Lal Lal Wind Farms Nom Co Pty Ltd v Vestas Australian Wind Technology Pty Ltd
[2021] VSC 884
•28 September 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST
S ECI 2021 03457
| LAL LAL WIND FARMS NOM CO PTY LTD (ACN 625 768 774) AS AGENT FOR THE LAL LAL WIND FARMS PARTNERSHIP | Plaintiff |
| v | |
| VESTAS – AUSTRALIAN WIND TECHNOLOGY PTY LTD (ACN 089 653 878) | First Defendant |
| and | |
| MAX TONKIN | Second Defendant |
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JUDGE: | Stynes J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 September 2021 |
DATE OF RULING: | 28 September 2021 |
CASE MAY BE CITED AS: | Lal Lal Wind Farms Nom Co Pty Ltd v Vestas – Australian Wind Technology Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2021] VSC 884 |
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PRACTICE AND PROCEDURE — Injunction — Injunction to restrain enforcement of adjudication determination made under the Building and Construction Industry Security of Payment Act 2002 (Vic) — Adequacy of damages for the plaintiff — Balance of convenience — Injunction refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | B Mason | Herbert Smith Freehills |
| For the Defendants | N Pane QC with F Cameron | Pinsent Masons |
HER HONOUR:
A Introduction
By its originating motion filed 22 September 2021, the plaintiff seeks, amongst other things, an order that an adjudication determination dated 17 September 2021 (‘Adjudication Determination’) be quashed or set aside. Pending the determination of that proceeding, the plaintiff seeks an interlocutory injunction restraining the first defendant from relying on, seeking to enforce, or taking action under the Building and Construction Industry Security of Payment Act 2002 (Vic) (‘SOP Act’) in relation to the Adjudication Determination. The plaintiff relies on the written submissions of counsel and the four affidavits of Ms Smethurst. The first defendant relies on the written submissions of counsel and the affidavits of Mr Taylor and Mr Heading.
In support of its application, the plaintiff has offered the usual undertaking as to damages, and has further undertaken to pay the adjudicated amount plus interest as well as the adjudicator's costs into the trust account of its solicitors or into Court.
B Background
The plaintiff (‘the Principal’) is developing the Lal Lal Wind Farm facility on sites at Elaine and Yendon in the State of Victoria. It engaged the first defendant (‘the Contractor’), together with Zenviron Pty Ltd, to engineer, procure and construct that development. The Principal has separately engaged the Contractor to maintain and operate the wind farm facility for 30 years under an Operation and Maintenance Agreement (‘O&M Agreement’).
On 28 July 2021, the Contractor purported to issue a payment claim under s 14 of the SOP Act to the Principal. The amount claimed was $6,313,734.49 in respect of services said to have been performed from 27 May 2019 to 1 May 2021. The Principal asserts that the document the Contractor served on it was not a payment claim under the SOP Act. As a precaution, the Principal responded by providing the Contractor with a payment schedule stating that the amount payable was ‘nil’.
Following this, the Contractor applied for an adjudication under the SOP Act. On 17 September 2021, pursuant to s 23 of the SOP Act, the second defendant (‘the Adjudicator’) issued his determination. He found in favour of the Contractor that the adjudicated amount of $6,303,933.45 was payable to the Contractor.
The Principal has applied for judicial review of the Adjudication Determination.
Pending the determination of the substantive proceeding, the Principal has brought the present application for an interlocutory injunction by which it seeks to restrain the Contractor from enforcing the Adjudication Determination on an interim basis.
C Applicable legal principles
The legal principles relevant to this application are not in dispute. Granting interlocutory relief is a discretionary matter. In the exercise of the Court's discretion, the Court must be satisfied that:[1]
(a)there is a serious question to be tried as to the plaintiff's entitlement to relief;
(b)the plaintiff is likely to suffer injury for which damages will not be an adequate remedy; and
(c)the balance of convenience favours the granting of an injunction.
[1]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, [19] (Gleeson CJ and Crennan J); Bradto Pty Ltd v State of Victoria (2006) 15 VR 65, [39], [84] (Maxwell P and Charles JA).
These are the organising principles to be applied, having regard to the nature and circumstances of the case. They are derived from the fundamental principle that ‘the court should take whichever course appears to carry the lower risk of injustice’.[2]
[2]Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772, 780–1 (Hoffmann J), cited with approval in Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499, 502 (Gummow J). See also Bradto Pty Ltd v State of Victoria (2006) 15 VR 65, [32] (Maxwell P and Charles JA).
The Court’s consideration of these organising principles is not at large, as it must take into account the particular circumstances of the case. A circumstance of relevance to the exercise of the Court’s discretion in this case is the statutory regime under which the Adjudicator made his decision, that being the SOP Act.
Section 1 of the SOP Act sets out the legislation’s main purpose, which is to provide for entitlements to progress payments for persons who carry out construction work or who supply related goods and services under construction contracts. Section 3 sets out the object of the SOP Act, which is to ensure that any person who undertakes to carry out construction work, or who undertakes to supply related goods and services under a construction contract, is entitled to receive, and is able to recover, progress payments for carrying out that work or supplying those goods and services. This objective is implemented by the granting of a statutory entitlement to progress payments under the SOP Act, and the establishment of a procedure for the speedy determination of any disputed claim by an adjudicator.[3]
[3]Building and Construction Industry Security of Payment Act 2002 (Vic) ss 3(2)–(3) (‘SOP Act’).
A contractor’s rights under the SOP Act place it in a privileged position in the sense that it acquires rights that go beyond its contractual rights.[4] The emphasis of the legislation is to provide for the speedy interim adjudication of disputed payment claims. The speed of the process is facilitated by the imposition of strict timeframes, including timeframes for the payment of an adjudicated amount.[5]
[4]Protectavale Pty Ltd v K2K Pty Ltd [2008] FCA 1248, [8] (Finkelstein J), citing Jemzone Pty Ltd v Trytan Pty Ltd (2002) 42 ACSR 42, 50 (Austin J); Yuanda Vic Pty Ltd v Façade Designs International Pty Ltd [2021] VSCA 44, [90] (Sifris JA).
[5]See, eg, SOP Act s 28M.
C.1 Is there a serious issue to be tried as to the Principal’s entitlement to relief?
The Principal’s application for judicial review is based on two alleged jurisdictional errors. The first is that the Adjudicator purportedly erred in concluding that the SOP Act applies to the O&M Agreement. It is the Principal’s position that on the proper construction of that agreement, the amounts payable to the Contractor are to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied, such that s 7(2)(c) is engaged to exclude the operation of the SOP Act. The second allegation is that the Adjudicator erred in concluding that a reference date attached to the Contractor’s payment claim.
The Principal submits that each of these alleged jurisdictional errors constitute a serious question to be tried. Sensibly, this was not contested by the Contractor.
The Principal further submits that its prima facie case is strong. Lengthy submissions were made about this issue in writing and during the hearing. While the Contractor intends to resist the substantive claims in the proceeding, for the purpose of this application, it did not seek to challenge the Principal’s assessment that its claims are strong. I was persuaded by the Principal’s submissions that, at least for the purpose of this application, there is a serious question to be tried and it is strong.
C.2 Does the balance of convenience favour the grant of an injunction?
The Principal identified the following matters to be weighed in the balance in its favour:
(a)First, the strength of the serious question to be tried;
(b)Second, the absence of evidence that the Contractor will suffer prejudice if the injunction is granted;
(c)Third, the protection afforded to the Contractor by the Principal’s undertaking to pay into Court or into trust the full adjudicated amount, the Adjudicator’s costs, and interest on the adjudicated amount from the date of payment being 11 August 2021; and
(d)Fourth, the change to the commercial dynamic between the parties that will operate to prejudice the Principal if the adjudicated amount is paid to the Contractor rather than being paid into trust or into Court. The Principal relies on the various curial means employed by the Contractor in recent times and asserts, in summary, that they are part of a wider commercial strategy employed by it to exert commercial pressure on the Principal.
The Contractor identified the following matters to be weighed in the balance in its favour:
(a)First, the policy of the SOP Act that successful applicants should be paid promptly;
(b)Second, the undertaking given by the Contractor, through its solicitors, to repay in full the adjudicated amount and costs and interest as awarded by the adjudicator within three business days if the Court finds in favour of the Principal that the Adjudication Determination is affected by jurisdictional error and is invalid; and
(c)Finally, the guarantee executed by the Contractor’s parent company in favour of the Principal in relation to the Contractor’s repayment obligation. Relevantly, that guarantee states ‘[i]f the court determines in the Judicial Review Proceeding that the Adjudication Determination is affected by jurisdictional error and is invalid, then the Guarantor unconditionally and irrevocably guarantees to the Principal the due, proper, punctual, full and complete performance by the [Contractor] of any obligation to repay the Principal any amount paid by the Principal to the [Contractor] pursuant to the Adjudication Determination, including the adjudicated amount, costs and interest as described in the Adjudication Determination, together with any interest that the [Contractor] is obliged to pay on that amount'.
D Consideration
I accept that the strength of the prima facie case weighs in favour of the Principal for the balance of convenience. I also accept there is no evidence the Contractor will suffer injury for which damages will be an inadequate remedy. However, and more relevantly having regard to the applicable legal principles, I am not satisfied that if I refuse to grant an injunction and the Principal is ultimately successful in this proceeding, it will suffer injury for which damages will be inadequate.
In the absence of any evidence relevant to it, I do not accept the Principal’s submission that if the adjudicated amount is paid to the Contractor rather than into Court or into trust, the Principal will suffer a detrimental change in the commercial dynamic between the parties which cannot be addressed by damages.
Further, the following factors weigh heavily in favour of the Contractor in the balance of convenience. First, until the Adjudication Determination is quashed, the status quo in this case is that the Contractor should be paid the adjudicated amount, plus costs and interest as determined by the Adjudicator. Payment of that amount to the Contractor is consistent with the terms and purpose of the legislation. Non-payment prejudices the Contractor’s position under the SOP Act.
Second, I am satisfied on the evidence before me that the risk of injury to the Principal in the event it is ultimately successful in this proceeding is minimal in light of the undertaking given by the Contractor together with the guarantee put in place by its parent company.
Having regard to these factors, I find that the lower risk of injustice lies in refusing to grant an injunction.
E Orders
For the reasons above, subject to any further submission from the parties in relation to the form of order, I propose to order that the Principal’s application for an interlocutory injunction be dismissed.
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