The New South Wales Netball Association Ltd (ACN 001 685 007) v Probuild Constructions

Supreme Court of NSW|2015-04-07|Before: Ball J

Introduction

By a notice of motion filed on 2 April 2015, the plaintiff (Netball NSW) sought an interlocutory injunction restraining the first defendant, Probuild, from taking any further steps to prosecute the adjudication of a payment claim that was issued by Probuild on 2 March 2015 under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act). Netball NSW also sought an interlocutory injunction restraining the second defendant, who had been nominated as the adjudicator in respect of Probuild's adjudication application, from proceeding to adjudicate the payment claim. After hearing the parties and inviting Probuild to give an undertaking to pay the adjudicator's costs in the event that Netball NSW was successful in the proceedings, I refused the injunction sought by Netball NSW, but granted an injunction until further order restraining Probuild from taking any steps to file in any court any adjudication certificate it obtains as a result of the adjudication process. That order was made without prejudice to Probuild's right to seek to vary that order once the adjudication determination is made. I also gave directions for the preparation of the case for a final hearing on 25 May 2015. At the time of making those orders, I indicated that I would give my reasons for making the orders I did later. These are those reasons.

The parties' contentions

Mr Miller SC, who appeared for Netball NSW, submitted that payment claim no 24 was invalid because it was served in respect of the same reference date as payment claim no 23 in contravention of s 13(5) of the Act. He submitted that, as a consequence, the Adjudicator had no jurisdiction to determine the adjudication application in respect of it: see The Trustees of the Roman Catholic Church for the Diocese of Lismore v T F Woollam and Son [2012] NSWSC 1559; Reitsma Constructions Pty Ltd v Davies Engineering Pty Ltd [2015] NSWSC 343. The question of jurisdiction was one for the Court, not the adjudicator: Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; 78 NSWLR 393 at [101] per Basten JA; [238] per McDougall J. Consequently, Netball NSW was entitled to an injunction restraining Probuild and the Adjudicator from proceeding with the adjudication. Moreover, by granting an injunction now, the Court would spare Netball NSW the costs of dealing with an adjudication application in circumstances where it has limited financial resources.
Mr Christie SC, who appeared for Probuild, opposed the injunction on three bases. First, he submitted that Netball NSW's claim was weak. It was apparent from the covering letter that payment claim no 23 was a draft. Netball NSW, or at least Crown Projects Services on its behalf, denied that the claim was a payment claim for the purposes of the Act. It was in that context that Probuild submitted payment claim no 24.
Second, Probuild submitted that Netball NSW was guilty of delay in bringing the proceedings. Payment claim no 24 was served on 2 March 2015. Netball NSW waited until 2 April 2015 before it informed Probuild of its intention to apply for injunctive relief.
Third, Probuild submitted that the balance of convenience was against granting an injunction. It submitted that it would suffer prejudice in two main respects if an injunction were granted. First, the adjudication application would not be able to proceed in accordance with the Act. As a result, if an injunction was granted, Probuild would lose its rights under the Act. Second, if an injunction was granted, Probuild submitted that it would lose the benefit of s 25 of the Act, which relevantly provides: (1) An adjudication certificate may be filed as a judgment for a debt in any court of competent jurisdiction and is enforceable accordingly. (2) … (3) … (4) If the respondent commences proceedings to have the judgment set aside, the respondent: (a) … (b) is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final determination of those proceedings. Probuild submitted that if an injunction was granted it would lose the benefit of the security to which it would have been entitled under s 25 if Netball NSW followed the usual course and waited for the determination and then sought to set aside the judgment obtained as a result of the determination.

Consideration

I concluded that Netball NSW had an arguable case that payment claim no 23 was a payment claim for the purposes of the Act. "Payment claim" is defined in s 4 of the Act to mean "a claim referred to in section 13". Section 13 relevantly provides: (1) A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment. (2) A payment claim: (a) must identify the construction work (or related goods and services) to which the progress payment relates, and (b) must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and (c) if the construction contract is connected with an exempt residential construction contract, must state that it is made under this Act.
The question must be whether, looking at the matter objectively, by serving payment claim no 23 Probuild was seeking to serve a payment claim in accordance with s 13 of the Act so as to trigger its rights under the Act. The fact that the covering letter described what was served as a "draft" and the fact that Netball NSW contended that it was not properly served, raise factual issues relevant to the answer to that question. But I did not think either of those matters was determinative. Claim no 23 undoubtedly came to Netball NSW's attention and, on its face, it is not clear what its purpose was if not to assert a right to be paid the amounts specified in the claim in accordance with the Act. It may be that if Netball NSW is correct, Probuild has a defence based on an estoppel, but that itself raises factual and legal questions that cannot be resolved on an interlocutory basis.
I concluded Netball NSW had not been guilty of delay in bringing the application. Although it might have been expected that Probuild would lodge an adjudication application based on payment claim no 24, Netball NSW could not know that it would do so. In my opinion, it was reasonable for Netball NSW to wait until the adjudication application was actually lodged. That did not occur until 30 March 2015 and was not served on Netball NSW until 31 March 2015. Netball NSW commenced these proceedings two days later.
I also concluded that Netball NSW will suffer some prejudice if an injunction is not granted because it will incur costs in connection with the adjudication which will be wasted if it ultimately succeeds in these proceedings. To some extent, that prejudice was ameliorated by the undertaking given by Probuild at my suggestion to pay the Adjudicator's costs in the event that Netball NSW is successful in these proceedings.
However, any prejudice that Netball NSW suffers if an injunction is not granted is far outweighed by the prejudice that Probuild will suffer if an injunction is granted. The Act sets out a timetable for the determination of adjudication applications. The object of the timetable is to ensure that adjudication applications are dealt with promptly. That object reflects the underlying policy of the legislation to ensure that contractors receive interim payments for their work promptly. The Court is not given power to adjust the timetable provided for by the Act. The Act sets out the consequences of non‑compliance with the timetable. In my opinion, the Court has no power to relieve a party of those consequences. For that reason, I concluded that it ought not to grant an injunction that interferes with the processes set out in the Act for the determination of adjudication applications.
The same consideration does not apply to an injunction to restrain Probuild from enforcing an adjudication determination in accordance with s 25 of the Act. However, as I have said, Probuild submitted that the Court ought not to grant an injunction restraining it from filing an adjudication certificate as a judgment for a debt in any court of competent jurisdiction because to do so would deprive it of the benefit of the security provided for by s 25(4)(b). Or, to put the point another way, it submitted that, consistently with s 25, the Court should only grant an injunction on condition that Netball NSW provided security for any amount that is the subject of the adjudication determination. That is consistent with the practice of the Court in cases where a respondent to an adjudication determination seeks to injunct a claimant from registering an adjudication certificate in respect of the determination. Probuild submitted that Netball NSW should not be entitled to achieve a better outcome by commencing proceedings at an earlier stage in the adjudication process.
I considered that there was considerable force in the position taken by Probuild. There can be little doubt that s 25 reflects a general policy that a respondent should only be entitled to challenge the validity of an adjudication determination if it provides security for the amount of the determination. However, in my opinion, there was nothing to stop Netball NSW from commencing proceedings when it did. By its terms, s 25(4) only applies if a respondent commences proceedings to have a judgment based on an adjudication determination set aside. Absent a legislative requirement, there may be some cases where it is appropriate to permit a respondent to challenge an adjudication determination without providing security. Relevant to that decision will be the strength of the respondent's case, whether there will be significant delay in the determination of the issue and whether the proceedings will be stultified if security is required.
In the present case, it is unclear how much the adjudication determination will be for and whether, if Netball NSW had to provide security in that amount, that would bring an end to its application.
For those reasons, I considered it appropriate to grant an injunction restraining Probuild from taking any steps to enforce any determination it obtains in its favour. That, however, was on the basis that Probuild could make an application for that injunction to be dissolved once the amount of any adjudication determination was known and Netball NSW was in a position to provide evidence concerning its ability to provide security for that amount.

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 April 2015

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