Nepean Conveyors Pty Ltd v Linkforce Industrial Services Pty Ltd - [2024] WASC 71

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   NEPEAN CONVEYORS PTY LTD -v- LINKFORCE INDUSTRIAL SERVICES PTY LTD [2024] WASC 71
CORAM:   SEAWARD J
HEARD:   1 AND 8 MARCH 2024
DELIVERED          :   14 MARCH 2024
PUBLISHED           :   14 MARCH 2024
FILE NO/S:   CIV 1252 of 2024
BETWEEN:   NEPEAN CONVEYORS PTY LTD
Plaintiff
AND
LINKFORCE INDUSTRIAL SERVICES PTY LTD
Defendant

Catchwords:

Practice and procedure - Application for interlocutory injunction to prevent adjudication under the Construction Contracts Act 2004 (WA) - Serious question to be tried - Whether construction contract is not a construction contract for the purposes of the Act - Balance of convenience favours defendant

Legislation:

Construction Contracts (Former Provisions) Act 2004 (WA)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr M R Collins
Defendant	:	Mr D Pratt

Solicitors:

Plaintiff	:	Thomson Geer Lawyers
Defendant	:	Tottle Partners

Cases referred to in decision:

Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91
Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2016] WASC 119
Enerflex Process Pty Ltd v Kempe Engineering Services (Australia) Pty Ltd [2013] WASC 406
Field Deployment Solutions Pty Ltd v SC Projects Australia Pty Ltd [2015] WASC 60
Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd (2012) 28 BCL 226; [2010] NSWCA 283
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Oasis Newman Operations Pty Ltd v Hockley [2023] WASC 79
Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319
Re Graham Anstee-Brook; Ex Parte Karara Mining Ltd [2012] WASC 129
Samsung C & T Corporation v Loots [2016] WASC 330
Samsung C&T Corporation v Duro Felguera Australia Pty Ltd [2018] WASCA 27; (2018) 52 WAR 281
Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd (2015) 31 BCL 407; [2015] VSCA 98

SEAWARD J:

Introduction

This is the plaintiff's application for an interlocutory injunction seeking to prevent the defendant from commencing an adjudication application under the Construction Contracts (Former Provisions) Act 2004 (WA) (the Act).
The plaintiff's application came before me on an urgent basis on Friday 1 March 2024 on an ex parte basis. After hearing from counsel for the plaintiff, I granted an interim injunction until further order of the court and listed the matter for an inter partes hearing on Tuesday 5 March 2024. I indicated to counsel for the plaintiff that I had availability during the week to hear the application for the interlocutory injunction on other days of the week if, following service of the papers and conferral with the defendant, the defendant sought additional time to file any submissions in response. Following that conferral, the parties provided my chambers with a minute of consent orders programming the application to a hearing on Friday 8 March 2024.

Evidence

The plaintiff relies on the affidavit of Roelof van Rooyen, affirmed on 1 March 2024. Mr van Rooyen is the Managing Director of the plaintiff.
The plaintiff also relies on the affidavit of David Stott affirmed 20 February 2024 in respect of a related application for judicial review filed on 1 March 2024 (which I discuss further below). Mr Stott is the Commercial Manager of the plaintiff.
The plaintiff has provided an undertaking as to damages in the usual form, signed by Mr van Rooyen and Mr Stott.
The defendant relies on the affidavit of Benn Simon Mark Wallace affirmed on 6 March 2024. Mr Wallace is a solicitor employed by the firm of solicitors representing the defendant.

Background

The background to the matter is not generally in dispute. The following summary of events is taken largely from the plaintiff's submissions filed on 1 March 2024.
The plaintiff entered into a contract with Roy Hill Iron Ore Pty Ltd dated 8 December 2021, to construct two overland conveyor systems as part of Roy Hill Iron Ore Pty Ltd's ROM4 Expansion Project. The project scope included the design, procurement, fabrication, construction, handover and commissioning of two overland conveyors, namely, CVR 020 and CVR 021, along with associated transfer stations, electrical installation, and other plant.[1]
[1] Affidavit of Roelof van Rooyen affirmed 1 March 2024 (van Rooyen affidavit) [9] - [10]; Affidavit of David Stott affirmed 20 February 2024 (Stott affidavit), DS-1, Scope of Works, pages 217 to 243.
The plaintiff then entered into a contract with the defendant dated 14 March 2022 to construct the two overland conveyor systems the subject of the Roy Hill Contract (the Contract). The scope of work under the Contract included the following works:[2]
(a) Separable Portion 1, which included the procurement, fabrication, assembly, construction, handover and commissioning of the overland conveyor system CVR 020; and
(b) Separable Portion 2, which was to be formally directed by the plaintiff as a variation under the Contract and included the procurement, fabrication, assembly, construction, handover and commissioning of the overland conveyor system CVR 021.
[2] van Rooyen affidavit [11] - [12]; Stott affidavit, DS-1, Scope of Works, pages 217 to 243.
The contract price was $54,615,228.53 (excl GST) and the date for practical completion of the works was 3 December 2022.[3]
[3] van Rooyen affidavit [13].
Mr van Rooyen deposes that whilst the defendant largely completed the Contract works in April 2023, the defendant returned to the site for a period of less than one week in May and August 2023 to attend to minor matters.[4]
[4] van Rooyen affidavit [14] - [15].
The defendant has made near identical monthly payment claims (purportedly) under the Contract every month since April 2023.[5]
[5] van Rooyen affidavit [16] - [17] and RVR-1 and RVR-2.
On or about 20 July 2023, the defendant submitted progress claim No 20 in the gross amount of $83,393,111.84 (excl GST) (before retention), claiming a net amount payable of $23,048,745.55 (excl GST).[6]
[6] van Rooyen affidavit [18] and RVR-2.
On or about 26 July 2023, the plaintiff issued its assessment, being a negative amount, by which it determined that the defendant owed the plaintiff $3,706,705.98 (excl GST).[7]
[7] van Rooyen affidavit [19]; Stott affidavit, DS-1, pages 335 to 354.
By an application under the Act dated 13 November 2023, and lodged and served on 14 November 2023, the defendant commenced an adjudication application (First Adjudication Application).[8]
[8] van Rooyen affidavit [20]; Stott affidavit, DS-1, pages 5 to 824.
The plaintiff lodged and served its response dated 28 November 2023.[9]
[9] van Rooyen affidavit, [22]; Stott affidavit, DS-3, pages 830 to 1161.
The appointed adjudicator provided the parties with his determination dated 20 December 2023 (which was subsequently 'corrected' by a determination dated 22 December 2023 (First Determination).[10] In the First Adjudication Application, the adjudicator determined that the plaintiff was required to pay the defendant the sum of $1,311,887 (incl GST). That amount was paid by the plaintiff on or around 27 December 2023.[11]
[10] van Rooyen affidavit [23] - [24]; Stott affidavit DS-5, pages 1227 to 1292.
[11] van Rooyen affidavit [24] - [26]; Stott affidavit DS-5, pages 1227 to 1292; DS-6 pages 1293 - 1294.
Mr van Rooyen deposes that between January and February 2024, there was an exchange of correspondence between the solicitors for the parties regarding the First Determination and the utility in attempting to resolve the disputes between their respective clients.[12]
[12] van Rooyen affidavit [28] - [29].
Mr van Rooyen also deposes that on 26 February 2024, he met in person with the defendant's General Manager, Christopher Dargie, for the purpose of discussing whether the plaintiff and the defendant could resolve a number of disputes in connection with the Contract.[13] As the majority of this meeting was subject to without prejudice privilege, no further details have (appropriately) been provided. However, Mr van Rooyen deposes that:[14]
During this meeting, Mr Dargie told me on an open basis, and I believed him, that Linkforce would lodge a second adjudication application seeking an amount of approximately $18 million next week.
[13] van Rooyen affidavit [30] - [31].
[14] van Rooyen affidavit [32].
Mr van Rooyen deposes that he understood the reference to 'next week' to be a reference to the week commencing 4 March 2024.[15]
[15] van Rooyen affidavit [33].
On 1 March 2024, the plaintiff lodged the following applications in this court:
(1)an application for judicial review of the First Determination (CIV 1251 of 2024). This application names the adjudicator as the first respondent and the defendant as the 'other party', and is supported by the affidavit of Mr Stott. By way of summary, in that application, the plaintiff seeks a writ of certiorari, a declaration, and other orders on the following grounds:
(a)The adjudicator fell into jurisdictional error by determining the claims the subject of the First Determination because as a matter of objective fact, the Contract is not a construction contract for the purposes of the Act.
(b)Further or in the alternative, the adjudicator fell into jurisdictional error by determining that the claims the subject of the First Determination were in respect of construction work which could be the subject of a payment claim that could be adjudicated under the Act, when the claims included substantial work the subject of the mining exclusion under s 4(3)(c) of the Act and the adjudicator lacked jurisdiction to determine claims in respect of work the subject of the mining exclusion; and
(c)The adjudicator fell into jurisdictional error in making the First Determination because in purporting to make his determination the adjudicator did not consider the plaintiff's response to the application, being whether the plaintiff was entitled to set off a counterclaim on account of cash retentions for which the defendant was liable to pay under the Contract.
(2)a writ of summons with an indorsement of claim (CIV 1252 of 2024). By way of summary, in the writ the plaintiff seeks orders for:
(a)a declaration that the Contract is not a construction contract for the purposes of the Act;
(b)in the alternative to the above declaration, a declaration that the progress claims referred to in par 1(b) of the writ of summons (being a series of monthly claims made by the defendant between April 2023 and February 2024) do not give rise to payment claims or payment disputes for the purposes of the Act;
(c)in the alternative to these two declarations, a declaration that a payment claim for the purposes of the Act does not include a claim made under a construction contract for an amount in relation to the performance of obligations under the construction contract where such obligations were not performed within:
(i)a reasonable period of the relevant claim under the contract; or
(ii) alternatively, six months of the relevant claim under the contract;
(d)further to the declaration sought in par (c) above, a declaration that the obligations the subject of the progress claims referred to in par 1(b) of the writ of summons were not performed within:
(i)a reasonable period of the progress claims referred to in par 1(b) above; or
(ii)alternatively, six months of the progress claims referred to in par 1(b) above;
(e)an interlocutory injunction restraining the defendant from making any application for adjudication under the Act in respect to any claims arising in connection with the Contract, pending the court's determination of the plaintiff's application for judicial review and pending the court's determination of the declarations in par (c) and par (d) above.
(3)this present application in CIV 1252 of 2024 for an interlocutory injunction. By this application, the plaintiff seeks the following order:
An injunction be granted restraining the Defendant, whether by itself, its officers, servants, agents or otherwise, until further order, from making any application for adjudication under section 26 of the Construction Contracts (Former Provisions) Act 2004 (WA) in respect to any claims arising in connection with the contract between the Plaintiff and the Defendant dated 14 March 2022.

Legal principles - injunction

The general principles applicable to the exercise of the power to grant an interlocutory injunction were not in dispute. They were summarised by Newnes JA (with whom McLure P and Corboy J agreed) in Mineralogy Pty Ltd v Sino Iron Pty Ltd as follows:[16]
The principles to be applied on an application for an interlocutory injunction are well-known and were not in dispute. The two main enquiries that arise are whether the plaintiff has made out a prima facie case and whether the balance of convenience favours the grant of the injunction. The first inquiry as to a 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks. The second inquiry is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted. Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of convenience favours the grant of such relief are related, not independent, questions.
(citations omitted)
[16] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87] (Newnes JA) (McLure P & Corboy J agreeing).

Legal principles - the Act

It is not in dispute that the Act is the relevant version of the Act governing this dispute.
The Act provides a means for adjudicating payment disputes arising under 'construction contracts'. It achieves this purpose by providing for a party to a 'payment dispute' to apply to have the dispute adjudicated (s 25 and s 26). The adjudicator must either dismiss the application if certain circumstances exist (s 31(2)(a)) or determine on the balance of probabilities the liability of a party to the payment dispute to make a payment (including interest and the return of securities) (s 31(2)(b) and s 33).
The object of an adjudication of a payment dispute is to determine the dispute fairly and as quickly, informally and inexpensively as possible (s 30). Accordingly, the Act provides for an expedited process for adjudications (see s 26, s 27, s 31 and s 32). Subject to one exception (concerning frivolous or vexatious conduct or unfounded submissions), the parties to a payment dispute bear their own costs in relation to an adjudication (s 34).
A determination made by an adjudicator is binding on the parties to the construction contract (s 38) and creates a statutory liability to pay an amount under a determination on or before the date specified in the determination (s 39(1)). With the leave of a court of competent jurisdiction, a determination may be registered and enforced as a judgment of the court (s 43).
Section 46 of the Act provides for a limited right of review to the State Administrative Tribunal from a decision of an adjudicator to dismiss an application pursuant to s 31(2)(a) of the Act. Section 46(3) of the Act provides that except as provided for in s 46(1), a decision or determination of an adjudicator on an adjudication cannot be appealed or reviewed. However, it is well established that this exception does not preclude this court from exercising its constitutionally protected supervisory jurisdiction to grant relief on account of jurisdictional error.[17]
[17] Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319 [121] - [126]; Samsung C&T Corporation v Duro Felguera Australia Pty Ltd [2018] WASCA 27; (2018) 52 WAR 281 [139].
It is important to observe that a determination made by an adjudicator does not finally determine the rights, duties or liabilities of any party to a construction contract. In this regard, s 45 of the Act is significant and provides:
(1) This Part does not prevent a party to a construction contract from instituting proceedings before an arbitrator or other person or a court or other body in relation to a dispute or other matter arising under the contract.
(2) If other such proceedings are instituted in relation to a payment dispute that is being adjudicated under this Part, the adjudication is to proceed despite those proceedings unless all of the parties, in writing, require the appointed adjudicator to discontinue the adjudication.
(3) Evidence of anything said or done in an adjudication is not admissible before an arbitrator or other person or a court or other body, except for the purposes of an application made under section 29(3) or an appeal made under section 46.
(4) An arbitrator or other person or a court or other body dealing with a matter arising under a construction contract —
(a) must, in making any award, judgment or order, allow for any amount that has been or is to be paid to a party under a determination of a payment dispute arising under the contract; and
(b) may make orders for the restitution of any amount so paid, and any other appropriate orders as to such a determination.
Accordingly, nothing in the Act prevents a person who is dissatisfied with an adjudication determination from instituting legal proceedings seeking an alternative outcome.[18]
[18] Field Deployment Solutions Pty Ltd v SC Projects Australia Pty Ltd [2015] WASC 60 [20].
The central subject to which the Act applies is a construction contract. The Court of Appeal has made it clear that the power of an adjudicator under the Act to determine a payment dispute is conditional upon the objective existence of (relevantly for present purposes) a construction contract as defined by the Act. To use the language of jurisdictional error, the existence of a construction contract is a jurisdictional fact in the narrow sense.[19] The existence of a payment dispute is also a precondition to an applicant having a dispute adjudicated under Pt 3 of the Act.[20] That precondition is dependent on (first) the existence of a construction contract.
[19] Samsung C&T Corporation v Duro Felguera Australia Pty Ltd [2018] WASCA 27; (2018) 52 WAR 281 [170].
[20] Samsung C&T Corporation v Duro Felguera Australia Pty Ltd [2018] WASCA 27; (2018) 52 WAR 281 [161], [167], [169].
A 'construction contract' is defined in s 3 of the Act as (relevantly):
a contract or other agreement, whether in writing or not, under which a person (the contractor) has one or more of these obligations —
(a) to carry out construction work;
'Construction work' has the meaning given in s 4(2) of the Act. However, s 4(3) of the Act provides a number of exceptions to this definition. This subsection is generally known as the 'mining exception'. Relevant for present purposes is s 4(3)(c) which provides:
Despite subsection (2) construction work does not include any of the following work on a site in WA —
…
(c) fabricating or assembling items of plant used for extracting or processing oil, natural gas or any derivative of natural gas, or any mineral bearing or other substance;
The question in the present case is whether the work the subject of the Contract falls within this exception.
The term 'payment dispute' is defined in s 6 of the Act as (relevantly):
(1) For the purposes of this Act, a payment dispute arises if —
(aa) a payment claim is rejected or wholly or partly disputed;

The term 'payment claim' is defined in s 3 of the Act as:
payment claim —
(a)means a claim made under a construction contract —
(i) by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under the contract; or
(ii) by the principal to the contractor for payment of an amount in relation to the performance or non-performance by the contractor of its obligations under the contract;
and
(b) includes a payment claim that includes matters covered by a previous payment claim;
By the inclusion of item (b) in the above definition, the Act permits what are colloquially known as 'recycled payment claims' made under a construction contract.[21]
[21] See Oasis Newman Operations Pty Ltd v Hockley [2023] WASC 79 at [198] - [201].
When considering this application, I have had regard to the general purpose and scheme of the Act as revealed by the text in so far as it concerns adjudications. The key object of the Act in this regard is best revealed by the wording of s 30 of the Act, being to provide for a (statutory) system of adjudication of payment disputes arising under a construction contract fairly and as quickly, informally and inexpensively as possible. Importantly, this expeditious adjudication process does not finally determine the rights, duties or liabilities of any party to a construction contract, and the parties retain the ability to institute other proceedings in relation to the payment dispute. That is, the Act provides for a rapid arbitration process to determine payment disputes arising under a contract, albeit on an interim basis.
This description of the purpose of the Act is supported by the Second Reading Speech for the Bill which became the Act:[22]
… the Bill provides a rapid adjudication process that operates in parallel to any other legal or contractual remedy. The rapid adjudication process allows an experienced and independent adjudicator to review the claim and, when satisfied that some payment is due, make a binding determination for money to be paid. The rapid adjudication process is a trade-off between speed and efficiency on the one hand, and contractual and legal precision on the other. Its primary aim is to keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes. The process is kept simple, and therefore cheap and accessible, even for small claims. In most cases the parties will be satisfied by an independent determination and will get on with the job. If a party is not satisfied, it retains its full rights to go to court or use any other dispute resolution mechanism available under the contract. In the meantime, the determination stands, and any payments ordered must be made on account pending an award under the more formal and precise process.
[22] See Samsung C&T Corporation v Duro Felgura Australia Pty Ltd [2018] WASCA 27; (2018) 52 WAR 281 [19], [103].
Similar expressions as to the purpose of the Act are found in other cases of this court. See for example Oasis Newman Operations Pty Ltd v Hockley;[23] Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd;[24] Perrinepod Pty Ltd v Georgiou Building Pty Ltd;[25] Samsung C & T Corporation v Loots.[26]
[23] Oasis Newman Operations Pty Ltd v Hockley [2023] WASC 79 at [145] - [146] (Solomon J).
[24] Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91 [55] (Pullin JA).
[25] Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319 [87] - [88] (Murphy JA).
[26] Samsung C & T Corporation v Loots [2016] WASC 330 [65] (Beech J).

Serious question to be tried

As this is an application for an interlocutory injunction, my views and opinions as to whether there is a serious question to be tried are views expressed only as to the strength of the serious question to be tried. They are not views as to the final merits of the plaintiff's case.

Construction contract

The primary basis of the plaintiff's case in both the application for a declaration the subject of these proceedings, and the application for judicial review, is that the Contract is not a construction contract for the purposes of the Act because it concerns construction work falling within the 'mining exception' contained in s 4(3)(c) of the Act. This position underpins the first two declarations sought in these proceedings, and the first two grounds of the application for judicial review.
The question of whether the work the subject of the Contract falls within the exception involves a consideration and understanding of the work to be performed under the Contract, the purpose and function of the plant to be assembled (in this case, two overland conveyor systems for the Roy Hill Iron Ore Pty Ltd expansion project) and then a consideration of the extent to which it can be said that the conveyors are items of plant used for extracting or processing any of the relevant substances referred to in the exemption. This may (depending on that evidence) involve considering whether the plant performs a function so related to the extraction or processing of the substance so as to make it part of plant used for that purpose. In this regard, see the decisions of Re Graham Anstee-Brook; Ex Parte Karara Mining Ltd[27] and Samsung C &T Corporation v Loots.[28]
[27] Re Graham Anstee-Brook; Ex Parte Karara Mining Ltd [2012] WASC 129 [16].
[28] Samsung C &T Corporation v Loots [2016] WASC 330 [354].
The defendant accepts that the plaintiff can meet the threshold of establishing a serious question to be tried in relation to this aspect of the plaintiff's case. This concession is appropriately made. The description of the work contained in the Contract, when compared with the wording of the exemption, forms a reasonable basis to conclude that the exemption might apply. However, I accept the defendant's submission that it is not possible, at this interlocutory stage, for me to form any view about the strength of the plaintiff's case. This is because a consideration of this issue will likely involve the leading of evidence as to the precise nature and scope of the works under the Contract and how that work sits in the context of the Roy Hill mining operations and the provisions of the exception.

Temporal claims

In light of my conclusion above it is not strictly necessary to consider whether there is a serious question to be tried in relation to the other declarations sought (being the temporal implications).
However, it is necessary for me to make some observations about the strength of the plaintiff's case in relation to these other declarations, because not only is the strength of the plaintiff's case on this aspect relevant to the balance of convenience, but the plaintiff's submissions also underpin some of the other factors relevant to the balance of convenience.
The plaintiff's case is concerned with whether the entitlement to adjudicate a payment dispute under the Act is limited to payment claims where the relevant works were completed within a reasonable period of the relevant progress claim under the construction contract (or alternatively within six months of the relevant progress claim). The plaintiff submits that whilst there is no express statutory provision to this effect, Parliament must have intended that such a limit be implied.
Both parties agree that it is not appropriate for me to form a final view as to this matter at this interlocutory stage. However, my preliminary view is that the plaintiff's legal reasoning underpinning this proposition does not appear to proceed in accordance with the orthodox rules of statutory interpretation.
The plaintiff's legal reasoning is set out in par [6] - [21] of the plaintiff's submissions in reply, filed 7 March 2024. I have not repeated details of that reasoning process here. However, by way of very brief overview, the plaintiff accepts that there is no express time limitation on making a payment claim by a party in the text of the Act. Nonetheless, the plaintiff submits that Parliament must have intended there to be such a limit, as the plaintiff submits that the object and purpose of the Act is concerned with providing for the rapid adjudication of payment claims which are linked to the cash flow of the parties during the term of the construction project. The plaintiff submits that the rapid adjudication provided for under the Act is not intended to extend to payment claims which are not temporally linked to the construction project and are more akin to a claim for debt or damages at the conclusion of the project.
My preliminary view is that this process of reasoning appears to impermissibly work backwards to imply words into the text. These words are not based on the purpose of the Act as discerned from the text, but from the wording of the second reading speech and the explanatory memorandum, accompanied by a number of assumptions as to what Parliament must have intended. These are only my preliminary observations on this issue and it is not necessary for me to form a final view. However, in the absence of any express statutory provision or any judicial authority supporting the plaintiff's proposed construction, I consider the strength of the plaintiff's case on this aspect of its claim to be weak.

Balance of convenience

I have next gone on to consider the balance of convenience. For the following reasons, I am not satisfied that the balance of convenience favours granting the interlocutory injunction.
First, the prospects of the plaintiff's case and the balance of convenience are not factors to be considered independently of each other. I have had regard to the fact that the plaintiff has established a serious question to be tried in relation to the question of whether the Contract is a construction contract, but I am unable to assess the strength of that case at this point, save for observing that the scope of works raises clear issues as to the application of the mining exemption. As previously outlined, my preliminary view as to the strength of the plaintiff's case in relation to the temporal element of the plaintiff's case is that it is weak.
Secondly, I am of the view that the plaintiff's legal interests and ability to advance its desired legal arguments are adequately protected in the event that the injunction is not granted. If the defendant makes a second adjudication application (or more), the plaintiff is able to respond to that application and participate in the process, including by submitting that no construction contract exists, and each of the other matters raised in the writ of summons. The fact that a previous adjudicator has ruled against the plaintiff in that respect, does not necessarily mean that this will be the outcome again. The adjudicator appointed may not be the same. If the plaintiff is dissatisfied with the outcome of the adjudication, the plaintiff can seek judicial review of the arbitrator's decision (if appropriate). In this regard, I refer to the reasons of Le Miere J in Enerflex Process Pty Ltd v Kempe Engineering Services (Australia) Pty Ltd at [14].[29]
[29] Enerflex Process Pty Ltd v Kempe Engineering Services (Australia) Pty Ltd [2013] WASC 406.
Thirdly, I consider the grant of an injunction would undermine the objects and purpose of the Act in that it would prevent the defendant from exercising its rights to engage in the very process the Act permits (if it so choses), and for the payment dispute to be resolved on an interim basis in a timely fashion.
The plaintiff submits that the objects and purpose of the Act will not be undermined because the defendant has delayed in making its payment claims and therefore this is not a case of keeping the cash flow moving whilst the construction project is on foot. Rather, the plaintiff says that the defendant is seeking to make payment claims of a type not envisaged under the Act. Instead of being progress payment claims, the plaintiff submits that the defendant is really seeking to (impermissibly) bring a claim for debt or damages under the Act. The plaintiff's submissions in this regard depend upon its proposed construction of the Act, including in relation to the temporal elements. As outlined earlier in these reasons, my preliminary view of the plaintiff's case in this regard is that it is weak, and therefore I consider that on balance granting an injunction will undermine the objects and the purpose of the Act.
Fourthly, the plaintiff submits that if the injunction is granted, the defendant will not suffer any prejudice as, if the plaintiff is unsuccessful before this court, the defendant can still make the adjudication application at a later time, and if successful, will receive interest which will mitigate any delay. That is, the defendant's case is a money case only. Whereas the plaintiff will suffer prejudice if they must participate in an adjudication process which is later found to be beyond power, as the process under the Act is a 'no cost' jurisdiction and the plaintiff will not therefore be able to recover their costs. In this regard, the van Rooyen affidavit provides an estimate of the costs that may be incurred.
It is not in dispute that the defendant has not put on any evidence as to specific prejudice (aside from the limitation issues discussed below). The lack of specific prejudice is a factor which weighs in favour of granting an injunction. However, I do not accept that the defendant does not suffer general prejudice if the injunction is granted. The defendant suffers prejudice in the form of not being able to exercise its rights under the Act to make an adjudication application for the duration of any injunction, and to have that claim adjudicated in a timely fashion in accordance with the Act. The other difficulty with the proposition is that the Act provides that the adjudication process is a 'no cost' jurisdiction. Accordingly, to the extent an injunction is being sought to avoid that aspect of the process, then granting the injunction will undermine the very process established under the Act.
Fifthly, the plaintiff proposes that the writ of summons and the judicial review application be heard together on an expedited basis. The plaintiff proposes a trial in approximately five weeks' time. The plaintiff submits that accordingly, this will limit the period of time in which the defendant is subject to the injunction.
The court is not presently in a position to determine whether such a trial date and timetable is possible. However, even if it were, I do not consider holding a trial of these matters in this time period outweighs the various other factors in favour of refusal of the grant of the interlocutory injunction previously referred to. Further, whilst the defendant agrees that the judicial review matter and the writ of summons should be heard together, it does not consider a period of five weeks will necessarily be sufficient. The defendant submits that in light of the fact that the writ and application for an injunction were only filed on 1 March 2024, his client and instructors have not yet had sufficient time to consider the precise length of the trial and the evidence needed. However, the defendant submits that even at this stage, it is likely that it will wish to put on at least some evidence regarding the nature of the works and their interrelationship with the mining operations already in existence. I accept at this preliminary stage that such evidence may be required. Accordingly, the defendant anticipates a longer period until the matters are ready for trial/hearing. It is too early to form a final view on this matter, but at this preliminary stage, five weeks may be ambitious. I therefore consider that the time to trial/hearing is, in the context of the timing of the process provided for under the Act, a factor weighing against granting an interlocutory injunction.
I have also considered the various other factors raised by the parties in their written and oral submissions. I have discussed each of these other factors below, however I am of the view that none of these factors (either alone or in combination with all other factors) weights the balance of convenience in favour of granting an interlocutory injunction.
First, I accept that the grant of an injunction puts the defendant at risk of being unable to meet all the prescribed time periods under the Act for making future adjudication applications. The affidavit of Mr Wallace details the dates of the various payment claims that have been made, the date of the plaintiff's response and the last date for making an adjudication application.[30] The last date for making an adjudication application in relation to the October 2023 payment claim is 18 March 2024. However, the following matters should be noted in this regard: (a) as the various payment claims are recycled claims,[31] the fact that the defendant may miss an upcoming adjudication deadline in the event that the injunction is granted will not, on the facts, prevent the defendant from meeting the deadline for one of the future payment claims instead; and (b) even if the defendant is unable to make an adjudication application, this would not extinguish the defendant's underlying rights and the defendant would still be entitled to bring an alternative action.
[30] Affidavit of Benn Simon Mark Wallace affirmed 6 March 2024 [7].
[31] van Rooyen affidavit [16] - [17] and RVR-1 and RVR-2.
The defendant accepts that it can make an adjudication application in relation to a future payment claim, but submits that it remains at risk in relation to the third and fourth declarations sought (the temporal claims) to this extent: the defendant submits that as the plaintiff is submitting that there should be a time limit on when a payment claim can be made (by reference to when the works were undertaken), that time period may pass in the upcoming months. The defendant bases that submission on a reference in the plaintiff's response to the First Adjudication Application to the date for practical completion being in October 2023, and an expiry of six months from this date is April 2024. It is not clear to me that this date is of significance in the plaintiff's case. The plaintiff's case is that a payment claim must be made within a reasonable period, or alternatively six months, from the date the work is in fact performed. If the plaintiff is correct on this issue, it would appear that this period of time has already passed. Therefore, ultimately, on balance I do not consider the question of limitation periods to be a strong factor in favour of refusing an injunction.
Secondly, in so far as the plaintiff says that the delay by the defendant in making its payment claims reveals that there is no urgency on the part of the defendant, and therefore the granting of an injunction will not prejudice it, in light of the lack of any express time limit under the Act for making a payment claim (and the express ability to recycle claims), I do not consider this to be a factor which strongly weights the balance in favour of granting an injunction.
Thirdly, the plaintiff submits that it will suffer reputational damage unless the injunction is granted. The van Rooyen affidavit deposes to that reputational damage at [37] - [44]. By way of brief summary, the plaintiff's case is that invitations to tender often require disclosure of any disputes the party is currently involved in or anticipates being involved in. Having to disclose involvement in any second adjudication application is likely to result in a reduction in market confidence in the ability of the plaintiff to perform its obligations under existing and future contracts and the plaintiff receiving fewer invitations to tender and reduced chances of success on those tenders. Similar disclosure requirements in credit applications may also lead to reduced amounts of credit and/or credit provided on less favourable terms.

The defendant has not put on any affidavit evidence challenging the van Rooyen evidence on this issue. However, I have some difficulty with the proposition being advanced by the plaintiff on the facts of this case. To the extent the plaintiff is concerned that reporting any second adjudication application or determination may have a negative impact because it will need to be included in tender applications, it would appear to me that this is already the case, as both the judicial review application and the present application for a declaration would also need to be included, and will already need to be included. Depending on the requirements of the tender process, it may be that even the payment claims will need to be disclosed. Therefore, it is difficult to see how any second adjudication application or determination will add significantly to what is already required to be disclosed and have any greater negative effect.
More fundamentally, however, I observe that reservations have been expressed about this type of evidence generally. Both in terms of the high level of generality (and the associate difficulty of the evidence being in the nature of assertions) and in terms of its correctness. I accept that evidence of reputational damage can be difficult to quantify and will, often, need to be given at a high level of generality. I draw no negative inferences from the van Rooyen affidavit in this regard. However, I note that in Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd,[32] Kaye JJA observed that, 'it is notorious that disputes are commonly part and parcel of building contracts' and questioned the extent to which the existence of a second adjudication application or determination will have any substantial adverse impact on the reputation of the party in question. See also in this regard Duro Felguera Australia Pty Ltd v Samsung C&T Corporation[33] and Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd.[34]For these reasons, I do not consider any reputational damage is a factor (either alone or in combination with other factors), which weights the balance of convenience in favour of the grant of an interlocutory injunction.
[32] Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd (2015) 31 BCL 407; [2015] VSCA 98 [233].
[33] Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2016] WASC 119 [77] (Le Miere J).
[34] Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd (2012) 28 BCL 226; [2010] NSWCA 283 [70] (Young JA).
Fourthly, I have had regard to the potential quantum of the defendant's outstanding payment claims as being around $18 million. However, I do not consider this is a factor (either alone or in combination with the other factors) sufficient to weigh the balance of convenience in favour of the grant of an interlocutory injunction. The Act does not contain any upper limit on the quantum of payment claims that can fall within the scope of the Act. The fact that the quantum is high does not detract from the factors relied on above. In combination with this, I observe that there is no evidence before me (and no allegation) of the defendant being unable to repay any adjudication determination/s if this court later finds in favour of the plaintiff and a need for the defendant to re-pay any sum of money arises.
Finally, I accept that the plaintiff has made this application for an injunction promptly upon being advised on 26 February 2024 that a second adjudication application would be made in the following week and that the plaintiff has given an undertaking as to damages in the usual form. However, these factors are not sufficient, in light of all the other circumstances, sufficient to weight to the balance in favour of granting an interlocutory injunction.

Discretionary considerations

In terms of any other discretionary factors relevant to the exercise of the court's discretion, I have already considered (as part of considering the balance of convenience) the question of whether granting the injunction would undermine the objects and purpose of the Act.
In addition, I agree with the observations of Le Miere J in Enerflexin so far as I consider that, given the existence of the Act and the procedures under it, it is premature to grant an injunction. It may be that the adjudicator agrees with the case advanced by the plaintiff, in which case there is no need for an injunction. As previously observed, if the adjudicator is against the plaintiff, it can apply for judicial review of the arbitrator's decision or can commence any other legal action it considers appropriate.
For completeness, I note that in the defendant's written submissions the defendant raises the issue of whether the plaintiff has demonstrated a sufficient underlying cause of action.[35] During oral submissions, counsel for the defendant clarified that he was not submitting that the plaintiff could not apply for the declarations as sought in the writ of summons (or that the court did not have jurisdiction to hear and make them if appropriate).[36] Rather, the defendant's case is that the plaintiff has not identified any underlying legal or equitable rights which would be prejudiced or inconvenienced if the injunction was not granted. I have considered this issue in the context of considering the extent to which the plaintiff's interests are adequately protected when considering the balance of convenience.
[35] Defendant's submissions [35] - [45].
[36] The defendant's counsel also withdrew [37] of the defendant's submissions, which alleged that the writ was defective and must fail for not identifying a cause of action.

Conclusion

Accordingly, for the reasons set out above, I do not consider it an appropriate exercise of my discretion to grant the interlocutory injunction sought by the plaintiff. I will hear further from the parties in relation to appropriate orders, including as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AA
Associate to the Honourable Justice Seaward
14 MARCH 2024