Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 4)
[2022] ACTSC 275
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 4) |
Citation: | [2022] ACTSC 275 |
Hearing Date: | 4 October 2022 |
DecisionDate: | 11 October 2022 |
Before: | Elkaim J |
Decision: | (i) The applicant has leave to rely on the application in proceeding filed on 4 January 2022. (ii) The respondent (the first defendant) is to pay the applicant (the plaintiff) the sum of $196,428.79 by way of restitution. (iii) The respondent is to pay the applicant $11,893 by way of interest on the sum stated in the previous order. (iv) The respondent is to pay the applicant’s costs of the application in proceedings filed on 4 January 2022. |
Catchwords: | CIVIL LAW – APPLICATION – Restitution – where the plaintiff seeks an order that the first defendant pay the plaintiff a sum by way of restitution |
Legislation Cited: | Building and Construction Industry (Security of Payment) Act 2009 (ACT) s 38 |
Cases Cited: | Barclays Bank Pty Ltd v W.J. Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2) [2021] ACTSC 296 Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659 |
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) Dr A Greinke (First Defendant) |
| Solicitors Joseph Tallarita (Plaintiff) Mills Oakley ( First Defendant) | |
File Number: | SC 206 of 2021 |
Elkaim J:
On 4 January 2022 the plaintiff filed an application in proceeding seeking an order that the first defendant pay to the plaintiff the sum of $196,428.79 by way of restitution, together with various associated orders.
The application is opposed.
The application is supported by an affidavit of Ms Diana Bencic sworn on 1 September 2022. The respondent relies upon an affidavit of Mr Benjamin Moseley affirmed on 16 September 2022.
Ms Bencic is the business and administration manager of the plaintiff company. Mr Moseley is a director of the first defendant company.
The basis for the application is seemingly straightforward:
(a)On 17 March 2021 an adjudicator (the second defendant) made a determination under the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (the SOP Act) directing the plaintiff to pay $598,812.17 to the first defendant.
(b)After obtaining the necessary certificate, the first defendant registered the certificate in the District Court of New South Wales and thereafter obtained a garnishee order against the plaintiff.
(c)Consequent upon the garnishee order the sum of $196,415.79 was paid into the trust account of the first defendant’s solicitors.
(d)On 26 November 2021 Mossop J quashed the adjudicator’s determination (Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2) [2021] ACTSC 296; 363 FLR 238).
(e)On 11 August 2022 an appeal from the decision of Mossop J was dismissed (Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2022] ACTCA 42). An application for special leave has been filed in the High Court but has yet to be determined.
(f)Therefore, says the applicant, the monies paid as a result of the garnishee order should be returned.
In addition to quashing the determination, Mossop J also made an order that the applicant had liberty to apply within 28 days for an order seeking restitution. This was not done. The application was filed on 4 January 2022. No opposition was made however to the late filing and I will make an order accordingly.
Returning to the matter generally the applicant submitted that it fits within the principles stated by the New South Wales Court of Appeal in Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659 at 661:
It is well-established that the reversal of a judgment on appeal entitles the successful appellant to recover any moneys paid under the reversed judgment.
And at 663:
Counsel for the opponents in the alternative submitted that this Court should mould the relief to be granted to the claimants to preserve the sum of $122,389.28 and interest as a fund so that it would be available to meet any judgment that the opponents may eventually obtain against the claimants in the foreshadowed proceedings for fraud and deceptive conduct etc. In my opinion, the Court is not entitled to take that course. The orders sought would either convert the opponents into secured creditors of the claimants, or else would tie up the fund in some other way. On either basis the claimants would continue to be disadvantaged as a result of the orders of the Industrial Commission quashed by this Court, and they would not have been “restored to all things” which they had lost as a result of those orders. The claimants are entitled to an unconditional order for the repayment of the sum paid under the order of Glynn J and interest thereon.
The seeming simplicity of the application, as I have set out above, was challenged by the respondent, essentially on three bases:
(a)The application for restitution can only be based on the unjust enrichment of the plaintiff. As the plaintiff owed more than the claimed amount to the first defendant, there had not been any unjust enrichment.
(b)The monies claimed had been paid pursuant to a garnishee order made in the District Court of New South Wales. No proceedings had been taken to set aside that order. It still remained in existence and this court did not have the power to set it aside.
(c)The claim for restitution was inconsistent with s 38 of the SOP Act which expressed a legislative intention that there should be no restitution until the whole of the dispute between the parties had been completed.
In support of its first point the respondent referred me to the English case of Barclays Bank Pty Ltd v W.J. Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677 where Goff J said this at page 695:
From this formidable line of authority certain simple principles can, in my judgment, be deduced: (1) If a person pays money to another under a mistake of fact which causes him to make the payment, he is prima facie entitled to recover it as money paid under a mistake of fact. (2) His claim may however fail if (a) the payer intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend; or (b) the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by third party by whom he is authorised to discharge the debt; or (c) the payee has changed his position in good faith, or is deemed in law to have done so.
I have underlined in the above quote the portions said to apply in the present case. The submission was emphasised, said the respondent, by the decision of Brennan J in the High Court in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 392:
If a defendant has a right to receive a payment, whether under a statute, in discharge of liability owing to him pursuant to a contract, a mistake by the plaintiff in making the payment does not convert the receipt into an unjust enrichment. To the extent that the payment satisfies a defendant’s right to receive it, the defendant gives good consideration and is not unjustly enriched.
The respondent says that the affidavit of Mr Moseley establishes, through the exhibiting of tax invoices, a debt owed by the applicant to the respondent which is well in excess of the money claimed by way of restitution. The respondent says that there has been no challenge to the asserted debt.
The applicant responded that, in an interlocutory proceeding, a mere statement of a debt in an affidavit did not establish that debt. Moreover, the whole of the dispute between the parties in this matter revolved around whether money was owed by the applicant to the respondent.
I note here, and it will be relevant again later, that there are no other proceedings in existence by either the applicant to resolve its position in the dispute between the parties or by the respondent to establish the debt that is the subject of the tax invoices. Both parties are presumably awaiting the result of the High Court proceedings before taking any further steps.
The result is that the respondent has certainly established a basis, through the affidavit of Mr Moseley, for the existence of a debt but has not proved that debt, either by consent or through court proceedings. It follows, I think, that the payment made under the garnishee order is not necessarily a payment made for good consideration, or by compulsion, in satisfaction of the debt owed by the applicant to the respondent.
A similar argument had been made in Go Electrical Pty Limited v Class Electrical Services Pty Limited [2013] NSWSC 517. Hammerschlag J (as he then was) dealt with the argument in this way:
17.The plaintiff puts that ordinary restitutionary principles apply and that whilst the defendant might have a prima facie case to recovery, its right is based on notions of unjust enrichment. It puts that restitution may be withheld if to grant it would be unjust. It puts that an order to make restitution is unjust if it causes injury to a person.
18.It puts that to make the order sought here would cause injury to it because of the pendency of the statutory demand proceedings. It puts that if the defendant's attempt to set the statutory demand aside fails there will arise against the defendant a presumption of insolvency based on the existence of a money claim of which the amount recovered by it under the now set aside judgment forms part. It also says that if it is ordered to make restitution it will have a pro tanto claim of set off for the same amount.
19.Attention was drawn to s 21(1) of the Civil Procedure Act 2005 (NSW) which provides that if there are mutual debts between a plaintiff and a defendant in any proceedings, the defendant may by way of defence set off against the plaintiff's claim any debt that is owed by the plaintiff to the defendant that was due and payable at the time the defence set off was filed, whether or not the mutual debts are different in nature.
20.The plaintiff's submissions are manifestly unsustainable. I do not consider that the Court has a discretion to refuse relief in circumstances where the plaintiff has obtained payment based on a judgment in turn based on a void adjudication determination which has been quashed. The entire consideration for the payment has failed and a common money count lies: John Holland Pty Ltd v Roads and Traffic Authority of NSW (2006) 66 NSWLR 624 at 634.
Therefore the respondent’s first point fails.
Turning now to the second point, the applicant accepts that it has taken no proceedings in the District Court of New South Wales to set aside the garnishee order. I agree with the respondent that I do not have the power to set aside the order, or to in any other way interfere with the due process that has occurred in the District Court.
The applicant’s answer to this point is that the District Court proceedings have been completed and there is no need for any involvement of the District Court; whatever happened in that court is no longer relevant.
I was referred to the affidavit of Ms Bencic and in particular the email sent on 28 May 2021 from the solicitor for the respondent to the applicant’s solicitor stating that the $196,415.79 had been received into the solicitors’ trust account and then distributed to 3 separate entities. Consequently, said the applicant, the process generated by the garnishee order had been completed and so too had the role of the District Court. The sum sought by way of restitution was no longer the product of the garnishee order, but rather represented the amount by which the respondent had received a non-justifiable benefit.
I think the applicant’s analysis is correct. If the District Court’s order was set aside that would have no effect on the return of the money. The garnishee order was made and its role has been completed.
Returning to the email sent on 28 May 2021, I note that $34,730.53 was paid to the applicant’s solicitor’s trust account. This could be seen as a return of the money to the applicant, so that the amount claimed should be reduced by this sum. However this point was not taken by the respondent suggesting that in a case that was otherwise strongly resisted. I can only assume the point was not taken for good reason. Accordingly I will ignore the seeming repayment of money to the applicant.
The respondent’s second point also fails.
The third point arises from s 38 of the SOP Act. The respondent submitted that this section, in particular highlighting subsection 3(b), suggested that the statutory intention “is that the question of restitution of monies paid in respect of statutory payment claims is a matter for determination in any final proceedings to establish contractual rights pursuant to s 38” (written submissions at [11]).
The respondent may well be right in its interpretation of the legislative intent behind s 38. The difficulty I have however is that there are no final proceedings awaiting resolution. The only proceedings in this matter are constituted by the adjudication, which has now been set aside, and the decisions of Mossop J and the Court of Appeal respectively, both of which have been completed (subject of course to their future in the High Court).
It is possible that there may be future proceedings, but that is speculative and I do not think any such proceedings, whatever they may be and by whom they may be brought, can be influential upon a restitution claim presently before the Court.
Therefore the third point fails.
The result is that the applicant is entitled to the orders that it seeks. I make the following orders:
(i)The applicant has leave to rely on the application in proceeding filed on 4 January 2022.
(ii)The respondent (the first defendant) is to pay the applicant (the plaintiff) the sum of $196,428.79 by way of restitution.
(iii)The respondent is to pay the applicant $11,893 by way of interest on the sum stated in the previous order.
(iv)The respondent is to pay the applicant’s costs of the application in proceedings filed on 4 January 2022.
| I certify that the preceding twenty-eight [28] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Elkaim. Associate: Date: |
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