Sandvik Mining and Construction Australia Pty Ltd v Fisher
[2019] WASC 352
•16 SEPTEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: SANDVIK MINING AND CONSTRUCTION AUSTRALIA PTY LTD -v- FISHER [2019] WASC 352
CORAM: ARCHER J
HEARD: 16 SEPTEMBER 2019
DELIVERED : 16 SEPTEMBER 2019
FILE NO/S: CIV 1842 of 2019
BETWEEN: SANDVIK MINING AND CONSTRUCTION AUSTRALIA PTY LTD
Applicant
AND
JOHN FISHER
Respondent
CIVMEC CONSTRUCTION & ENGINEERING PTY LTD
Other Party
Catchwords:
Injunction application - Construction Contracts Act 2004 (WA) - Alleged jurisdictional error - Policy of the Act
Legislation:
Construction Contracts Act 2004 (WA)
Result:
TBA
Category: B
Representation:
Counsel:
| Applicant | : | M J Feutrill SC |
| Respondent | : | No appearance |
| Other Party | : | M N Solomon SC & L S Panotidis |
Solicitors:
| Applicant | : | Squire Patton Boggs |
| Respondent | : | No appearance |
| Other Party | : | Tottle Partners |
Case(s) referred to in decision(s):
Bedshed Franchising Pty Ltd v Battersby [2015] WASC 224
BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394; [2015] 1 Qd R 228
BMF16 v Minister for Immigration and Border Protection [2016] FCA 1530
BRB Modular Pty Ltd v AWX Constructions Pty Ltd [2015] QSC 222
Carillion Construction v Devonport Royal Dockyard Ltd [2006] BLR 15
Easy Stay Mining Accommodation Pty Ltd v Faigen [2017] WASC 266
Hossain v Minister for Immigration and Border Protection [2018] HCA 34
Jadwan Pty Ltd v Secretary, Department of Health and Aged Care (2003) 145 FCR 1
John Holland Pty Ltd v Chidambara [2017] WASC 179
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Minister for Immigration and Border Protection v CLV16 [2018] FCAFC 80
Minister for Immigration and Border Protection v SZMTA [2019] HCA 3
Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597
Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Re Anstee‑Brook; Ex parte Karara Mining Ltd [2012] WASC 129
RJ Neller Building Pty Ltd v Ainsworth [2008] QCA 397; [2009] 1 Qd R 390
State of New South Wales v Kable [2013] HCA 26; (2013) 252 CLR 118
Total Eden Pty Ltd v ECA Systems Pty Ltd [2017] WASC 58
Tulloh v Chief Executive Officer of the Department of Corrective Services [2018] WASC 105
ARCHER J:
(This judgment was delivered extemporaneously on 16 September 2019 and has been edited from the transcript and full citations added.)
Introduction
The applicant Sandvik seeks an interlocutory injunction for orders, among other things, that the other party, Civmec, be restrained from taking any steps to enforce an adjudication decision made by the respondent under s 31(2)(b) the Construction Contracts Act 2004 (WA), which I will refer to as the Act.
Sandvik submits that the respondent did not have the power to make the adjudication decision because of an earlier adjudication decision. I will refer to the earlier decision as the First Determination, and the challenged decision as the Second Determination.
Sandvik submits that, by operation of s 25 and s 41(1)(b) of the Act, the adjudicator did not have the power to make the Second Determination.
Section 25 of the Act provides:
25.Who can apply for adjudication
If a payment dispute arises under a construction contract, any party to the contract may apply to have the dispute adjudicated under this Part unless -
(a)an application for adjudication has already been made by a party, whether or not a determination has been made, but subject to section 37(2); or
(b)the dispute is the subject of an order, judgment or other finding by an arbitrator or other person or a court or other body dealing with a matter arising under a construction contract.
Section 41(1)(b) provides:
41.Determinations are final
(1)If on the adjudication of a payment dispute the appointed adjudicator makes a determination -
…
(b)a party to the dispute may not apply subsequently for an adjudication of the dispute.
Sandvik submits that each determination involved the same payment dispute. Therefore, by operation of s 25 and s 41(1)(b), Civmec was not entitled to make the second application, because an application in relation to that dispute had already been made and the dispute was already the subject of a determination. Accordingly, says Sandvik, the adjudicator did not have the power to make the Second Determination.
Sandvik further or alternatively sought that enforcement of the respondent's decision be suspended pursuant to s 15(1) of the Civil Judgments Enforcement Act 2004 (WA). However, the parties agreed that materially the same principles would apply, and Sandvik agreed it could not lose on one but win on the other. It is therefore unnecessary to consider the alternative basis at all.
Sandvik has also brought judicial review proceedings challenging the adjudication decision. The hearing of this has been listed for 28 October 2019.
The parties helpfully provided comprehensive statements of agreed facts in relation to the injunction application and the judicial review proceedings, which I have annexed to these reasons. It is sufficient to include here the following (footnotes omitted):
2On or about 14 March 2016, the Applicant (Sandvik) entered into a contract with [RTA Weipa Pty Ltd, the developer of a bauxite mine] under which Sandvik was engaged to design, fabricate, assemble, deliver, install, and commission three rail‑mounted machines …
3On or about 24 October 2016, Sandvik entered into a subcontract with the Other Party (Civmec) for the fabrication, off‑site assembly and off‑site commissioning of the Machines …
…
6On 25 October 2018, Civmec issued progress claim number 26 under the Subcontract, claiming the amount of $17,045,654.36 (Progress Claim 26). …
7On 8 November 2018, Sandvik issued a payment notice under the Subcontract in response to Progress Claim 26, certifying a negative amount of $881,380.15 (Payment Notice 26).
8Payment Notice 26 identified 15 items of deduction resulting in the assessment in Payment Notice 26 of a total amount less than as claimed in Progress Claim 26 …
9On 15 November 2018, Civmec issued a notice of dispute under the Subcontract in relation to Sandvik's assessment of Progress Claim 26 … By the Notice of Dispute, Civmec disputed Sandvik's assessment of the 15 items of deduction in Payment Notice 26.
…
10On 10 December 2018, Sandvik received an application for adjudication from Civmec under the Construction Contracts Act 2004 (WA) (Act) in relation to Progress Certificate 26 (First Application).
11In the First Application Civmec claimed the amount of $4,938,369.60 (excluding GST), and challenged [five] items of deduction from Payment Notice 26 [one of which was challenged only in part]:
…
12In the First Application Civmec said that:
(a)'this Application only concerns a limited payment dispute relating to particular (not all) items in [Progress Claim 26]. It does not concern:
(a)the portion of Item 15 LD's which relate to the shiploader;
(b)the Items other than the five Items covered by this Application; or
(c)the entirety of the payment dispute arising out of [Payment Notice 26].';
(b)'The Adjudicator's task is therefore to determine the flow of money as part of calculating whether Sandvik is liable to make a payment to Civmec. That will involve:
(a)making the necessary adjustments to reflect the prior cumulative claims which are recorded up to the issue of [Payment Notice 26];
(b)accepting the values set out in [Payment Notice 26] about which, to ensure this Application is not too complex and for the purposes of this adjudication only, Civmec does not raise dispute in this adjudication (including the majority of the "Disputed Items" (set‑offs) applied by Sandvik in [Payment Notice 26]); and
(c)making findings about the five "Disputed Items" the subject of this Application,
to determine what the flow of money should be on the balance of probabilities.
For the above reason, Civmec does not ask the Adjudicator to find that an amount is payable to Civmec irrespective of the deductions and set‑offs stated in [Payment Notice 26], or to consider the five "Disputed Items" the subject of this Application in isolation.
Civmec has chosen to adjudicate a limited aspect of the payment dispute arising out of PPC026 so that this Application is not too complex for the Adjudicator to fairly determine in the limited (albeit extended, due to the Christmas period) time available.'; and
(c)the 'Adjudicator need not determine the correctness of any other item stated in PPC026 for the purposes of making his or her determination; they can all be accepted for that purpose' (Unchallenged Items).
…
14On 21 January 2019, the appointed adjudicator for the First Application, Mr Hugh Davis, made a determination under section 31(2)(b) of the Act in which Mr Davis determined that Sandvik was liable to pay Civmec the amount of $4,938,369.60 (excluding GST) (First Determination).
15On 31 January 2019, Sandvik paid Civmec the amount of the First Adjudication Determination.
…
16On 29 March 2019, Sandvik received an application for adjudication from Civmec under the Act in relation to Payment Notice 26 (Second Application).
17[In] [t]he Second Application Civmec claimed the amount of $3,864,459.56 (excluding GST), and challenged [seven] items of deduction from Progress Certificate 26:
…
18Each of the [seven items] above was one of the Unchallenged Items in the First Application.
…
20On 6 May 2019, the Respondent issued a document which purported to be a determination under section 31(2)(b) [of] the Act, under which the Respondent determined that Sandvik was liable to pay Civmec the sum of $1,664,650.29 (excluding GST) in relation to the Second Adjudication Application (Second Determination).
The test
There is no dispute about the test to be applied, although there is a difference between the parties in relation to some aspects of the manner in which it should be applied in this case.
Sandvik helpfully summarised the relevant principles in its submissions.[1] I would only simplify and localise the references by citing Mineralogy Pty Ltd v Sino Iron Pty Ltd[2] for each of the propositions and by adding an additional reference to Bedshed Franchising Pty Ltd v Battersby.[3] The Submissions were (footnotes omitted):
The two main inquiries that arise are whether the applicant has made out a prima facie case and whether the balance of convenience favours the grant of the injunction.
(a)The first inquiry as to a prima facie case does not mean that the applicant must show that it is more probable than not that at trial the applicant will succeed. It is sufficient to show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong a probability needs to be depends upon the nature of the rights the applicant asserts and the practical consequences likely to flow from the orders the applicant seeks.
(b)The second inquiry is whether the inconvenience or injury which the applicant would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the respondent will be likely to suffer if an injunction were granted.
Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of convenience favours a grant of such relief are related, not independent, questions.
Further, when considering the balance of convenience, the Court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been "wrong", in the sense of granting an injunction to a party who fails to establish its right at trial, or in failing to grant an injunction to a party who succeeds at trial.
[1] Applicant's Submissions in Support of an Interlocutory Injunction and Other Orders dated 18 June 2019 [17] ‑ [19].
[2] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87].
[3] Bedshed Franchising Pty Ltd v Battersby [2015] WASC 224 [70], in relation to [17] of Sandvik's submissions.
I would also incorporate what was said in Mineralogy at [102] (citations omitted):
It is clear that on an application for an interlocutory injunction the court does not 'undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case': … But it is necessary for an assessment to be made of the strength of the plaintiff's probability of ultimate success. It is plain … that the plaintiff's probability of success at trial is a critical factor in the determination of such an application. In that respect … it is not enough simply to conclude that the plaintiff has a 'prima facie' case. What is required is an assessment or evaluation of the case for the purpose of deciding whether the plaintiff has made out a prima facie case of sufficient strength to justify the grant of an interlocutory injunction and to enable the strength of the case to be taken into account in an assessment of the balance of convenience and justice.
Has Sandvik established a prima facie case?
The merits of Sandvik's case turn upon the proper characterisation of Civmec's first application for adjudication and upon the proper construction of the Act. For the purposes of the application for an injunction, Sandvik relies only on the former – what, as a matter of fact, Civmec applied for and what, as a matter of fact, the first adjudicator determined.
As I have said, Sandvik submits that Civmec was not entitled to make the second application, because an application in relation to that dispute had already been made and the dispute was already the subject of a determination.
Civmec submits that the second application did not seek the adjudication of a payment dispute that had already been determined by the first determination, because the 'payment dispute' in the first application was limited to the specific items Civmec challenged, which did not include the deductions the subject of the second application. The items in issue in both applications were all contained in the single progress claim. However, Civmec says that, under the Act, a 'payment claim' may be for a single item in a progress claim, permitting an application to be made in relation to a dispute about a single item. It submits that it sought in its first application an adjudication only of specific items within the progress claim. It submits it was open to it to do this on the basis that all of the deductions it did not seek to challenge in the first application were assumed to be proper deductions (assumed deductions). It says it was then entitled to subsequently seek an adjudication of the correctness of deductions that had previously been assumed to be correct, because the 'payment dispute' resolved in the first application was the dispute about the individual items it challenged, not the assumed deductions.
Sandvik submits that Civmec's first application was, as a matter of fact, an application in relation to all of the matters in the progress claim. The facts upon which Sandvik relies are set out in its reply in the judicial review proceedings (footnotes omitted):[4]
On 10 December 2018, Civmec applied to have the aggregated payment dispute adjudicated in the first application. From the terms of the first application it is quite clear that Civmec considered progress claim 26 to be the 'payment claim' that had given rise to the 'payment dispute'.
However, in the first application Civmec did not seek payment of 'an amount' of $17,045,654.36, in aggregate, but of 'an amount' of $4,938,369.60, in aggregate. That is, it elected to claim less than the amount in dispute.
Mr Davis, in the first determination, made a determination that Civmec was entitled to payment of 'an amount' of $4,938,369.60. That was a determination in respect of the aggregated payment dispute that arose from progress claim 26 and payment notice 26. As submitted above, the substance of that determination was that Civmec was entitled to be paid $42,331,774.96 (in aggregate or as a cumulative amount) less the previously certified amount (in aggregate) of $37,393,405.35.
Put another way, Civmec did not apply for the adjudication of a discrete payment dispute or group of payment disputes. It applied for the adjudication of the aggregate payment dispute and sought payment of an aggregated amount in respect of that aggregated payment dispute. That Civmec chose not to challenge parts of payment notice 26 does not change the character of the payment dispute that was the subject of its application.
In the first application, Civmec clearly stated that it only disputed items 2, 8, 12 and 13 and part of item 15 and that the adjudicator need not determine the correctness of any other valuations or set offs in payment notice 26 for the purpose of making the determination. Civmec said "they can all be accepted for that purpose". Plainly, that was an admission as to the correctness of all unchallenged items in payment notice 26, except for those specifically challenged in the first application, for the purposes of an application for adjudication under the Act. Thus, the 'payment dispute' covered all disputed items in progress claim 26 and payment notice 26 whether challenged or unchallenged in the first application.
[4] Applicant's Outline of Submissions in Reply on Application for Judicial Review dated 9 September 2019 (Sandvik's Reply in Judicial Review Proceedings) [32] ‑ [36].
Sandvik says that the First Determination did, as a matter of fact, determine the assumed matters.
Civmec says that it made it plain it was not seeking a determination on the merits of all of the items in dispute and clearly stipulated those matters on which it did seek a merits determination. It says, in effect, that its acceptance of the other disputed deductions for the purposes of the application was simply a recognition that, unless or until the dispute as to those matters had been adjudicated, Sandvik should not have to pay those amounts to satisfy the Act's purpose of keeping the money flowing. In other words, the assumed deductions were to be assumed simply for mathematical purposes.
Having regard to the facts which have been drawn to my attention, I doubt that, as a matter of fact, Civmec sought to have a payment dispute adjudicated that included the assumed matters. I accept that its application referred to 'the payment dispute in respect of the relevant progress certificate'.[5] Civmec also referred to its single payment claim as 'the payment claim'. It sought, and was found to be entitled to, payment of an aggregated amount less than the total amount in dispute. However, Civmec said in its application that it only applied for adjudication of the payment dispute regarding the five disputed items.[6] It explained why it asked the adjudicator to assume the correctness of each of the other deductions.[7]
[5] Affidavit of Aaron Di Giacomo sworn 17 June 2019 (Di Giacomo Affidavit) page 585.
[6] Di Giacomo Affidavit page 585.
[7] See in particular Di Giacomo Affidavit page 605 [2.59] ‑ [2.60] and page 609 [3].
In Sandvik's reply in the judicial review proceedings,[8] it referred to the various principles that are based upon the finality of final orders of the court, such as res judicata, issue estoppel and Anshun estoppel. Civmec submits that those principles cannot be assumed to apply to determinations under the Act. This will no doubt be the subject of debate in the substantive judicial review proceedings. For present purposes, it is enough to say I am not willing to assume that those principles apply in this context.
Conclusion
[8] Sandvik's Reply in Judicial Review Proceedings [23] ‑ [25].
In my view, Sandvik has established a prima facie case that the First Determination did, as a matter of fact, determine the assumed matters.
On that basis, I find that Sandvik has established a prima facie case that the Second Determination involved jurisdictional error.
However, I do not find that Sandvik's case is a strong one, on the facts. That is because Civmec's application expressly stated that it only concerned a dispute regarding the five disputed items, and explained why.
Balance of convenience
Sandvik submits the balance of convenience lies in its favour for a number of reasons.
Sandvik notes that it has provided the usual undertaking and will pay into court the full amount of the purported determination, plus interest and a further amount on account of future interest.
It notes that the judicial review proceedings are to be heard on 28 October 2019. However, judgment will likely be delivered some time later.
Sandvik notes that the only apparent prejudice to Civmec is delayed payment, and that this prejudice is mitigated by payment into court of an amount including anticipated interest.
So far, nothing out of the ordinary.
Sandvik's other submissions are more contentious.
First, it submits that the application for judicial review will be rendered nugatory and the court's process in these proceedings frustrated if the purported determination were enforced.
Second, and independently of the first, it submits that there is a real risk that if the purported determination were enforced, Civmec would not be able to repay Sandvik the adjudication sum, plus interest and costs.
Third, it submits that the policy of the Act is a neutral factor because there is a prima facie case that the determination is 'invalid'.
Fourth, Sandvik submits that the enforcement of an 'invalid' determination would be unjust, an abuse of process and oppressive.
Although there is some overlap in the issues, I will deal with the last point first.
Unjust, an abuse of process and oppressive
Sandvik submits that enforcing an 'invalid' determination would abuse the enforcement process of the court and interfere with and frustrate proceedings for judicial review of such an 'invalid' determination. This is based upon Sandvik's much repeated submission that a determination involving jurisdictional error has no legal effect at all, citing Minister for Immigration and Multicultural Affairs v Bhardwaj.[9] However, this is not inevitably so.
[9] Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597 [51]; Sandvik's submissions [14].
In Hossain,[10] Kiefel CJ and Gageler and Keane JJ said (emphasis added):
Jurisdictional error, in the most generic sense in which it has come to be used to describe an error in a statutory decision-making process, correspondingly refers to a failure to comply with one or more statutory preconditions or conditions to an extent which results in a decision which has been made in fact lacking characteristics necessary for it to be given force and effect by the statute pursuant to which the decision‑maker purported to make it. To describe a decision as 'involving jurisdictional error' is to describe that decision as having been made outside jurisdiction. [Eg Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 606 [17]]. A decision made outside jurisdiction is not necessarily to be regarded as a 'nullity', in that it remains a decision in fact which may yet have some status in law [Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 613 [46]; Jadwan Pty Ltd v Secretary, Department of Health and Aged Care(2003) 145 FCR 1 at 16 [42]]. But a decision made outside jurisdiction is a decision in fact which is properly to be regarded for the purposes of the law pursuant to which it was purported to be made as 'no decision at all'. [Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 615 [51]]. To that extent, in traditional parlance, the decision is 'invalid' or 'void' [Baxter v New South Wales Clickers' Association (1909) 10 CLR 114 at 157; [1909] HCA 90; Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 92 ALJR 248 at 264 [63]; 351 ALR 225 at 241; [2018] HCA 4].
[10] Hossain v Minister for Immigration and Border Protection [2018] HCA 34 [24].
It is noteworthy that, in stating that a 'decision made outside jurisdiction is not necessarily to be regarded as a "nullity", in that it remains a decision in fact which may yet have some status in law', the plurality cited Bhardwaj at [46] and Jadwan Pty Ltd v Secretary, Department of Health and Aged Careat [42].[11]
[11] Jadwan Pty Ltd v Secretary, Department of Health and Aged Care (2003) 145 FCR 1 [16].
In Bhardwaj at [46], Gaudron and Gummow JJ said:
In our view, it is neither necessary nor helpful to describe erroneous administrative decisions as 'void', 'voidable', 'invalid', 'vitiated' or, even, as 'nullities'. To categorise decisions in that way tends to ignore the fact that the real issue is whether the rights and liabilities of the individual to whom the decision relates are as specified in that decision. And, perhaps more importantly, it overlooks the fact that an administrative decision has only such force and effect as is given to it by the law pursuant to which it was made … [46].
In Jadwan at [42], Gray and Downes JJ said:
In our view, Bhardwajcannot be taken to be authority for a universal proposition that jurisdictional error on the part of a decision-maker will lead to the decision having no consequences whatsoever. All that it shows is that the legal and factual consequences of the decision, if any, will depend upon the particular statute. As McHugh, Gummow, Kirby and Hayne JJ said in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at 388 ‑ 389:
'An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition' [42].
Numerous cases have since confirmed that a decision involving jurisdictional error will be no decision at all, and have no legal effect, unless the statutory provisions require a contrary conclusion.[12] Civmec drew my attention to the useful summary given by Nettle and Gordon JJ in Minister for Immigration and Border Protection v SZMTA.[13] Civmec also pointed to the amendment to s 43 of the Act, by which a determination is taken to be an order of the court upon its filing with an affidavit as to the amount not paid (dispensing with the need to first get leave). Civmec further noted that orders of superior courts of record are treated as valid until set aside even if made in excess of jurisdiction (referring to State of New South Wales v Kable[14]). Civmec also referred to ProbuildConstructions (Aust) Pty Ltd v DDI Group Pty Ltd[15] and Carillion Construction v Devonport Royal Dockyard Ltd.[16]
[12] BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[2013] QCA 394; [2015] 1 Qd R 228 [66]; BMF16 v Minister for Immigration and Border Protection [2016] FCA 1530 [151]; Minister for Immigration and Border Protection v CLV16 [2018] FCAFC 80 [64], [69].
[13] Minister for Immigration and Border Protection v SZMTA [2019] HCA 3 [84].
[14] State of New South Wales v Kable [2013] HCA 26; (2013) 252 CLR 118.
[15] ProbuildConstructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151 [105] – [107] and [130].
[16] CarillionConstruction v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358; [2006] BLR 15 [26].
Sandvik pointed to cases from the eastern states in which determinations involving jurisdictional error were said to be invalid, in particular BRB Modular Pty Ltd v AWX Constructions Pty Ltd,[17] a 2015 ex tempore decision of Bond J. Sandvik submits that these cases show that the judges in those cases found that the eastern states' legislation does not require a contrary conclusion. Sandvik acknowledged that those cases did not expressly refer to the proper approach for determining the effect of jurisdictional error, and did not refer to Project Blue Sky,[18] or the like. I am not willing to infer that those matters were the subject of consideration. In my view, it is far more likely that the courts were simply using 'invalid decision' to mean a decision involving jurisdictional error. This is commonly done.
[17] BRB Modular Pty Ltd v AWX Constructions Pty Ltd [2015] QSC 222.
[18] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355.
Further, even if a decision has no legal effect, the fact that it was made may be relevant.[19]
[19] See, for example, Tulloh v Chief Executive Officer of the Department of Corrective Services [2018] WASC 105.
In the judicial review proceedings, it is likely to be necessary to determine the effect, if any, that a determination involving jurisdictional error has. For present purposes, my preliminary view is that the statutory provisions require a conclusion contrary to invalidity and ineffectiveness. That is, I consider that the intention of the legislature was that a determination is valid and of full effect unless or until it is set aside, even if made in excess of jurisdiction.[20]
[20] See the later discussion of the policy of the Act.
For present purposes, it is enough to say that I do not consider it is inevitably unjust, an abuse of process or oppressive to treat a determination as having legal and factual effect unless and until it is quashed. Nor am I satisfied that it would be any of those things in this case.
Nugatory
Sandvik submits that the application for judicial review will inevitably be rendered nugatory and the court's process in these proceedings frustrated if the purported determination were enforced, because it would give effect to a decision made without power.
I do not accept this. In my view, the application for judicial review would only be rendered nugatory if Sandvik could not recover the amount it had paid if it is successful in the judicial review proceedings.
In John Holland Pty Ltd v Chidambara[21] Chaney J said:
In relation to similar legislation in other jurisdictions, there are a number of cases where courts have held that where a superior court quashes an adjudication determination, and moneys have been paid pursuant to that determination, the successful party is entitled to restitution of the moneys so paid [John Holland Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 66 NSWLR 624, 633 ‑ 634; Go Electrical Pty Ltd v Class Electrical Services Pty Ltd [2013] NSWSC 517 [11], [20]; J Hutchinson Pty Ltd v Cada Formwork Pty Ltd [2014] QSC 63 [83]; BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394 [76] ‑ [77]].
[21] John Holland Pty Ltd v Chidambara [2017] WASC 179 [74].
In John Holland, the applicant sought to distinguish the cases referred to in that extract on the basis that the relevant legislation under which the adjudications were made provided that the adjudication determination could be enforced as an order of the court without leave, whereas an adjudication determination under the Act could only be enforced with leave of the relevant court. Chaney J found that that distinction was not material to the general proposition that where a determination is quashed, the successful party is entitled to restitution of any moneys paid pursuant to that determination. In any event, the Act has been amended such that, as with the eastern states' jurisdictions, a determination may be enforced as an order of the court without leave.[22]
[22] Act s 43. The amendment took effect on 15 December 2016.
Chaney J noted that the Act simply has the effect of determining who should hold funds pending the final resolution of the parties' dispute by whatever means will result in a final binding determination of entitlements.[23] His Honour said:[24]
There seems to me to be no reason in principle why any order for repayment consequent upon the quashing of a determination under the CC Act should not be approached on the same basis. … I am satisfied that the payment was made only because of the requirements of the determination, and was thus a payment made under the compulsion of s 39 of the CC Act.
In those circumstances, I am satisfied that it would be unjust for SEBA to retain the funds pending final resolution of the dispute between the parties, and that the position should be restored to that which would have subsisted had the determination not been made.
[23] John Holland [78].
[24] John Holland [79] ‑ [80].
His Honour made orders that the adjudicator's determination be quashed, and the sum paid by John Holland to SEBA pursuant to that determination be repaid to John Holland.
John Holland and other authorities (including those cited in John Holland) indicate that where money has been paid by virtue of a determination that is later quashed, an order for restitution should ordinarily be made.
Civmec accepts that Sandvik would be legally entitled to repayment if the judicial review succeeded.[25] Civmec confirmed that it would not oppose an application to amend the judicial review proceedings to include an application for repayment. It accepted that an order for repayment could be made as part of the judicial review orders, and indeed said that, if Sandvik was successful, such an order ought to be made.
[25] See Other Party's Amended Submissions in Opposition to Applicant's Notice of Motion for Interlocutory Injunction dated 2 September 2019 [23].
For completeness, I note that Sandvik sought to rely on what Pritchard J said in Total Eden Pty Ltd v ECA Systems Pty Ltd:[26]
The other matter to which I should refer, and which powerfully supports the existence of special circumstances here, is that if the suspension order is not made, the judicial review application will effectively be rendered nugatory. That is because if the amount of the determination is paid (as a result of the enforcement proceedings), then there will be nothing this Court could do, even if it concluded that the determination was invalid, to assist Total Eden to enjoy the result of any success it might have on the judicial review application. It would by then be left to Total Eden to seek to take steps to recover any monies paid (if it was able to do that).
…
The balance of convenience weighs in favour of the grant of the suspension order having regard to the risk of the non‑repayment identified, and to the fact that in that event the judicial review application would be rendered nugatory, Total Eden would be denied the opportunity to pursue its rights through the judicial review application.
[26] Total Eden Pty Ltd v ECA Systems Pty Ltd [2017] WASC 58 [16], [28].
This was an ex tempore decision. In my view, reading the reasons as a whole, her Honour was not there asserting that the judicial review proceedings would be rendered nugatory for a reason unrelated to whether or not there would be repayment if the decision was quashed. Reading both [16] and [28] together, it appears that her Honour's concern was that the proceedings would be rendered nugatory if the risk of non‑repayment materialised. To the extent that [16] may be read as suggesting that her Honour's concern was that the court was powerless to order repayment in the judicial review proceedings if the decision was quashed, I would simply note that it appears that her Honour was not alerted to the decision in John Holland.
Risk Civmec could not repay
Sandvik submits that there is a risk that, if the purported determination were enforced, Civmec would not be able to repay Sandvik the adjudication sum, interest and costs. This is clearly a relevant consideration.
Sandvik submits that there is both an inherent risk and an actual risk.
The inherent risk is said to be that Civmec may resist the court making such an order and (or) the court may not make such an order or, if made, Civmec may not comply with such an order or may delay repayment. While I accept these risks exist, in my view, they are of little weight in the balancing exercise. Each is speculative and, as Sandvik obviously recognises by describing the risk as inherent, the risk would exist in every case. Further, as I have indicated, the authorities indicate that where money has been paid by virtue of a determination that is later quashed, an order for restitution should ordinarily be made.
More weighty would be any actual risk the Civmec would not have the funds to repay.
The affidavit evidence includes an affidavit from Justine Anne Campbell, sworn 11 September 2019, in which it is said that, although Civmec's financial statements for the financial year ending June 2019 have not been completed, its overall net assets have not materially changed since June 2018, and that it could pay the amount of the Second Determination with no difficulty, given that its cash and cash equivalent assets currently greatly exceed that amount.
In my view, having regard to that evidence alone, on the current state of affairs, there is little risk.
Policy of the Act
Sandvik submits that the policy of the Act is a neutral factor. It submits that the policy of the Act does not favour enforcement of 'invalid' determinations. Sandvik points out that the Act obliges an appointed adjudicator to dismiss an application for adjudication in circumstances in which the appointed adjudicator does not have jurisdiction. It submits that, while the Act favours enforcement of valid determinations, the court cannot be satisfied that the policy of the Act would be advanced by enforcement of the purported determination because there is a prima facie case that the determination is 'invalid'.
After some exploration of this, it appeared that Sandvik's proposition was not that the policy was neutral. Rather, it submits that the stronger the case of jurisdictional error, the weaker the weight of the policy against the grant of an injunction.
In Easy Stay Mining Accommodation Pty Ltd v Faigen,[27] Allanson J found that the applicant had established an arguable case. His Honour said:[28]
In my opinion, both the balance of convenience and wider discretionary considerations require the court to have regard to matters going beyond the two parties.
An important factor is that the scheme of the Construction Contracts Act is clearly directed to ensuring the flow of funds in projects. The object of the scheme in pt 3 div 3 of that Act is to determine payment disputes arising out of construction contracts 'fairly and as quickly, informally and inexpensively as possible' (s 30), with the primary aim of keeping the money flowing down the contractual chain: see Perrinepod Pty Ltd v Georgiou Building Pty Ltd [88]. In Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91 [55], Pullin JA (Newnes and Murphy JJA) said:
'The broad purpose of the Act, insofar as it relates to payment disputes, is to ensure that, in construction contracts, progress claims are paid on time and that principals obliged to pay do not act as their own judge and jury and hold up payment on their own assertion that they have a defence warranting refusal to pay. It is a "pay now, argue later" system: Multiplex Constructions Pty Ltd v Lui Kans [2003] NSWSC 1140 [96] (Palmer J), with the primary aim of keeping the money flowing by enforcing timely payment: Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319 [87]. If a payment dispute arises, then the Act provides for a system of rapid and summary adjudication which is conducted without any oral hearing. If the adjudicator, having received written submissions, makes a determination that the payment has to be made, then that determination gives rise to a debt "presently due" and payable by the principal: see Georgiou Building v Perrinepod [2012] WASC 72 [32].'
Neither party can be adequately protected from the consequences should that party be unsuccessful at this stage, but ultimately succeed. On balance, I believe that the better course is to not restrain Grounded Construction from continuing in its attempt to enforce its judgments. That is more consistent with the objects of the Construction Contract Act - particularly now that leave is no longer required to enforce a determination.
I considered the possibility of requiring Easy Stay to pay the disputed amount into court as a condition of any restraint. Easy Stay seemed ready to accept payment of the amount subject to the debt appropriation order, although it was unclear whether that was to be from its own funds or from any appropriated debt. Ultimately, however, I am not satisfied that tying up the funds in a court order is consistent with the objects of the Construction Contracts Act.
[27] Easy Stay Mining Accommodation Pty Ltd v Faigen [2017] WASC 266.
[28] Easy Stay [40] ‑ [43].
Allanson J was clearly of the view that the policy extended to a decision which arguably involved jurisdictional error. I am not satisfied his Honour was plainly wrong. On the contrary, I agree with his Honour.
I also note the cases cited by Civmec in its submissions, in particular RJ Neller Building Pty Ltd v Ainsworth[29] where Keane JA, as his Honour then was, discussed the intention of the Queensland Act. In Re Anstee‑Brook; Ex parte Karara Mining Ltd,[30] Le Miere J said this applied to the Western Australian Act. Like Allanson J in Easy Stay, Le Miere J in Karara Mining Ltd was clearly of the view that the policy extended to a decision which arguably involved jurisdictional error.[31]
[29] RJ Neller Building Pty Ltd v Ainsworth [2008] QCA 397; [2009] 1 Qd R 390 [39] ‑ [41].
[30] Re Anstee‑Brook; Ex parte Karara Mining Ltd [2012] WASC 129 [19].
[31] See Karara Mining Ltd [11], [18] ‑ [19].
Whether the adjudicator's decision involved jurisdictional error will be determined in the judicial review proceedings. Whether it involved non‑jurisdictional errors may be determined in substantive proceedings. The Act does not shut out either process of challenge. Until a challenge is made and succeeds, determinations are binding on the parties (s 38) and may be enforced as orders of the court (s 43). Only dismissals may be reviewed by the SAT (s 46).
The Act discloses an intention to keep the money flowing - a 'pay now, argue later' system. I do not accept that the intention is limited to non‑jurisdictional errors. There is nothing in the Act to indicate such a limitation, and there is no support in the authorities for such a distinction.
In both Easy Stay and Karara Mining Ltd, a stay (or injunction) was sought pending the determination of judicial review proceedings alleging the determination involved jurisdictional error. Both Allanson J in Easy Stay and Le Miere J in Karara Mining Ltd were clearly of the view that the policy of the Act weighed against granting a stay. There was no suggestion that any lesser weight should be given to the policy given that the error alleged was a jurisdictional error.
I am not satisfied that either were plainly wrong and indeed I consider, with respect, that they were right. This makes it unnecessary to consider Civmec's submissions that further support for this conclusion is to be found in the amendment to s 43, the Evans report[32] and the way in which an order of the court is treated (referring to Kable).
[32] Report on the Operation and Effectiveness of the Construction Contracts Act 2004 (WA), dated August 2015, by Professor Philip Evans.
I do accept, however, that the policy is only one factor in the evaluation. I also accept that a case for jurisdictional error may be sufficiently strong to overcome the weight of the policy, such that an injunction would be appropriate. The proper approach remains, given that I have found Sandvik has established a prima facie case, an assessment of whether the balance of convenience favours the grant of the injunction.
Prejudice
As noted earlier, the only apparent prejudice to Civmec is delayed payment. I accept that that prejudice would be mitigated by payment into court of an amount including anticipated interest. However, it would not be eliminated, and the policy of the Act is to keep the money flowing.
In my view, the prejudice is real. My view is confirmed by Allanson J's remarks in [43] of Easy Stay, which I have already quoted. In that paragraph, his Honour noted that he was ultimately not satisfied that tying up the funds in a court order was consistent with the objects of the Act.
Conclusion
I have found that Sandvik has established a prima facie case that the Second Determination involved jurisdictional error. As I have said, I do not consider its case to be strong. However, even if I was to consider that it had a strong prima facie case, I would not grant the injunction.
I am not satisfied that the judicial review proceedings will be rendered nugatory if the Second Determination is found to have involved jurisdictional error. Sandvik will be entitled to be repaid. The evidence does not suggest any real risk that Civmec will be unable to repay the amount.
Enforcing the determination pending the outcome of the judicial review proceedings would not abuse the enforcement process of the court or interfere with and frustrate the proceedings.
The policy of the Act weighs against an injunction. Pending the determination of the judicial review proceedings, the money should continue to flow and the argument be had later.
Orders
I will make the following orders:
(1)the application for an injunction and/or suspension order dismissed;
(2)there be liberty to relist the means inquiry; and
(3)Sandvik is to pay Civmec's costs to be taxed if not agreed.
ANNEXURE A
AGREED FACTS IN THE INJUNCTION APPLICATION
| IN THE SUPREME COURT OF WESTERN AUSTRALIA COMMERICAL AND MANAGED CASES LIST | CIV 1842 of 2019 |
BETWEEN: | |
| SANDVIK MINING AND CONSTRUCTION AUSTRALIA PTY LTD (ACN 003 771 382) | Applicant |
and | |
JOHN FISHER (ABN 22 131 108 499) | Respondent |
and | |
| CIVMEC CONSTRUCTION & ENGINEERING PTY LTD (ACN 137 816 025) | Other Party |
STATEMENT OF AGREED FACTS FOR AN INTERLOCUTORY INJUNCTION AND OTHER ORDERS
Case Manager: The Hon Justice Archer
Date of document: 5 September 2019
Filed on behalf of: The Applicant
Date of filing: 5 September 2019
Filed by:
Squire Patton Boggs (AU) Telephone: (08) 9328 5999
Level 21, 300 Murray Street Facsimile: (08) 9328 6046
PERTH WA 6000
As town agents for:
McCullough Robertson
Level 11, 66 Eagle Street
Brisbane QLD 4000
____________________________
Statement of Agreed Facts
The parties agree as to the following material facts:
Supreme Court of Western Australia Proceeding
On 6 May 2019, the Respondent issued a document described as a determination under section 31(2)(b) the Construction Contracts Act 2004 (WA) (Act), under which the Respondent determined that the Applicant (Sandvik) was liable to pay the Other Party (Civmec) the sum of $1,664,650.29 (excluding GST) (Respondent’s decision).[33]
[33] Di Giacomo Affidavit 17 June 2019, [32]; Di Giacomo Affidavit 17 June 2019, ADG-24 (pages 833-863).
On 14 May 2019, Sandvik, by its solicitors, stated that it was willing to provide Civmec with security for $1,831,115.32 (including GST) by payment of that sum into Court or by some equivalent form of security.[34]
[34] Bradbury Affidavit 12 June 2019, MRB-1, page 5.
On 14 May 2019, Civmec, by its solicitors, stated that it does not accept payment of $1,831,115.32 (including GST) into Court or some equivalent form of security.[35]
[35] Bradbury Affidavit 12 June 2019, MRB-2, pages 8-9.
On 14 May 2019, Civmec filed in the Supreme Court of Western Australia (the Court) a certified copy of the Respondent’s decision and affidavit as to the amount not paid.[36]
[36] Bradbury Affidavit 12 June 2019, MRB-3 (pages 10-76).
On 14 May 2019, Sandvik filed an application for judicial review of the Respondent’s decision in the Court, for a writ of certiorari and, inter alia, a declaration that the Respondent’s decision is not a determination made under section 31(2)(b) of the Act (Proceeding).[37]
[37] Application filed 14 May 2019 (Court Document 1).
On 16 May 2019, Civmec filed a memorandum of appearance in the Proceeding.[38]
[38] Memorandum of Appearance filed 16 May 2019 (Court Document 2).
On 19 May 2019, the Respondent filed a notice of intention to abide by the decision of the Court in the Proceeding.[39]
[39] Notice of Intention to Abide by Decision filed 19 May 2019 (Court Document 4).
Means Inquiry
On 27 May 2019, the Court issued a notice of hearing of means inquiry (Notice of Means Inquiry) and a means inquiry summons for Mr Christopher Parham, a Director of Sandvik, in Supreme Court of Western Australia proceeding PER/CCD/2/2019 (Means Inquiry).[40]
[40] Bradbury Affidavit 12 June 2019, MRB-4, pages 81-88.
The Notice of Means Inquiry gave notice that the Means Inquiry was listed for Thursday, 25 July 2019, at 2:15 pm.[41]
[41] Bradbury Affidavit 12 June 2019, MRB-4, page 82.
By orders of the Court on 19 June 2019:
proceeding PER/CCD/2/2019 was admitted to the Commercial and Managed Cases List and case managed together with this Proceeding; and(a)
the Means Inquiry was adjourned until further order of the Court.(b)
Motion for Interlocutory Injunction
On 12 June 2019, the Applicant filed a notice of motion for an interlocutory injunction in the Proceeding for orders, inter alia:[42]
[42] Motion for Interlocutory Injunction filed 12 June 2019 (Court Document 5).
that Civmec be restrained from taking any steps to enforce the Respondent’s decision; and(a)
further or alternatively, that enforcement of the Respondent’s decision be suspended pursuant to section 15(1) of the Civil Judgments Enforcement Act 2004 (WA). (b)
On 21 June 2019, the Interlocutory Injunction was listed for hearing on 16 September 2019.[43]
[43] As per the email correspondence from Ms Siobhan Walsh, Research Orderly to the Honourable Justice Archer to the parties on 21 June 2019.
Group structure
Civmec Construction & Engineering Pty Ltd (i.e., the Other Party, referred to in this Minute as ‘Civmec’) is an engineering and construction company, operating in the construction industry.
Civmec has issued 6,244,571 ordinary shares, and all of these shares are beneficially held by Civmec Limited.[44]
[44] See Di Giacomo Affidavit 13 June 2019, ADG-1, page 11.
Civmec Limited is a holding company which is listed on the Singapore Exchange Securities Ltd and, since 22 June 2018, listed on the Australian Securities Exchange (ASX).[45]
[45] See Di Giacomo Affidavit 13 June 2019, ADG-3, page 107.
As at 30 June 2018, Civmec (i.e. Civmec Construction & Engineering Pty Ltd), held:[46]
[46] See Di Giacomo Affidavit 13 June 2019, ADG-3, page 133.
100% of the issued share capital in Civmec Holdings Pty Ltd;(a)
100% of the issued share capital in Multidiscipline Solutions Pty Ltd;(b)
83.5% of the issued share capital in Civmec Pipe Products Pty Ltd;(c)
100% of the issued share capital in Civmec Electrical and Instrumentation Pty Ltd;(d)
100% of the issued share capital in Civmec DLG Pty Ltd;(e)
100% of the issued share capital in Forgacs Marine and Defence Pty Ltd;(f)
100% of the issued share capital in Civmec Construction & Engineering Africa Ltd; and(g)
49% of the issued share capital in Australian Maritime Shipbuilding and Export Group Ltd.(h)
Civmec Limited publishes annual reports in which it reports consolidated financial statements comprised of the financial statements of Civmec Limited and other corporations related to Civmec Limited (Civmec Group). The Civmec Group is comprised of:
Civmec Limited;(a)
Civmec Construction & Engineering Pty Ltd;(b)
Civmec Construction & Engineering Singapore Pte Ltd;(c)
Civmec-Mala PNG;(d)
Civmec Holdings Pty Ltd;(e)
Multidiscipline Solutions Pty Ltd;(f)
Civmec Pipe Products Pty Ltd;(g)
Civmec Electrical and Instrumentation Pty Ltd;(h)
Civmec DLG Pty Ltd;(i)
Forgacs Marine and Defence Pty Ltd;(j)
Civmec Construction & Engineering Africa Ltd;(k)
Australian Maritime Shipbuilding and Export Group Ltd;(l)
Forgacs Valco Pty Ltd;(m)
Civmec Construction & Engineering Uganda Ltd; and(n)
Civtec Africa Ltd.(o)
Financial reporting
For the financial year ending 30 June 2018, the Civmec Group had:
a net negative amount of cash generated from operating activities, being negative $20,633,000;(a) [47]
[47] Di Giacomo Affidavit 13 June 2019, ADG-3, page 106.
a net negative amount of cash used in investing activities, being negative $25,926,000;(b) [48]
[48] Di Giacomo Affidavit 13 June 2019, ADG-3, page 106.
a net cash amount of $47,222,000 generated from financing activities;(c) [49]
[49] Di Giacomo Affidavit 13 June 2019, ADG-3, page 106.
total cash and equivalents of $23.4M;(d) [50]
[50] Di Giacomo Affidavit 13 June 2019, ADG-4, page 184.
non-current assets of $146.2M;(e) [51]
[51] Di Giacomo Affidavit 13 June 2019, ADG-4, page 184.
trade and other receivables and contract assets of $267.6M;(f) [52] and
[52] Di Giacomo Affidavit 13 June 2019, ADG-4, page 184.
trade and other payables and contract liabilities of $150.9M.(g) [53]
[53] Di Giacomo Affidavit 13 June 2019, ADG-4, page 195.
For the period from 1 July 2018 to 31 December 2018, Civmec Group:[54]
[54] Campbell Affidavit, 5 August 2019, JAC-1.
had revenue of $335.03M; (a)
made a net profit of $6.762M; (b)
earned net cash from operating activities of $16.73M (ie had positive cash flow); (c)
achieved a net increase in cash and cash equivalents of $45.716M; (d)
ended the period with cash and cash equivalents of $69.085M; (e)
incurred finance costs of $2.533M; (f)
ended the period with total current assets $301.154M and total assets of $473.936M; and(g)
ended the period with total capital and reserves of $173.859M. (h)
For the period from 1 January 2019 to 31 March 2019, Civmec Limited had:
sales revenue of $80.090M;(a) [55]
[55] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
costs of sales of $74.743M;(b) [56]
[56] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
gross profit of $5.347M;(c) [57]
[57] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
profit (before tax) of $161,000;(d) [58] and
[58] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
profit (after tax) of $141,000.(e)
For the period from 1 January 2019 to 31 March 2019, Civmec Group:
had revenue of $80.090M ($415.120M for the 9 months including that quarter); (a) [59]
[59] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
made a gross profit of $5.3M;(b) [60]
[60] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
made a net profit of $141,000 (and therefore $6.903M for the 9 months including that quarter); (c) [61]
[61] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
earned net cash from operating activities in the 9 months ending that quarter of $31.401M; (d) [62]
[62] Di Giacomo Affidavit 13 June 2019, ADG-4, page 186.
achieved a net increase in cash and cash equivalents for the 9 months ending that quarter of $16.7M; (e) [63]
[63] Di Giacomo Affidavit 13 June 2019, ADG-4, page 186.
ended the period with cash and cash equivalents of $40.069M; (f) [64]
[64] Di Giacomo Affidavit 13 June 2019, ADG-4, page 184.
incurred finance costs of $1.392M, or $3.925M for the 9 months ending that quarter; (g) [65]
[65] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
ended the period with total current assets of $264.598M and total assets of $453.755M; (h) [66]
[66] Di Giacomo Affidavit 13 June 2019, ADG-4, page 184.
ended the period with capital and reserves of $174.001M;(i) [67]
[67] Di Giacomo Affidavit 13 June 2019, ADG-4, page 195.
ended the period with trade and other receivables and contract assets of $223.1M(j) [68];
[68] Di Giacomo Affidavit 13 June 2019, ADG-4, page 195.
ended the period with trade and other payables and contract liabilities of $119.6M.(k) [69]
[69] Di Giacomo Affidavit 13 June 2019, ADG-4, page 184.
For the period from 1 January 2019 to 31 March 2019 Civmec Limited’s after tax profit was $6.956M.[70]
[70] Di Giacomo Affidavit 13 June 2019, ADG-4, page 181.
As at 31 March 2019:[71]
[71] Di Giacomo Affidavit 13 June 2019, ADG-4, page 184.
the Civmec Group held cash and cash equivalent assets of $40.069M; and(a)
Civmec Limited held cash and cash equivalent assets of $12,000.(b)
For the financial year ending 30 June 2019 (the most recent financial reports published by the Civmec Group), the Civmec Group: [72]
[72] Supplementary Campbell Affidavit 2 September 2019, JAC-6
had revenue of $488.50M; (a)
made a gross profit of $25.533M; (b)
made a net profit of $7.030M; (c)
earned net cash from operating activities of $78.861M; (d)
ended the period with cash and cash equivalents of $40.662M; (e)
incurred finance costs of $5M; (f)
ended the period with total current assets of $226.750M and total assets of $429.735M; and(g)
ended the period with capital and reserves of $174.128M. (h)
For the period from 1 April 2019 to 30 June 2019, Civmec Limited’s after tax profit was $127,000.[73]
[73] Supplementary Campbell Affidavit 2 September 2019, JAC-6, page 7.
As at 30 June 2019:
the Civmec Group held cash and cash equivalent assets of $40.66M(a) [74]; and
[74] Supplementary Campbell Affidavit 2 September 2019, JAC-6, page 20.
Civmec Limited held cash and cash equivalent assets of $6,000.(b) [75]
[75] Supplementary Campbell Affidavit 2 September 2019, JAC-6, page 10.
As at 10 August 2018, the ASX share price for Civmec Limited was $0.80 per share.
As at 16 August 2019, the ASX share price for Civmec Limited was $0.405 per share.
Other disputes
Civmec is presently in dispute with Multiplex Engineering and Infrastructure Pty Ltd.
On 22 February 2019, Civmec filed a writ of summons in the Court claiming an amount of $6,505,753.11, with further amounts to be quantified after expert evidence.[76] Those proceedings do not give rise to any current liabilities.
[76] Di Giacomo Affidavit 13 June 2019, ADG-5.
Civmec Holdings Pty Ltd (Civmec Holdings) is presently in dispute with iPilot Australia Pty Ltd (iPilot).[77] Civmec Holdings’ claims against iPilot greatly exceed those of iPilot against Civmec Holdings.
[77] Di Giacomo Affidavit 13 June 2019, [25]-[-26].
Current and future projects
On 13 August 2019 Civmec Limited issued an ASX media release which stated that the Civmec Group had an order book of approximately $850M.[78]
[78] Supplementary Campbell Affidavit 2 September 2019, JAC-7, page 25
Civmec, or one of its subsidiaries, has been awarded a package of works for the supply, assembly and commissioning of 23 ‘smart modules’ for the South Flank iron ore mine project.[79]
[79] Campbell Affidavit 5 August 2019, JAC-2, page 48.
A large portion of the fabrication works for the South Flank iron ore project has been awarded to AusGroup Limited (AusGroup), or a subsidiary of AusGroup.[80]
[80] Di Giacomo Affidavit 13 June 2019, [33].
Civmec will deliver the Primary Crushing and Ore Processing Facility for Fortescue Metals Group’s new Eliwana Mine and Rail Project. Civmec’s scope is for the full vertical delivery of the facility’s Iron Ore Loading, Primary, Secondary and Tertiary Crushing, Ore Screening and Associated Conveyor Systems, up to no load commissioning. Shop detailing, fabrication, delivery and site installation of the civil, structural, mechanical, piping and electrical works is included in this package of work.[81]
[81] Supplementary Campbell Affidavit 2 September 2019, JAC-7, page 25
ANNEXURE B
AGREED FACTS IN THE JUDICIAL REVIEW APPLICATION
| IN THE SUPREME COURT OF WESTERN AUSTRALIA COMMERICAL AND MANAGED CASES LIST | CIV 1842 of 2019 |
BETWEEN: | |
| SANDVIK MINING AND CONSTRUCTION AUSTRALIA PTY LTD (ACN 003 771 382) | Applicant |
and | |
JOHN FISHER (ABN 22 131 108 499) | Respondent |
and | |
| CIVMEC CONSTRUCTION & ENGINEERING PTY LTD (ACN 137 816 025) | Other Party |
STATEMENT OF AGREED FACTS FOR AN APPLICATION FOR JUDICIAL REVIEW
Case Manager: The Hon Justice Archer
Date of document: 13 September 2019
Filed on behalf of: The Applicant
Date of filing: 13 September 2019
Filed by:
Squire Patton Boggs (AU) Telephone: (08) 9328 5999
Level 21, 300 Murray Street Facsimile: (08) 9328 6046
PERTH WA 6000
As town agents for:
McCullough Robertson
Level 11, 66 Eagle Street
Brisbane QLD 4000
____________________________
Statement of Agreed Facts
The parties agree as to the following material facts:
The Project and the Subcontract
RTA Weipa Pty Ltd (RTA) is the developer of a bauxite mine south west of Weipa in Northern Queensland which includes mining, processing, and export facilities (the Project).[82] The Project is known as the ‘Amrun’ project.[83]
[82] Di Giacomo Affidavit 17 June 2019, [5].
[83] Di Giacomo Affidavit 17 June 2019, [5].
On or about 14 March 2016, the Applicant (Sandvik) entered into a contract with RTA under which Sandvik was engaged to design, fabricate, assemble, deliver, install, and commission three rail-mounted machines, namely:
a stacker;(a)
a reclaimer; and(b)
a shiploader,(c)
(together, the Machines).[84]
[84] Di Giacomo Affidavit 17 June 2019, [6].
On or about 24 October 2016, Sandvik entered into a subcontract with the Other Party (Civmec) for the fabrication, off-site assembly and off-site commissioning of the Machines (the Subcontract).[85]
[85] Di Giacomo Affidavit 17 June 2019, [6].
The Subcontract is comprised of:[86]
[86] Di Giacomo Affidavit 17 June 2019, [8].
(a) Part A, containing:[87]
[87] Di Giacomo Affidavit 17 June 2019, ADG-1, pages 9-73.
(i) a formal instrument of agreement;
(ii) general conditions of contract; and
(iii) special conditions of contract;
(b) Part B, containing a scope of work;[88]
[88] Di Giacomo Affidavit 17 June 2019, ADG-2 (pages 147-189).
(c) Part B0, containing a technical specification;[89] and
[89] Di Giacomo Affidavit 17 June 2019, ADG-3 (pages 190-230).
schedules A to U.(d) [90]
[90] Di Giacomo Affidavit 17 June 2019, ADG-1, pages 74-146.
The Subcontract is amended by an agreement known as variation 6 or ‘V06’, entered into on or about 1 February 2018.[91]
[91] Di Giacomo Affidavit 17 June 2019, [13]; Di Giacomo Affidavit 17 June 2019, ADG-5 (pages 294-299).
Progress Claim 26
On 25 October 2018, Civmec issued progress claim number 26 under the Subcontract, claiming the amount of $17,045,654.36 (Progress Claim 26).[92] Progress Claim 26 was comprised of three emails, namely:
[92] Di Giacomo Affidavit 17 June 2019, [14].
(a) an email from Mr Griff Trigg to Mr Aaron Di Giacomo on 25 October 2018 with the subject line ‘CIV-F528-283 – PPC-026 – Email 1/3’;[93]
[93] Di Giacomo Affidavit 17 June 2019, ADG-6 (pages 300-412).
(b) an email from Mr Griff Trigg to Mr Aaron Di Giacomo on 25 October 2018 with the subject line ‘CIV-F528-283 – PPC-026 – Email 2/3’;[94] and
[94] Di Giacomo Affidavit 17 June 2019, ADG-7 (pages 413-451).
(c) an email from Mr Griff Trigg to Mr Aaron Di Giacomo on 25 October 2018 with the subject line ‘CIV-F528-283 – PPC-026 – Email 3/3’.[95]
[95] Di Giacomo Affidavit 17 June 2019, ADG-8 (pages 452-515).
On 8 November 2018, Sandvik issued a payment notice under the Subcontract in response to Progress Claim 26, certifying a negative amount of $881,380.15 (Payment Notice 26).[96]
[96] Di Giacomo Affidavit 17 June 2019, ADG-9 (pages 516-578).
Payment Notice 26 identified 15 items of deduction resulting in the assessment in Payment Notice 26 of a total amount less than as claimed in Progress Claim 26, namely:[97]
[97] Di Giacomo Affidavit 17 June 2019, ADG-9, page 529.
(a) Item 1 – Bonus for meeting FAS date;
(b) Item 2 – Construction Verification Certificate;
(c) Item 3 – Transport Supports;
(d) Item 4 – Assembly Man Hours and Overtime incorrectly claimed;
(e) Item 5 – Indirects and supervision;
(f) Item 6 – Third party invoices and Fuel;
(g) Item 7 – AMC invoices;
(h) Item 8 – Third party mark-up;
(i) Item 9 – Punchlisting, carry-over works & NCRs;
(j) Item 10 – Variations;
Item 11 – Omit provisional sum;(e)
Item 12 – Workshop drawings not provided by supplier;(f)
Item 13 – TQs;(g)
Item 14 – Reworks at AMC; and(h)
Item 15 – LDs for late delivery.(i)
On 15 November 2018, Civmec issued a notice of dispute under the Subcontract in relation to Sandvik’s assessment of Progress Claim 26 (Notice of Dispute).[98] By the Notice of Dispute, Civmec disputed Sandvik’s assessment of the 15 items of deduction in Payment Notice 26.
[98] Di Giacomo Affidavit 17 June 2019, ADG-10 (pages 579-583).
First application for adjudication on Payment Notice 26
On 10 December 2018, Sandvik received an application for adjudication from Civmec under the Construction Contracts Act 2004 (WA) (Act) in relation to Progress Certificate 26 (First Application).[99]
[99] Di Giacomo Affidavit 17 June 2019, [17]. See Di Giacomo Affidavit 17 June 2019, ADG-11, ADG-12, and ADG-13.
In the First Application Civmec claimed the amount of $4,938,369.60 (excluding GST), and challenged the following items of deduction from Payment Notice 26:[100]
[100] See Di Giacomo Affidavit 17 June 2019, ADG-12, pages 587 ‑ 588, [5.1].
Item Progress Certificate 26 description Amount 2 Construction Verification Certificate $2,100,000 9 Punchlisting, carry-over works & NCRs $102,500 12 Workshop Drawings not provided by Supplier $2,161,068.75 13 TQs $143,681 15 LDs for late delivery (Stacker and Reclaimer only) $1,312,500 Sub-total $5,819,749.75 Less: ‘Nett Certified’ PPC026 ($881,380.15) Total $4,938,369.60
In the First Application Civmec said that:
(a) “this Application only concerns a limited payment dispute relating to particular (not all) items in [Progress Claim 26]. It does not concern:
(a) the portion of Item 15 LD’s which relate to the shiploader;
(b) the Items other than the five Items covered by this Application; or
(c) the entirety of the payment dispute arising out of [Payment Notice 26].” [101];
[101] Di Giacomo Affidavit 17 June 2019, ADG-12, pages 603 ‑ 604, [2.54].
(b) “The Adjudicator’s task is therefore to determine the flow of money as part of calculating whether Sandvik is liable to make a payment to Civmec. That will involve:
(a) making the necessary adjustments to reflect the prior cumulative claims which are recorded up to the issue of [Payment Notice 26];
(b) accepting the values set out in [Payment Notice 26] about which, to ensure this Application is not too complex and for the purposes of this adjudication only, Civmec does not raise dispute in this adjudication (including the majority of the ‘Disputed Items’ (set-offs) applied by Sandvik in [Payment Notice 26]); and
(c) making findings about the five ‘Disputed Items’ the subject of this Application,
to determine what the flow of money should be on the balance of probabilities.
For the above reason, Civmec does not ask the Adjudicator to find that an amount is payable to Civmec irrespective of the deductions and set-offs stated in [Payment Notice 26], or to consider the five ‘Disputed Items’ the subject of this Application in isolation.
Civmec has chosen to adjudicate a limited aspect of the payment dispute arising out of PPC026 so that this Application is not too complex for the Adjudicator to fairly determine in the limited (albeit extended, due to the Christmas period) time available.” [102] ; and
[102] Di Giacomo Affidavit 17 June 2019, ADG-12, pages 605-606, [2.59-2.61].
(c) the “Adjudicator need not determine the correctness of any other item stated in PPC026 for the purposes of making his or her determination; they can all be accepted for that purpose” (Unchallenged Items).
On 21 December 2018, Sandvik served its adjudication response under the Act to the First Application.[103]
[103] Di Giacomo Affidavit 17 June 2019, [21]. See Di Giacomo Affidavit 17 June 2019, ADG-14.
On 21 January 2019, the appointed adjudicator for the First Application, Mr Hugh Davis, made a determination under section 31(2)(b) of the Act in which Mr Davis determined that Sandvik was liable to pay Civmec the amount of $4,938,369.60 (excluding GST) (First Determination).[104]
[104] Di Giacomo Affidavit 17 June 2019, [22]; Di Giacomo Affidavit 17 June 2019, ADG-15 (pages 683-718).
On 31 January 2019, Sandvik paid Civmec the amount of the First Adjudication Determination.
Second application for adjudication on Payment Notice 26
On 29 March 2019, Sandvik received an application for adjudication from Civmec under the Act in relation to Payment Notice 26 (Second Application).[105]
[105] Di Giacomo Affidavit 17 June 2019, [23]. See Di Giacomo Affidavit 17 June 2019, ADG-16, ADG-17, and ADG-18.
The Second Application Civmec claimed the amount of $3,864,459.56 (excluding GST), and challenged the following items of deduction from Progress Certificate 26:[106]
[106] See Di Giacomo Affidavit 17 June 2019, ADG-17, page 723 [5.1].
Item Progress Certificate 26 description Amount 1 Bonus for meeting FAS date $750,000 4b Overtime incorrectly claimed $365,504.40 5 Indirects & Supervision $2,269,916.82 6 Third Party Invoices (exc. Fuel) (part only) $515,984.18 8 Third Party Mark Up (part only) $51,598.41 11 Omit Provisional Sum (as per VO-05) $183,650.36 15 LDs for late delivery (Shiploader only) $609,185.54 Sub-total $4,745,839.71 Less: ‘Nett Certified’ PPC026 ($881,380.15) Total $3,864,459.56
Each of the items in the table above was one of the Unchallenged Items in the First Application.
On 12 April 2019, Sandvik served its adjudication response under the Act to the Second Application.[107]
[107] Di Giacomo Affidavit 17 June 2019, [31]. See Di Giacomo Affidavit 17 June 2019, ADG-23.
On 6 May 2019, the Respondent issued a document which purported to be a determination under section 31(2)(b) the Act, under which the Respondent determined that Sandvik was liable to pay Civmec the sum of $1,664,650.29 (excluding GST) in relation to the Second Adjudication Application (Second Determination).[108]
[108] Di Giacomo Affidavit 17 June 2019, [32]; Di Giacomo Affidavit 17 June 2019, ADG-24 (pages 833-863).
Supreme Court of Western Australia Proceeding
On 14 May 2019, Sandvik filed an application for judicial review of the Second Adjudication Determination in the Supreme Court of Western Australia (Proceeding).
On 16 May 2019, Civmec filed a memorandum of appearance in the Proceeding.
On 21 June 2019, the application for judicial review was listed for hearing on 28 October 2019.[109]
[109] As per the email correspondence from Ms Siobhan Walsh, Research Orderly to the Honourable Justice Archer to the parties on 21 June 2019.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SW
Research Associate/Orderly to the Honourable Justice Archer25 SEPTEMBER 2019
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