Supreme Court New South Wales

• Medium Neutral Citation: Williams v Concreting Services [2013] NSWSC 85
• Hearing dates: 14/02/2013
• Decision date: 14 February 2013
• Jurisdiction: Equity Division - Technology and Construction List
• Before: McDougall J

Decision

Grant interlocutory injunction on condition as to payment into court

• Catchwords: BUILDING & CONSTRUCTION - building contracts - adjudication - interlocutory injunction - whether payment into court of adjudicated amount should be ordered
• Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
• Category: Procedural and other rulings
• Parties: Lloyd Hinton Williams (Plaintiff); Concreting Services Pty Ltd (First defendant); Alan Stapleton (Second defendant)
• Representation: Counsel: M A C Painter / T M Glover (Plaintiff); T O Bland (Defendant); Solicitors: Adams & Partners Lawyers (Plaintiff); Lou Baker & Associates (Defendant)
• File Number(s): 2013/43294

Judgment (EX TEMPORE - REVISED 14 FEBRUARY 2013)

1 HIS HONOUR: This is yet another dispute over the validity of a determination made by an adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW). The plaintiff asserts that the determination made in favour of the first defendant is void because there was no construction contract between the plaintiff and the first defendant. That point had been raised before the adjudicator. He decided it in favour of the first defendant. It is, I think, common ground, and in any event is correct, that the adjudicator cannot give himself jurisdiction in this way if it should be the case that there were no construction contract between the parties.

2 The plaintiff approached the Court on 12 February 2013 seeking ex parte interlocutory relief. I refused to grant that relief, on the basis that there had been an unexplained delay of more than six weeks between the making of the determination and the application to the Court. I did, however, bring the matter back today to see what the first defendant's attitude might be.

3 Counsel for the first defendant, Mr Bland, said that when his client heard that the proceedings had been commenced, it halted steps that it had caused to be put in place to enforce its rights under the determination.

4 It seemed to me that the appropriate course, if it could be organised, was to give the parties a swift final hearing rather than put them to the expense of a contested interlocutory hearing followed by a final hearing. It is likely that a final hearing date could be given for 26 or 27 February 2013, and that the parties could prepare themselves for that final hearing.

5 Mr Bland then sought instructions. He said that his client was in a position to offer an undertaking to the Court not to enforce. That was, however, conditional not only on the usual undertaking as to damages (which was proffered) but also on payment into court of the adjudicated amount.

6 Ms Painter of counsel, who appeared with Mr Glover of counsel for the plaintiff, submitted that it was not appropriate to require payment into court; or at least, not of the entire amount. She accepted, however, that it was the usual practice of the Court to require payment in as a condition of the grant of interlocutory relief.

7 There is a long string of first instance decisions which establishes that usual practice. Some of them are decisions of mine. I do not feel persuaded that I should depart from the principle established by those decisions. The legislative purpose underlying the Act is clear. It is to ensure that those who perform work under a construction contract get paid quickly. One of the ways of achieving that is through the process of adjudication, including enforcement of determinations.

8 The basis on which the courts may interfere in determinations of adjudicators are limited. They do, however, include (as was common ground) the situation where there is no construction contract between the parties concerned.

9 Nonetheless, the process of payment into court has its part to play in facilitating achievement of the legislative purpose. If there were no undertaking and no interlocutory injunction, the first defendant would be able to enforce its rights. It could do so by registering the determination in a court of competent jurisdiction and then seeking to enforce that judgment, by execution or otherwise, in the usual way

10 The general practice is, as I have said, that someone in the position of the first defendant should be prevented from exercising those rights only if it is given a substantial degree of satisfaction in return. Traditionally, that satisfaction has been payment into court of the adjudicated amount, or provision of a guarantee in an acceptable form in place of payment into court.

11 Ms Painter submitted that in circumstances where the court could offer an early final hearing, there was no need to order payment into court. She submitted, in the alternative, that if there were to be some order for payment into court, it should be of less than the adjudicated amount.

12 Ms Painter submitted, also, that her client was a private individual. I do not know why that is a reason for declining to order payment into court. In any event, it is the plaintiff's case that the correct contracting party was his associated company, not him. If that be correct, then it is open to infer that the work done by the first defendant was done for the benefit of that contracting party, and that the contracting party might be in a position to assist the plaintiff in making payment into court.

13 I do not propose to accede to the submission that there should be interlocutory relief without payment in. Nor do I propose to accede to the submission that some lengthy period of time (Ms Painter suggested a week) should be allowed for the payment in to occur. In this context, I note that if I had been minded to grant ex parte interlocutory relief on 12 February (and it is likely that I would have done so either if the delay had been explained properly or if there had been no relevant delay), one of the conditions of that relief would have been payment in. I do not see why the plaintiff should be in a better position because the application is now made on an at least partially contested interlocutory basis.

14 On considering the material, I am satisfied that there is a serious question to be tried as to whether there was any construction contract in place between the plaintiff and the first defendant. Thus, I am satisfied that there is a serious question to be tried as to whether the adjudicator (the second defendant) had jurisdiction to make the determination that he did. It is common ground that if the adjudicator lacked jurisdiction, he could not give it to himself by deciding that there had been a construction contract in place between the parties.

15 Bearing in mind the nature of the challenge, I am satisfied that it would be appropriate to grant interlocutory relief. However, when turning to the balance of convenience, I note that the plaintiff's case does not appear to be based on harm to the plaintiff if a judgment were obtained against him. It appears to be (and I take this from paras 83 and following of the plaintiff's affidavit sworn 11 February 2013) that if he is required to pay the amount in question, and if it is later decided that the determination is void, he might not be able to recover the amount paid from the first defendant. The plaintiff says, further, although as a throwaway line, that his company (which he says is the correct contracting party) intends to commence proceedings claiming damages for faulty and incomplete workmanship. There is no evidence of what those damages might be in monetary terms.

16 On that basis I am only prepared to grant interlocutory relief if the amount of the adjudicated amount (which is a little under $243,000, exclusive of costs), together with the amount of the costs of the adjudication on the assumption that the adjudicator ordered the plaintiff to pay them, is paid into court within a relatively short time. I am prepared to fix 5pm tomorrow, 15 February 2013 as the time for payment into court. I will hear the parties on whether in those circumstances orders are sought and should be made.

[Counsel addressed]

17 HIS HONOUR: The adjudicator concluded that the amount of the relevant progress payment was (as asserted by the first defendant) $242,903.43. He did, however, note that any enforcement must take into account that $142,903.43 had been stated to be the scheduled amount, and had been paid in full some months ago. He seems to be saying, as I understand it, that the amount owing (on his conclusions) is therefore $100,000.

18 In addition, there is the question of the fees and expenses of the adjudication. It is common ground that they are $10,000. The adjudicator's decision was that the plaintiff should pay those in full.

19 I will therefore grant injunctive relief on condition, among other things, that the sum of $110,000 be secured either by payment into court or by provision to the court of a guarantee in such form as the Registrar may accept.

20 I make the following orders:

(1) Note that the plaintiff by leading counsel gives to the court the usual undertaking as to the damages.

(2) On condition that the plaintiff either pay into court by 5pm tomorrow, 15 February 2013, the sum of $110,000, or provide a guarantee in a form acceptable to the Registrar for that sum and by that time, order that the first defendant be restrained until further order from, by itself, its servants and agents or otherwise taking any action to enforce the adjudication determination of the second defendant dated 7 January 2013.

(3) Order that if the said sum of $110,000 be not paid or secured in the manner set out in order 2 then the injunction granted by order 2 shall forthwith and without the need for any further order stand discharged.

(4) Fix the proceedings for final hearing on a date in the week commencing 25 February 2013 to be notified to the parties.

(5) Direct the parties to provide to my Associate by 4pm today agreed directions for the preparation and conduct of that final hearing.

(6) Reserve costs.

(7) Reserve liberty to apply on 24 hours' notice.

**********

Decision last updated: 25 February 2013