Smith v Impero Pacific Group Pty Ltd t/as Impero Constructions - [2024] NSWSC 1234

Supreme Court

New South Wales

Medium Neutral Citation: Smith v Impero Pacific Group Pty Ltd t/as Impero Constructions [2024] NSWSC 1234
Hearing dates: 26 September 2024
Date of orders: 26 September 2024
Decision date: 26 September 2024
Jurisdiction: Equity - Technology and Construction List
Before: Stevenson J
Decision:
Proceedings stayed until the plaintiff pays into Court the sum of the adjudication determination

Catchwords:
BUILDING AND CONSTRUCTION – adjudication – adjudicated amount – where plaintiff commenced these proceedings seeking to quash an adjudication determination – where first defendant registered adjudication certificate – where judgment now entered against plaintiff – where first defendant seeks stay of these proceedings until plaintiff pays into Court the adjudicated amount – where plaintiff has no present ability to pay amount into Court – where plaintiff’s assets exceed her liabilities – where secured creditor in possession and about to exercise power of sale over plaintiff’s principal assets

Legislation Cited:
Building and Construction Industry Security of Payment Act 1999 (NSW)

Cases Cited:
Nazero Group Pty Limited v Top Quality Construction Pty Limited [2015] NSWSC 232
Surfabear Pty Ltd v GJ Drainage & Concrete Construction Pty Ltd [2009] QSC 308
Tombleson v Dancorell Constructions Pty Limited [2007] NSWSC 1169

Category: Procedural rulings
Parties: Samantha Smith (Plaintiff/Respondent)
Impero Pacific Group Pty Ltd trading as Impero Constructions (First Defendant/Applicant)
John O’Brien (Second Defendant)
Representation:
Counsel:
M Sheldon / J M Kadar (Plaintiff/Respondent)
F Hicks SC (First Defendant/Applicant)
Solicitors:
ITC Law Pty Ltd (Plaintiff/Respondent)
Construction Legal (First Defendant/Applicant)
Lauderdale Construction Lawyers (Second Defendant)

File Number(s): 2024/292680

EX TEMPORE JUDGMENT (REVISED)

The plaintiff, Ms Samantha Smith, owns a property in Northbridge.
On 3 April 2020, she entered a cost plus contract with the first defendant, Impero Pacific Group Pty Ltd, to demolish the home that then existed on the Northbridge property and to construct an alternative residence.
The original contract value was $4.4 million. Evidently, because of a large number of variations, the contract value increased to $8.3 million.
On 14 March 2024, Ms Smith’s financier, Aura Loan Management Pty Ltd, exercised its “step-in” rights under a tripartite agreement between it, Ms Smith and Impero, and terminated the contract.
Aura is now in possession of the Northbridge property and has listed it for sale.
Following the exchange of a payment claim, payment schedule, adjudication application and adjudication response under the Building and ConstructionIndustry Security of Payment Act 1999 (NSW) (“the Act”), Impero now has the benefit of an adjudication determination made on 23 July 2024 that Ms Smith pay it $419,183.16.
On 9 August 2024, Ms Smith commenced these proceedings seeking to quash that adjudication determination.
The first return date of Ms Smith’s Summons was last Friday, 20 September 2024. Although Ms Smith’s solicitors have encouraged Impero’s then solicitor to proceed with the matter as quickly as possible, it has not yet served a List Response.
Impero recently engaged a new solicitor, and by Notice of Motion filed on 19 September 2024, now seeks an order that the proceedings be stayed until…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NSWSC 1234
Decision Date: 26 September 2024

CaseChat Overview and Summary

The matter before the court involved a dispute between the plaintiff, Smith, and Impero Pacific Group Pty Ltd t/as Impero Constructions. The plaintiff sought to challenge an adjudication determination, which had been registered as a judgment by the first defendant. The adjudication resulted in a monetary amount being owed by the plaintiff to the first defendant. The plaintiff had commenced proceedings to quash the adjudication determination, but the first defendant had already entered judgment against the plaintiff. In response, the first defendant applied for a stay of the plaintiff's proceedings until the plaintiff paid the adjudicated amount into court.

The court was tasked with deciding whether to grant a stay of the proceedings under the Building and Construction Industry Security of Payment Act 1999. The first defendant argued that the stay was necessary to protect its interests, given that the plaintiff had no present ability to pay the adjudicated amount into court. The plaintiff, on the other hand, maintained that there was no basis for a stay as it had sufficient assets, despite the presence of a secured creditor poised to exercise its power of sale over the plaintiff's principal assets. The court had to balance the rights of both parties, considering the statutory framework and the practical implications of enforcing the adjudicated amount.

In determining the application, the court considered the statutory provisions and relevant case law. It found that the statutory mechanism provided for in the Security of Payment Act was designed to ensure prompt and effective enforcement of adjudication determinations. The court recognised the importance of preserving the integrity of the adjudication process and the rights of parties who had successfully obtained an adjudication determination. The court also noted the plaintiff's financial situation, including the presence of a secured creditor with a pending power of sale over the plaintiff's main asset. Ultimately, the court held that the stay was necessary to protect the first defendant's rights and ordered that the plaintiff pay the adjudicated amount into court as a condition of staying the proceedings. The court also set a timeframe for the payment and provided for potential consequences if the plaintiff failed to comply.

In summary, the court granted the first defendant's application for a stay of the plaintiff's proceedings, subject to the plaintiff paying the adjudicated amount into court within a specified period. Failure to do so would result in the continuation of the stay and potential further action by the first defendant. This decision underscored the importance of enforcing adjudication determinations and the need to balance the rights of all parties involved in the dispute.

Orders