Re Graham Anstee-Brook; Ex Parte Karara Mining Ltd
[2012] WASC 129
•20 APRIL 2012
RE GRAHAM ANSTEE-BROOK; EX PARTE KARARA MINING LTD [2012] WASC 129
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 129 | |
| Case No: | CIV:1364/2012 | 16 MARCH 2012 | |
| Coram: | LE MIERE J | 20/04/12 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Order nisi granted on two grounds Application for stay dismissed | ||
| B | |||
| PDF Version |
| Parties: | KARARA MINING LTD |
Catchwords: | Prerogative writ Certiorari Order nisi Stay of determination Turns on own facts |
Legislation: | Building and Construction Industry Payments Act 2004 (Qld) Construction Contracts Act 2004 (WA), s 4(2), s 4(3)(c), s 26, s 27, s 27(1), s 31(2), s 31(2)(b), s 46 Rules of the Supreme Court 1975 (WA), O 56 r 3(2) |
Case References: | Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1982) 2 NSWLR 685 Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389 JC Scott Constructions v Mermaid Waters Tavern Pty Ltd (No 2) [1983] 2 Qd R 255 R J Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390 Re Graham Anstee-Brook; Ex Parte Mount Gibson Mining Ltd [2011] WASC 172 Re Her Honour Judge Schoombee; Ex Parte Attorney General for Western Australia [2011] WASC 23 Stampalia v The Stewards of the Western Australian Trotting Association [1999] WASC 7 Woodley v Minister for Indigenous Affairs [2009] WASC 251 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
KARARA MINING LTD
Applicant
Catchwords:
Prerogative writ - Certiorari - Order nisi - Stay of determination - Turns on own facts
Legislation:
Building and Construction Industry Payments Act 2004 (Qld)
Construction Contracts Act 2004 (WA), s 4(2), s 4(3)(c), s 26, s 27, s 27(1), s 31(2), s 31(2)(b), s 46
Rules of the Supreme Court 1975 (WA), O 56 r 3(2)
Result:
Order nisi granted on two grounds
(Page 2)
Application for stay dismissed
Category: B
Representation:
Counsel:
Applicant : Ms P E Cahill SC & Mr A D Bereyne
Solicitors:
Applicant : Jackson McDonald
Case(s) referred to in judgment(s):
Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1982) 2 NSWLR 685
Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389
JC Scott Constructions v Mermaid Waters Tavern Pty Ltd (No 2) [1983] 2 Qd R 255
R J Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390
Re Graham Anstee-Brook; Ex Parte Mount Gibson Mining Ltd [2011] WASC 172
Re Her Honour Judge Schoombee; Ex Parte Attorney General for Western Australia [2011] WASC 23
Stampalia v The Stewards of the Western Australian Trotting Association [1999] WASC 7
Woodley v Minister for Indigenous Affairs [2009] WASC 251
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1 LE MIERE J: The applicant, Karara Mining Limited, applied for an order nisi for a writ of certiorari to quash a determination by Mr Graham Anstee-Brook (the Adjudicator) under the Construction Contracts Act 2004 (WA) (the Act) in respect of an application for adjudication by DM Drainage and Constructions Pty Ltd (DMC) made on 28 February 2012 determining that Karara must pay DMC $4,981,285.50 (the Determination). Karara also applied for a stay of the Determination, the proceedings the subject of the application for adjudication and the Determination or the enforcement of, or any reliance upon, the Determination. On 16 March 2012 I granted an order nisi on two grounds and dismissed the application for a stay. These are my reasons for making those orders.
The Determination
2 Karara is developing port, rail and mine facilities required for the mining, transport and export of iron ore deposits at the Karara mine site, approximately 328 km north north-east of Perth. The project is a greenfields project with the bulk of the works being performed at a remote location. Water is required for the mine site operation and potable use. The water will be supplied from Twin Hills Water Supply System which consists of Twin Hills Borefield, two transfer pumping stations and a pipeline which is approximately 152 km long and connects Twin Hills Borefield to Karara mine site.
3 By contract dated 6 July 2010 (the Pipeline Contract) DMC agreed to construct the pipeline and associated works. The Determination relates to a claim for $4,975,650.70 by DMC. Karara refused to pay the claim.
4 DMC applied for an adjudicator to be appointed to determine the dispute under the Act. Mr Graham Anstee-Brook was appointed the adjudicator. Section 26 of the Act requires the applicant for an adjudication to prepare a written application for adjudication and serve it on the other party to the contract and on the adjudicator within the time prescribed. The application must be presented and contain the information set out in the Act and Regulations. The required information includes all the information, documentation and submissions on which the party making it relies in the adjudication. DMC served its application for adjudication (Application) on Karara on 24 January 2012. Section 27(1) of the Act provides that a respondent must prepare and serve a written response to the application and serve it on the applicant and the adjudicator within 14 days of service of the Application. The 14 days expired on 7 February 2012. On 10 February 2012 Karara served its
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- response to the application (Response). On 28 February 2012 the Adjudicator delivered the Determination. In his reasons for decision the Adjudicator decided that Karara's response had not been served within 14 days of service of the Application on it as required by s 27 of the Act and that he was obliged to ignore the Response and to make the determination only on the Application.
Grounds for order nisi
5 Karara seeks certiorari on three grounds. The first is that the Adjudicator committed a jurisdictional error in that he misapprehended the nature or limits of his functions or power and/or misconstrued the Act and thereby misconceived the nature of the function he was performing or the extent of his powers by concluding that the Act required him to ignore the Response and to make a decision whether or not to dismiss the Application and/or to determine the Application on the basis of the Application only. The second ground is that Karara was denied procedural fairness in that the Adjudicator did not consider the Response for the purposes of making his decision whether or not to dismiss the Application and/or his determination. The third ground is that the Adjudicator committed a jurisdictional error in that the works to be performed under the Pipeline Contract were for the construction of a plant for the purposes of processing a mineral bearing substance within the meaning of s 4(3)(c) of the Act and therefore the Pipeline Contract was not a 'construction' contract for the purposes of the Act and the Act does not apply to that contract.
6 The threshold for the grant of an order nisi has been discussed in many decisions of this court. Many of the authorities are referred to by Corboy J in Re Her Honour Judge Schoombee; Ex Parte Attorney General for Western Australia [2011] WASC 23 [11] - [18]. It is sufficient for the purposes of this application to say that the applicant must satisfy the court that there is an arguable case and if that case had no reasonable prospect of success it would be inappropriate to grant relief even though there was an arguable case: Woodley v Minister for Indigenous Affairs [2009] WASC 251 [37] Martin CJ.
Grounds 1 and 2
7 The applicant has an arguable case on ground 1. I am not satisfied that that case has no reasonable prospect of success. Ground 1 gives rise to two questions. First, did the Adjudicator err in deciding that he was obliged to ignore the Response and in making his decision on the basis of
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- the Application alone. The second question is whether such an error, if established, is amenable to judicial review.
8 It is arguable the Adjudicator erred in deciding he was obliged to ignore the Response. Section 27(1) of the Act says the party on whom an application is served (the respondent) must prepare a written response to the application and serve it on the applicant and the adjudicator within 14 days after the date on which the respondent was served with the application. The section does not expressly state the consequences of a respondent not serving its response within the prescribed time. The Act provides a rapid adjudication process. The object of s 27(1) is to ensure the adjudication proceeds rapidly. Section 31(2) provides, in effect, that an adjudicator must either dismiss the application or make a determination within the period expiring 14 days after the date of the service of the response unless that time is extended under s 32(3)(a). Karara concedes that an adjudicator may be entitled to ignore a response served after the expiry of the 14 day period, if it is served at a time when the adjudicator has insufficient time to consider the response and make his determination within the prescribed time. However, the requirement for rapid resolution is not frustrated by the adjudicator considering a response served upon him after the expiry of the 14 day period but before he has made his determination, and at a time when he still has sufficient time to consider the response and make his determination within the prescribed time. Section 32(2) provides that in order to obtain sufficient information to make a determination an adjudicator may request a party to make a, or a further, written submission, or to provide information or documents. In all the circumstances it is arguable that whilst an adjudicator may be entitled to do so, he is not obliged to ignore a response served upon him after the expiry of the 14 day period specified in s 27(1) of the Act.
9 It is also arguable that that error, if it is an error, is a jurisdictional error and hence one subject to judicial review and is not precluded by s 46 of the Act. Section 46 does not confer a right of appeal to the State Administrative Tribunal against a determination made under s 31(2)(b). I am not satisfied at this stage of the proceedings, and after limited argument, that the applicant's case has no reasonable prospect of success. It is not appropriate to undertake any more detailed evaluation of the applicant's case at this stage of the proceedings.
10 DMC submitted that even if the applicant made out an arguable case the court should exercise its discretion to refuse an order nisi. Prerogative relief is discretionary. One discretionary bar is the availability of other relief: Dranichnikov v Minister for Immigration and Multicultural
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- Affairs (2003) 197 ALR 389 [33] (Gummow & Callinan JJ). In Re Graham Anstee-Brook; Ex Parte Mount Gibson Mining Ltd [2011] WASC 172 (Mount Gibson Mining) Kenneth Martin J said that he would have refused certiorari on discretionary grounds even if the grounds had been established. His Honour explained:
I would, in any event, on the basis of an exercise of discretion, refuse an order nisi for certiorari, bearing in mind the future opportunities Mount Gibson clearly holds under the more traditional paths of arbitration or litigation to pursue any issue over this disputed payment of adjudicated funds to Downer. The importance of the Construction Contracts Act as a swift circuit-breaking mechanism in a construction contract dispute is the fundamental governing criteria in the analysis. The need to swiftly break a construction contract payment deadlock, to enable a contractor to receive payment on an interim basis to relieve that contractor from possibly suffering terminal economic harm in a situation of limited bargaining power, would be undermined if the scope for challenges by judicial review allowed a nit-picking dissection of mere aspects of an adjudicator's reasons. Arguments over minor alleged errors, on analysis, present as second order technical arguments, well capable of being ventilated elsewhere and later, pursuant to a preserved right to arbitrate or to litigate.
A discretion not to allow prerogative relief looms large in such circumstances. I would decline relief here, on that basis alone [107] - [108].
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- aside if the court subsequently determines it was made as a result of a jurisdictional error and is a nullity. The money will flow unless and until the court determines that the decision of the adjudicator was a nullity.
12 As the matter will now proceed to a hearing of Karara's case on ground 1 it is not necessary or appropriate that I say anything further about that ground.
13 DMC submits that ground 2 discloses no jurisdictional error. The parties agreed that grounds 1 and 2 are closely associated. As I have determined that ground 1 should proceed I will also grant the order nisi in relation to ground 2.
Ground 3
14 Ground 3 does not disclose an arguable case, or if it does it has no reasonable prospect of success. The order nisi will not be granted in relation to ground 3.
15 The Act applies to a payment dispute arising under a construction contract. A construction contract includes a contract under which a person has an obligation to carry out construction work (s 4). Construction work is defined in s 4(2) of the Act. The parties agree that under the Pipeline Contract, DMC has an obligation to carry out construction work as defined in s 4(2) of the Act. However, s 4(3) provides construction work does not include 'constructing any plant for the purposes of extracting or processing oil, natural gas or any derivative of natural gas, or any mineral bearing or other substance'. Karara says the work it was obliged to carry out under the Pipeline Contract, that is the construction of the pipeline and associated works, is work constructing a plant for the purposes of extracting or processing a mineral bearing substance.
16 Whether the pipeline is part of any plant for the purposes of extracting or processing any mineral bearing substance, in this case iron ore, depends upon whether the pipeline, and the function performed by it, is so related to the extraction or processing of iron ore that it warrants being held to be plant. The evidence does not establish that the pipeline performs a function so related to the extraction or processing operations so as to make it part of the plant. The function performed by the pipeline is to transport water from the borefield to the mine site and camp. Clause 1.1 of the Pipeline Contract provides that raw water is required for mine site operation and potable use. Paragraph 1.1.4 provides that infrastructure at the mine site to receive the raw water includes a raw
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- water tank at the campsite, a raw water tank at the mine site and a raw water dam at the mine site which receives overflow from the raw water tank. Thus, the function of the pipeline is to transport the water from the bore field to the campsite and mine site. The water, or most of it, is then subsequently used for the purposes of extracting or processing iron ore. However, no extraction, concentration, filtering or other processes that form part of the extraction or processing of the iron ore takes place in the pipeline. The evidence does not establish the function performed by the pipeline, or the relationship between the pipeline and any part of the plant that directly extracts or processes iron ore, is such that the pipeline might be properly regarded as part of any plant for the purposes of extracting or processing any mineral bearing substance. Ground 3 of Karara's case has no reasonable prospect of success.
Stay of Determination
17 The court has jurisdiction to grant a stay under O 56 r 3(2) of the Rules of the Supreme Court 1975 (WA) and its inherent jurisdiction. In general, a litigant is entitled to the fruits of the litigation and special or exceptional circumstances are needed to justify a stay of proceedings or execution. In Stampalia v The Stewards of the Western Australian Trotting Association [1999] WASC 7 Owen J considered an application for a stay of a penalty imposed by the stewards of the Trotting Association pending the outcome of an application for a writ of certiorari to quash their decision. Order 56 r 5(2) at the time in effect conferred on the court power to order that the order nisi operate as a stay of the proceedings. That rule was repealed in 2007. Karara relies upon O 56 r 3(2) which provides that the court may order that an order nisi operate as a stay of the proceedings. In Stampalia Owen J observed that O 56 r 5(2) was silent as to the test to be applied. His Honour considered the test applied in a number of relevant authorities and concluded:
Adapting the concepts emerging from those cases I would shy away from phrases such as 'exceptional circumstances'. I think the test can be formulated in this way: has the applicant demonstrated that there are special circumstances sufficient to satisfy the court that it is just and reasonable to order a stay so as to preserve the subject-matter and integrity of the litigation? This formulation is sufficiently broad to encompass factors that would normally be taken into account in considering the balance of convenience [11].
18 What amounts to special circumstances of course varies. In the case of a money judgment an inability to refund the judgment sum if an appeal were successful has been held to be sufficient for a stay: JC Scott
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- Constructions v Mermaid Waters Tavern Pty Ltd (No 2) [1983] 2 Qd R 255, 259; Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1982) 2 NSWLR 685, 694 - 695. However, having regard to the scheme and purpose of the Act that will not be a sufficient reason to order a stay of a determination under the Act. In R J Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390, Neller served upon Ainsworth a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) (the BCIP Act). The dispute proceeded to an adjudication under the BCIP Act and it was adjudicated that Ainsworth was obliged to pay Neller the sum of $50,771.74. Ainsworth commenced action in the District Court seeking an order that the adjudication be set aside as invalid and also sought damages for breach of the building contract. Ainsworth applied to the court to have the enforcement warrant issued by Neller set aside. The court dismissed that application. Ainsworth sought leave to appeal to the Queensland Court of Appeal on the grounds, amongst other things, that there should have been a stay of the execution warrant pending the determination of its action for damages because of the risk that its action may be rendered nugatory by the possible inability of Neller to meet a judgment in its favour. Keane JA, with whom the other members of the court agreed said:
It is evidently the intention of the BCIP Act, and, in particular, s 31 and s 100 to which reference has been made, that the process of adjudication established under that Act should provide a speedy and effective means of ensuring cash flow to builders from the parties with whom they contract, where those parties operate in a commercial, as opposed to a domestic, context. This intention reflects an appreciation on the part of the legislature that an assured cash flow is essential to the commercial survival of builders, and that if a payment the subject of an adjudication is withheld pending the final resolution of the builder's entitlement to the payment, the builder may be ruined.
The BCIP Act proceeds on the assumption that the interruption of a builder's cash flow may cause the financial failure of the builder before the rights and wrongs of claim and counterclaim between builder and owner can be finally determined by the courts. On that assumption, the BCIP Act seeks to preserve the cash flow to a builder notwithstanding the risk that the builder might ultimately be required to refund the cash in circumstances where the builder's financial failure, and inability to repay, could be expected to eventuate. Accordingly, the risk that a builder might not be able to refund moneys ultimately found to be due to a non-residential owner after a successful action by the owner must, I think, be regarded as a risk which, as a matter of policy in the commercial context in which the BCIP Act applies, the legislature has, prima facie at least, assigned to the owner.
- The mere existence of the very kind of risk on which the provisions of the BCIP Act in favour of the builder are predicated would not ordinarily be sufficient of itself to justify a stay of an execution warrant based on the registration of a certificate of adjudication. There may, of course, be other circumstances, which, together with this risk, justify the staying of a warrant of execution based on the registration of an adjudication certificate. For example, the builder may have engaged in tactics calculated to delay the ultimate determination of the rights and liabilities of the parties so as unfairly to increase the owner's exposure to the risk of the builder's insolvency. Or the builder may have restructured its financial affairs after the making of the building contract so as to increase the risk to the owner of the possible inability of the builder to meet its liabilities to the owner when they are ultimately declared by the courts. In this case there are no such circumstance [39] - [41].
19 The considerations referred to by Keane JA apply to this case. Having regard to the scheme and purpose of the Act, the mere existence of the risk that DMC may not be able to refund any amount paid to it in satisfaction of the Determination is not sufficient of itself to justify a stay of the Determination.
20 Counsel for Karara, Ms Cahill SC, submitted that there were four matters that constituted special circumstances to justify a stay of the Determination. The first is the risk that the appeal will be rendered nugatory because DMC will be unable to refund money paid to it by Karara. Karara says that that risk arises from DMC being a trustee. The second matter is the economic impact upon Karara arising from having to pay the amount of the Determination as a result of which Karara would have a further $5 million shortfall in its construction funding. The third matter is the balance of convenience. On the fourth matter Karara says it has a good defence on the merits to the contractual claim.
21 As I have said, the risk that DMC may not be able to refund any amount paid to it in satisfaction of the Determination is not sufficient to justify a stay of the Determination.
22 In any event, the evidence does not satisfy me that the likelihood that DMC would not be able to refund money paid to it by Karara pursuant to the Determination justifies the grant of a stay. Counsel submitted there is a risk that any order quashing the Determination would be rendered nugatory because DMC is a trustee. In essence, it was submitted the beneficiaries, or unit holders, may require DMC to distribute to them the funds received from Karara pursuant to the Determination. If and when the Determination is quashed there may be no trust assets from which DMC can repay Karara. Furthermore, counsel submitted that in the
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- absence of evidence of the terms of the trust DMC may not be entitled to be indemnified by the beneficiaries or unit holders. Counsel submitted that DMC has chosen not to lead any evidence concerning the terms of the trust deed after that issue had been raised. I do not find that that is a special circumstance justifying the grant of a stay.
23 Counsel for Karara, Ms Cahill, submitted a stay should be granted in this case because of the economic impact of Karara having to pay the Determination. Karara does not say that it cannot pay the amount of the Determination. Rather, it says it will have to engage in additional fundraising and that would place on it a financial burden that justifies the grant of a stay. Having regard to the scheme and policy of the Act, I am not satisfied that that is a sufficient reason to grant a stay.
24 The third matter is the balance of convenience. Karara says the economic impact of having to raise an additional $5 million funding is a serious detriment to Karara and on the other hand DMC has not demonstrated any need for the payment at this time. Karara says the evidence is that DMC does not require the amounts the subject of the determination to meet any present or outstanding liabilities. The effect of DMC's evidence, counsel submits is:
It would be nice if we had the money, we could apply it to things we would like to apply it to if we had it.
25 But, counsel submits, the evidence does not show that DMC requires the funds for the continued operation and viability of the company.
26 Counsel for Karara further submitted that the strength of Karara's defence on the merits to the contractual claim which gave rise to the Determination is a special circumstance. A determination of the strength of Karara's defence to the contractual claim involves an extensive consideration of the terms of the Pipeline Contract and the evidence in relation to the claims. It is not appropriate to undertake such a task on this application. Furthermore, having regard to the scheme and policy of the Act it will be a rare case where the strength of the applicants defence on the merits to the contractual claim will justify a stay of the Determination.
27 Finally, I do not consider that the four matters relied upon by Karara collectively amount to special circumstances justifying a stay.
12