Watpac Constructions v Austin Corp
[2010] NSWSC 168
•19 March 2010
CITATION: Watpac Constructions v Austin Corp [2010] NSWSC 168 HEARING DATE(S): 25/2/10
JUDGMENT DATE :
19 March 2010JURISDICTION: Equity Division
Technology and Construction ListJUDGMENT OF: McDougall J at 1 DECISION: (1)Direct the parties to exchange draft short minutes of the orders to be made in the consequence of these reasons, and written submissions in support of those orders, by 31 March 2010.
(2)Direct the parties to exchange written submissions in reply by 12 April 2010.
(3)Direct copies of all documents exchanged pursuant to orders 1 and 2 to be delivered to my Associate when they are exchanged.
(4)Stand proceedings over to 9:30am on 16 April 2010 for the making of final orders.
(5)Reserve liberty to apply, either in respect of any application for oral argument in respect of the form of orders to be made or generally, on 7 days’ notice.CATCHWORDS: BUILDING AND ENGINEERING CONTRACTS – Building and Construction Industry Security of Payment Act 1999 – validity of second adjudication determination – where payment claim for amounts the subject of previous adjudication determination – where determination by previous adjudicator that defendant not entitled to amounts claimed – whether valid payment claim – whether subsequent claim before second adjudicator precluded by principles of issue estoppel or principles of abuse of process – whether plaintiff denied procedural fairness. - ESTOPPEL – issue estoppel – whether earlier determination created issue estoppel – whether abuse of process for defendant to reagitate claim leading to second adjudication determination. LEGISLATION CITED: Building and Construction Industry Security of Payment Act 1999 (NSW) CASES CITED: Blair v Curran (1939) 62 CLR 464
Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421
Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33
Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69
Greenhalgh v Mallard [1947] 2 All ER 255
Henderson v Henderson (1843) 3 Hare 100
John Goss Projects Pty Ltd v Leighton Contractors (2006) 66 NSWLR 707
Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 435
Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2004] NSWSC 823
Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Musico v Davenport [2003] NSWSC 977
Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd t/as Novatec Construction Systems [2009] NSWSC 416
Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589
Rothnere Pty Ltd v Quasar Constructions NSW Pty Ltd [2004] NSWSC 1151
The University of Sydney v Cadence Australia Pty Limited [2009] NSWSC 635
Urban Traders v Paul Michael [2009] NSWSC 1072PARTIES: Watpac Construction (NSW) Pty Limited (Plaintiff)
Austin Corp Pty Limited (Defendant)FILE NUMBER(S): SC 2010/41832 COUNSEL: N J Kidd (Plaintiff)
F C Corsaro SC (Defendant)SOLICITORS: Maddocks Lawyers (Plaintiff)
Crisp Legal (Defendant)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY & CONSTRUCTION LIST
McDOUGALL J
19 March 2010
2010/41832 WATPAC CONSTRUCTION (NSW) PTY LTD v AUSTIN CORP PTY LTD
JUDGMENT
: In these proceedings, the plaintiff (Watpac) challenges the validity of an adjudication determination made by the second defendant (the second adjudicator) in favour of the first defendant (Austin) on 11 February 2010 (the February determination). There are two grounds for the challenge:
(2) there was a substantial denial of natural justice because the second adjudicator dealt with a set-off for backcharges claimed by Watpac on a basis for which Austin had not contended, and in respect of which Watpac had been given no opportunity to put submissions.(1) the payment claim that was the subject of the second defendant’s adjudication (the December payment claim) included a claim for payment of $844,375.00 for what were called variations 1 to 8. Those variations had been the subject of an earlier adjudication determination (the November determination) made by another adjudicator (the first adjudicator) in which the first adjudicator had determined that Austin had no entitlement, as claimed, to be paid for those variations; and
The issues
2 The essential issues for decision are:
(1) was the December payment claim a valid payment claim for the purposes of the Act?
(2) Did the November determination create an issue estoppel in respect of variations 1 to 8?
(4) Did the second adjudicator deal with the claimed set-off for backcharges in a way that constituted a substantial denial of the measure of justice that Watpac was entitled to receive?(3) Was it an abuse of process for Austin to reagitate the claim for variations 1 to 8 in the December payment claim, and to press those in the adjudication application (the January application) that led to the February determination?
3 In substance, the first three issues arise out of the decision of the Court of Appeal in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69, as explained and applied in subsequent cases including Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd t/as Novatec Construction Systems [2009] NSWSC 416, The University of Sydney v Cadence Australia Pty Limited [2009] NSWSC 635 and Urban Traders v Paul Michael [2009] NSWSC 1072.
4 As to the second issue: Mr N J Kidd of Counsel, who appeared for Watpac, relied on both “issue estoppel in the strict sense” and on the “extended principle” defined by Wigram V-C in Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319. (Each of the quoted phrases in the preceding sentence comes from the joint judgment of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589 at 597 and 598 respectively. The former phrase was used by their Honours to describe the principle of issue estoppel discussed, for example, by Dixon J in Blair v Curran (1939) 62 CLR 464 at 532.) Mr F C Corsaro of Senior Counsel, for Austin, submitted that it was not open to Watpac to rely on the extended principle of issue estoppel, because that had not been properly notified in Watpac’s Commercial List statement. I will return to that contention when dealing with the second issue.
Factual background
5 The construction contract between Watpac and Austin (the subcontract) was a subcontract under which Austin and an associated company (described together as “Subcontractor”) agreed to carry out air-conditioning and mechanical services work for Watpac (described as “Builder”) for a project known as the Trio Apartments development at Camperdown. It was common ground that the subcontract was a construction contract for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act).
The October payment claim and payment schedule
6 On 15 October 2009, Austin served a payment claim (the October payment claim) on Watpac. The October payment claim sought payment for what it said was the work comprised in what were described as variations 1 to 8. The amount claimed for those variations totalled $765,647.00 exclusive of GST, or $842,211.70 inclusive of GST. The October payment claim included the following statement:
All construction work claimed by Austin Corp Pty Limited in this payment claim is claimed as a variation to the subcontract, or in the alternative, by way of quantum meruit.
7 On 29 October 2009, Watpac provided a payment schedule (the October payment schedule). That payment schedule stated, among other things, that after account was taken of backcharges raised by Watpac against Austin, retentions and amounts paid to date, the scheduled amount was negative: - $790,813.25 inclusive of GST.
The November application and response
8 The dispute thereby constituted was submitted to adjudication on 12 November 2009 (the November application). The November application comprised five folders of material, including the October payment claim and the October payment schedule, and a statutory declaration of Mr Bryan Phillips made on 12 November 2009 (Mr Phillips’ declaration).
9 The submissions in support of the November application included the following:
[22] The Claimant’s Payment Claim lists eight variations. The Claimant claims it is entitled to restitution based on unjust enrichment. The Claimant submits that the Statutory Declaration of Bryan Phillips sworn 12 November, 2009 herein is evidence that:-
(a) each variation was outside the Scope of Works of the Contract;
(b) the Claimant was required by the Respondent to carry out such work identified in the Payment Claim;
(c) the Respondent was aware that such work was outside the Scope of Contract;
(d) the Respondent was aware at [sic] prior to the Claimant commencing such work that the claimant would make a claim for this work in addition to the Contract Sum and further knew the value of each variation as determined by the Claimant would be the amounts claimed;
(e) the Respondent has received the benefit of the Claimant’s work in respect of the work identified in the Payment Claim; and
(f) it is unjust for the Claimant not to be paid by the Respondent for the work in the Payment Claim.
…
[24] The Claimant disputes that the value of the eight variations as certified by the Respondent are a true and fair value of the work performed by the Claimant. Because the Claimant has carried these works outside of the Contract and for the facts above (a) – (e), the Claimant claims a restitution based on unjust enrichment for these variations in the amount claimed in the Payment Claim. In this regard the Claimant submits that the Statutory Declaration of Bryan Phillips supports the Adjudicator in determining the value of the Variations as per the Payment Claim, see s. 10(1)(b)(ii) of the Act.
…
[33] Because this is an unjust enrichment claim outside the Contract, the Claimant submits that the Adjudicator only consider for the purpose of this adjudication the value of variations in the Payment Claim and whether it is just in the circumstances for the Claimant to be awarded the sums claimed.
10 Watpac submitted to the first adjudicator and to the Court that Austin had chosen to justify its claim for variations 1 to 8 on the basis of “unjust enrichment” because it had not complied with the contractual regime relating to variations and the entitlement to be paid for them. That is an available inference from the form of the payment claim, considered in conjunction with the relevant provisions of the subcontract (to which I shall turn in the next section of these reasons). It is open to infer that Austin perceived that it would be in its best interests to frame the October application as it did, by relying only on the doctrine of unjust enrichment and not on the terms of the subcontract. Whether such an inference should be drawn is another matter. For the reasons given at [123] and [124] below, it is not necessary to reach a conclusion on this.
11 Watpac served an adjudication response on 19 November 2009 (the November response). Among other things, that response asserted that Austin’s only entitlement to be paid was one arising pursuant to the terms of the subcontract, and that there was no freestanding right – at least, of a kind within the power of an adjudicator to determine – to be paid on the basis of unjust enrichment. Further, Watpac made submissions on the merits of the claim, and (as it had done in the October payment schedule) relied on its asserted entitlement to set off, against any amount otherwise due, backcharges.
The November determination
12 The dispute was referred to the first adjudicator for adjudication. He issued the November determination on 30 November 2009, in which he concluded that the adjudicated amount was “$nil”.
13 At para 8.1 of the November determination, the first adjudicator observed, correctly, that the claim was one in restitution “based on unjust enrichment”. At para 12, he identified the issues as follows:
[12] Issues
12.1 The issues thrown up by the Application and Response essentially are:
Is Austin Corp entitled to anything over and above what it has already been paid, for what it asserts are eight variations, on the basis of unjust enrichment?
Is Watpac entitled to offset the money it so asserts it is entitled to in the Payment Schedule?
14 At para 13, the first adjudicator set out, from para 22 of Austin’s submission, the claimed basis of entitlement (see at [9] above). The adjudicator stated his understanding of this claim as follows:
Because the Claimant has carried out these works outside of the Contract and for the facts above (a) – (e) [of para 22 of the submissions], the Claimant claims a restitution based on an unjust enrichment for these variations in the amount claimed in the Payment Claim.
15 At para 13.3, the first adjudicator observed that Austin had not proceeded “in the more conventional way – presenting a cogent argument in the Submissions themselves, that establishes the entitlement contractually, for each and every claimed “variation”.”
16 At paras 13.5 and 13.6, the first adjudicator reasoned:
13.6 As will be evident from the time I have spent on this Application, I attempted to find a cogent contractual basis for Austin Corp’s claims, reliant essentially on the bundled correspondence found in Volumes 2, 3 and 4 of the Adjudication Application, however I have not been able to in any way that gives me confidence that Austin Corp has proven on the balance of probabilities that it has a contractual entitlement beyond what has been paid.13.5 The subcontract does indeed provide in a quite prescriptive way, for variations, and in my view it was crucial for Austin Corp to demonstrate compliance with the contractual regime, for the Act unlike for example, the rules of equity, does not permit departure from the determination of entitlement, based on the proper construction of the contract. An entitlement under the Act can only have as its basis, a contractual right or entitlement, Appeals to justice, unjust enrichment and restitution have no place in an adjudication.
17 The adjudicator then turned to the claimed offset for backcharges. He said at para 14.1 that even if Austin “had… succeeded for the full face value of its eight variations”, the claimed offsets “would effectively zero out anything that Austin Corp might be entitled to”.
18 The first adjudicator summarised his reasons at para 15 as follows:
15. Summary
15.1 It follows from my analysis above that I am not satisfied that Austin Corp is entitled to any amount in this Application for the reason that it has failed to make out a contractual basis for what it has claimed, and the Act does not permit an Adjudicator to make a determination based on unjust enrichment, even if there were some evidence to support that assertion.
15.2 Furthermore, I consider that the provisions of the subcontract do allow Watpac to backcharge as it has, and on balance, I cannot detect any item of such magnitude that could possibly change the outcome of the Application.
15.3 It is of course not open to me to determine that Watpac has any entitlement against Austin Corp, and I do not do so.
15.4 The adjudication process is by virtue of Section 32 of the Act only as interim process and the final determination of rights must in any case, await arbitration, litigation, or, one hopes, settlement by agreement.
The December payment claim and January payment schedule
19 On about 15 December 2007, Austin served the December payment claim on Watpac. The amount claimed was $1,656,994.90 inclusive of GST. So far as I can tell, the entire claim was for variations. They comprised:
(1) variations numbered 1 to 20;
(3) variations identified as A1 to S1.(2) variations identified as A to Z; and
20 Of the numbered variations, 1 to 8 repeated (with a change in variation 3) variations 1 to 8 that had been the subject of the November determination. The change to variation 3 was to convert it from negative $1,500.00 to positive $467.00. The effect of this, was, obviously enough, to increase the total amount claimed for variations 1 to 8 by $1,967.00.
21 The case proceeded on the basis that variation 1 to 8 were repeated from the October payment claim to the December payment claim, and that the change to the amount claimed for variation 3 was not material. If that were not common ground, I would make a finding to that effect.
22 It appeared to be common ground also that further work had been done between the date of submission of the October payment claim and the date of submission of the December payment claim. Again, if that were not common ground, I would make a finding to that effect.
23 Watpac provided a payment schedule on 5 January 2010 (the January payment schedule). That payment schedule specified the scheduled amount as negative $1,217,228.00, inclusive of GST. As to variations 1 to 8, the payment schedule stated:
Watpac refers to its previous payment schedule dated 29 October 2009, its adjudication response dated 19 November 2009 and the adjudication determination of Mr David Campbell-Williams dated 30 November 2009. This item claimed by AustinCorp was claimed previously (and was included in AustinCorp’s adjudication application), following which it was determined by Mr Campbell-Williams in his adjudication determination that AustinCorp has no further entitlement to payment in respect of this item (under the Contract or SOP Act). The Act prohibits re-agitation of issues which have previously been determined through the adjudication process (refer Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69), therefore, AustinCorp has no entitlement to make any claim in respect of this item in this payment claim.
24 The January payment schedule also identified, and set off, a number of claimed backcharges. As to about 12 of those backcharges, which apparently had been the subject of the October payment schedule and of the November determination, Watpac included a note which was substantially to the effect of the note, in relation to variations 1 to 8, that I have just set out.
The January application and response
25 Austin made the January application on 19 January 2010. It was referred to the second adjudicator for adjudication. The following matters of relevance appear from the January application:
(1) it was based in part on Mr Phillips’ declaration, which had formed the basis for the November application;
(2) the variations, including variations 1 to 8, were claimed on the basis of an “other arrangement” which was said to constitute a “construction contract” for the purposes of the Act;
(4) Austin was entitled to be paid the full amount of the claim, including the amount claimed for variations 1 to 8.(3) alternatively, Austin said that Watpac had excused Austin from complying with the notice requirements of the subcontract relating to variations, or alternatively had waived compliance with, or was estopped from relying upon, those provisions; and
26 In addition, the January application:
(1) made submissions with respect to the claimed set-offs for backcharges; and
(2) made submissions in relation to the notes in the January schedule that had referred to and relied upon the decision of the Court of Appeal in Dualcorp .
27 Watpac submitted an adjudication response dated 28 January 2010 (the January response). In essence, it repeated and expanded upon the position set out in the January payment schedule, and drew attention to what it said was the fact that the first adjudicator had determined Austin’s entitlement (or lack of it) to be paid for variations 1 to 8, and to his determination on the backcharges relied upon in the October payment schedule.
The February determination
28 The second adjudicator gave the February determination on 11 February 2010.
29 The second adjudicator dealt with the “Dualcorp” submissions as follows: (at paras 84 to 135):
(1) He identified the issue determined by the first adjudicator as “whether [he] had jurisdiction to decide a claim based on unjust enrichment… not… whether, in respect of the 8 items, the claimant had an entitlement to a progress payment under the contract” (at para 86);
(2) the first adjudicator did not determine “a claim for a progress payment as defined in the Act” or “a progress claim under the contract” (at paras 94, 96);
(4) the extended, or “ Anshun ”, principle of issue estoppel had no application to the scheme of the Act: at least where a previous claim and adjudication application did not include a claim under the contract for all work done up until the date of the previous payment claim (at paras 109, 110); and(3) the first adjudicator “did not value any work” so that s 22(4) of the Act had no application (at para 100);
(5) the first adjudicator did not need to, and did not, determine the validity of the backcharges (at paras 116-118, 135).
30 Mr Kidd accepted, correctly, that even if this part of the second adjudicator’s reasoning were wrong, it betrayed no “Brodyn” error (Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; see, in particular, the categories of “basic and essential requirements” laid down by Hodgson JA, with whom Mason P and Giles JA agreed, at 441 [53]).
31 The second adjudicator then considered the backcharges. He dealt with various backcharges, either individually or in groups, in a way that was not submitted to involve Brodyn error. He then moved, at para 176, to “other backcharge claims”. Those other backcharge claims themselves fell into two categories. One category related to a variation known as variation M. That was a claim by Austin in effect for extra work necessary to repair damage to its works caused by other trades. At paras 340 and following of the February determination, the second adjudicator held that Austin was entitled to recover his assessed value of variation M.
32 At para 177, the second adjudicator referred to the “variation M” reasons, saying that it followed from those reasons that Watpac’s claim to offset backcharges relating to the variation M work could not succeed. That was because, the second adjudicator having accepted that Austin was entitled to recover the cost of the work as a variation, Watpac had failed to establish that the backcharges should be levied against Austin. On the contrary, on the second adjudicator’s view, the amount that Watpac was liable to pay Austin for variation M could be levied as backcharges against the other trades who had caused the damage. Mr Kidd accepted that this aspect of the second adjudicator’s reasoning betrayed no “Brodyn” error.
33 That left what may be called the rump of the other backcharges. In this context, it may be noted that the claimed total value of the other backcharges was $567,925.00. The parties agreed that of that total, at least $192,313.00 was attributable to what might be called variation M backcharges – backcharges that, in the second adjudicator’s view, Watpac was not entitled to levy against Austin. I deal with the amount of the variation M backcharges and related matters at [163] to [167] below. Of those remaining backcharges, the second adjudicator said (at paras 178-179):
[179] In each instance liability and quantum have yet to be determined and there is no evidence that the respondent has paid the security which the respondent would be required to pay if the respondent wished to have liability and quantum decided in expert determination. For reasons set out above under the subheading BC52, the respondent is not entitled to set off the claimed amounts.[178] I am satisfied that all of the remaining disputed backcharge claims are claims for alleged damages. The bases of the alleged entitlements and the amounts claimed differ from claim to claim but when analysed each claim is based upon an alleged default of the claimant and the amount claimed is a claim for damages. It would only delay my determination and unnecessarily increase the adjudication fees if I was to deal with each claim separately.
34 The reference back to “subheading BC52” takes one back to paras 141 and following of the February determination. The second adjudicator said at para 146 that:
- [t]he claimed amount is not an amount due from the claimant to the respondent. It is the respondent’s estimate of amounts which the respondent asserts will become due… . … it is an unproven claim for alleged damages.
35 The second adjudicator followed this observation with the comment that attracted the allegation of denial of natural justice. He said at para 147:
[147] I don’t accept that clause 14.5 effectively allows the respondent to set off against an amount claimed in a payment claim under the Act, any amount that the respondent asserts will become due. That would defeat the object of the Act. The provision would contravene s.34 of the Act [no contracting out].
36 The second adjudicator then gave consideration to certain clauses of the contract. In reasoning that I must say that I have difficulty in understanding, let alone accepting, he appeared to express the view that Watpac could not levy a backcharge against Austin under cl 14.5 unless and until (in the event of dispute) the dispute resolution procedure set out in cl 20.3 had been followed through, or alternatively the dispute resolution procedure in special condition 13.1.
37 This aspect of the reasoning appears to misconceive the proper construction and operation of cl 14.5 (which I set out at [41] below). In terms, that clause permits an offset to be made for the estimated amount of a backcharge, whether or not the amount of the backcharge has been settled authoritatively as between Watpac and Austin. Where Watpac alleges that an amount is due, but there is some dispute in relation to this, what can be set off is no more than a reasonable estimate of the amount due. It seems to me that a reasonable estimate of an amount said (but disputed) to be due by Austin by Watpac must take into account not only the valuation of the claim but also whether there are in truth sound grounds for making it. This aspect of the second adjudicator’s reasoning appears to me to overlook both the express requirement for any unquantified back charge to be “a reasonable estimate” and the likely incidence of implied obligations to act reasonably and in good faith in the exercise of the powers given by cl 14.5.
38 I refer to these matters not because they suggest any “Brodyn” error (of course, they do not), but because there is an issue as to whether any denial of natural justice, in relation to cl 14.5 and s 34, was material. If what I have just said is correct, it would suggest that there were submissions that Watpac could have made to seek to dissuade the second adjudicator from his view that cl 14.5 did offend s 34.
39 The second adjudicator then said, at para 155, that Watpac had not satisfied him that Austin had committed a breach of contract that might support the claimed backcharges, nor of the amount of damages. The claimed amount appeared to be, he said, “no more than an arbitrary assessment”. Accordingly, the second adjudicator concluded at para 156:
[156] For reasons covered, I am satisfied that the respondent is not entitled to make the set off claimed. The claim is totally without justification.
40 The second adjudicator then valued the variations, including variations 1 to 8. Mr Kidd did not submit that the process of valuation (assuming it to have been open to the second adjudicator to proceed to valuation of variations 1 to 8) betrayed any relevant error.
Clause 14.5
41 Clause 14.5 of the subcontract reads as follows:
14.5 Set-Off
Without limiting the Builder’s rights under the Subcontract the Builder may deduct from any money due to the Subcontractor:
(a) any money due, or a reasonable estimate of amounts which the Builder asserts will become due, from the Subcontractor to the Builder whether under or in connection with the Subcontract or otherwise; and
and if those moneys are insufficient the Builder may have recourse to any Bank Guarantees and retention under the Subcontract.(b) all losses, costs, charges, damages or expenses which the Builder has incurred or paid and for which the Subcontractor is or may be liable to make reimbursement to the Builder or to any corporation which is a subsidiary of or related to the Builder within the meaning of the Corporations Act 2001(Cth) , but has failed to pay or reimburse,
42 Although the second adjudicator referred to cl 20.3 and special condition 13.1, it is not necessary to set out those provisions.
Relevant provisions of the Act
43 Section 8 gives, to a person who carries out construction work or supplies related goods and services under a construction contract, a right to progress payments on and from each reference date under that contract. I set out s 8:
(1) On and from each reference date under a construction contract, a person:8 Rights to progress payments
(a) who has undertaken to carry out construction work under the contract, or
(b) who has undertaken to supply related goods and services under the contract,(2) In this section, "reference date" , in relation to a construction contract, means:is entitled to a progress payment.
(a) a date determined by or in accordance with the terms of the contract as the date on which a claim for a progress payment may be made in relation to work carried out or undertaken to be carried out (or related goods and services supplied or undertaken to be supplied) under the contract, or
(b) if the contract makes no express provision with respect to the matter—the last day of the named month in which the construction work was first carried out (or the related goods and services were first supplied) under the contract and the last day of each subsequent named month.
44 Section 9 specifies how the amount of a progress payment is to be calculated, and s 10 provides for valuation of construction work and related goods and services.
45 Part 3 of the Act deals with the recovery of progress payments. By s 13, a person who is or who claims to be entitled to a progress payment may serve a payment claim on the person who is or may be liable to make that payment (subs (1)). Subsections (2) and (3) do not require consideration. Subsection 4 limits the time within which a payment claim may be served. Subsections (5) and (6) deal with multiplicity of payment claims. The section reads as follows:
13 Payment claims
(2) A payment claim:(1) A person referred to in section 8 (1) who is or who claims to be entitled to a progress payment (the
"claimant" ) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment.
(a) must identify the construction work (or related goods and services) to which the progress payment relates, and
(b) must indicate the amount of the progress payment that the claimant claims to be due (the
"claimed amount" ), and(3) The claimed amount may include any amount:(c) must state that it is made under this Act.
(a) that the respondent is liable to pay the claimant under section 27 (2A), or
(b) that is held under the construction contract by the respondent and that the claimant claims is due for release.
(4) A payment claim may be served only within:
(a) the period determined by or in accordance with the terms of the construction contract, or
(b) the period of 12 months after the construction work to which the claim relates was last carried out (or the related goods and services to which the claim relates were last supplied),
whichever is the later.(6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim.(5) A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract.
46 Section 14 deals with the provision of a payment schedule and its contents. It does not require consideration. Neither do ss 15 and 16, which deal with the situations where there is no payment schedule or where the scheduled amount is not paid.
47 Section 17 provides for adjudication applications. The subject of adjudication is “a payment claim” (subs (1)). Subsection (2) does not require consideration. Subsection (3) specifies some formal requirements relating to adjudication applications, and subsequent subsections contain other machinery provisions. Section 17(1) reads as follows:
(1) A claimant may apply for adjudication of a payment claim (an "adjudication application" ) if:17 Adjudication applications
(a) the respondent provides a payment schedule under Division 1 but:
(b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount.
(i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or
(ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or
48 Section 20 deals with adjudication responses. It does not require consideration. Neither does s 21, which deals with adjudications procedures.
49 Section 22 deals with the determination that is to be made. The adjudicator is to determine among other things, “the amount of the progress payment (if any) to be paid…” (subs (1)(a)). Subsection (2) specifies the matters to be considered by the adjudicator. Subsection (3) requires the determination to be in writing, and to be reasoned unless the parties request otherwise. Subsection (4) deals with the valuation of work that was valued by a prior adjudicator. Subsection (5) is in effect a “slip” rule.
50 I set out s 22 so far as it is relevant:
(1) An adjudicator is to determine:22 Adjudicator’s determination
(a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the
"adjudicated amount" ), and
(b) the date on which any such amount became or becomes payable, and(2) In determining an adjudication application, the adjudicator is to consider the following matters only:(c) the rate of interest payable on any such amount.
(a) the provisions of this Act,
(b) the provisions of the construction contract from which the application arose,
(c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim,
(d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule,
(e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates.
(4) If, in determining an adjudication application, an adjudicator has, in accordance with section 10, determined:…
…
(a) the value of any construction work carried out under a construction contract, or
(b) the value of any related goods and services supplied under a construction contract,
the adjudicator (or any other adjudicator) is, in any subsequent adjudication application that involves the determination of the value of that work or of those goods and services, to give the work (or the goods and services) the same value as that previously determined unless the claimant or respondent satisfies the adjudicator concerned that the value of the work (or the goods and services) has changed since the previous determination.
51 Sections 24 and 25 deal with enforcement of adjudicated amounts. They do not require consideration.
52 Finally, it is necessary to refer to s 34, which prohibits contracting out. It is widely expressed:
34 No contracting out
(1) The provisions of this Act have effect despite any provision to the contrary in any contract.
(2) A provision of any agreement (whether in writing or not):
(a) under which the operation of this Act is, or is purported to be, excluded, modified or restricted (or that has the effect of excluding, modifying or restricting the operation of this Act), or
(b) that may reasonably be construed as an attempt to deter a person from taking action under this Act,
is void.
Issue estoppel, abuse of process and the Act
53 I dealt with the authorities, and the principles to be derived from them, in Urban Traders at [19] to [43]. With one exception, what I there said is sufficient to state the relevant principles for the purposes of these proceedings, and I incorporate those paragraphs into these reasons:
[19] The doctrines of estoppel by res judicata and issue estoppel are founded on the principle that controversies, once resolved by a court or tribunal of competent jurisdiction, should not be reopened except in limited circumstances: D’Orta Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at 17 [34]. Estoppels may arise from the decisions of judicial tribunals, domestic tribunals (including arbitrators and others given authority, by consent of the parties or otherwise, to hear and determine disputes) and in some cases administrative tribunals. See Spencer Bower, Turner and Handley, Res Judicata (third edition, 1996) at 25; and, as to administrative tribunals, the judgments of Barwick CJ and Gibbs J (with whom, on this point, Menzies and Stephen JJ agreed) in The Administration of the Territory of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at, respectively, 403 – 404 and 453 – 454.
[20] In Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69, the Court of Appeal considered a situation where a builder, having obtained adjudication on four invoices and been dissatisfied with the outcome, made a further adjudication application based on those four invoices and two others. The proprietor did not serve a payment schedule. The builder sought summary judgment in the District Court. The primary judge declined to give summary judgment because to do so “is barred because of principles akin to res judicata at least or constitutes an abuse of process” (see her Honour’s reasons quoted by Macfarlan JA at [31]). The Court of Appeal upheld her Honour’s decision.
[22] The conclusion, that the determinations of adjudicators attract the principles of issue estoppel, was based upon considerations of finality. This is apparent from the review of those principles undertaken by Macfarlan JA: see (under the general law) at [42] to [50] and (under the Act) at [51] to [62]. That review led his Honour to the conclusion that the legislature intended to render the determinations of adjudicators “relevantly conclusive”: i.e., conclusive as to entitlements to progress payments. As his Honour said at [60], where a dispute is resolved by determination, the intention of the Act is that the “determination… be final and binding between the parties as to the issues determined, except to the extent that the Act allows the determination to be revisited”.[21] Macfarlan JA, with whom Handley AJA agreed, held that on the proper construction of the Act, an adjudicator’s determination possessed a sufficient degree of finality to raise an issue estoppel precluding subsequent reagitation (in another adjudication) of the same issue: see, in particular, at [68] to [70]. However, as Macfarlan JA pointed out at [68], an adjudicator’s determination does not attract the principles of res judicata, because “the analogy between an adjudicator’s determination and a completed cause of action is an incomplete one”. Thus, as his Honour said (again at [68]), “[i]t is best that the applicable principles be recognised to be those of issue estoppel”.
[23] Further, Macfarlan JA said that to permit reagitation, in a subsequent adjudication, of issues decided in an earlier adjudication might amount to abuse of process: see, in addition to the paragraphs that I have referred to, his Honour’s reasons at [71]. I return to this at [28] below.
[24] Allsop P agreed that reagitation, in a subsequent adjudication, of issues decided in an earlier adjudication might be an abuse of process: see his Honour’s reasons at [2], [13] and [16]. His Honour would have reserved consideration of the applicability “of principles of estoppel to prevent any apparently abusive operation of the Act not specifically covered by” its relevant provisions: see, again, at [16].
[25] In Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWSC 416, Rein J held at [41] that the ground of the decision of the majority (Macfarlan JA and Handley AJA) in Dualcorp was based on estoppel.
[26] In The University of Sydney v Cadence Australia Pty Limited [2009] NSWSC 635, Hammerschlag J was faced with a submission that the majority holding in Dualcorp on issue estoppel was obiter. His Honour said at [46] that he had “significant doubt” that it was. I agree, as I agree with the analysis of Rein J on this point. In my view, Macfarlan JA and Handley AJA decided the matter on the basis that there was an issue estoppel even though an adjudicator’s determination could not give rise to res judicata. I think, reading the judgment of Macfarlan JA, it is clear that his Honour decided the matter on the basis of issue estoppel, and that what his Honour said about abuse of process was obiter.
[28] Rein J concluded in Perform that there was an issue estoppel, and that there was also an abuse of process, because the builder in that case had sought to reagitate, in a subsequent adjudication, claims decided by an earlier adjudication. In those circumstances, his Honour said, the Court could and should intervene to prevent the later adjudication from proceeding. His Honour gave five reasons for that at [47]. I paraphrase those reasons as follows:[27] In any event, this is in my view academic, because even if the majority view on issue estoppel were obiter, I agree with Hammerschlag J in Cadence at [47] that it is for someone other than a first instance judge to say that their Honours’ view is plainly wrong, and should not be followed.
(1) a subsequent payment claim seeking to reagitate matters determined in an earlier adjudication “is not… within the intent of the Act” and “is not… permitted by the Act”, and hence is not a payment claim for the purposes of the Act;
(2) the remedies for abuse of process or issue estoppel are dismissal or permanent stay, remedies that an adjudicator cannot grant;
(3) it is no answer to say that the respondent can raise the issue estoppel before the adjudicator, because requiring, or leaving, the respondent to do that is the very abuse that ought to be restrained;
(4) the Act aims to provide a speedy determination of claims for payment on an interim basis, not to burden parties to construction contracts with a repetitious and quasi-litigious process; and
(5) a determination under the Act is not final, but a means of enforcing interim payment; an unsuccessful party (claimant or respondent) retains all of its rights and remedies at law.
[29] Thus, his Honour said at [50], “[w]here steps have been taken in breach of and/or against the intent of a statutory scheme… it is part of this Court’s function to step in and prevent that occurring.”[31] As I have noted, the decision in Dualcorp concerned four only of the six claims that were put before the second adjudicator. The primary judge entered summary judgment in respect of the two claims that were not repetitious. The Court of Appeal upheld her Honour in this. As Macfarlan JA said at [73], “the primary judge was correct to refuse summary judgment in respect of the amounts which were the subject of the four invoices referred to in the [first] adjudicator’s determination”. Further, his Honour said at [74] “the primary judge was correct in the course she took”.[30] Hammerschlag J was faced with the same issue in Cadence . His Honour said that the considerations enunciated by Rein J in Perform favoured the grant of injunctive relief to prevent the proceedings continuing where there was abuse of process.
[32] In Perform , it appears from Rein J’s reasons at [22] that there was a complete correspondence between the first and second claims, in the sense that the second claim raised nothing that had not been raised in the first.
[33] There was no such exact correspondence in Cadence . However, Hammerschlag J said at [5], “even though [the second claim] is not exactly the same as the earlier claim, a substantial and unseverable part of it has already been adjudicated”. His Honour’s reasons at [13], [17], [19] and [20] show why this is so. Accordingly, his Honour held that the adjudication should not go forward. It does not follow that his Honour would have made the same order if the repetitious claims were not “substantial and unseverable”.
[34] The concept of abuse of process requires some further consideration. Gleeson CJ, Gummow, Hayne and Crennan JJ said in Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 at 265 [9]:
“What amounts to abuse of court process is insusceptible of a formulation comprising closed categories. Development continues.”
[35] The width of the concept is explained in the following paragraphs of their Honours’ reasons. As they said at [14] and following, one category of abuse of process is the use of a court’s procedures in a way that is frivolous, vexatious or oppressive; although it may be noted, as Gaudron J said in Ridgeway v The Queen (1995) 184 CLR 19 at 74, “there is no very precise notion of what is vexatious”.[36] In Walton v Gardiner (1993) 177 CLR 378, Mason CJ, Deane and Dawson JJ said at 393 that the institution or maintenance of proceedings in a court would constitute an abuse of process “if they can be clearly seen to be foredoomed to fail” or “if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings”. Although their Honours gave no examples of proceedings “foredoomed to fail”, proceedings bound to fail by application of the doctrine of issue estoppel would fall into this category.
[38] In the context of the Act (i.e., when asking whether there has been an abuse of the processes established by the Act), the essence of abuse of process is what Allsop P in Dualcorp described as:[37] Further, as Rein J noted in Perform at [48], it is also clear from the decision in Walton that this Court has power to restrain proceedings not only in the Court itself but also in other tribunals where those proceedings are an abuse of process. That follows from s 23 of the Supreme Court Act 1970, which gives this Court “all jurisdiction which may be necessary for the administration of justice in New South Wales”. Although in Walton the majority talked of the supervisory jurisdiction of the Court of Appeal under that section, by s 40 of the Supreme Court Act the court may be constituted (and in proceedings in any division and in business arising out of proceedings in a division is constituted) by a single judge.
(1) the “repetitious use of the adjudication process to require an adjudicator or successive adjudicators to execute the same statutory task in respect of the same claim on successive occasions” (at [2]);
(2) the use of the Act “to re-ignite the adjudication process at will in order to have a second or third or fourth go at the process provided by the Act merely because [the claimant] is dissatisfied with the result of the first adjudication” (again, at [2]); or
(3) “repetitious re-agitation of the same issues” (at [16]).
[39] Similarly, in Perform , the essence of Rein J’s reasons for concluding that there was an abuse of process was that, where an adjudication had been conducted and a determination given, the dissatisfied claimant sought to propound a claim, differently framed, for the very same works, goods or services (see at [42], [46]).
[41] It does not follow from the decisions to which I have referred that every repetition, in a subsequent payment claim, of a claim made in an earlier payment must amount to an abuse of process. That is so even if that earlier payment claim has been the subject of an adjudicator’s determination. The relevant concept is not abuse of process at large. It is abuse of the processes of the Act: specifically, the processes of the Act designed to ensure that builders and subcontractors (and of course others) received prompt and progressive payment for construction work performed or related goods and services provided. The question of whether there has been an abuse the processes of the Act must take into account relevant provisions of the Act. Specifically:[40] Again, in Cadence at [56], Hammerschlag J made it clear that the abuse of process lay in the fact that the claimant was seeking to re-agitate a payment claim that had been made and adjudicated upon.
(1) s 13(6) of the Act recognises that a claimant may include in a payment claim an amount that has been the subject of a previous payment claim; and
(2) s 22(4) of the Act deals, to an extent, with a repeated claim by providing that if particular construction work or related goods and services have been valued by an adjudicator, an adjudicator in a subsequent adjudication application is to give them the same value unless satisfied that the value has changed since that previous determination.
[43] I do not think that it is possible to state in some exhaustive fashion what combination of factors, including repetition, will lead to the conclusion that there is an abuse of process. (See, as to this, French CJ, Gummow, Hayne and Crennan JJ in Jeffery & Katauskas Pty Limited v SST Consulting Pty Limited [2009] HCA 43 at [27].) My concern is simply to make it clear that, in my opinion, it would be inconsistent with the provisions of the Act to which I have referred above to hold that repetition, by itself and without more, always amounts to abuse of process.
[42] Further, whether or not the repetition of a claim amounts to an abuse of process requires consideration of all relevant contextual facts. In addition, it requires consideration of the reasons why the courts intervene to prevent abuse of process. Those reasons include intervention to prevent a person from being vexed by having to reargue an issue already authoritatively decided. Thus, in deciding whether a repetition of a claim amounts to abuse of process, it may be relevant to take into consideration whether, because of fresh claims that are advanced, the respondent will be required to defend itself in any event.
54 There is one aspect of the reasons in Dualcorp which I did not consider in Urban Traders. Mr Kidd relied upon the approach of Allsop P summarised at [13] of his Honour’s reasons. His Honour there said that neither the contract under consideration nor s 8 of the Act permitted the creation of fresh reference dates by lodging the same claim for the same completed works in successive payment claims:
[13] I see no warrant under either the contract or the Act, s 8 for permitting a party in Dualcorp’s position to create fresh reference dates by lodging the same claim for the same completed works in successive payment claims. That is not the intended operation of the last phrase of s 8(2)(b) (“and the last day of each subsequent named month”).
55 The result, his Honour said at [14], was that a repetitious payment claim (i.e., one that purely repeated an earlier payment claim) was not a payment claim under the Act and did not attract the statutory consequences for which the Act provided:
[14] Here, the work had been done; Dualcorp, the subcontractor, had left the site; it claimed payment by six invoices; six weeks later it repeated that claim by reference to the same invoices and, in my view, in respect of the same reference date. Dualcorp was prevented from serving the second payment claim. The terms of s 13(5) are a prohibition. The words “cannot serve more than one payment claim” are a sufficiently clear statutory indication that a document purporting to be a payment claim that is in respect of the same reference date as a previous claim is not a payment claim under the Act and does not attract the statutory regime of the Act.
56 Those observations should be read in the context of what Allsop P had said at [8]. His Honour there noted that, although a claimant was limited to one payment claim per reference date (s 13(5)), amounts the subject of an earlier payment claim could be included in a later payment claim made by reference to another, and later, reference date (s 13(6)). Thus, cumulative payment claims, each based on a separate reference date, could include amounts the subject of previous claims. In those circumstances, if there had been an adjudication of the value of work included in one payment claim, it should be given the same valuation in subsequent payment claims unless the later adjudicator concluded that the value of the work had changed (s 22(4)).
57 Allsop P drew a distinction between:
(2) (at [13]), a situation where, once works were complete, a fresh reference date was “created” by the service of a repetitious payment claim (“the same claim for the same completed works”).(1) (at [8]), a situation where successive payment claims were served, based on successive reference dates, but later payment claims included work the subject of earlier payment claims; and
58 It follows from his Honour’s analysis that there is no necessary vice in submitting payment claims, incorporating claims for work that were made in earlier payment claims, on fresh reference dates where work is continuing under the contract. The vice arises (if at all) only where work has been completed, and the claimant takes advantage of the 12 month period referred to in s 13(4)(b) to “create” a reference date by serving, as a fresh payment claim, a claim that has been the subject of an earlier payment claim.
59 In this context, Mr Kidd relied also on what Macfarlan JA said at [53]: that s 13(6) of the Act did not authorise the inclusion in a later payment claim of an amount that had been the subject of an earlier adjudication. To allow this, his Honour said, would be inconsistent with the carefully structured provisions of the Act dealing with adjudication and other provisions pointing to considerations of finality:
[53] Secondly, as earlier mentioned, under s 13(5) only one payment claim may be served in respect of each reference date under the construction contract. There is a qualification that the claimant may include in a payment claim an amount that has been the subject of a previous claim. However, taking into account the Act’s objectives and its provisions, I do not consider that that qualification can, or should, be read as authorising the inclusion in a payment claim of an amount which has been the subject of an earlier adjudication. It would in my view be inconsistent with the carefully structured procedures as to adjudication and the provisions, which I am in the course of mentioning, pointing towards finality of adjudication determinations to give it that construction.
60 I confess that I have some difficulty with this aspect of the reasoning of Macfarlan JA. Section 13(6) authorises the inclusion in a later payment claim of an amount that has been the subject of an earlier payment claim. Section 22(4) contemplates that the amount that is “re-claimed” might have been the subject of earlier adjudication and provides for the consequences. I accept, of course, that s 22(4) does not deal with all occasions on which amounts are “re-claimed”, and that it is not an exclusive or exhaustive code dealing with the treatment of “re-claimed” amounts. Nonetheless, I do not understand how, in those circumstances, it can be said that the Act impliedly prohibits the inclusion, in a later payment claim, of an amount that has been the subject of a prior adjudication. His Honour’s approach would, with respect, make it difficult for the claimant to seek to have a later adjudicator revalue the work on appropriate evidence; yet the prospect of revaluation is expressly preserved by s 22(4).
61 The approach emerging from those paragraphs of the judgment of Allsop P in Dualcorp that I have set out at [54] and [55] above was picked up by Rein J in Perform at [42] and by Hammerschlag J in Cadence at [54] and [56].
62 Rein J said, as an alternative to his decision based on considerations of finality, that the payment claim with which he was concerned was incompetent, because the Act permits only one claim in respect of the same work. For the reasons that I have just given, I think, if I may say so with respect, that this overstates the position. Rein J based himself on the approach taken by Allsop P. However, as I have sought to point out, Allsop P did not consider that repetition of itself was itself sufficient to take a payment claim outside the Act.
63 Hammerschlag J expressed himself – at least, initially - in somewhat more limited terms. His Honour said at [54] that s 13(6) did not contemplate resubmission of a claim that had previously been adjudicated and rejected. If I may say so, that more limited statement of principle finds support both in the approach of Macfarlan JA and in that of Allsop P in Dualcorp.
64 However, at [56], Hammerschlag J appeared to put the matter somewhat more widely. His Honour said (echoing, I think, what I think Macfarlan JA had said in Dualcorp at [53]), “that the Act gives no right to re-make a payment claim which has earlier been made and adjudicated upon”. Such a “re-made” claim was, his Honour said, “not a payment claim within the meaning of the Act”. For the reasons that I have just given in relation to what Macfarlan JA said in Dualcorp at [53], I have difficulty with this aspect of the reasoning of Hammerschlag J.
65 I might add that it was essentially because of the concerns that I have stated above, as to some of the wider aspects of the reasoning in Dualcorp, Perform and Cadence, that I expressed the reservations that I did in Urban Traders at [41] to [43].
First issue: was the December payment claim a valid payment claim?
The competing submissions
66 Mr Kidd submitted that the December payment claim was not a valid payment claim for the purposes of the Act. He relied on what was said by Allsop P in Dualcorp at [8], [13] and [14]; by Macfarlan JA in the same case at [53]; by Rein J in Perform at [42]; and by Hammerschlag J in Cadence at [54], [56]. Mr Kidd drew from those cases the proposition that where a later payment claim resubmitted a claim for work the subject of an earlier payment claim and adjudication determination, that later payment claim was not a valid payment claim for the purposes of the Act: at least, in circumstances where there was no contention that the value of those works had changed since the previous determination. Alternatively, Mr Kidd submitted, the December payment claim was invalid to the extent that it repeated the claim for variations 1 to 8.
67 Mr Kidd submitted, correctly, that Austin had not suggested that there was any change in the value of the work comprised in variations 1 to 8. Indeed, as I have observed, the only change was an immaterial one relating not to the value of the work but, at most, the amount claimed for it (variation 3). Further, as Mr Kidd submitted, the evidence relied upon in support of those variations was identical in each payment claim.
173 I have indicated earlier some of the arguments that could have been advanced. It cannot be said that those arguments were futile (or that they would have been futile to one hearing them with an open mind). If the second adjudicator, having asked the parties for submissions on the operation of s 34, had considered the arguments in good faith and concluded, nonetheless, that cl 14.5 was void, his decision would be immune from interference. But it is not self-evident that, had he called for and considered submissions, he must have come to that conclusion. Thus, it is not self-evident that any submissions that could have been put must have failed to achieve their intended purpose.
174 It follows, in my view, that the second adjudicator’s failure to notify the parties of his views and to invite them to put submissions before him did deprive Watpac of an opportunity to put submissions that, if considered in good faith, could have caused the second adjudicator to conclude that s 34 did not operate. At least, the submissions would have put the s 34 point into its proper contractual context, and might have dispelled other misconceptions (including as to the “pre-conditional” operation of cl 20.3 in relation to backcharges). Thus, they might have caused the second adjudicator to change his provisional view.
Conclusion on the fourth issue
175 There has been a material denial of the measure of natural justice that the Act entitles a respondent in Watpac’s position to receive. That is because, simply put, an important element of its defence to the amount of the progress claim was rejected for a reason that Austin had never raised, and in respect of which it had been afforded no opportunity to put submissions.
Consequences and orders
176 It follows from what I have said as to issue estoppel and abuse of process that Austin should not have been permitted to reagitate its claim for variations 1 to 8. Since the matter went to adjudication, the appropriate relief, in relation to this aspect of the matter, would be to restrain Austin from enforcing its rights under the February determination to the extent of the amount allowed for those variations: $844,375.00.
177 It may follow from what I have said as to denial of natural justice that the February determination is void. A void determination creates no rights. The impact of that conclusion on Austin is far more significant than the amount of the backcharges in question. If the February determination is wholly void, Austin has no entitlement whatsoever under it.
178 The parties’ submissions did not address in detail the consequences of a finding of denial of natural justice of the kind that I have made. Mr Kidd submitted that a determination was either void or not; that there was “no notion of partial invalidity of an adjudication application”. The cases cited in support of this proposition included Brodyn at 443 [57]). Hodgson JA there said that “where there is a disclosed legislative intention to make a particular measure of natural justice a pre-condition of validity, failure to afford that measure of natural justice does make the determination void”.
179 His Honour was speaking in the context of a denial of natural justice that infected the whole of the claim. In this case, it is at least arguable that the denial affects a discrete part of the claim or, more accurately, a discrete aspect of the quantification debate. It is, perhaps, arguable that in those circumstances the consequence of denial of natural justice should be limited to the extent of the denial, on the basis that to leave otherwise unchallengeable conclusions enforceable is more consistent with the overall objectives of the Act.
180 Since the parties have not had an opportunity of addressing on this point, I think that the safest course is to publish these reasons and to direct the parties to bring competing short minutes of order together with written submissions in support. Unless the parties request otherwise, I would propose to deal with the form and extent of relief to be granted on the basis of those written submissions, without a further hearing.
181 In those circumstances I make the following orders:
(1) Direct the parties to exchange draft short minutes of the orders to be made in the consequence of these reasons, and written submissions in support of those orders, by 31 March 2010.
(2) Direct the parties to exchange written submissions in reply by 12 April 2010.
(3) Direct copies of all documents exchanged pursuant to orders 1 and 2 to be delivered to my Associate when they are exchanged.
(5) Reserve liberty to apply, either in respect of any application for oral argument in respect of the form of orders to be made or generally, on 7 days’ notice.(4) Stand proceedings over to 9:30am on 16 April 2010 for the making of final orders.
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