response to Netball's List Statement. In that document, Probuild stated that it now admitted the critical allegations in Netball's Amended List Statement (including those that I have summarised at [26] above). On the same day, Probuild filed a Cross-Claim Cross-Summons in which it sought the relief that I have set out at [11] above. It also filed a Cross-Claim List Statement in which it repeated the critical contentions made by Netball in its Amended List Statement and asserted that the Adjudicator "did not have jurisdiction to determine the matter, and the purported determination is therefore void".
On 22 May 2015, Netball filed a Cross-List Response. In that document, Netball adopted the position which it advanced before me, namely: "Given Probuild's approbation and reprobation, the Court should not entertain Probuild's contention that the Determination is void. In the alternative, if the Court were to conclude that the Adjudicator should not have made the Determination, relief should be withheld on the basis of Probuild's bad faith and want of clean hands."
As I have mentioned, on 26 May 2015 Netball was granted leave to discontinue its proceedings. On the same day, it filed its Second Cross-Summons in which it seeks the relief referred to at [12] above.

As a matter of discretion, should Probuild be denied the relief it seeks?

Neither party asserts that the Determination is valid. Probuild now asserts, in terms, that it is not. Immediately prior to the Determination, Netball asserted that the Adjudicator would fall into jurisdictional error if she purported to make the Determination. Netball now adopts a more nuanced position, namely that, assuming the Adjudicator fell into jurisdictional error, the Court should, in the exercise of its discretion, withhold relief having regard to Probuild's conduct.
Where excess of jurisdiction is shown, certiorari is granted almost as a right. Nonetheless, it is a discretionary remedy which, for good reason, can be withheld: for example see Oppedisano v Micos Aluminium Systems [2012] NSWSC 53 per McDougall J at [43] to [45].
I have been taken to a number of cases where judges of this, and other Courts, have either exercised their discretion not to grant prerogative relief or would have done so but for circumstances which enabled the cases to be otherwise disposed of: for example see Oppedisano per McDougall J at [43] to [45]; NC Refractories Pty Ltd v Consultant Bricklaying Pty Ltd [2013] NSWSC 842 per Hammerschlag J at [39]; McConnell Dowell Constructors (Aust) Pty Ltd v Heavy Plant Leasing Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] QSC 223 per Boddice J at [39] to [40].
Those cases, of course, give some guidance. However, this case must be decided by reference to its own facts.
Mr Miller also drew my attention to authorities to the effect that prerogative relief may be refused if the applicant for relief "has been guilty of unwarrantable delay" or has acted in "bad faith" (for example see R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Australia) Ltd (1949) 78 CLR 389 at 400), or where the applicant for relief has "acquiesced in the invalidity or has waived it" (per Lord Denning MR in F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295 at 320). In NSW, the latter authority has been construed as referring to circumstances "where conduct could properly give rise to an inference that the person had abandoned her or his rights" (per Beazley JA in Rodger v De Gelder [2011] NSWCA 97 at [90]).
The criticism that Netball makes of Probuild is not as to its conduct before Ball J or before the Adjudicator, but rather as to its volte face on 20 April 2015 when, faced with the result of the Determination, it abandoned its previous contention that the Adjudicator had jurisdiction and embraced Netball's position that she did not.
In those circumstances, it is not appropriate to characterise Probuild's behaviour as acquiescence, delay, abandonment or bad faith. I see no reason to doubt that, up to the point when it learned of the result of the Determination, it acted in good faith and advanced arguments which it genuinely believed were open to it on the facts.
Further, I infer, from the vigour with which Probuild advocated the validity of Payment Claim 24 and the jurisdiction of the Adjudicator (both before Ball J and in its adjudication application), that it was confident of success on the adjudication.
However, its conduct when faced with its substantial failure in the adjudication, whereby it simply abandoned its previous position, was certainly opportunist.
Probuild has sought to have it both ways; to approbate and reprobate.
In a passage cited with approval by the Full Court of the Federal Court of Australia in Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16 at [200] per Jacobson, Nicholas and Yates JJ, Browne-Wilkinson V-C put the matter this way in Express Newspapers plc v News (UK) Ltd (1990) 18 IPR 201 at 210: "There is a principle of law of general application that it is not possible to approbate and reprobate. That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance."
In Acohs, Jacobson, Nicholas and Yates JJ also referred with approval to the observations of McClure JA (as her Honour then was) in Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211. Her Honour stated at [109] and [110]: "There is authority in Australian law for an independent doctrine of approbation and reprobation: Commonwealth v Verwayen (1990) 170 CLR 394 at 421-422 per Brennan J; Fried v National Australia Bank Ltd [2000] FCA 910. The doctrine is summarised in Halsbury's Laws of Australia, Vol 190 [190-35] as follows: A person may not 'approbate and reprobate', meaning that a person, having a choice between two inconsistent courses of conduct and having chosen one, is treated as having made an election from which he or she cannot resile once he or she has taken some benefit from the chosen course. In Halsbury's Laws of England, Vol 60 [962] the authors state: Thus a claimant, having two inconsistent claims, who elects to abandon one and pursue the other may not, in general, afterwards choose to return to the former claim and sue on it; but this rule of election does not apply where the two claims are not inconsistent and the circumstances do not show an intention to abandon one of them."
In this case, Probuild had a choice between two inconsistent courses of conduct; seeking to uphold the validity of Payment Claim 24, or not. It chose to adopt one of those courses (to uphold), and now seeks to follow the other. It has also taken a benefit from its previously chosen course; namely, resisting a stay of the adjudication process.
In that regard, Mr Miller drew my attention to the observations of Einstein J (albeit in a different context) in Rojo Building Pty Limited v Jillcris Pty Limited [2006] NSWSC 309 at [39]: "The scheme of the Act is unforgiving in terms of the technicalities which require to be observed. There is no room for a claimant to approbate and reprobate. There is another party to be considered. There is no room for a claimant to leave a respondent in any form of doubt as to precisely what course is being followed by the claimant. Nor is there room for a respondent to leave a claimant in any form of doubt as to precisely what course is being followed by the respondent."
I accept Mr Miller's submission that this is a factor, indeed a powerful factor, which I should take into account when choosing whether to exercise my discretion to decline to grant Probuild the prerogative relief it seeks. Probuild's decision on 20 April 2015 to embrace the proposition that the Adjudicator did not have jurisdiction to deal with Payment Claim 24 was, as I have said, opportunistic, and doubtless born of its assessment as to where its commercial interests lay.
However, as Mr Christie SC, who appeared with Mr Hume for Probuild, submitted, I must take into account all of the circumstances that I have set out above, including Netball's own opportunistic behaviour.
I must also take into account whether or not the Determination was made in excess of jurisdiction, and is thus a nullity. This is because the effect of refusing relief would be "to enable the parties to confer jurisdiction by consent on a person exercising statutory functions, where otherwise that person did not have jurisdiction" (per McDougall J in Oppedisano at [45]).
My conclusion is that the Determination was made in excess of jurisdiction and is a nullity. I have found that Payment Claim 23 was a valid payment claim for the purposes of the Act. It is common ground that, if that be so, both it and Payment Claim 24 arise in respect of the same reference date. It must follow that Payment Claim 24 was served in contravention of s 13(5) and that the Adjudicator had no jurisdiction to deal with it.
Further, as Mr Christie submitted, the nullity of the Adjudicator's decision is distinct from the grant of relief. If, as I have concluded, the Determination was vitiated by jurisdictional error, the decision is null and void whether or not I grant Probuild the relief it now seeks.
As the High Court said in Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2; 211 CLR 476 at [76]: "This Court has clearly held that an administrative decision which involves jurisdictional error is 'regarded, in law, as no decision at all'." [Citations omitted; per Gaudron, McHugh, Gummow, Kirby and Hayne JJ]
There is another relevant factor. The Contract remains on foot. Another reference date will arise later this year or early next year (see [10] above). In those circumstances, it is undesirable that the status of the Determination be left unresolved; notwithstanding Probuild's conduct.
In that context, I accept the following submission of Mr Christie: "The relief sought by Probuild serves the salutary purpose of indicating to any future adjudicator that the 'decision' at issue in this case is in fact no decision at all and does not affect the future adjudicator's task. However, if the court is satisfied that the decision is invalid, but nevertheless declines to issue relief, the parties may very well need to re-agitate the issues in this litigation before the adjudicator. That is an undesirable outcome, and one which can be avoided by issuing the relief sought by Probuild. That relief will indicate to the world the true position: that the decision was invalid."
In all these circumstances, I do not propose to exercise my discretion to decline to grant Probuild the relief it seeks.
I should add that Mr Miller also drew my attention to authorities to the effect that prerogative relief might, as a matter of discretion, be refused if "a more convenient and satisfactory remedy exists": for example Ex parte Ozone Theatres at 400. Mr Miller submitted that the "more convenient and satisfactory remedy" was that available to Probuild under the Contract itself; as preserved by s 32 of the Act. I do not accept that submission. Were it correct, prerogative relief would be denied in every case involving the Act, because underlying all claims under the Act is a construction contract. In a case such as this, a court would only decline to grant prerogative relief if there was available to a party in the position of Probuild an alternative way of challenging the Determination having "the same effect as relief in the nature of prerogative relief": per McDougall J in Musico v Davenport [2003] NSWSC 977 at [130].

Netball's claim for damages

In those circumstances, Netball claims for damages in respect of the costs it incurred in preparing its adjudication response. That figure is agreed to be $99,563.80.
Netball's claim depends upon the propositions that, in serving Payment Claim 24, Probuild represented to Netball that it was entitled to issue the claim (and thus, implicitly, that Payment Claim 23 was not a valid payment claim and that there was no s 13(5) impediment to the issue of Payment Claim 24), and that Netball was required to respond to it lest Probuild enforce it as a judgment under s 14(4) of the Act. Netball contends that Probuild repeated those representations when it served its adjudication application. Netball contends that both these representations were false, and that Probuild thereby engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth)). Thus, Netball claims that it is entitled to damages under s 236 of the Australian Consumer Law (as it suffered loss or damage "because of" Probuild's misleading and deceptive conduct).
In my opinion, the short answer to Netball's contentions is that Probuild did not, by serving Payment Claim 24, make any representations to this effect. It merely claimed be entitled to the payment specified. Further, Probuild did not, by serving Payment Claim 24, represent that Netball was obliged to respond to it. That obligation arose under the Act.
It is well established that an allegation in a pleading is not a representation but is merely a statement of what is claimed: for example Little v Law Institute of Victoria (No 3) [1990] VR 257 at 273 per Kaye and Beach JJ.
The same principle applies to statements made in a payment claim under the Act.
As Mason P (with whom Giles and Santow JJA agreed) said in Clarence Street Pty Ltd v ISIS Projects Pty Ltd [2005] NSWCA 391; 64 NSWLR 448 at [31] (albeit not in the context of a claim of misleading or deceptive conduct), "a 'payment claim' is no more than a claim".
Similarly, in Energetech Australia v Sides Engineering [2005] NSWSC 1143, Campbell J (as his Honour then was) said at [48]: "[T]he Second Payment Claim does not purport to be a statement of anything more than what the defendant claims it is owed by the plaintiff. The defendant really does claim that it is owed the amount of money referred to in the Second Payment Claim."
There is no reason to doubt that, at the time it served Payment Claim 24, Probuild "really [did] claim" that it was owed the amount referred to in it. Netball made no submission to the contrary.
In his reply submissions, Mr Miller drew attention to the decision of the Court of Appeal in Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; 67 NSWLR 9. However, so far as is relevant, that case established no more than that s 15(4)(b)(ii) of the Act did not preclude a party from raising, by way of a defence to a claim based on a failure to provide the payment schedule, a contention that the failure to provide a payment schedule within the time specified by the Act was a result of misleading or deceptive conduct on the part of the party serving the payment claim (see [124] per Basten JA, with whom Hodgson and Tobias JJA agreed). In my opinion, Bitannia does not support the proposition that the service of a payment claim involves the making of representations as to the truth of the matters contained in the payment claim. Indeed, it would be difficult to reconcile such a proposition with another conclusion drawn by the Court of Appeal in Bitannia that, in order to serve a valid payment claim, it is not necessary that the claimant have a bona fide belief in its entitlement to the monies claimed (at [58], [73] and [75] per Basten JA).
For those reasons, I do not accept that Payment Claim 24 was a representation of the kind alleged by Netball.
In any event, as Probuild points out, Netball did not rely upon any representation in Payment Claim 24, nor did Netball incur the expense of preparing its adjudication response "because of" what was stated in Payment Claim 24 and repeated in Probuild's adjudication application. Indeed, by its adjudication response, it expressly rejected the correctness of the contentions in the adjudication application. It did not respond to the adjudication application "because of" what was stated in it. It responded to the adjudication application because it did not agree with what was stated in it and because of the exigencies imposed on it by the Act.
Netball advanced an alternative case based on equitable estoppel. That claim, which was not developed before me orally, must fail for the same reasons, as it must follow from my conclusions at [57] to [65] that Probuild did not induce, nor intend to induce, a belief in Netball that it was required to respond to either Payment Claim 24 or the adjudication application.

Conclusion

I invite the parties to bring in short minutes to give effect to these reasons.
I will hear the parties as to costs and, in particular, as to why Probuild should not pay Netball's costs of the proceedings, on an indemnity basis, despite its success in obtaining the relief it sought.

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: 11 September 2015

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