Total Eden Pty Ltd v Eca Systems Pty Ltd
[2017] WASC 58
•9 FEBRUARY 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: TOTAL EDEN PTY LTD -v- ECA SYSTEMS PTY LTD [2017] WASC 58
CORAM: PRITCHARD J
HEARD: 9 FEBRUARY 2017
DELIVERED : 9 FEBRUARY 2017
FILE NO/S: CIV 1202 of 2017
BETWEEN: TOTAL EDEN PTY LTD
Plaintiff
AND
ECA SYSTEMS PTY LTD
Defendant
Catchwords:
Practice and Procedure - Remittal
Practice and Procedure - Suspension of enforcement of determination of adjudicator under Construction Contracts Act 2004 (WA) - Special circumstances - Reasonable prospects of success - Balance of convenience
Legislation:
Civil Judgments Enforcement Act 2004 (WA)
Construction Contracts Act 2004 (WA)
Result:
Application granted
Category: B
Representation:
Counsel:
Plaintiff: Mr D Shaw
Defendant: Mr R Blow
Solicitors:
Plaintiff: Gandhi and Shaw
Defendant: Lateral Legal
Cases referred to in judgment:
Alliance Contracting Pty Ltd v James [2014] WASC 212
Chantec Pty Ltd v Comgroup Supplies Pty Ltd [2001] WASCA 238
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693
Cooper & Oxley Builders Pty Ltd v Steensma [2016] WASC 386
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307
Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689
Laing O'Rourke Australia Construction Pty Ltd v Samsung C&T Corporation [2015] WASC 237
Love v KWS Capital Pty Ltd [2013] WASC 466
Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9; (1983) 152 CLR 328
Re Graham Anstee-Brook; Ex parte Karara Mining Ltd [2012] WASC 129
PRITCHARD J:
(This judgment was delivered extemporaneously on 9 February 2017 and has been edited from the transcript.)
This is an application brought by the plaintiff (Total Eden) for orders that the Court remit District Court of Western Australia action CIVO 1202 of 2016 to this Court to be heard with CIV 3206 of 2016. CIV 3206 of 2016 is an application by Total Eden for judicial review of a determination made by an adjudicator (the adjudicator) pursuant to the Construction Contracts Act 2004 (WA). In addition, Total Eden seeks an order, pursuant to s 15 of the Civil Judgments Enforcement Act 2004 (WA), suspending the enforcement of the judgment obtained in CIVO 1212 of 2016 until the determination of the judicial review application (the suspension application).
For the reasons which I am about to give, Total Eden succeeds in its application. I will make an order that the proceedings in the District Court CIVO 1212 of 2016, be remitted to this Court, and I will make an order that there be a suspension of the enforcement of the judgment obtained in that proceeding until the determination of the judicial review application.
In these reasons, I will deal with the following matters:
1.A brief outline of the facts;
2.whether CIVO 1202 of 2016 should be remitted from the District Court to this Court; and
3.whether the suspension application should be granted, having regard to the existence of special circumstances, reasonable prospects of success and the balance of convenience.
A brief outline of the facts
The facts are somewhat convoluted and the following does not attempt to encapsulate in any detail all of the circumstances, but simply focuses on the facts which are relevant for present purposes.
A determination was made by the adjudicator on 1 November 2016 in respect of a claim by ECA Systems for payment of an amount said to be due under a construction contract (the determination). Prior to the end of 2016, an application for judicial review of the determination was made in this Court contending various jurisdictional errors by the adjudicator in reaching his determination.
In the meantime, an application had been made by ECA Systems to enforce the determination as a judgment of the District Court. At the time that application was made, s 43 of the Construction Contracts Act was not in the same terms as it is now. The applicable procedure at that time required an application for leave to be made to the District Court for the enforcement of the determination as a judgment of that Court. It appears, for reasons that I need not grapple with at the moment, that the District Court simply 'registered' the determination as a judgment of the Court without providing Total Eden with the opportunity to be heard in respect of the question of leave, and despite its request that it have an opportunity to be heard in respect of that matter.
When that difficulty was drawn to the attention of ECA Systems, it appears that it sought to do two things almost simultaneously. First, its solicitors wrote to the District Court Registrar and requested that the first judgment be 'discontinued'. At the same time, ECA Systems made a further application to the District Court for the enforcement of the determination.
By that stage, s 43 of the Construction Contracts Act had been amended to streamline the process by which a determination of an adjudicator is enforced in a court. The effect of that amendment is that on the filing of an application to a court for a determination to be treated as a judgment of the court, that determination is taken to be an order of the court.
At the time that ECA Systems made its second application to enforce the determination, it was not drawn to the attention of the District Court that there was on foot an earlier judgment of the Court in respect of the same determination. The District Court proceeded to record the determination as a judgment of the Court. That led to what seems, on the face it, to be an abuse of the process of the Court because there were, and remain, two judgments of the District Court in respect of the determination.
Against all that background, ECA Systems has now sought to enforce the second of those judgments through action by the sheriff, which has led to the present application to suspend that enforcement process.
Whether CIVO 1202 of 2016 should be remitted to this court
Total Eden has made an application to the District Court to suspend the enforcement of the determination and now makes the application to remit the action in which that application is made to this Court. The Court clearly has a power to remit under s 76 of the District Court Act 1969 (WA). That section provides that upon the application of any of the parties to an action or matter brought in the District Court, a judge of this Court may order that the action or matter be tried or heard in the Supreme Court.
The power to remit has been discussed in a number of cases, including Chantec Pty Ltd v Comgroup Supplies Pty Ltd [1] and Love v KWS Capital Pty Ltd[2]. In Love, Edelman J observed that the Court has a wide discretion under s 76:[3]
... There is no express prescription for the manner in which this Court's discretion to order remittal to the Supreme Court should be exercised, although it must, of course, be exercised 'judicially' ... .
Amongst other things, it would be relevant to take into account the nature of the matter being determined by the District Court.
[1] Chantec Pty Ltd v Comgroup Supplies Pty Ltd [2001] WASCA 238.
[2] Love v KWS Capital Pty Ltd [2013] WASC 466.
[3] Love v KWS Capital Pty Ltd [2013] WASC 466 [6] (Edelman J).
In this case, it is appropriate to remit the matter to this Court, in my view, because it will be convenient for the enforcement process to be dealt with hand‑in‑hand, or immediately after, the determination of the judicial review proceedings which will determine whether the determination was a valid exercise of the power of the adjudicator under the Construction Contracts Act.
Whether the suspension application should be granted, having regard to the existence of special circumstances, reasonable prospects of success and the balance of convenience
The suspension application is an application made pursuant to s 15 of the Civil Judgments Enforcement Act. It is well recognised that the principles in respect of an application for suspension are those discussed by the Full Court in Eastland Technology.[4] The Court said:
[4] Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307 [9] & ff (the Court).
In the light of the authorities, we may attempt to distil what we take to be the generally applicable relevant principles ‑
•The successful litigant at first instance will ordinarily be entitled to enforce the judgment pending the determination of any appeal.
•It is for the applicant for a stay to move the court to a favourable exercise of its discretion.
•It will not do so unless special circumstances are shown justifying the departure from the ordinary rule.
•The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation, or where refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. It is often put shortly that it will first and foremost be necessary to establish that without the grant of a stay, the right of appeal, whether upon the grant of leave or special leave or not, will be rendered nugatory.
•If that can be demonstrated, the stay will generally still be refused unless it can be established that the appeal process, whether upon the grant of leave or special leave or not, has ultimately reasonable prospects of success so as to result in the grant of relief to the appellant.
•If that hurdle can be overcome, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant; where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted.
(a) Existence of special circumstances
I turn, first, to the question whether special circumstances exist to warrant a suspension. In my view, the history of the matter, as I have briefly recounted it, supports the conclusion that special circumstances exist in this case, which would warrant a suspension of the District Court judgment which ECA Systems seeks to enforce. In essence, if the proper process had been observed in the District Court, Total Eden would have had the opportunity to be heard in respect of the grant to ECA Systems of leave to enforce the judgment, at which point the substance of the present application (in relation to the strength of the judicial review application) could have been considered. That history, in my view, is sufficient to give rise to special circumstances in this case.
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).
(b) Reasonable prospects of success
I turn then to whether Total Eden has shown that it has reasonable prospects of success on the application for judicial review. The various grounds of jurisdictional error focus on two aspects of the determination. First, it is said that the adjudicator failed to take into account a counterclaim raised by Total Eden in the adjudication, namely that it was entitled to a set‑off, which meant that it was not in fact liable to pay the amount claimed by ECA Systems. Secondly, Total Eden challenges the decision of the adjudicator to include within the determination a component that Total Eden should pay the costs of ECA Systems in preparing for the adjudication on the basis that, in effect, Total Eden's resistance to payment of the amount claimed was vexatious and frivolous.
I am satisfied that Total Eden's counsel has made out reasonable prospects of success in respect of the application for judicial review. Nothing in that comment, or the observations I am about to make, is in any way intended to suggest that I have predetermined that application. I have simply looked at the question of whether there appears at this stage to be reasonable prospects of success on the grounds of jurisdictional error. The reason I have formed the view that there are reasonable prospects of success on those grounds is partly a result of the fact that the adjudicator simply did not, in express terms at least, deal with the question of the set‑off claim in his reasons. At par [47] through to par [54] of his reasons for the determination, the adjudicator set out his reasons for determining that Total Eden was liable to pay the total of the amount claimed. In those paragraphs, the adjudicator did not, in any express terms, deal with the set‑off claim. He did make a reference, in passing, to correspondence which appears to be correspondence containing the set-off claim or drawing it to his attention. By that reference, his approach appears to have been that that claim was made too late (in that it was apparently made after the time at which the adjudicator considered payment to be due).
Counsel for ECA Systems submitted that it is implicit in the reasoning of the adjudicator that he did take into account the set-off claim, because he clearly spent time on the set-off claim, in the sense of considering it, albeit without expressly saying so in his reasons. It was submitted that the adjudicator's costs make that clear, and he also sought submissions from the parties on the point. Nevertheless, it is far from clear in the adjudicator's reasons that he did give any consideration at all, certainly in express terms, to the set‑off issue, or if he did so, the extent to which he did consider the argument raised by Total Eden.
Two arguments are effectively made by Total Eden in relation to the various grounds of jurisdictional error alleged. They are that the adjudicator approached the determination on the basis that he was to determine liability as at the date when payment was due, rather than as at the date of the determination itself. I am persuaded that there are reasonable prospects of success in the argument that that was an approach which was not consistent with the requirements of the Construction Contracts Act. At the very least, the fact that that Act requires consideration of the position after the date that payment is due is supported by the fact that when it comes to the determination of interest, interest is calculated up to the point in time when the determination itself is made. It is not necessary to explore other arguments in support of that ground at this stage. Apart from the lack of any express reference to that issue in the reasons for determination, an additional basis for concluding that there are reasonable prospects of success is that there have been cases in which set‑off claims have been considered, and required to be considered, in respect of payment claims under the Construction Contracts Act.[5]
[5] Alliance Contracting Pty Ltd v James [2014] WASC 212 [66]; Laing O'Rourke Australia Construction Pty Ltd v Samsung C&T Corporation [2015] WASC 237 [245] (Mitchell J); Cooper & Oxley Builders Pty Ltd v Steensma [2016] WASC 386 [22] (Le Miere J).
The second argument advanced is that there is nothing in the present contract which deals expressly with the exclusion of any set‑off claim that Total Eden might have had. The argument then boils down to whether the provisions of sch 1 to the Construction Contracts Act (and, in particular, cl 7 of sch 1) exclude the exercise of a right of set-off in respect of an amount which might otherwise be due in accordance with cl 7. As counsel for Total Eden has indicated, that aspect of the operation of cl 7 has not been considered by the courts. But bearing in mind that, ordinarily, as a matter of statutory construction, a court would not readily conclude that the legislature had intended to exclude common law rights or remedies, save where that is required by clear words or necessary implication,[6] there seems to me to be reasonable prospects of success in the contention that Total Eden's right to rely on the set-off, if one existed, was not excluded by cl 7.
[6] Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693, 699 (Gleeson CJ, Gaudron & Gummow JJ); Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689, 717 - 718 (Lord Diplock); Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9; (1983) 152 CLR 328, 341.
The arguments to which I have adverted seem to me to be open, and to have reasonable prospects of success.
Although it is hardly necessary for present purposes to dwell too long on the question of the costs determination made by the adjudicator, in my view, my conclusion that there are reasonable prospects of success on the substantive grounds (if I can describe them in that way) for challenging the validity of the determination suggest that there are reasonable prospects of success on the ground that the stance taken by Total Eden was not frivolous and vexatious so as to warrant the cost order that was made in the circumstances.
Again, I emphasise again that the observations I have made are not in any way intended to convey a final view about these matters, but simply to confirm that, in my view, there do seem to be reasonable prospects of success which would be sufficient to support the making of a suspension order.
(c) The balance of convenience
I turn, finally, to the question of the balance of convenience. There was very little evidence in respect of the question of balance of convenience other than that it appears that the position of Total Eden is that it is a large company with significant business interests and assets, and ECA Systems accepts that that is so. In fact, counsel for ECA Systems relies on that position to support its argument that Total Eden is in a position to pay the amount of the determination and should do so. On the other hand, Total Eden points to the fact that the position of ECA Systems is not nearly so financially robust. That submission was not disputed by counsel for ECA Systems who submitted that ECA Systems was the weaker party and had had to cope with the difficulty of being without the significant amount of money required to be paid under the determination. Having regard to the information in the affidavits relied upon by Total Eden in relation to the assets of ECA Systems, it seems to me there is some basis for concern on the part of Total Eden that if the amount the subject of the determination is paid, it may not be able to be recovered.
Counsel for ECA Systems relied on the observation of Le Miere J in Re Graham Anstee-Brook; Ex parte Karara Mining Ltd, where his Honour said:[7]
the mere existence of a risk that [a party] may not be able to refund any amount paid ... in satisfaction of the [d]etermination is not sufficient of itself to justify a stay of the [d]etermination.
[7] Re Graham Anstee-Brook; Ex parte Karara Mining Ltd [2012] WASC 129 [19] (Le Miere J).
However, as I read his Honour's reasons, his Honour was not there suggesting, in any way, that the risk of non-payment or non-refund of an amount paid is not relevant to the question of balance of convenience. In fact, when one looks at [24] of his Honour's reasons, he expressly takes into account that very consideration in the determination of the balance of convenience in that case. All that his Honour was seeking to point out in the passage quoted was that the mere existence of the risk of non-payment was not sufficient of itself to warrant the suspension of a determination. There could be no doubting that that is a correct statement of the position having regard to considerations outlined in Eastland Technology to which I have already referred.
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.
So, in all of the circumstances, I am persuaded to accede to Total Eden's application for the orders that are sought in its minute of orders.
Orders
The orders that will be made are:
1.Pursuant to s 76 of the District Court of Western Australia Act1969 (WA), District Court of Western Australia action CIVO 1212 of 2016 is remitted to the Supreme Court of Western Australia, to be heard in conjunction with CIV 3206 of 2016.
2.Pursuant to s 15 of the Civil Judgments Enforcement Act 2004 (WA), the judgment obtained in CIVO 1212 of 2016 is suspended until the determination of CIV 3206 of 2016.
3.The costs of the application will be reserved to the hearing of the application in CIV 3206 of 2016.
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