Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd

Case •

[2025] NSWCA 5

•

04 February 2025

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

  • Summary available
Medium Neutral Citation: Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2025] NSWCA 5
Hearing dates: 26 September 2024
Date of orders: 04 February 2025
Decision date: 04 February 2025
Before: Bell CJ at [1];
Ward P at [75];
Payne JA at [76]
Decision:

1.  Grant leave to appeal.

2.  Appeal dismissed with costs.

Catchwords:

JUDGMENTS AND ORDERS – Adjudication determination entered as a judgment – Adjudication determination affected by jurisdictional error – Judgment set aside on the basis that adjudication determination affected by jurisdictional error

RESTITUTION – Where moneys paid under a garnishee order pursuant to a judgment – Where judgment subsequently set aside – Right to restitution of moneys paid under a judgment subsequently set aside – No discretion to refuse relief under general law – Alternative basis for restitution pursuant to s 124A of the Civil Procedure Act 2005 (NSW)

Legislation Cited:

Building and Construction Industry (Security of Payment) Act 2009 (ACT) ss 24, 27, 38

Building and Construction Industry Security of Payment Act 1999 (NSW)

Civil Procedure Act 2005 (NSW) ss 60, 124A

District Court Act 1973 (NSW) s 127(2)(a)

Cases Cited:

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 6) [2023] ACTSC 245

Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 7) [2023] ACTSC 292; (2023) 382 FLR 220

Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 8) [2023] ACTSC 399

BHP Steel (JLA) Pty Ltd Khan (No 2) [2001] NSWCA 269

BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2015] 1 Qd R 228; [2013] QCA 394

Brodyn Pty Ltd (t/as Time Cost and Quality) v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394

Commonwealth of Australia v McCormack (1984) 155 CLR 273; [1984] HCA 57

Correa v Whittingham (No 2) [2013] NSWCA 471

Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44; [2022] NSWCA 216

David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48

Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; [2009] NSWCA 69

Easterday v The State of Western Australia [2005] WASCA 202

Go Electrical Pty Limited v Class Electrical Services Pty Limited [2013] NSWSC 517

Haig v Minister for Administering the National Parks and Wildlife Act 1974 (No 3) (1996) 90 LGERA 408

Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2022] ACTCA 42; (2022) 371 FLR 96

Heydon v NRMA (No 2) (2001) 53 NSWLR 600; [2001] NSWCA 445

Holdcroft v Market Garde Produce Pty Ltd [2000] 2 Qd R 381; [2000] QCA 396

House v The King (1936) 55 CLR 499; [1936] HCA 40

In the matter of Powerpark Systems Pty Ltd [2018] NSWSC 793

Khouzame v All Seasons Air Pty Ltd (2015) 229 FCR 279; [2015] FCAFC 28

Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2011] FCAFC 141

Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140

National Australia Banking Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386

New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26

Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659

Provide Nominees Pty Ltd v Australian Securities and Investments Commission (2024) 301 FCR 569; [2024] FCAFC 25

Re J Group Constructions Pty Ltd [2015] NSWSC 1607; (2015) 303 FLR 139

TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381; [1999] NSWCA 104

Woolworths Limited v Kelly (No 2) [1991] NSWCA 287

Woolworths Limited v Strong (No 2) (2011) 80 NSWLR 445; [2011] NSWCA 72

Category:Principal judgment
Parties: Harlech Enterprises Pty Ltd (Applicant)
Beno Excavations Pty Ltd (Respondent)
Representation:

Counsel:

A Greinke (Applicant)
D Hume (Respondent)

Solicitors:

Mills Oakley (Applicant)
Tallarita Joseph Lawyers (Respondent)
File Number(s): 2024/147330
Publication restriction: N/A
 Decision under appeal 
Court or tribunal:
District Court of New South Wales
Jurisdiction:
Civil
Citation:

[2024] NSWDC 151

Date of Decision:
27 March 2024
Before:
Montgomery DCJ
File Number(s):
2021/117035

HEADNOTE

[This headnote is not to be read as part of the judgment]

Following a payment claim served by Harlech Enterprises Pty Ltd (Harlech or the Applicant) on Beno Excavations Pty Ltd (Beno or the Respondent), an adjudicator made a determination under the Construction Industry (Security of Payment) Act 2009 (ACT) (the SOP Act), directing Beno to pay Harlech $638,248.70 (the Adjudication Determination). An adjudication certificate was subsequently issued (the Adjudication Certificate) and entered as a judgment for a debt in the sum of $638,442.70 in the District Court of NSW (the Adjudication Judgment). A garnishee order was made by the District Court of NSW in respect of Beno’s judgment debt, leading to $196,428.79 being debited from Beno’s bank account.

On 19 November 2021, Mossop J in the Supreme Court of the ACT held that the Adjudication Determination was affected by jurisdictional error, and subsequently quashed the Adjudication Determination on 26 November 2021. On 11 October 2022, Elkaim J in the Supreme Court of the ACT ordered that Harlech pay Beno $196,428.79 by way of restitution. The application for restitution was made without any attempt to set aside the Adjudication Judgment or the garnishee order. On 17 October 2023, McCallum CJ in the Supreme Court of the ACT set aside Elkaim J’s orders for restitution on the basis that the Adjudication Judgment remained in force.

On 27 March 2024, Montgomery DCJ (the primary judge) in the District Court of NSW set aside the Adjudication Judgment and garnishee order on the basis that the Adjudication Determination was quashed for jurisdictional error. In turn, the primary judge ordered restitution of the moneys advanced under the garnishee order together with interest.

Harlech challenged the primary judgment on various grounds, including that the primary judge erred in finding that: (i) the Adjudication Judgment was void ab initio; and (ii) Beno was entitled to restitution for money had and received.

The Court (Bell CJ, Ward P and Payne JA agreeing), dismissed each challenge raised by the Appellant. Its holdings included that:

  1. The primary judge did not err in setting aside the Adjudication Judgment on the basis that the Adjudication Determination had been quashed for jurisdictional error. It was therefore unnecessary to consider whether the Adjudication Judgment was valid and enforceable until set aside or void ab initio: [52]-[55] (Bell CJ); [75] (Ward P); [76] (Payne JA).

Brodyn Pty Ltd (t/as Time Cost and Quality) v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394; New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26; Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; [2009] NSWCA 69, considered.

Khouzame v All Seasons Air Pty Ltd (2015) 229 FCR 279; [2015] FCAFC 28; In the matter of Powerpark Systems Pty Ltd [2018] NSWSC 793; Re J Group Constructions Pty Ltd [2015] NSWSC 1607; (2015) 303 FLR 139, noted.

  1. The primary judge did not err in ordering restitution of moneys paid under the garnishee order as the Adjudication Judgment had been set aside. Harlech was unjustly enriched by the receipt of moneys to which there was no underlying entitlement following the setting aside of the Adjudication Judgment. No discretion existed as a matter of general principle to withhold an order for restitution of moneys paid under a judgment which had been set aside: [60]-[66] (Bell CJ); [75] (Ward P); [76] (Payne JA).

Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659; Go Electrical Pty Limited v Class Electrical Services Pty Limited [2013] NSWSC 517, applied.

Commonwealth of Australia v McCormack (1984) 155 CLR 273; [1984] HCA 57; Woolworths Limited v Strong (No 2) (2011) 80 NSWLR 445; [2011] NSWCA 72; Correa v Whittingham (No 2) [2013] NSWCA 471; Heydon v NRMA (No 2) (2001) 53 NSWLR 600; [2001] NSWCA 445; National Australia Banking Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386; Haig v Minister for Administering the National Parks and Wildlife Act 1974 (No 3) (1996) 90 LGERA 408; Easterday v The State of Western Australia [2005] WASCA 202; Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2011] FCAFC 141; BHP Steel (JLA) Pty Ltd Khan (No 2) [2001] NSWCA 269; TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381; [1999] NSWCA 104; Holdcroft v Market Garde Produce Pty Ltd [2000] 2 Qd R 381; [2000] QCA 396, cited.

JUDGMENT

  1. BELL CJ:  This proceeding involves an aspect of a dispute between Beno Excavations Pty Ltd (Beno or the Respondent), a civil contracting company, and Harlech Enterprises Pty Ltd (Harlech or the Applicant).

  2. Harlech is the trustee of the Harlech Family Trust. Pursuant to an oral contract between Harlech and Beno, Harlech agreed that its sole director, Mr Ben Moseley, would perform services as a general manager for Beno. The underlying dispute concerns whether the oral contract obliged Beno to pay Harlech a proportion of Beno’s gross profits: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 7) [2023] ACTSC 292; (2023) 382 FLR 220 at [1] (Beno (No 7)). That dispute is now being litigated before Thawley J in the Federal Court of Australia.

  3. How an aspect of this still unresolved dispute has ended up in the New South Wales Court of Appeal, via hearings before Mossop J, the Australian Capital Territory (ACT) Court of Appeal, the High Court of Australia, Elkaim J, McCallum CJ and Montgomery DCJ of the District Court of New South Wales is a protracted saga which must be traversed in order to understand Harlech’s application for leave to appeal.

History of the proceedings

  1. On 5 February 2021, Harlech sought to recover its alleged entitlement to a proportion of Beno’s gross profits by making a payment claim under the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (the SOP Act). (It is important to note that the sections of the SOP Act, although overlapping substantially with its NSW counterpart, do not coincide precisely with the section numbers of equivalent provisions in the Building and Construction Industry Security of Payment Act 1999 (NSW)).

  2. On 19 February 2021, Beno served a payment schedule for nil.

  3. On 17 March 2021, an adjudicator made a determination under the SOP Act, directing Beno to pay Harlech $638,248.70 (the Adjudication Determination).

  4. On 30 March 2021, an adjudication certificate was issued, at Harlech’s request, confirming that the total adjudicated amount owing was $638,248.70 (the Adjudication Certificate).

  5. On 27 April 2021, the Adjudication Certificate was entered as a judgment for a debt in the sum of $638,442.70 in the District Court of NSW, pursuant to s 27(1) of the SOP Act (the Adjudication Judgment).

  6. On 6 May 2021, a garnishee order was issued by the District Court made to the Commonwealth Bank of Australia in respect of Beno’s judgment debt. The following day, an amount of $196,415.79 was debited from Beno’s Commonwealth Bank account.

  7. On 20 May 2021, Beno commenced proceedings in the Supreme Court of the ACT against Harlech seeking to restrain Harlech from enforcing the Adjudication Judgment, and prerogative relief in respect of the Adjudication Determination.

  8. On 28 May 2021, Beno filed a notice of motion in the District Court of NSW seeking to stay enforcement of the Adjudication Judgment pending the determination of proceedings commenced in the Supreme Court of the ACT. Ultimately, consent orders were entered on 6 August 2021.

  9. On 19 November 2021, Mossop J in the Supreme Court of the ACT held that the Adjudication Determination was affected by jurisdictional error by virtue of the adjudicator’s misinterpretation of s 24(4) of the SOP Act: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2) [2021] ACTSC 296; 363 FLR 238 at [110]-[112] (Beno (No 2)). It is not necessary to consider the detailed reasons for his Honour’s conclusion.

  10. On 26 November 2021, Mossop J ordered that the Adjudication Determination be quashed: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 3) [2021] ACTSC 330 at [17(1)] (Beno (No 3)). His Honour also ordered that Beno had “liberty to apply within 28 days on two days’ notice in relation to any order seeking restitution”: Beno (No 3) at [17(5)]. The restitution contemplated was in respect of the $196,428.79 that had been debited from Beno’s Commonwealth Bank account pursuant to the garnishee order on 7 May 2021. In his reasons for judgment, Mossop J observed:

“[6] The plaintiff seeks a declaration that the first defendant is liable to account to the plaintiff and the amount of $196,428.79 being the amount garnished from the plaintiff’s bank account following the filing of the adjudication certificate in the New South Wales (NSW) District Court pursuant to s 27(1) of the Building and Construction Industry (Security of Payment) Act 2009 (ACT) and the issuing of a garnishee order. In the alternative, it seeks leave to file a further amended originating application seeking orders in the nature of restitution.

[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. That is order 5 which I will make.”

  1. It is important to note that, in the course of hearing of argument which led to the judgment in Beno (No 3), the following exchange occurred between Mossop J and Mr Moffett who then acted for Beno:

“MR MOFFETT: … So the broad discretion that your Honour has there in the scope of what I would be ultimately asking your Honour to do, subject to your Honour making final orders, is to effectively return the $196,000. Now, that application, I agree with my learned friend Dr Greinke, that could be made in the District Court of New South Wales, because that’s where the garnishee order was taken out. But in principle, there’s no reason why it can’t be made in this court.

HIS HONOUR: What about the existence of a judgment in the New South Wales District Court?

MR MOFFETT: That can be set aside as well. Your Honour doesn’t have jurisdiction over what that court does, but - - -

HIS HONOUR: How could there be possibly an order for restitution while there’s an existing judgment?

MR MOFFETT: The judgment would need to be set aside and the basis upon which that is set aside is by filing what will eventually be the general form of order in this court in the New South Wales District Court.” (emphasis added)

  1. 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; (2022) 371 FLR 96 at [117] (Harlech ACTCA).

  2. On 11 October 2022, following the filing of an application for restitution of the kind contemplated by Mossop J in Beno (No 3) (see [13] above), Elkaim J ordered that Harlech pay Beno $196,428.79 by way of restitution together with interest and costs: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 4) [2022] ACTSC 275 (Beno (No 4)). Elkaim J regarded the application for restitution as straightforward, essentially reasoning that, as the underlying Adjudication Determination that had led to the Adjudication Judgment and garnishee order had been quashed, by analogy with the well-established principle that the reversal of a judgment on appeal entitles the successful appellant to recover any moneys paid under the reversed judgment (see  Production Spray Painting & Panel Beating Pty Ltd v Newnham (No 2) (1992) 27 NSWLR 659 at 661 (Production Spray Painting)), restitution should lie.

  3. Contrary to what had passed between Mossop J and Mr Moffett as set out at [14] above, the application for restitution was made without any attempt being made to set aside the Adjudication Judgment or the garnishee order which had resulted in Harlech being paid $196,415.79. As to the latter, Elkaim J observed in Beno (No 4) that:

“[18]   … 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.

[19]    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.

[20]    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.

[21]    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.”

  1. Elkaim J also rejected Harlech’s argument that restitution should be withheld because it had other claims against Beno which should be taken into account on a discretionary basis such that Harlech could not be said to have been unjustly enriched. These other claims were just that, claims, and had not been subject to any adjudication or determination. His Honour rejected this argument at [16] by reference to the reasoning of Hammerschlag J in Go Electrical Pty Limited v Class Electrical Services Pty Limited [2013] NSWSC 517 (Go Electrical):

“[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] NSWSC 874; (2006) 66 NSWLR 624 at 634.”

  1. Elkaim J also rejected Harlech’s argument that s 38 of the SOP Act precluded Beno’s claim for restitution: Beno (No 4) at [24]-[27]. A similar argument to that advanced on the basis of s 38 is sought to be made in the current proceedings and will be dealt with in that context.

  2. On 15 December 2022, the High Court of Australia refused special leave to appeal from the ACT Court of Appeal’s dismissal of the appeal from Mossop J’s decision in Beno (No 3) that the Adjudication Determination should be set aside for jurisdictional error in Harlech ACTCA: Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2022] HCATrans 228.

  3. On 23 December 2022, Harlech commenced proceedings against Beno in the Federal Court of Australia (ACD1/2023). These proceedings remain on foot, or at least did so at the time of the hearing of the appeal.

  4. On 6 September 2023, McCallum CJ stayed Elkaim J’s orders for restitution, interest and costs made in Beno (No 4): Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 6) [2023] ACTSC 245 at [25]-[27] (Beno (No 6)). The stay was ordered pending the determination of Harlech’s application to set aside Elkaim J’s orders in Beno (No 4): Beno (No 6) at [4]. The Chief Justice took the view that Elkaim J’s orders were interlocutory in nature and thus could be set aside by another judge at first instance rather than being the subject of an appeal. Her Honour’s reasoning (at [14]) was that:

“The orders made by Elkaim J were not the final determination of that underlying dispute. The determination under the Security of Payments Act did not finally determine that claim.”

  1. Subsequently, on 17 October 2023, McCallum CJ set aside Elkaim J’s orders in Beno (No 4) for restitution, interest and costs: Beno (No 7) at [49]. Her Honour determined that there was no basis on which Elkaim J could have ordered restitution in Beno (No 4), and that ordering restitution in the circumstances “misconceived the operation of the security of payments legislation, the legal effect of certiorari and the nature of restitution”: Beno (No 7) at [32].

  2. Beno sought to defend Elkaim J’s orders on two bases: (i) Harlech was unjustly enriched by receiving payment in light of Mossop J’s quashing of the Adjudication Determination; and (ii) the restitution order was a proper exercise of the inherent jurisdiction to award restitution of an amount paid in satisfaction of a judgment later overturned on appeal: Beno (No 7) at [33].

  3. McCallum CJ rejected Beno’s contention that Harlech was unjustly enriched, stating at [35] that:

“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.” (emphasis added)

  1. Her Honour further held that a “final determination has not yet occurred in the present case”, and that “so long as the judgment obtained in the District Court remains in force, it cannot be said that Harlech has been unjustly enriched”: Beno (No 7) at [37]-[38] (emphasis added).

  2. In a still further judgment, McCallum CJ held that the question of costs before both Elkaim J and herself were to be costs in the cause: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 8) [2023] ACTSC 399 at [24(1)]. The cause was by that time to be determined in the Federal Court before Thawley J.

The primary judgment

  1. The next chapter in this lengthy saga of litigation came with the commencement of proceedings in the District Court of NSW resulting in the judgment the subject of the present application for leave to appeal. On 27 March 2024, Montgomery DCJ (the primary judge), ordered that:

“(1)   The [Adjudication] judgment entered 27 April 2021 be set aside.

(2)    The Garnishee Order entered 6 May 2021 be set aside.

(3)    [Harlech] pay [Beno] $196,428.79 together with interest calculated in the agreed sum of $32,860.32, to run from 7 May 2021 to the date of this Order, pursuant to s 100 CPA.

(4)    [Harlech’s] Notice of Motion filed 19 May 2024 be dismissed.

(5)    [Harlech] pay [Beno’s] costs on the usual basis.”

Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2024] NSWDC 151 (the primary judgment or PJ).

  1. Order 3 was sought pursuant to s 124A of the Civil Procedure Act 2005 (NSW) (CPA) which provides:

124A   Variation, suspension or repayment of payments under garnishee orders

The court may, at any time on the application by a judgment debtor, vary or suspend the making of payments by the judgment debtor under a garnishee order, or order the total amount paid by the judgment debtor under the garnishee order to be repaid, if the court is satisfied that it is appropriate to do so.

  1. Harlech’s Notice of Motion which was dismissed pursuant to Order 4 of the primary judge’s orders had sought the permanent stay of Beno’s application for restitution as an abuse of process.

  2. The primary judge noted that Mossop J in Beno (No 2) held that the Adjudication Determination was affected by jurisdictional error, and that it was quashed in Beno (No 3): PJ [16]. In turn, the primary judge held that “[a]ccordingly, there is no adjudicator’s decision for the purposes of s 27(4)” of the SOP Act: PJ [17]. Section 27 of the SOP Act provides that:

27    Filing of adjudication certificate as judgment debt

(1)    An adjudication certificate may be filed as a judgment for a debt, and may be enforced, in any court of competent jurisdiction.

…

(4)    If the respondent starts a proceeding to have the judgment set aside, the respondent—

(a)    is not, in the proceeding, entitled—

(i)    to bring any cross-claim against the claimant; or

(ii)    to raise any defence in relation to matters arising under the construction contract; or

(iii)    to challenge the adjudicator’s decision; and

(b)    is required to pay into the court as security the unpaid part of the adjudicated amount pending the final decision of the proceeding.

  1. The primary judge made the following observation as to the effect of the determination being quashed by Mossop J in Beno (No 3):

“[18] As an administrative decision, the Determination, and the judgment in this Court obtained on the filing of the Determination, has only such force and effect as is given to it by the SOP Act pursuant to which it was made. The SOP Act should not be construed as giving rise to an implication which gives the Determination and the judgment greater force or effect than it would otherwise have unless that implication is strictly necessary…

[19]    The appealing observation is that, there being no Determination obtained in accordance with the statutory regime pursuant to which the judgment was obtained; then the Determination being now void and ineffective, it would ordinarily follow that the judgment is vulnerable to be set aside…”

  1. His Honour framed the relevant question as being whether the judgment should be set aside, and restitution ordered, “as if the Determination and the judgment were void ab initio”: PJ [19].

  2. Harlech contended that the determination and judgment were not void ab initio, and therefore restitution should not be ordered: PJ [20]. To support this proposition, Harlech relied upon New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26 at [52]-[61] (Kable). The primary judge rejected Harlech’s analogy to Kable on the present facts because: (i) Kable concerned a judgment of a “superior court ordering the imprisonment of an individual”; and (ii) the judgment in Kable was not a “judgment by way of an administrative process”: PJ [20].

  3. The primary judge followed and applied Brodyn Pty Ltd (t/as Time Cost and Quality) v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394 at [41] (Brodyn), where Hodgson JA held that quashing or declaring void a determination made under the NSW equivalent of the SOP Act could support the setting aside of the judgment. The primary judge held at PJ [22]:

“…At [41], Hodgson JA (Mason P and Giles JA agreeing) determined that an Order of the Supreme Court quashing the Determination or declaring it to be void could itself support the setting aside of the judgment. And that, if the Determination was quashed or declared void, reliance on there being no determination to support the judgment would not be to challenge the Adjudicator’s adjudication within the meaning of s 25(4) (equivalent of section 27(4) SOP Act (ACT)) because the wording of the subsection assumed that there was a determination which was challenged. At [42], Hodgson JA (Mason P and Giles JA agreeing) determined that, in the absence of an order quashing the Determination or declaring it void, the Defendant to the judgment could seek to have it set aside on the ground that there never was a determination. His Honour identified such a ground as ‘for some other reason recognised in law a purported adjudicator’s determination did not amount to an adjudicator’s determination within the meaning of the Act’.”

  1. The primary judge held that Hodgson JA’s dicta in Brodyn at [41]-[42] applied to the present circumstances given that Mossop J in Beno (No 2) and Beno (No 3) had found that the determination was affected by jurisdictional error, and was quashed: PJ [23]. The primary judge further relied upon the dicta in Brodyn at [61]:

“Where the adjudicator’s determination is void for one of the reasons discussed above, then until it is filed as a judgment, proceedings can appropriately be brought in a court with jurisdiction to grant declarations and injunctions to establish that it is void and to prevent it being filed. However, once it has been filed, the resulting judgment is not void. An application can be made to set aside the judgment; and as noted above in pars.[41] and [42], it is not contrary to s.25(4)(a)(iii) [equivalent of s 27(4)(a)(iii) SOP Act (ACT)] to do so on the basis that there is in truth no adjudicator’s determination.”

  1. The primary judge determined that the Adjudication Judgment should be set aside because:

“[24]    … in truth, there is no Determination and the statutory regimen was, in that regard, not fulfilled when the Certificate of Determination was filed to obtain the judgment.

[25] Put simply, the judgment obtained on 27 April 2021 is not the specie of administrative judgment contemplated by the SOP Act.”

  1. The primary judge, in determining whether restitution of the sum paid under the garnishee order was available, relied upon Hammerschlag J’s reasoning in Go Electrical which had also been relied upon by Elkaim J in Beno (No 4). The primary judge held that Go Electrical was relevantly analogous to the present case:

“[29]   Hammerschlag J found it to be well-established that the reversal of a judgment on appeal entitles the successful Appellant to recover any monies paid under the reversed judgment and that in that context of appeal in a superior court from a determination of an inferior court, it has no jurisdiction to withhold relief by way of recovery of monies paid. His Honour cited for that general principle, Production Spray Painting & Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659 at 661-662. His Honour also observed that, in the appeal context, UCPR r 51.54 should be seen as requiring the Court to make appropriate restitutionary orders and that the rule does not confer a discretion to refrain from making orders for repayment, for example, pending a retrial of the proceedings…

[30] With reference to UCPR r 36.15, pursuant to which rule the Defendant proceeds in the present case, in Go Electrical, Hammerschlag J said that in the circumstance of the judgment having been irregularly obtained in that it was based on a void Adjudication Determination which was ultimately quashed, equivalent principles as in the context of appeal pursuant to UCPR r 51.54 should apply. His honour reasoned: ‘The Court has inherent power to make orders necessary and ancillary to an order (whether under Pt 36 or otherwise) setting aside a judgment.’: at [16]. In my opinion, this statutory Court has that equivalent power, by implication, of its exercise of power to set aside the judgment under UCPR r 36.15. When the question of this Court's implied power to order restitution by repayment consequent of the judgment being set aside was raised, no submission was made to the contrary.

[31]   In response to the Plaintiff’s argument here, the Defendant pointed to Hammerschlag J’s rejection in Go Electrical of the argument that ordinary restitutionary principles applied against the ordering of repayment of money because, such repayment would provide unjust enrichment to the Defendant in circumstances of their competing claims in the soon to be determined statutory demand proceedings. His Honour reasoned: ‘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…’. Further, his Honour reasoned that the proposition that there would be a set-off was also unsustainable because the Defendant was forced to make payment based on a judgment which had been set aside: at [17]-[23].”

  1. Relying upon these principles, the primary judge rejected Harlech’s argument that restitution should not be ordered because the substantive claims were yet to be determined in the Federal Court proceedings on the basis of the construction contract rather than the SOP Act: PJ [34]. The primary judge also made reference to the decision of BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2015] 1 Qd R 228; [2013] QCA 394 (BM Alliance), which involved a determination made under jurisdictional error (PJ [35]):

“At [77], the Court [in BM Alliance Coal] found that the Determination gave no entitlement to payment of any part of the Adjudication amount, as the party in the position of [Beno] here, had no obligation to pay it and, having paid it, had a right to recover it.”

  1. The primary judge also rejected Harlech’s argument that it would be “unjust to order restitution”: PJ [34], holding at PJ [36] that Harlech’s submission as to unjustness was misconceived, as “[b]road notions of unjustness are not the basis for restitutionary relief”: citing Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44; [2022] NSWCA 216 (Coshott); David SecuritiesPty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48 at [20].

  2. In turn, the primary judge held that restitution of the moneys advanced under the garnishee order must be made, and that the Court did not have a discretion in this regard: PJ [37]-[38].

  3. The primary judge went on to state that, even if a discretion to withhold restitution did exist, it should not be exercised: PJ [38]-[43]. In this context, his Honour rejected Harlech’s contention that an order of restitution should not be made on the basis that Beno’s application for restitution constituted an “abuse of process”: PJ [36]. The primary judge relied upon four overlapping reasons for this conclusion: PJ [39]-[43].

  4. First, that McCallum CJ in Beno (No 7) did not determine the question of restitution on the same basis as in the present proceedings. This was because her Honour determined the question of restitution on the basis that while the Adjudication Determination had been set aside, the Adjudication Judgment had not been: PJ [39]. Indeed, the Chief Justice expressly referred to this distinction in Beno (No 7) at [38]: see [25]-[26] above. Secondly, the primary judge relied on the fact that McCallum CJ’s decision in Beno (No 7) to set aside Elkaim J’s order of restitution in Beno (No 4) was interlocutory in nature: PJ [40]. Thirdly, according to the primary judge, the fact that the Adjudication Judgment was to be set aside constituted a “change of circumstance” as compared to the circumstances existing at the time Beno (No 7) was decided: PJ [40]. Fourthly, the primary judge held that Beno’s failure to seek to set aside the Adjudication Judgment in the Supreme Court of the ACT should not prevent it from doing so in the District Court proceedings because: (i) in the Supreme Court of the ACT, Beno “did not ever claim restitution in the circumstance of the judgment having been set aside”; (ii) in the Supreme Court of the ACT, Beno successfully quashed the Adjudication Determination; and (iii) it was “practical and logical” first to quash the determination before seeking to set aside the Adjudication Judgment: PJ [42]. The primary judge concluded that Beno’s approach to litigation in the Supreme Court of the ACT “is not [a] good reason to exercise a discretion not to order restitution now”: PJ [43].

  5. Harlech also argued before the primary judge that the Court should not exercise its discretion to order restitution (if discretion there truly was) because: (i) s 38(3) of the SOP Act provided an exclusive source of power to order restitution; and (ii) s 38(3) did not apply in the present circumstances because restitution can only be ordered under s 38(3) where final relief is sought (such as in the Federal Court proceedings): PJ [44]. This was an argument that had been made before and rejected by Elkaim J: Beno (No 4) at [24]-[27].

  6. Section 38(3) of the SOP Act provides that:

“In any proceeding before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal—

(a)    must in any order or award it makes in the proceeding, take into account any amount paid to a party to the contract under or for the purposes of this part; and

(b)    may make the orders it considers appropriate for the restitution of any amount so paid, and any other orders it considers appropriate, having regard to its decision in the proceeding.”

  1. The primary judge rejected Harlech’s construction of s 38(3) as being contrary to the reasoning of Hammerschlag J in Go Electrical: PJ [44]. Furthermore, his Honour held that the SOP Act “should not be found to intend to bind the process in this foreign jurisdiction”: PJ [45].

  2. Furthermore, the primary judge held that s 124A of the CPA “puts beyond contest this Court’s power to order that the total amount paid by [Beno] to [Harlech] under the Garnishee Order be repaid”: PJ [47].

Application for leave to appeal

  1. By summons dated 21 June 2024, Harlech sought leave to appeal from the primary judgment on the following 12 grounds:

“1   The primary judge erred in finding that the judgment entered in the District Court on 27 April 2021 was void ab initio.

2    The primary judge erred in finding that the defendant was entitled to restitution on a claim for money had and received.

3    The primary judge ought to have found that he could not summarily determine such a cause of action, including whether the appellant had been enriched at the expense of the respondent.

4    The primary judge erred in finding that he had no discretion but to order restitution of the monies obtained by garnishee.

5    The primary judge ought to have found that the Court’s inherent power to order restitution of monies paid pursuant to an interlocutory judgment, including a judgment registered pursuant to the Building and Construction Industry (Security of Payment) Act 2009 (ACT), was to be exercised in the same manner as s 124[A] of the Court [sic] Procedure Act 2005 (NSW), namely a broad discretion to be exercised judicially having regard to the circumstances of the case.

6 The primary judge ought to have found that monies paid pursuant to Part 4 of the Building and Construction Industry (Security of Payment) Act 2009 (ACT) are not recoverable prior to the determination of the parties’ rights on a final basis, by orders for restitution made pursuant to s 38(3)(b).

7 Alternatively, the primary judge ought to have found that s 38(3)(b) reflects a legislative policy that interim payments should not be recoverable prior to the determination of the parties’ rights on a final basis, and that this policy is relevant to the exercise of discretion as to orders for restitution.

8    In the exercise of discretion, the primary judge failed to consider: (a) the failure of the respondent to take steps to prevent the registration of the judgment or the issue of a garnishee order; (b) the failure of the respondent to commence proceedings to challenge the adjudication determination until after the monies were garnisheed; (c) the failure of the respondent to adduce evidence challenging the appellant’s evidence of the construction contract and indebtedness.

9    The primary judge erred in reopening the rulings of McCallum CJ in Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 7) [2023] ACTSC 292.

10   The primary judge erred in finding that there was a material change in circumstance as a result of the respondent applying to set aside the District Court judgment.

11   The primary judge ought to have found that the respondent should be held to its election not to litigate the issue of restitution in the District Court but before the ACT Supreme Court.

12   Applying principles of finality and the above considerations, the primary judge ought to have stayed the respondent’s application as an abuse of process.”

  1. Harlech accepted that it required leave to appeal because the primary judgment was interlocutory: District Court Act 1973 (NSW) s 127(2)(a). Nonetheless, Harlech submitted that the primary judgment “while technically interlocutory, nonetheless has a substantive effect as an enforceable money order”. Harlech also argued that leave should be granted because the appeal raised “several novel and important questions” concerning the SOP Act and its NSW equivalent. These questions were said to include: (i) whether a judgment filed on an adjudication certificate, where the Adjudication Determination is later quashed, is void ab initio; (ii) whether Go Electrical was wrongly decided; (iii) principles of finality restraining the reopening of interlocutory decisions; and (iv) whether Beno (No 7) was wrongly decided.

  2. Beno contended that leave to appeal should be refused because the primary judgment was not attended with sufficient doubt to warrant reconsideration on appeal, and there is no “clear case of material error”. Furthermore, Beno argued that further litigation was disproportionate to the monetary amount in issue, and that the appeal would be contrary to s 60 of the CPA. Beno also noted that Harlech can sue (and indeed is suing) to recover the money subject of the Adjudication Determination in the proceedings in the Federal Court.

  3. In circumstances where the amount at issue in these proceedings comfortably exceeds $100,000 and extensive argument was entertained, it is appropriate to grant leave to appeal. For the reasons which follow, however, the appeal should be dismissed with costs.

Ground 1: Was the Adjudication Judgment void ab initio?

  1. Harlech submitted that the primary judge erred in reasoning that, given the Adjudication Determination was void for jurisdictional error, the Adjudication Judgment had no force or effect, even prior to the order quashing the determination. Harlech contended that the primary judge erred at PJ [24]-[25] because, contrary to his Honour’s finding, the Adjudication Judgment was valid and effective until set aside. In support of this contention, Harlech relied upon Hodgson JA’s reasoning in Brodyn at [61], extracted at [36] above. Harlech further relied upon Gageler J’s dicta in Kable at [52]-[61] for the proposition that acts done in excess of power are not nullities, and judgments (even affected by jurisdictional error) are valid and enforceable until set aside. Harlech also argued that the primary judge erred at PJ [20] in distinguishing Kable on the basis that the Adjudication Judgment was obtained by an “administrative process”. Contrary to the primary judge, Harlech contended that the Adjudication Judgment was the act of a judicial tribunal, and was not obtained through an “administrative process”: citing Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; [2009] NSWCA 69 at [60].

  2. Beno contended, in my opinion correctly, that it was unnecessary for this Court to determine whether the Adjudication Judgment was void ab initio. The critical point was that the quashing of the Adjudication Determination provided a proper basis for setting aside the Adjudication Judgment. So much was accepted by Dr Greinke in the course of argument on appeal:

“BELL CJ: Can I just ask this: you don't make any criticism, do you, of that part of Judge Montgomery's decision to set aside the judgment in light of Mossop J's quashing of the adjudication? Is that correct?

GREINKE: That's correct, and that's embodied in terms of the orders that are sought. We don't seek to set aside that order. I think the major difference between myself and my learned friend Mr Hume's approach to that is, in part, turns upon whether the order itself was void ab initio. My client's submission is that it was not void until it was set aside because it wasn't entered as a judgment of the Court, and therefore it can't be said that the steps taken by my client through the garnishee process were inherently void or invalid, and therefore--

BELL CJ: No, but as a consequence of those steps, the basis on which you secured the judgment in the District Court has been removed.

GREINKE: Indeed.

BELL CJ: Putting to one side for the moment - and we'll need to come back to it because your client has been put to expensive two sets of proceedings in the ACT, in front of Elkaim J and in front of the Chief Justice. Putting that to one side just for the moment, had, after Mossop J's decision, Mr Hume's client gone directly to the District Court rather than staying in the ACT to set aside the judgment, there wouldn't have been any basis for opposing that because the underlying adjudication had been quashed.

GREINKE: Yes.”

  1. In other words, Harlech’s objection was not to the setting aside of the Adjudication Judgment in light of the quashing of the Adjudication Determination; rather it was to the ordering of restitution consequent upon the setting aside of the Adjudication Judgment.

  2. It is not necessary, as Beno in fact accepted, to engage with its submission that, given a “section 27 judgment… does not issue in the exercise of judicial power”, there are “powerful reasons” suggesting that, without a valid determination underpinning it, the s 27 judgment lacks force even prior to that judgment being set aside. Beno pointed to conflicting authorities on this issue: Khouzame v All Seasons Air Pty Ltd (2015) 229 FCR 279; [2015] FCAFC 28 at [33]-[38], In the matter of Powerpark Systems Pty Ltd [2018] NSWSC 793 at [18]-[26], Re J Group Constructions Pty Ltd [2015] NSWSC 1607; (2015) 303 FLR 139 at [131]. Prima facie, the position in New South Wales is as stated in Brodyn at [61] by Hodgson JA with whom Mason P and Giles JA agreed, namely that the Adjudication Judgment was valid until set aside. As noted above and as was accepted, however, it is not necessary to consider whether the dicta at [61] of Brodyn needs to be revisited given that there was a basis for setting aside the Adjudication Judgment and the order for restitution was made consequent upon its being set aside.

Grounds 2, 3, 4, 5 and 8: Restitution for money had and received

  1. Grounds 2, 3, 4, 5 and 8 can be dealt with compendiously.

  2. Harlech argued that the primary judge erred in framing the basis of restitution on a qualifying or vitiating factor giving rise to a claim for “money had and received”. This ground of appeal challenged the following reasoning of the primary judge:

“[32]   During argument, I directed the parties to Coshott Family Pty Ltd v Lyons [2022] NSWCA 216. In that decision, Kirk JA (with whom Meagher JA & Griffiths AJA agreed) emphasised that, in order for the Appellant there to obtain restitution, the Appellant had to establish a qualifying or vitiating factor….

[33]    At [22], his Honour [in Coshott], after recounting a long line of authority establishing that some qualifying or vitiating factor was required to be shown in order to make out a claim for money had and received, stated ‘The presence of such a factor goes to establish that money the defendant received is held to the use of the plaintiff so as to found a claim to restitution.’

[34] Applying the above referred to principles in the present case, I reject the Plaintiff’s argument that I should refrain from ordering relief by way of repayment of the money obtained under the compulsion of the Garnishee Order on the basis that the Plaintiff has claims yet to be determined in the Federal Court proceedings which the parties contest on the basis of the construction contract and external to their rights under the SOP Act. On those principles, I also reject an argument, to which I will come later in these reasons, where the Plaintiff put that, for general considerations, it would be unjust to order restitution. In that submission, the Plaintiff fails to identify a qualifying or vitiating factor, whereas the Defendant relies on the irregularity of the judgment, it having been obtained on the procedural and administrative filing of the Determination which has been quashed.”

  1. Harlech argued that the primary judge erred in considering that Harlech had been “enriched at the expense of” Beno because his Honour failed to take account of the “underlying debts” said to be owed by Beno to Harlech. This submission was misconceived, even putting to one side Beno’s objection that the underlying affidavit upon which this argument rested, namely that of Mr Moseley of 16 September 2022, was not referred to in oral argument, or read in open court, and therefore was not in evidence, citing Provide Nominees Pty Ltd v Australian Securities and Investments Commission (2024) 301 FCR 569; [2024] FCAFC 25 at [41], [47]-[48].

  2. The “underlying debts” to which Harlech referred in argument were merely contractual claims it asserted against Beno which were not before the Court for determination by way of cross claim. The claim for those “underlying debts” had been made by Harlech in the still to be determined Federal Court proceedings. Had such an entitlement already been established, it may have been open to Harlech to raise a set-off but the existence of a claimed entitlement did not have the consequence that Harlech had not been enriched or unjustly enriched by a payment secured by the garnishee order which had no proper underlying basis once the Adjudication Judgment had been set aside.

  3. In addition to Production Spray Painting and Go Electrical, Beno pointed to a wealth of authority for the proposition that where a judgment has been set aside, there is a right to restitution with interest of moneys paid under the judgment: Commonwealth of Australia v McCormack (1984) 155 CLR 273 at 276; [1984] HCA 57; Woolworths Limited v Strong (No 2) (2011) 80 NSWLR 445; [2011] NSWCA 72 at [31]-[35], [47]; Woolworths Limited v Kelly (No 2) [1991] NSWCA 287; Correa v Whittingham (No 2) [2013] NSWCA 471 at [91]; Heydon v NRMA (No 2) (2001) 53 NSWLR 600; [2001] NSWCA 445 at [12]; National Australia Banking Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 591-8; Haig v Minister for Administering the National Parks and Wildlife Act 1974 (No 3) (1996) 90 LGERA 408 at 411; Easterday v The State of Western Australia [2005] WASCA 202 at [10]; Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2011] FCAFC 141 at [3]-[5]; BHP Steel (JLA) Pty Ltd Khan (No 2) [2001] NSWCA 269 at [5]; TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381; [1999] NSWCA 104 at [3]-[13]; Holdcroft v Market Garde Produce Pty Ltd [2000] 2 Qd R 381; [2000] QCA 396 at [37]-[40]. This right to restitution following a garnishee order is reflected in s 124A of the CPA: see [29] above.

  4. A challenge to the correctness of Production Spray Painting and Go Electrical was foreshadowed by Dr Greinke who appeared for Harlech but, for good reason, was not advanced with any persuasive force. There was no error by the primary judge in applying both of those authorities. An attempt to distinguish them was made on the basis that, in both proceedings, an underlying judgment had been set aside. But in circumstances where the Adjudication Judgment was set aside before restitution became available consequent upon the quashing of the Adjudication Determination, albeit in separate sets of proceedings, there was no valid point of distinction. Nor was there any tension between McCallum CJ’s decision in Beno (No 7) and that of the primary judge. Her Honour was correct, in my view, to hold at [35]-[38] that restitution was not available whilst the Adjudication Judgment of the District Court remained an order of the Court: see above at [23]-[27].

  5. The point of the primary judge’s reference to Coshott at PJ [32]-[33] was to make the elementary point that a restitutionary remedy does not entail a claimant establishing that in all the circumstances retention of money paid is unjust; the primary judge was entirely correct in observing that “[b]road notions of unjustness are not the basis for restitutionary relief”: PJ [36]. Rather, as Kirk JA observed in Coshott at [22]-[23], the claimant must establish the existence of some qualifying or vitiating factor the presence of which “goes to establish that money the defendant received is held to the use of the plaintiff so as to found a claim to restitution”. A claim for restitution of moneys paid pursuant to a judgment which has been set aside is such a recognised category, as the cases cited in [60] above make plain.

  6. Harlech was unjustly enriched by the receipt of moneys to which there was no underlying entitlement following the setting aside of the Adjudication Judgment. It is not necessary to decide whether any defence to the claim for restitution would have been available to such a claim as none was raised. Rather, Harlech relied upon an argument to the effect that the Court should, in its discretion, withhold restitutionary relief.

  7. The primary judge held, correctly in my view (and consistently with the decision of the Queensland Court of Appeal in BM Alliance at [74]-[77]), that no such discretion existed as a matter of general principle. There was a general law right to restitution. The only possible qualification to this arises under s 124A of the CPA which provides for restitution following amounts being garnisheed, with the statutory power to order restitution being conditioned upon the court being “satisfied that it is appropriate to do so”: see [29] above. But that potential qualification is not to the point in the circumstances of the present case where the primary judge went on to hold that, even if there were such a discretion, he would not exercise it to withhold restitutionary relief: see [42] above. This being a discretionary decision, it could only be impugned for House v The King (1936) 55 CLR 499; [1936] HCA 40 error, which was not expressly asserted.

  8. To the extent that ground 8 sought to attack the primary judge’s conclusion in this regard, of the three matters referred to in ground 8, the first two, namely the failure of Beno to take steps to prevent the registration of the judgment or the issue of a garnishee order and to commence proceedings to challenge the Adjudication Determination until after the moneys were garnisheed ignored the fact that the registration of the Adjudication Determination and the seeking of the garnishee order shortly thereafter were essentially ex parte steps taken by Harlech which Beno moved to undo by bringing proceedings before Mossop J, and seeking to preserve its position by securing consent orders in the District Court: see [9]-[10] above. The third matter relied upon in ground 8, namely “the failure of the respondent to adduce evidence challenging the appellant’s evidence of the construction contract and indebtedness” repeats the fallacy already dealt with, namely the fact that this issue was not properly before the District Court and was not sought to be raised as a cross claim in those proceedings but rather, was the subject of a claim by Harlech in the Federal Court.

  9. In relation to ground 3 which was to the effect that the “primary judge ought to have found that he could not summarily determine such a cause of action, including whether the appellant had been enriched at the expense of the respondent”, there was no summary determination involved in the primary judge’s determination and this ground must be rejected.

Grounds 6 and 7: section 38 of the SOP Act

  1. These grounds of appeal reprised an unsuccessful argument originally made before Elkaim J and repeated unsuccessfully before the primary judge. Harlech, by ground 6 of its appeal, argued that the primary judge erred in failing to find that moneys paid under Pt 4 of the SOP Act were not recoverable prior to determining the parties’ rights on a final basis, consistent with the “pay now, argue later” principle (see, for example, Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [96]; Brodyn at [21]) and that s 38(3)(b) of the SOP Act made express provision for restitution, which was exclusive in its operation.

  2. The primary judge summarised Harlech’s submission as follows:

“s 38(3) [of the SOP Act] ousts the power to order restitution because it provides an exclusive source of that power. That is, that restitution can only be ordered under final relief in the Federal Court proceedings”: PJ [44].

Section 38(3) of the SOP Act has been set out in [45] above.

  1. Harlech also contended, by ground 7, that the primary judge erred in failing to find that s 38(3)(b): (i) reflects a legislative policy that interim payments should not be recoverable prior to determining the parties’ rights on a final basis; and (ii) this policy was relevant to the exercise of the discretion to order restitution.

  2. Harlech’s arguments should be rejected. Section 38(3)(b) is facilitative in that it permits the making of an order for restitution where that is appropriate following determination of a dispute under the construction contract. Thus, where a payment has been made under the “pay now argue, later principle”, following a demand or adjudication, but it is subsequently determined that that payment (or a part of it) was not owing, restitution may be ordered. That is a very different circumstance, however, to that which arose in the present case where the Adjudication Determination had been quashed and the Adjudication Judgment set aside. As Payne JA put to Dr Greinke in the course of argument, the “pay now argue later” principle was spent once Mossop J had found jurisdictional error and quashed the Adjudication Determination. Without there being any entitlement under the SOP Act, any reliance on s 38 of that Act as in some way precluding or ousting the power of the District Court to order restitution was misplaced.

Grounds 9 to 12: Finality and abuse of process

  1. These four grounds are related. By ground 9, Harlech contended that the primary judge erred in reopening the rulings of McCallum CJ in Beno (No 7). I do not consider that this is an appropriate way of characterising what transpired in the District Court. True it is that McCallum CJ set aside the orders that had been made by Elkaim J but this was on the basis, made express by her Honour, that restitution did not lie in respect of garnisheed moneys which were paid pursuant to a judgment of the District Court which had not been set aside: see [25]-[26] above. There was no canvassing of her Honour’s reasoning in the proceedings before the primary judge and his Honour’s judgment was delivered in light of a materially changed circumstance, namely the setting aside of the Adjudication Judgment, an order of the primary judge which is not the subject of appeal. Harlech did not suggest that McCallum CJ, sitting in the Supreme Court of the ACT, could have set aside the Adjudication Judgment of the District Court. In these circumstances, it is difficult to see how Beno could be said to have committed an abuse of process by seeking relief in the District Court which was not available in the Supreme Court of the ACT. As has been seen, the order for restitution which was made by the primary judge was consequent upon the setting aside of the Adjudication Judgment.

  2. Criticism may fairly be made of Beno’s failure to seek to set aside the Adjudication Judgment prior to seeking relief before Elkaim J, especially in light of what passed between Mossop J and Beno’s then counsel, as noted in [14] above, and the outcome of proceedings before McCallum CJ. But any wasted expense could be (or could have been) compensated by orders for costs in relation to those two sets of proceedings. Orders for costs have relevantly been made (see [27] above) and it is not for this Court to interfere with those orders.

  3. No unfair prejudice was caused to Harlech by Beno’s proceedings in the District Court so as to require them to be stayed as an abuse of process, and the primary judge was correct to reject Harlech’s application for a stay of proceedings on that basis.

Conclusion

  1. For the above reasons, I would propose the following orders:

  1. Grant leave to appeal.

  2. Appeal dismissed with costs.

  1. WARD P: Having regard to the saga of this litigation, to which the Chief Justice has referred, and the likely disproportion between the costs incurred to date and the amount in issue, there would be much to be said for simply refusing leave to appeal (particularly so as not to encourage further such applications). That said, I am in agreement with the Chief Justice as to the disposition of the appeal and hence would grant leave but dismiss the appeal with costs. I therefore agree with Bell CJ.

  2. PAYNE JA: I agree with Bell CJ.

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Decision last updated: 04 February 2025

Cases Citing This Decision

0

Cases Cited

36

Statutory Material Cited

4

Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2) [2021] ACTSC 296
Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd [2021] ACTSC 330
Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 4) [2022] ACTSC 275