Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd
[2023] ACTSC 292
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 7) |
Citation: | [2023] ACTSC 292 |
Hearing Date: | 28 September 2023 |
Decision Date: | 17 October 2023 |
Before: | McCallum CJ |
Decision: | Set aside orders (ii)-(iv) made by Elkaim J on 11 October 2022. |
Catchwords: | CIVIL LAW – PRACTICE AND PROCEDURE – Application to have order for “restitution” set aside – where order consequential upon successful application for judicial review of decision under the Building and Construction Industry (Security of Payment) Act – whether order final or interlocutory – whether commencement of civil proceedings claiming payment of the sum the subject of the quashed decision amounts to a relevant change of circumstance – whether application in substance an appeal in disguise CIVIL LAW – RESTITUTION – where defendant received funds under a garnishee order following the registration of an adjudication certificate as a judgment in the NSW District Court – legal effect of registration of the certificate – where underlying decision subsequently set aside on the ground of jurisdictional error – consequential order for restitution of funds received under garnishee order – effect of District Court judgment – whether payment under garnishee order capable of being characterised as unjust enrichment – consideration of inherent power to order repayment of monies paid under a judgment reversed on appeal – consideration of s 38 of the Building and Construction Industry (Security of Payment) Act |
Legislation Cited: | Building and Construction Industry (Security of Payment) Act 2009 (ACT) ss 27, 38, 43 |
Cases Cited: | Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 Birdon Pty Ltd v Houben Marine Pty Ltd [2011] FCAFC 126; 197 FCR 25 Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd [2021] ACTSC 166 Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2) [2021] ACTSC 296; 363 FLR 238 Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 3) [2021] ACTSC 330 Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 4) [2022] ACTSC 275 Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd(No 5) [2023] ACTSC 233 Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 6) [2023] ACTSC 245 Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421 Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd [2005] NSWCA 49; 62 NSWLR 385 Go Electrical Pty Ltd v Class Electrical Services Pty Ltd [2013] NSWSC 517 Hall v Nominal Defendant (1966) 117 CLR 423 Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2022] ACTCA 42; 18 ACTLR 245 Licul v Corney (1976) 180 CLR 213 Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; 232 CLR 635 Production Spray Painting v Newnham (No 2) (1992) 27 NSWLR 659 VBI Properties Pty Ltd v Victorian Civil and Administrative Tribunal [2003] VSCA 17 Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 |
Texts cited: | Ian Jackman, The Varieties of Restitution (The Federation Press, 2nd ed, 2017) |
Parties: | Beno Excavations Pty Ltd t/as Benex Pipelines ( Plaintiff) Harlech Enterprises Pty Ltd atf Harlech Family Trust ( First Defendant) Jonathon H Sive (Second Defendant) |
Representation: | Counsel D Robens ( Plaintiff) A J Greinke ( First Defendant) |
| Solicitors Tallarita Joseph Lawyers ( Plaintiff) Mills Oakley ( First Defendant) | |
File Number: | SC 206 of 2021 |
McCALLUM CJ:
1․This case raises an interesting question as to the operation of the Building and Construction Industry (Security of Payment) Act 2009 (ACT). Beno Excavations Pty Ltd is a construction company. Until 2020, Harlech Enterprises Pty Ltd provided Beno’s general manager under an oral contract. The parties are in dispute as to whether the contract included a term that Harlech would receive a percentage of Beno’s profits. Harlech sought to recover its alleged entitlement under the contract by making a payment claim under the Building and Construction Industry (Security of Payment) Act. An earlier claim for a smaller amount was accepted by an adjudicator and appears to have been paid by Beno. The same adjudicator also decided the larger claim in Harlech’s favour and provided an adjudicator’s certificate. In due course, Harlech filed the certificate as a judgment for a debt in the District Court of New South Wales, as allowed under s 27(1) of the Act. Harlech then obtained partial payment of the judgment debt under a garnishee order issued by that Court.
2․The underlying decision of the adjudicator was later quashed by this Court on the ground of jurisdictional error: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2) [2021] ACTSC 296; 363 FLR 238; Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 3) [2021] ACTSC 330 (Mossop J). Harlech was unsuccessful in an appeal from that decision: Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2022] ACTCA 42; 18 ACTLR 245. Harlech then sought special leave to appeal to the High Court. That application was also unsuccessful.
3․In the meantime, before the application for special leave had been determined, Beno applied to this Court for payment “by way of restitution” of the amount received by Harlech under the garnishee order. Elkaim J granted that application and made an order in the terms sought by Beno, that Harlech to pay Beno the sum of $196,428.79 “by way of restitution”: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 4) [2022] ACTSC 275. I will refer to that order as the restitution order, in the language of Beno’s application. However, as I will explain, that description of the relief sought was apt to confuse.
4․Elkaim J also made consequential orders for interest and costs. On the assumption that the restitution order is interlocutory, Harlech now seeks to have all three orders set aside on two grounds. First, it was submitted that the order should be set aside in light of a relevant change of circumstance, namely, that Harlech has now commenced civil proceedings to recover the amount awarded under the adjudicator’s invalid decision. Separately, Harlech submitted that the restitution order should not have been made as no entitlement to restitution was established in the circumstances.
5․The following issues arise:
(a)whether the restitution order is final or interlocutory;
(b)whether there was a basis for ordering restitution in the circumstances and having regard to the operation of the Building and Construction Industry (Security of Payment) Act; and
(c)assuming the order is interlocutory, whether it is appropriate to set it aside in light of Harlech’s commencement of proceedings to enforce the contract.
6․The answer to the first question is provided by the answer to the second. There was no basis for ordering restitution as that term is conventionally or properly understood. The restitution order did not finally determine the parties’ rights under the contract in respect of the amount received by Harlech under the garnishee order. Having regard to the intended operation of the Building and Construction Industry (Security of Payment) Act, Harlech was entitled to receive and retain that payment. Its commencement of separate proceedings is a relevant change of circumstance warranting reopening the application determined by Elkaim J. The restitution order and the consequential order for the payment of interest should be set aside. My reasons for those conclusions are set out below.
7․It does not necessarily follow that the costs order should also be set aside. I will hear the parties on that issue.
Whether the restitution order is final or interlocutory
8․Harlech accepts that, if the restitution order is final, the basis for the present application falls away. It is established that, in the case of final orders, “[t]he public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution”: Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684, cited in Autodesk v Dyason (No 2) (1993)176 CLR 300 at 302 (Mason CJ); 317 (Dawson J). This will ordinarily mean that a final order will not be set aside unless, by accident and without fault, a party has not been heard or the judgment has otherwise apparently miscarried.
9․Harlech did not contend it had a basis for seeking to have the restitution order set aside on that constrained approach. The explicit premise of Harlech’s application is that the restitution order is interlocutory.
10․The usual test for determining whether an order is final or interlocutory is derived from the statement of Windeyer J in Hall v Nominal Defendant (1966) 117 CLR 423 at 443:
In most cases the test that seems to be most satisfactory, and the one that accords most nearly with what has been said on the subject in this Court, is it seems to me to look at the consequences of the order itself and to ask does it finally determine the rights of the parties in a principal cause pending between them. It is never enough to ask simply does the order finally determine the actual application or matter out of which it arises; because, subject to the possibility of an appeal, every order does that, unless it be an order that is expressly declared to be subject to variation.
11․That statement has been applied many times since and remains the law.
12․The Victorian Court of Appeal has framed the test by reference to the corollary of the statement in Hall in stating that an order is interlocutory unless it finally determines the rights of the parties in a principal cause pending between them: VBI Properties Pty Ltd v Victorian Civil and Administrative Tribunal [2003] VSCA 17 at [5]. The Court stated in the same passage that the “principal cause” is sometimes in another court. While none of the authorities cited to illustrate that observation was a case in which the order under consideration was for the payment of money, the statement acknowledges the possibility that an order might be interlocutory because it concerns rights in a cause that remains to be determined in another court. This highlights the importance of identifying the nature of the authority in exercise of which the order under consideration was made.
13․Standing back from the internecine course of the litigation between Beno and Harlech to date, the principal cause pending between them is a dispute in contract. The orders made by Elkaim J did not finally determine that dispute.
14․In order to explain why that is so, it is necessary to consider the disputes that have been determined between the parties to date in the context of the purpose and operation of the Building and Construction Industry (Security of Payment) Act.
15․First, the adjudicator’s decision did not finally determine the parties’ contractual rights. So much is confirmed by the decision of the Court of Appeal in Harlech’s appeal from the decision of Mossop J to which I have referred. The primary judgment in the appeal was written by Lee J, Elkaim J agreeing at [1] and Kennett J agreeing on this issue at [5]. Lee J began by considering the intended operation of the Act at [47]:
The SOP Act was intended to establish a system for the rapid adjudication and interim resolution of payment disputes. It provides a “minimalist, hands-off” alternative to “costly and protracted” court proceedings, with the aim of alleviating pressure on subcontractors and small business operators: Presentation Speech, Hansard (Thursday 15 October 2009) (at 4541–4543); Explanatory Statement, Building and Construction Industry (Security of Payment) Bill 2009 (ACT) (at 3). The statute is commercial in focus, designed to protect against the failure of any one party in a chain of “cascading payment obligations” to pay for work, goods or services: Presentation Speech (at 4541). The building and construction industry is particularly vulnerable to security of payment issues because it is uniquely reliant on subcontracting relationships with inherent imbalances in bargaining power: Explanatory Statement (at 3).
16․As Lee J went on to explain, the Act does not decide final rights:
When the nature of this “pay now, argue later” scheme is appreciated, it is unsurprising that a cardinal component of the statutory regime is that the SOP Act does not decide final rights: it preserves them for later resolution: Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151; 95 NSWLR 82 (at 106–107 [102] per McColl JA, Beazley ACJ and Macfarlan JA agreeing at 85 [1] and 116 [146] respectively); John Holland Pty Limited v Roads and Traffic Authority of New South Wales [2006] NSWSC 874 (at [33] per McDougall J).
17․In that appeal, the boot was on the other foot. Harlech sought to relate “principles of issue estoppel” to adjudications under the Building and Construction Industry (Security of Payment) Act, arguing that Beno was precluded from restating, for the purpose of the second adjudication, a series of contentions that had been rejected in the first. For that purpose, Harlech argued that decisions of the adjudicator were final. The Court resolved the issue (which Lee J termed the “preclusion” issue) in Beno’s favour on a different basis, holding at [100]:
Simply put, the two adjudications in question concerned different work completed years apart. There was no precluded re-agitation or attempt to value the same work anew.
18․For completeness, however, Lee J nonetheless went on at [102]-[106] to explain why he would reject Harlech’s contention that the adjudicator’s decision is final. As that analysis shows, the Act evinces a clear intention to secure payments on an interim basis while preserving substantive contractual rights. It creates what has been described as “a novel right to progress payments in respect of a construction contract”: Birdon Pty Ltd v Houben Marine Pty [2011] FCAFC 126; 197 FCR 25 at [21] (Keane CJ). But the procedure for recovering such payments preserves the parties’ substantive rights under the contract pending their determination in any civil claim.
19․Secondly, the filing of the adjudicator’s certificate as a judgment did not finally determine the parties’ contractual rights. Section 27(1) allows for an adjudication certificate to be filed as a judgment for a debt and enforced in “any court of competent jurisdiction”. However, s 27(4) contemplates the possibility of commencing a “proceeding to have such a judgment set aside” and prohibits the use of any such proceeding as either the forum for the resolution of substantive contractual disputes (s 27(4)(a)) or a means of circumventing the statutory object of securing progress payments (s 27(4)(b)).
20․Keane CJ explained in Birdon at [30] (dealing with the New South Wales equivalent of s 27(1)) that the section:
…does not deem an adjudication certificate to be a judgment of a court of competent jurisdiction for all purposes. Rather, it provides only that it may be “filed as a judgment” and is “enforceable” as if it were a judgment for a debt. It is also to be noted that [the equivalent of s 27(4)] does not speak to the court seized of the underlying dispute, if any, between the parties.
21․The position is put beyond dispute by s 38, which expressly preserves the parties’ contractual rights and contemplates that any dispute arising from the contract will be determined in civil proceedings outside the mechanism for recovering progress payments provided for by the Act: Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49; 62 NSWLR 385 at [22] (Handley JA, Santow JA and Pearlman AJA agreeing at [33] and [34]); cited by Keane CJ in Birdon at [56].
22․It necessarily follows, and is the case in any event, that Mossop J’s order quashing the adjudicator’s decision did not finally determine the parties’ rights at common law. It necessarily follows because, if the adjudication of a claim for payment did not finally determine contractual rights, a decision quashing the adjudication could rise no higher. It is the case in any event because the legal effect of an order in the nature of certiorari operates only on the decision under review. In quashing an administrative decision, the Court does not determine any substantive right affected by the decision; it simply adjudges the invalidity of the decision. The question always remains; what happens next. Having been successful in having the decision quashed, Beno could have moved to have the judgment in the District Court set aside but that did not happen.
23․As further explained in the next section of this judgment, it follows that there was no basis on which a final order could be made for restitution as that term is conventionally or properly understood. If not a final order for restitution, the restitution order must accordingly be characterised as an interlocutory order concerning the payment in question.
Basis for ordering “restitution”
24․It is helpful at this point to provide more detail as to the circumstances in which Beno sought an order for the payment of money “by way of restitution”. The adjudicator made his decision on 17 March 2021. The adjudication certificate was filed in the New South Wales District Court as a judgment in the sum of approximately $600,000 with effect from 27 April 2021.
25․As already noted, s 27(4) of the Building and Construction Industry (Security of Payment) Act contemplates the bringing of a proceeding by the respondent to an adjudication to have such a judgment set aside. However, the respondent is not entitled in that proceeding to challenge the adjudicator’s decision. The avenues for challenging the adjudicator’s decision are addressed in s 43 of the Act.
26․Section 43(1) acknowledges the availability of judicial review of such a decision but purports to preclude jurisdiction to review on the ground of error of fact or law on the face of the decision. In Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd [2021] ACTSC 166 at [85], Mossop J explained why, in the Territory, the efficacy of a privative clause purporting to exclude the jurisdiction of the Supreme Court is not clear. It was not necessary for his Honour to determine that interesting question.
27․Separately, s 43(2) creates a right of appeal to the Supreme Court on any question of law arising out of an adjudication decision.
28․The garnishee order was issued on 5 May 2021. An amount of approximately $200,000 was taken from Beno’s account on 7 May 2021 pursuant to that order: Beno v Harlech at [18].
29․Beno commenced these proceedings on 20 May 2021, after the execution of the garnishee order. The originating application sought to invoke both the Court’s appellate jurisdiction under s 43(2) of Act and the Court’s supervisory jurisdiction. Both were out of time. On 23 July 2021, Mossop J extended the time for bringing the application for prerogative relief but refused to extend the time for bringing an appeal under s 43(2) of the Act: Beno v Harlech at [65].
30․On 26 November 2021, Mossop J quashed the adjudicator’s decision on the ground of jurisdictional error: Beno v Harlech (No 2). His Honour further ordered that a sum of $450,000 that had been paid into court by Beno be repaid to Beno. I am not aware of the circumstances in which that payment into court was required. The Building and Construction Industry (Security of Payment) Act draws a distinction between an adjudicator’s decision (which creates a statutory obligation to pay the adjudicated amount under s 25), an adjudication certificate (which may be sought under s 26 upon failure to pay the adjudicated amount) and a judgment (which may be obtained under s 27 by filing an adjudication certificate). Section 27(4) requires payment into court in proceedings to have the judgment set aside. In such a proceeding, the respondent is not entitled to challenge the adjudicator’s decision. The clear purpose of those provisions is to insulate the statutory mechanism for obtaining security from the process of any later determination of the parties’ substantive rights at common law. Section 27(4) did not require payment into court as the price of seeking judicial review of the adjudicator’s decision.
31․Mossop J also granted liberty to Beno to apply within 28 days on two days’ notice “in relation to any order seeking restitution”. His Honour explained his reasons for doing so at [7]-[9] of Beno v Harlech (No 3):
7. The defendant submitted that the issue of restitution was one entirely for the NSW District Court. That contention is not obviously correct.
8.While the course proposed by the plaintiff has the attraction of efficiency, my tentative view was that the appropriate course was to commence separate proceedings seeking restitution. Restitution was not claimed as relief in the present proceedings. It raises separate issues to those which have been finally determined in these proceedings. Rule 3559 of the Court Procedures Rules is not obviously applicable. It is not appropriate, after having determined the issues in the proceedings, to allow the nature of the proceedings to be amended so as to claim additional final relief.
9.The submissions of the parties were inadequate to permit the determination of the appropriate procedural course. Notwithstanding that the issue of restitution must be an issue which commonly arises in proceedings of this nature, the parties directed me to no authority illustrating the appropriate procedural course. The submissions of the first defendant were not sufficient to convince me that, having regard to the fact that the garnishee order was issued by the NSW District Court, that court was the only jurisdiction in which the issue of restitution could be raised. In order to permit the making of final orders and not preclude an argument that an order for restitution may be sought as relief ancillary upon the setting aside of the adjudicator’s decision, I will expressly grant liberty to apply for an order relating to restitution within a limited period. This, I must emphasise, is not to encourage the making of such an application. It is simply to permit one if, properly advised in the light of relevant authority in relation to the circumstances in which this issue has arisen, it is open to make that order in these proceedings.
32․It is unfortunate that those carefully articulated reservations did not deter Beno from seeking “restitution” framed as relief ancillary to the quashing of the adjudicator’s decision. With respect, his Honour’s tentative view expressed at [8] of the judgment was correct. In seeking a payment from Harlech as ancillary relief in these proceedings, Beno misconceived the operation of the security of payments legislation, the legal effect of certiorari and the nature of restitution. In the circumstances, framing the order sought as an order for payment “by way of restitution” was apt to confuse.
33․Beno has identified two separate grounds for seeking the restitution order. In its application as filed, the order was sought on the ground that, by receiving the payment and in light of the quashing of the adjudicator’s decision, Harlech has been unjustly enriched. Separately, in opposing Harlech’s application for a stay of the restitution order, Beno argued that the restitution order was a proper exercise of the inherent jurisdiction to award restitution of an amount paid in satisfaction of a judgment subsequently overturned on appeal. Neither ground provides a sound basis for the order made.
34․In his text, The Varieties of Restitution (The Federation Press, 2nd ed, 2017), Mr Ian Jackman (now Jackman J) argues that there can be no unifying principle of “unjust enrichment at the plaintiff’s expense”. Rather, the questions which the law of restitution addresses relate to three fundamentally distinct concepts of injustice. Relevantly for present purposes, one is the circumstances in which a person is liable to repay money received from another in the absence of any contractual or tortious duty to do so. Jackman notes that, in this category, “the injustice lies in the non-voluntary conferring of an incontrovertible benefit, the non-voluntariness arising on grounds such as mistake, duress, undue influence or total failure of consideration”: at page 3.
35․The amount Harlech received under the garnishee order was not paid by mistake, under duress or as a result of undue influence. Nor can it be said that there was a total failure of consideration in circumstances where the funds were taken from Beno’s account in accordance with an order of a court of competent jurisdiction and paid to Harlech entirely in accordance with the statutory regime for securing payment of disputed amounts provided for in the Building and Construction Industry (Security of Payment) Act. Harlech has no established contractual or tortious duty to repay to Beno a payment duly received.
36․A judgment obtained in accordance with s 27(1) of the Act is something of a statutory unicorn. As noted by Handley AJ in Falgat at [22], “the common law does not permit inconsistent judgments, but this may be sanctioned by statute”. Section 27(1) permits a claimant to obtain and enforce a judgment for the payment of money while acknowledging and preserving the respondent’s contractual rights. To that end, the statute contemplates the prospect of restitution should that be required upon final determination of the parties’ rights at common law.
37․That final determination has not yet occurred in the present case. I considered that issue in an earlier application in these proceedings in which I stayed the enforcement of Elkaim J’s orders pending the determination of the present application: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 6) [2023] ACTSC 245. For the reasons explained in that judgment at [16]-[18], neither Elkaim J nor the parties approached the application for the restitution order as a final hearing of Harlech’s contractual rights.
38․Furthermore, so long as the judgment obtained in the District Court remains in force, it cannot be said that Harlech has been unjustly enriched. Jackman notes at page 1 that the High Court “has unequivocally stated on numerous occasions that the concept of unjust enrichment is not a principle which can be taken as a sufficient premise for direct application in a particular case”. The authorities are collected in the footnote. It is enough to refer to Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; 232 CLR 635 in which the plurality said at [85] (Gummow, Hayne, Crennan and Kiefel JJ):
The second point to be noted is that unjust enrichment was identified as a legal concept unifying "a variety of distinct categories of case". It was not identified as a principle which can be taken as a sufficient premise for direct application in particular cases. Rather, as Deane J emphasised in Pavey & Matthews, it is necessary to proceed by "the ordinary processes of legal reasoning" and by reference to existing categories of cases in which an obligation to pay compensation has been imposed. "To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate." On the contrary, what the recognition of the unifying concept does is to assist "in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case" (emphasis added).
39․In a separate judgment, Gleeson CJ said at [48]:
In some Australian jurisdictions, there has been legislation enacted to protect the interests of building subcontractors, but such protection is confined within a certain statutory framework. The fact that such legislation exists should discourage, rather than encourage, attempts to extend the scope of restitutionary claims beyond the bounds set by legal principle, especially where to do so would be to cut across or disturb contractual relationships and established allocation of risk.
40․In the stay application, Beno sought to defend the restitution order on the alternative basis that it was a proper exercise of the Court’s inherent power, relying on the decision of the NSW Court of Appeal in Production Spray Painting v Newnham (No 2) (1992) 27 NSWLR 659. That decision is distinguishable. It was an orthodox application of the principle that “the reversal of a judgment on appeal entitles the successful appellant to recover any moneys paid under the reversed judgment”: at 661 per Handley JA. As already explained, Mossop J’s decision quashing the decision did not have final effect, as did the Court of Appeal’s order quashing the orders of the Industrial Commission in Production Spray Painting.
41․Beno also relied on a decision relied upon by Elkaim J in his judgment on the restitution application, being a decision of Hammerschlag J in Go Electrical Pty Ltd v Class Electrical Services Pty Ltd [2013] NSWSC 517. That decision is also distinguishable. There, the judgment based on the quashed decision had also been set aside. Here, the underlying decision has been quashed but that is not a final determination of the contractual dispute between the parties. The adjudicator’s certificate having been filed as a judgment, the quashing of the decision did not render the judgment void: Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421 at 443 [61] (Hodgson JA).
42․As I noted in the stay application, the underlying dispute has never been determined. I am not persuaded that there was any basis for ordering restitution in the present case.
Whether it is appropriate to set aside the order
43․As already noted, the restitution order must accordingly be characterised as an interlocutory order concerning the payment in question. In effect, what Beno sought and obtained from Elkaim J is the release of funds held as security for a contingent liability.
44․In my view, the order should be set aside for two principal reasons. First, for the reasons I have explained, Harlech was entitled to receive the payment under the Building and Construction Industry (Security of Payment) Act 2009. Securing cash flow by means of “a novel [statutory] right to progress payments in respect of a construction contract” pending the final resolution of common law rights is the whole point of that statutory regime.
45․Secondly, the fact that Harlech has now commenced civil proceedings to resolve the factual dispute is a relevant change of circumstances. Contrary to a submission put on Beno’s behalf, I do not think Elkaim J is to be understood to have pre-empted that submission and rejected it. On the contrary, it is clear from his Honour’s judgment at [24]-[25] that the fact that Harlech had not commenced proceedings to recover its claim was the reason his Honour did not embark on an analysis of the provisions of the Building and Construction Industry (Security of Payment) Act, particularly the operation of s 38 of the Act.
46․Beno submitted that the order should not be set aside because the present application is in the nature of an appeal in disguise. Beno noted that Harlech was heard by Elkaim J on its three principal arguments and was unsuccessful in persuading his Honour that any was a reason not to make the restitution order. Once it is appreciated that the order was interlocutory, the question becomes whether the fact of a change of circumstances warrants the consideration of the issue afresh. As I have explained, Elkaim J considered the matter at a point in time when the effect of s 38 was moot because there were no proceedings on foot to determine the substantive dispute between the parties. That has changed.
47․Separately, it is necessary to consider whether to exercise the discretion to intervene having regard to any other relevant considerations. Beno noted that Harlech failed to comply with the order until Beno commenced enforcement proceedings. Harlech’s delay is certainly a relevant factor militating against revisiting the order. However, Beno has been guilty of its own delay in the proceedings, first requiring an extension of time to commence the proceedings at all and then requiring an extension of the period of leave for bringing the application for the restitution.
48․Harlech explains its delay in paying the amount ordered by Elkaim J and in commencing separate proceedings to enforce the contract by reference to the fact that it was pursuing its rights of appeal against Mossop J’s decision to quash the decision of the adjudicator. I am not persuaded that Harlech is guilty of such delay as to deprive it of the opportunity to seek to have the order set aside now that it has commenced substantive proceedings invoking the application of s 38 of the Act.
Orders
49․Accordingly, I make the following order:
(1)Set aside orders (ii)-(iv) made by Elkaim J on 11 October 2022.
| I certify that the preceding forty-nine [49] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum Associate: Date: 17 October 2023 |
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