Civil & Allied Technical Construction Pty Ltd v Sarens (Australia) Pty Ltd (No 2) - [2019] SASC 219

Supreme Court of South Australia
(Civil: Application)
CIVIL & ALLIED TECHNICAL CONSTRUCTION PTY LTD v SARENS (AUSTRALIA) PTY LTD & ORS (No 2)
[2019] SASC 219
Judgment of The Honourable Chief Justice Kourakis (ex tempore)
24 December 2019
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS - ADJUDICATION OF PAYMENT CLAIMS
ARBITRATION - THE SUBMISSION AND REFERENCE - SUBMISSION AS A DEFENCE AND AS A GROUND FOR STAY OF PROCEEDINGS - STAY OF PROCEEDINGS
Interlocutory application by the plaintiff seeking a stay of its proceedings in SCCIV-19-1327 and SCCIV-19-1348.
The stay of proceedings is sought on the basis that the underlying contractual dispute over the building and construction of a wind farm and the contractual payments due for the work performed have been referred to an arbitration. The plaintiff contends that the hearing and determination of its actions would require this Court to determine issues arising in the matter which have been referred to arbitration, or at least so many such issues, that there is no utility in a hearing of the remaining issues.
Held, dismissing the application:
1. There remain sufficient issues, which is it efficacious to decide ahead of the arbitration, to allow the actions to proceed.
Building and Construction Industry Security of Payment Act 1999 (NSW) ss 8, 13, 34; Commercial Arbitration Act 2011 (SA) s 8, referred to.
Civil & Allied Technical Construction Pty Ltd v Resolution Institute [2019] SASC 193, considered.

CIVIL & ALLIED TECHNICAL CONSTRUCTION PTY LTD v SARENS (AUSTRALIA) PTY LTD & ORS (No 2)
[2019] SASC 219

KOURAKIS CJ (ex tempore): This is an interlocutory application brought in an action for a declaration that a payment claim made against the plaintiff, Civil & Allied Technical Construction Pty Ltd (CATCON), by the defendant, Sarens (Australia) Pty Ltd (Sarens), was invalid and ineffective to invoke an adjudication pursuant to the provisions of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act).
On 14 November 2019, I stayed the referral of the payment claim to an adjudicator, and its acceptance, pending the hearing and determination of CATCON’s actions (SCCIV-19-1327 and SCCIV-19-1348). These reasons should be read together with the reasons given by me in Civil & Allied Technical Construction Pty Ltd v Resolution Institute [2019] SASC 193.
The trial of the action (in SCCIV-19-1327) has been scheduled for hearing in this Court in February 2020. CATCON seeks a stay of its proceedings because the underlying contractual dispute over the building and construction of the Silverton Wind Farm and the contractual payments due for the work performed have been referred to an arbitrator. The parties agree that the Commercial Arbitration Act 2011 (SA) (the Commercial Arbitration Act) applies, or at least that their agreement is a valid arbitration agreement (the contract).
CATCON contends that the hearing and determination of its actions would require this Court to determine issues arising in the matter which have been referred to arbitration, or at least so many such issues, that there is no utility in a hearing of the remaining issues.
Section 8 of the Commercial Arbitration Act provides that a court, before which an action is brought, in a matter which is the subject of an arbitration agreement, must, if a party so requests by a particular time, refer the parties to arbitration unless it finds the agreement is null and void. The effect of s 8 is that the Court cannot itself proceed to hear an action to the extent that it includes a claim which is made in a matter that is the subject of an arbitration.
A ‘matter’ for the purposes of s 8 is the matrix of:
·disputed claims over legal rights, interests and obligations arising out of an arbitration agreement (the legal claims);
·the laws which confer those rights, interests and obligations; and
·the relevant facts on which those laws operate to confer or deny a legal entitlement.
When a matter is referred to arbitration, the legal claims are resolved by final arbitral orders which operate as a new charter embodying those entitlements and binding the parties.
The statutory rights and obligations conferred by the Security of Payment Act cannot be the subject of an arbitration.[1] However, an action brought to enforce or declare a right or obligation under the Security of Payment Act may nonetheless be brought in a matter which is the subject of an arbitration to the extent that the action calls for a judicial resolution of a part, or parts, of the matter which is subject to an arbitration. Again, that sub-matter is a matrix of the legal claims, the laws conferring applicable rights, interests and obligations, and the relevant facts.
[1] Building and Construction Industry Security of Payment Act 1999 (NSW) s 34.
The subject matter of the arbitration between the parties in this matter necessarily includes:
·whether there is a contract or contracts;
·the identification of the contractual terms and their proper construction;
·whether any and what work was performed under the contract and when it was performed; and
·whether an entitlement to be paid a sum provided for by the contract for work performed has accrued and when it accrued.
On the other hand, a dispute over whether the statutory preconditions for a valid payment claim pursuant to s 13 of the Security of Payment Act have been satisfied cannot form any part of a matter which has been referred to arbitration unless, for example, the disputed precondition is whether or not there is a contractual reference date and its identification. A question of that kind, plainly enough, requires a construction of the terms of the contract.
A ‘reference date’ is defined by s 8 of the Security of Payment Act to be a date determined by, or in accordance with, the terms of the contract, as the date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out. It follows that the first step in the identification of the reference date involves the construction of the terms of the relevant contract. Only if, after undertaking that construction, the answer is given that no express provision is made would the reference date become the statutory reference date as defined by s 8 of the Security of Payment Act.
It is convenient to apply those general principles and remarks to the issues which Sarens contends remain to be determined.[2]
[2] 1. Did the subcontract between the parties expressly provide a reference date?
2.If the answer to question 1 is ‘yes’, what is the reference date?
3.If the answer to question 1 is ‘no’:
3.1Does s 8(2)(b) of the Security of Payment Act apply to fix the reference date as the last day of each relevant month and if so, what is the reference date?
4.If the second payment claim specified a reference date other than that found by the Court to be an available reference date:
4.1Does that invalidate the second payment claim because it specifies a reference date other than an available reference date found by the Court?
4.2If the answer to question 4.1 is ‘yes’, can Sarens serve a fresh payment claim based upon the reference date found by the Court?
5.Accepting that it is a condition of the validity of a payment claim under the Security of Payment Act that the payment claim identify the construction work to which the progress payment relates, objectively, did the second payment claim identify the construction work to which it related?
6.If a payment claim includes work under a contract different from, or additional to, the contract relied on in a payment claim, is it a valid payment claim?
7.If a payment claim includes work done, or related goods or services provided, after the reference date, is it a valid payment claim?
8.If a payment claim includes a claim for work which is, or goods or services that are, not construction work or related goods or services, is it a valid payment claim?
The first issue is whether the subcontract between the parties expressly provides a reference date. It follows from my general remarks that that question has been referred to arbitration. The second question, likewise, is a matter turning on the construction of the contract and it has been referred for arbitration. It follows that one cannot get to the third question without finally determining matters that are part of the matters sent to arbitration.
Insofar as the fourth question concerns the proper application of s 13(5) of the Security of Payment Act, it raises the issue which has been described as the banking of reference dates, or the making of a duplicate claim. That issue concerns the proper construction of the Security of Payment Act. It should be amenable to determination on a perusal of both payment claims without having to decide whether the contract provided for a particular reference date or whether it did not stipulate a reference date at all. The question is whether a duplicate claim has been made, whatever the appropriate contractual or statutory reference date. The question of banking or duplicate payment claims is one that has not been referred to arbitration. There is utility in determining that question.
The fifth issue, whether or not the intelligibility of the claim is a precondition to its validity and whether the second payment claim is, on its face, intelligible, can also be determined, irrespective of whether the work claimed is or is not work performed under the contract. There is utility in determining that question.
The sixth issue is whether the second payment claim has included work under an agreement or arrangement other than the contract. It is contended that s 13 of the Security of Payment Act requires that a payment claim be made under a single contract. Whether or not on a proper construction s 13 so requires and whether that requirement is a condition of validity is not a claim made in the arbitration and can be determined by this Court. The determination of that question of construction may be of limited utility in this case because what work was performed and the contract or contracts pursuant to which it was performed are necessarily questions which have been referred to arbitration. However, if this Court were to determine that the validity of a payment claim is not dependent on the claim being, on its face, one made under only one contract, will resolve the sixth issue even if it is the case that some of the work was performed under another agreement or agreements. I acknowledge that the converse is not true, but there is some utility in an early resolution of the question of law.
A similar approach can be taken with respect to the seventh issue. It raises the question of law of whether claims for work done after a reference date invalidates the payment claim. That question of law may be decided despite its limited utility because whether work was performed, and when it was performed, are issues arising in the matter which has been referred to arbitration.
So too with the eighth issue, which is whether the validity of a payment claim depends on it comprising only claims for goods or services supplied pursuant to a construction contract. A determination of that question may also be of limited utility because, again, the question of what work has been performed is an issue falling within the matter which has been referred to arbitration.
For the above reasons, there remain sufficient issues, which it is efficacious to decide ahead of the arbitration, to allow the actions to proceed. I therefore dismiss CATCON’s application to stay the proceedings.
This order is interlocutory. If, in the course of argument, it appears that more or less may be decided, then the Court will proceed accordingly.