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Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd

Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd

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Case Copied 16 August 2016 34 min read

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Supreme Court

New South Wales

Medium Neutral Citation: Hakea Holdings Pty Limited v Denham Constructions Pty Ltd; BaptistCare NSW & ACT v Denham Constructions Pty Ltd [2016] NSWSC 1120
Hearing dates: 9 and 10 August 2016
Decision date: 16 August 2016
Jurisdiction: Equity - Technology and Construction List
Before: Ball J
Decision:
See paragraphs 66 to 69 of this judgment.

Catchwords: BUILDING AND CONSTRUCTION – Building and Construction Industry Security of Payment Act 1999 (NSW) – whether order preventing enforcement of an adjudication determination should be continued on the ground that the beneficiary of the determination is insolvent or at substantial risk of becoming insolvent
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Industrial Relations Act 1996 (NSW)
Payroll Tax Act 2007 (NSW)
Taxation Administration Act 1953 (Cth)
Workers Compensation Act 1987 (NSW)
Cases Cited: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238
Brodyn Pty Ltd t/as Time Cost & Quality v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421
Denham Constructions Pty Ltd v Islamic Republic of Pakistan [2016] ACTSC 215
RJ Neller Building Pty Ltd v Ainsworth [2008] QCA 397
Romaldi Constructions Pty Ltd v Adelaide Interior Linings Pty Ltd (No 2) [2013] SASCFC 124
Veolia Water Solutions v Kruger Engineering Australia Pty Ltd (No 3) [2007] NSWSC 459
Category: Procedural and other rulings
Parties: Hakea Holdings Pty Ltd ACN 116 147 436 (Plaintiff 2016/104627)
BaptistCare NSW & ACT ACN 000 049 525 (Plaintiff 2016/161700)
Denham Constructions Pty Ltd ACN 086 503 568 (First Defendant 2016/104627 & 2016/161700)
Australian Solutions Centre Pty Ltd ACN 085 917 219 (Second Defendant 2016/104627)
Deputy Commissioner of Taxation (Second Defendant 2016/161700)
Edward Smithies (Third Defendant 2016/104627)
5G Capital SPV27 Pty Ltd ACN 604 038 722 (Third Defendant 2016/161700)
SPV28 Pty Ltd ACN 605 190 083 (Fourth Defendant 2016/161700)
Australian Prestressing Services Pty Limited ACN 082 408 124 (Fifth Defendant 2016/161700)
Representation:
Counsel:
IG Roberts SC with L Shipway (Plaintiff 2016/104627)
Ms J Wright (Plaintiff 2016/161700)
BF Katekar with SS Ahmed ((First Defendant 2016/104627 & 2016/161700)
JC Giles SC with T Cleary (Second Defendant 2016/161700)
Submitting Appearance (Third Defendant 2016/104627)
Ms J Gatland (Third and Fourth Defendants 2016/161700)
Submitting Appearance (Fifth Defendant 2016/161700)
Submitting Appearance (Sixth Defendant 2016/161700)
Solicitors:
Kennedys (Plaintiff 2016/104627)
Colin Biggers & Paisley (Plaintiff 2016/161700)
KWS Legal (First Defendant 2016/104627 & 2016/161700)
ATO Legal Services (Second Defendant 2016/161700)
Moisson Lawyers (Third and Fourth Defendants 2016/161700)

File Number(s): 2016/104627 and 2016/161700
Publication restriction: Nil

Judgment

Introduction

Before the court are two applications to continue orders the effect of which is to prevent Denham Constructions Pty Ltd (Denham) from obtaining the benefit of adjudication determinations in its favour under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the SOP Act). One application is brought by Hakea Holdings Pty Ltd in respect of an adjudication determination made on 18 March 2016 in the sum of $1,138,045.33. The other is brought by BaptistCare NSW & ACT in respect of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] NSWSC 1120
Decision Date: 16 August 2016

CaseChat Overview and Summary

The case of Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd involves a dispute between the contractor and the principal in a construction project, with the matter being heard in the Supreme Court of New South Wales. The principal, Denham Constructions, sought to prevent the enforcement of an adjudication determination in favour of the contractor, Hakea Holdings, on the grounds that Hakea was either insolvent or at substantial risk of becoming insolvent. This matter raises issues regarding the application of the Building and Construction Industry Security of Payment Act 1999 (NSW) and the court's discretion to prevent enforcement of an adjudication determination under section 17Q(2) of the Act.

The key legal issues before the court were whether there was evidence to support the claim that Hakea was insolvent or at substantial risk of becoming insolvent, and if so, whether this justified the continuation of an order preventing enforcement of the adjudication determination. The court had to consider the relevant statutory provisions, including section 17Q(2) of the Act, which allows the court to prevent enforcement of an adjudication determination if it is satisfied that there are substantial grounds for doing so, including that the beneficiary of the determination is insolvent or at substantial risk of becoming insolvent. The court also needed to assess the evidence presented by both parties regarding the financial status of Hakea.

The court found that there was insufficient evidence to establish that Hakea was insolvent or at substantial risk of becoming insolvent. Consequently, the court concluded that the order preventing enforcement of the adjudication determination should not be continued. The court emphasised the importance of the principal providing clear and compelling evidence to support such a claim, as the consequences of preventing enforcement could be significant for the contractor. The court also noted that the statutory scheme under the Security of Payment Act is designed to facilitate prompt payment in the construction industry and that orders preventing enforcement should be used sparingly.

As a result of the court's findings, the order preventing enforcement of the adjudication determination was set aside, and the principal was directed to pay the adjudicated amount to the contractor. This decision underscores the need for principals to carefully consider the evidence they rely on when seeking to prevent enforcement of an adjudication determination, and highlights the court's cautious approach in such matters.

Orders