Icon Co (NSW) Pty Ltd v AMA Glass Facades Pty Ltd

[2019] NSWSC 250

Supreme Court

New South Wales

Medium Neutral Citation:	Icon Co (NSW) Pty Ltd v AMA Glass Facades Pty Ltd [2019] NSWSC 250
Hearing dates:	6 March 2019
Decision date:	12 March 2019
Before:	Stevenson J
Decision:	Second Durham Determination to be quashed. Cross-Summons to be dismissed
Catchwords:	BUILDING AND CONSTRUCTION – security of payment – where successive adjudicators expressed inconsistent findings as to proper construction of the building contract – subcontractor did not challenge second determination and instead resubmitted payment claim – contractor contended third determination void because construction issue determined by unchallenged second determination – subcontractor belatedly sought to challenge second determination by cross-summons
Legislation Cited:	Building and Construction Industry Security of Payment Act 1999 (NSW) Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Arconic Australia Rolled Products Pty Limited v McMahon Services Australia Pty Ltd [2017] NSWSC 1114 Blair v Curran (1939) 62 CLR 464; [1939] HCA 23 Buttrose v Attorney General of New South Wales [2015] NSWCA 221; (2015) 324 ALR 562 Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393; [2010] NSWCA 190 Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; [2009] NSWCA 69 Fernando v Commonwealth of Australia (2014) 231 FCR 251; [2014] FCAFC 181 Kingston Building (Australia) Pty Ltd v Dial D Pty Ltd [2013] NSWSC 2010 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 351 ALR 225 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; [2000] HCA 57 Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2016] NSWCA 379; (2016) 344 ALR 355 State Water Corporation v Civil Team Engineering Pty Ltd [2013] NSWSC 1879 Sunshine Coast Regional Council v Earthpro Pty Ltd [2015] QSC 168 Victims Compensation Fund Corporation v District Court of New South Wales [2001] NSWCA 241
Category:	Principal judgment
Parties:	Icon Co (NSW) Pty Ltd (Plaintiff/First Cross-Defendant) AMA Glass Facades Pty Ltd (First Defendant/Cross-Claimant) Helen Durham (Second Defendant) Doron Rivlin (Second Cross-Defendant)
Representation:	Counsel: M Christie SC with D Hume (Plaintiff/First Cross-Defendant) I G B Roberts SC (First Defendant/Cross-Claimant)   Solicitors: Vincent Young (Plaintiff/First Cross-Defendant) Pryor Tzannes & Wallis Law (First Defendant/Cross-Claimant)
File Number(s):	SC 2019/39268

Judgment

1. Two adjudicators appointed under the Building and Construction Industry Security of Payment Act 1999 (NSW) have, in three succeeding determinations under the one building contract, expressed different and inconsistent views as to the proper construction of the terms of the contract which govern the right of:

1. the subcontractor, AMA Glass Facades Pty Ltd, to payment for variation works where the direction to carry out those works was not confirmed in writing; and

2. the head contractor, Icon Co (NSW) Pty Ltd, to set off liquidated damages against AMA’s payment claims.

2. The contract in question was made on 15 December 2015 and relates to the installation by AMA of a facade and associated works on the Opal Tower at Sydney Olympic Park. The contract includes a modified form of Subcontract Conditions AS4901-1998. All clause references that follow are from those conditions.

3. The three determinations were by:

1. Ms Helen Durham on 2 March 2018 in respect of, relevantly, Variations 2 to 24 (“the First Durham Determination”);

2. Mr Doron Rivlin on 13 August 2018 in respect of, relevantly, Variations 26 to 31 (“the Rivlin Determination”); and

3. Ms Durham on 23 January 2019 also in respect of Variations 26 to 31 (“the Second Durham Determination”).

4. In the First Durham Determination, Ms Durham determined that:

1. as to variations, on the proper construction of cl 36, when read with cl 20, AMA was entitled to have the contract sum adjusted by reason of doing work the subject of variation directions from the superintendent, notwithstanding the fact that such directions were not in writing nor confirmed in writing;

2. as to liquidated damages, Icon was not entitled to set off an amount of liquidated damages because, on the proper construction of the contract, the works had not reached practical completion; and

3. the adjudicated amount was some $1.9 million.

5. In the Rivlin Determination, which raised indistinguishable issues, Mr Rivlin determined, contrary to Ms Durham’s findings in the First Durham Determination, that:

1. as to variations, nothing should be allowed to AMA variations because the relevant variation directions were not in writing nor confirmed in writing and that no “issue estoppel or res judicata arises in respect of this claim as the claim itself was not the subject of any previous determination by an adjudicator”;

2. as to liquidated damages, Icon was entitled to a specified amount of liquidated damages; and

3. the adjudicated amount was “$nil”.

6. AMA now contends that the Rivlin Determination was void. However, until these proceedings were commenced, AMA did not seek to challenge the Rivlin Determination by application to this Court for declaratory or prerogative relief. Nor did it seek to exercise its rights under s 26(2) of the Act to withdraw the adjudication application that led to the Rivlin Determination and to make a new adjudication application under s 17 of the Act.

7. Rather, on 26 October 2018 AMA served on Icon a fresh payment claim which, it is agreed, is relevantly indistinguishable from that which led to the Rivlin Determination. That further payment claim led to the Second Durham Determination.

8. In the Second Durham Determination, Ms Durham determined, contrary to the Rivlin Determination, that:

1. AMA was not barred by reason of the absence of the written confirmation to the variation instructions given to it by the superintendent, from claiming the variations the subject of the Rivlin Determination;

2. Icon was not entitled to set off liquidated damages against AMA’s claim for variations; and

3. the adjudicated amount was some $660,000.

9. Icon now seeks a declaration that the Second Durham Determination is void, or alternatively an order in the nature of certiorari quashing the Second Durham Determination on the basis that:

1. bringing the payment claim and adjudication application that led to the Second Durham Determination was an abuse of process; and

2. Ms Durham did not have jurisdiction to reopen the matters the subject of the Rivlin Determination.

10. By cross-summons, AMA seeks a declaration that the Rivlin Determination is void, or alternatively, leave pursuant to r 59.10(2) of the Uniform Civil Procedure Rules 2005 (NSW) to seek an order in the nature of certiorari quashing the Rivlin Determination, on the basis that an issue estoppel arose from the First Durham Determination which prevented Icon re-agitating before Mr Rivlin the contractual construction issues to which I have referred above at [1].

11. It is common ground that:

1. the contractual construction issues concerning variation and entitlement to liquidated damages considered in each of the three determinations to which I have referred, were the same; and

2. it is neither necessary nor appropriate for me to express any view as to the correct construction of the contract.

12. It is also common ground that:

1. determinations of adjudicators under the Act attract the principles of issue estoppel; [1]

2. the issue estoppel applicable to adjudicator’s determinations “precludes re-agitation of the same issue where that issue is essential to a determination in an earlier adjudication”; [2] and

3. in addition to issue estoppel, the doctrine of abuse of process, in a sense of abuse of the processes of the Act, applies to adjudication proceedings. [3]

   1. Dualcorp Pty Ltd v Remo Constructions Pty Ltd (2009) 74 NSWLR 190; [2009] NSWCA 69 at [51]-[62] (Macfarlan JA, Handley AJA agreeing at [76]).

   2. Sunshine Coast Regional Council v Earthpro Pty Ltd [2015] QSC 168 at [2] (Byrne SJA).

   3. Kingston Building (Australia) Pty Ltd v Dial D Pty Ltd [2013] NSWSC 2010 at [13]-[14] (McDougall J).

13. There may be an abuse of the processes of the Act where there is “repetitious re-agitation of payment claims”. [4] Allsop P was speaking of such a situation in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [5] when his Honour said:

“[T]he Act was not intended to permit the repetitious use of the adjudication process to require an adjudicator or successive adjudicators to execute the same statutory task in respect of the same claim on successive occasions. A party in the position of the applicant (Dualcorp), here, should not be able to re-ignite the adjudication process at will in order to have a second or third or fourth go at the process provided by the Act merely because it is dissatisfied with the result of the first adjudication.”

4. Kingston Building at [13]; Arconic Australia Rolled Products Pty Limited v McMahon Services Australia Pty Ltd [2017] NSWSC 1114 at [13] (McDougall J).

5. Dualcorp Pty Ltd v Remo Constructions Pty Ltd at [2].

The situation before the Court

14. There is thus this spectacle:

1. on the one hand, AMA contends that Mr Rivlin should have found that Icon was estopped from contending that Ms Durham’s construction of the Contract was incorrect; and

2. on the other hand, Icon contends that Ms Durham, when considering that construction question for the second time in the Second Durham Determination, should have found that AMA was estopped from contending that Mr Rivlin’s construction was incorrect.

15. This highly unsatisfactory situation has been caused by two things.

16. The first is Mr Rivlin’s decision to express different opinions as to the construction of the contract to those expressed by Ms Durham.

17. Irrespective of whether Ms Durham’s construction was correct or her opinions were “fundamental” to her determination in the sense of being the sole basis for her findings, it was not appropriate for an adjudicator to, in effect, dissent from earlier adjudicative expressions of opinion in relation to the same provisions of the same contract between the same parties in adjudications arising from the same project.

18. It was also subversive of the intended operation of the Act, which is to establish a “coherent, expeditious and self-contained” scheme,[6] “designed to act quickly”,[7] and to achieve the result that “each party knows precisely where they stand at any point of time”. [8] That intended operation of the Act is illustrated by s 22(4) which provides that where an adjudicator determines the value of any construction work carried out under a construction contract or of any related goods and services to such work, subsequent adjudicators must adopt the same value, unless it can be shown the value has changed.

    6. Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2016] NSWCA 379; (2016) 344 ALR 355 at [59].

    7. Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2017) 351 ALR 225 at [40].

    8. Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393; [2010] NSWCA 190 at [47].

19. AMA submitted that s 22(4) is “not an exhaustive statement of the matters determined by an earlier adjudication that are binding on a subsequent adjudicator” and that the Act “manifests an intention to preclude re-agitation of the same issues”. I agree.

20. The second is AMA’s response to the Rivlin Determination. AMA did not, until now, seek to challenge the Rivlin Determination in the usual way. Rather, on 26 October 2018, within the three month time limit in UCPR r 59.10 for the commencement of proceedings for judicial review of the Rivlin Determination, AMA served on Icon a payment claim relevantly identical to that the subject of the Rivlin Determination. AMA then, in its adjudication application, put the same argument that it now seeks to put in these proceedings, namely that Icon was estopped from contending before Mr Rivlin that the conclusions expressed in the First Durham Determination as to the proper construction of the Contract were incorrect.

21. This course was adopted in the face of judicial deprecation of the practice of the repetitious use of the adjudication process the subject of Allsop P’s observations that I have set out at [13].

What is to be done?

22. It is common ground that if the Rivlin Determination is valid, the Second Durham Determination is invalid as it dealt with a payment claim relevantly identical to that dealt with in the Rivlin Determination.

23. Notwithstanding my misgivings concerning Mr Rivlin’s decision not to adopt Ms Durham’s construction of the relevant provisions of the Contract, I doubt that the Rivlin Determination is thereby invalid.

24. An issue estoppel will only arise if the issue in question is “fundamental” in the sense of being “legally indispensable to the conclusion” in question. [9] An issue estoppel does not cover “subsidiary or collateral matters of law or fact”. [10] If the issue in question was one of a number of alternative bases for the relevant decision it will not have the requisite “legal indispensability” such as to attract the doctrine of estoppel.

    9. Blair v Curran (1939) 62 CLR 464 at 532; [1939] HCA 23 (Dixon J).

    10. Fernando v Commonwealth of Australia (2014) 231 FCR 251; [2014] FCAFC 181 at [43] (Besanko and Robertson JJ) citing Blair v Curran (1939) 62 CLR 464 at 532 to 533; [1939] HCA 23 (Dixon J).

25. I think there is substance in Icon’s submission that Ms Durham’s conclusions in the First Durham Determination as to the proper construction of the relevant provisions of the Contract were one of a number of bases upon which she concluded that AMA was entitled to variation and Icon was not entitled to liquidated damages.

26. However, I need not form any final view about that question because there are a number of reasons why I consider I should not entertain AMA’s challenge to the Rivlin Determination.

27. The first of those reasons is that AMA’s application to impeach the Rivlin Determination is made outside the three month time limit in UCPR r 59.10 which is, relevantly, in the following terms:

“(1)   Proceedings for judicial review of a decision must be commenced within 3 months of the date of the decision.

(2)    The court may, at any time, extend the time for commencing proceedings fixed by subrule (1).

(3)     In considering whether to extend time under subrule (2), the court should take account of such factors as are relevant in the circumstances of the particular case, including the following:

(a)    any particular interest of the plaintiff in challenging the decision,

(b)    possible prejudice to other persons caused by the passage of time, if the relief were to be granted, including but not limited to prejudice to parties to the proceedings,

(c)     the time at which the plaintiff became or, by exercising reasonable diligence, should have become aware of the decision,

(d)    any relevant public interest.”

28. The Rivlin Determination was made on 13 August 2018. The three month period referred to in UCPR r 59.10(1) expired on 13 November 2018. AMA filed its cross-summons on 22 February 2019. No witness on behalf of AMA has proffered an explanation for the delay.

29. It is true that UCPR r 59.10, in terms, imposes a time limit only in relation to proceedings for judicial review. In its cross-summons AMA is, in addition to seeking judicial review of the Rivlin Determination seeking a declaration that the Rivlin Determination is void.

30. However, the Court of Appeal has opined that the three month basis should been seen as applying also to declaratory relief. In Buttrose v Attorney General of New South Wales,[11] Beazley P and Leeming JA said:

“Contrary to the position taken by the parties, we would not lightly conclude that merely because the relief sought is declaratory that the general provisions in Part 59 of the Uniform Civil Procedure Rules 2005 (NSW) do not apply. That Part applies generally to ‘proceedings under section 65 and section 69 of the Supreme Court Act and other proceedings in the supervisory jurisdiction of the Supreme Court’: r 59.1(1)(a). Rule 59.10 provides that proceedings for judicial review must be commenced within three months of the date of the decision, and confers a power for that time period to be extended at any time. Although the rule does not apply ‘to any proceedings in which the setting aside of a decision is not required’: see r 59.10(5), our preliminary view is that the three month period would either apply directly, or alternatively inform the Court’s discretion to grant declaratory relief, even though the formal setting aside of a decision is not required. The substance of the rule is that challenges to the exercise of executive power should be brought reasonably promptly, or else be accompanied by an explanation as to why that did not occur.”

11. [2015] NSWCA 221; (2015) 324 ALR 562 at [13].

31. I am not persuaded that I should grant leave to AMA to apply for an extension of time to seek relief. AMA has been aware of the Rivlin Determination since it was made. Its decision inappropriately to challenge the Rivlin Determination by resubmitting the payment claim, rather than apply for declaratory or prerogative relief, has caused prejudice to Icon in that Icon has now had to resist AMA’s adjudication application to Ms Durham as well as bring these proceedings to quash the consequent determination.

32. I would, in any event, withhold relief from AMA on discretionary grounds similar to those that commended themselves to Sackar J in State Water Corporation v Civil Team Engineering Pty Ltd,[12] in which case his Honour said:

“I note additionally, though strictly unnecessarily, that the remedy Civil Team seeks is discretionary. The delay in seeking to quash Mr Wilson’s determination, the absence of an explanation for such delay, and, if I may say so, the obvious and overwhelming inference arising from the circumstances in which Civil Team’s application is brought (namely that it is a forensic move to remove one of the grounds of State Water’s attack on Mr Sive’s adjudication determination), are factors which, taken together, would in any event have led to my refusal, as a matter of discretion, to quash Mr Wilson’s adjudication determination (Victims Compensation Fund Corporation v District Court of New South Wales & Ors [2001] NSWCA 241 at [9]-[10] per Heydon JA with whom Handley and Stein JJA agreed; Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57, (2000) 204 CLR 82 from [52] per Gaudron and Gummow JJ).”

12. [2013] NSWSC 1879 at [72].

33. Like Sackar J, in the absence of any explanation for the delay, I would infer that AMA decided not to follow the usual procedure of seeking prerogative relief to quash the Rivlin Determination, and to instead serve the further payment claim, which was a repetition of the payment claim determined by Mr Rivlin, in the hope of securing a more favourable determination.

Conclusion

34. For those reasons I propose to make an order in the nature of certiorari quashing the Second Durham Determination and to dismiss the cross-summons.

35. I invite the parties to bring in short minutes to give effect to these reasons.

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Endnotes

Decision last updated: 12 March 2019