J Hutchinson Pty Ltd v Cada Formwork Pty Ltd (No 2)
[2014] QSC 98
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- Unreported Judgment
- J Hutchinson Pty Ltd v Cada Formwork Pty Ltd (No 2)[2014] QSC 98
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J Hutchinson Pty Ltd v Cada Formwork Pty Ltd (No 2)[2014] QSC 98
J Hutchinson Pty Ltd v Cada Formwork Pty Ltd (No 2)[2014] QSC 98
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Trial Division | |
PROCEEDING: | Application |
DELIVERED ON: | 15 May 2014 |
HEARING DATE: | On the papers |
JUDGE: | Peter Lyons J |
ORDER: | 1.It is declared that the decision of the Third Respondent dated 21 June 2013, and issued pursuant to the provisions of the Building and Construction Industry Payments Act 2004 (Qld) in respect of a dispute between the Applicant and the First Respondent, is void. 2.The First Respondent pay to the Applicant the sum of $233,333.92 and interest on that amount in the sum of $5,350.70 pursuant to section 58 of the Civil Proceedings Act 2011 (Qld). 3.The First Respondent pay the Applicant's costs of and incidental to the application, including any reserved costs, on the standard basis. |
CATCHWORDS: | RESTITUTION – OTHER MATTERS – RECOVERY OF MONEY PAID UNDER JUDGMENT OR ORDER – where the applicant paid money to the first respondent under an adjudication decision made by the third respondent – where the adjudication decision of the third respondent was found to be void – where the applicant submits it is entitled to an order for restitution of the amount it paid to the first respondent, with interest – where the first respondent argues that the Court should grant a stay of the order because final determination of the competing claims of the parties is pending in the District Court – whether the circumstances of the case justify an order for a stay PROCEDURE – COSTS – GENERAL RULE – COSTS FOLLOW THE EVENT – COSTS OF WHOLE ACTION – GENERALLY – where the applicant was successful in establishing that the adjudication decision of the third respondent was void – where the applicant seeks costs from the first respondent for costs of, and incidental to, its application – where the first respondent argues that it would be unfair for it to pay costs when it was not its fault that the adjudication decision was void and that, in any event, there is a pending District Court proceeding which would determine such issues – whether the ordinary rule of costs following the event should be applied in the circumstances Building and Construction Industry Payments Act 2004 (Qld), s 7, s 8, s 100 Uniform Civil Procedure Rules 1999 (Qld), r 260A, r 681(1) Northbuild Construction Pty Ltd v Central Interior Lightings Pty Ltd [2012] 1 Qd R 525; [2011] QCA 22, cited |
COUNSEL: | K E Downes QC for the applicant |
SOLICITORS: | Holding Redlich for the applicant Paul J Hick for the first respondent |
[1] On 7 April 2014 I gave reasons for judgment on the applicant’s substantive application (April reasons)[1]. In the April reasons, I concluded that an adjudication decision of the third respondent under the provisions of the Building and Construction Industry Payments Act 2004 (Qld) (BCIP Act) was of no effect[2]. I invited submissions about the relief to be granted.
[2] It is uncontentious that I should declare the decision of the third respondent to be void. The applicant seeks an order for the repayment by the first respondent of a sum paid to it by the applicant, pursuant to the adjudication decision, together with interest. The first respondent contends that an order for the repayment to the applicant of the amount paid by it should be stayed pending determination of a District Court action. The applicant seeks an order for its costs; and the first respondent contends that each party should bear its own costs.
Background
[3] The first respondent provided formwork services to the applicant for a construction project. After a dispute between them, the first respondent took steps under the BCIP Act, resulting in the adjudication decision, the effect of which was that the first respondent was entitled to an amount of $222,625.70, including GST, together with interest from 27 May 2013, and costs. On 27 June 2013, the applicant commenced the substantive proceedings. On 2 July 2013, it paid the first respondent the sum of $233,333.92 pursuant to the adjudication decision. That amount included the costs paid by the first respondent of the adjudication.
[4] On 16 July 2013 the applicant commenced proceedings in the District Court for restitution in the amount of $218,226.84, calculated on the basis that it had already paid the amount of $233,333.92 to the first respondent pursuant to the adjudication decision. The first respondent counterclaimed in those proceedings for an amount of $353,091.92, which also took into account the payment made under the adjudication decision.
Stay application
[5] As has been mentioned, the submissions for the first respondent in support of the stay application refer to the District Court proceedings. The first respondent then submits that the court has a discretion to grant a stay of any order for repayment; and that final determination of the competing claims of the parties as to a right to payment, including a right to the amount paid pursuant to the third respondent's adjudication decision, will not be determined until the finalisation of the District Court proceedings.
[6] The applicant submits that there is no legal basis for an order staying an order for repayment to it. It submits that the first respondent is not entitled at law or otherwise to withhold repayment of the sum paid to it, and to do so “would defeat the whole purpose” of the BCIP Act. It submits that, the invalidity of the third respondent's adjudication decision having been established, there is no basis at law for the first respondent's retention of the money paid under the order.
[7] An object of the BCIP Act is to ensure that a person is able to recover progress payments for construction work carried out under a construction contract, and establishes a procedure for that purpose[3]. The interim or provisional nature of any adjudication decision and any payment made under it is made apparent by s 100 of the BCIP Act[4]. The submissions for the applicant do not explain how it might be concluded that “the whole purpose” of the BCIP Act would be defeated by an order permitting the first respondent to withhold repayment of the amount paid pursuant to the third respondent's adjudication decision, until the District Court proceedings have been determined. The proposition for which the applicant contends is not self-evident. I do not accept it.
[8] In the April reasons, I referred to authorities supporting my conclusion that it would be appropriate to order the first respondent to refund the monies paid pursuant to the third respondent's adjudication decision[5]. Some of those authorities related to adjudication determinations under similar legislation in force in New South Wales. Plainly enough, they were made in circumstances where the ultimate entitlement of the parties to monies payable in relation to the performance of a construction contract remained undetermined. The granting of a stay is inconsistent with the proposition (derived from those cases, and adopted in the April reasons) that an order should be made for the repayment of the money paid pursuant to the adjudication decision.
[9] It might observed that an order for a stay would, in the circumstances, have an effect akin to granting the first respondent a possessory security over the applicant’s funds, in advance of the determination of its entitlement to payment. The only matter relied upon by the first respondent is the existence of the undetermined litigation in the District Court. The granting of an order of this kind in such circumstances would be highly unusual. Such an order would also be somewhat analogous to a freezing order[6], although it is not suggested that the circumstances of this case would justify the making of such an order.
[10] Accordingly, I am not prepared to grant a stay of the order.
Costs
[11] The applicant submits that the order it seeks is the usual order for costs made in favour of a successful party. The first respondent submits that the fact that the adjudication decision is void is not its fault, but the fault of the third respondent; and that it would be anomalous that it would be required to repay the costs it paid to the adjudicator as well as the costs of the present application. Moreover, it relies upon the existence of the District Court proceedings, where the entitlements of the parties will ultimately be determined.
[12] In response to the first respondent's submissions on costs, the applicant submits that the actions of the first respondent led the third respondent into error, with the result that his decision was void. Reference is also made to offers to settle. The applicant submits that the first respondent, having contested the proceedings, caused the applicant to incur costs which need not have been incurred.
[13] The BCIP Act provides a mechanism by which a person who has carried out construction work under a construction contract might recover a progress payment, in advance of the ultimate determination of the entitlements of the parties to the contract. It has the consequence that, in the circumstances to which it applies, a person performing such work receives payment on a provisional basis, the person for whom the work is performed bearing the risk that the other person will be able to repay the money, if not ultimately entitled to retain it. However, that outcome is only intended to be the consequence of a valid adjudication determination. The fact that the first respondent might ultimately be found to be entitled to an award of the amount identified in the adjudication decision does not mean that the applicant was not entitled to pursue the present proceedings, or should suffer any penalty in costs because it did so. Moreover, the first respondent having unsuccessfully contested the proceedings, the ordinary rule as to costs[7] would support an order for costs in favour of the applicant.
[14] The applicant's submissions that the actions of the first respondent in delivering material to the third respondent, without reference to the applicant, led the third respondent into error does not sit comfortably with my finding in the April reasons[8]. However, that is not determinative of the applicant's costs application.
[15] In the circumstances, it seems to me appropriate to make the costs order sought by the applicant.
Conclusion
[16] The applicant sought an order for interest on the amount to be repaid to it. No submissions were made to the contrary. Accordingly, I propose to include in my order, an order for interest.
[17] I shall make an order in the terms of the draft submitted on behalf of the applicant.
Footnotes
[1] [2014] QSC 63.
[2] [2014] QSC 63 at [58]; see also [63].
[3] See ss 7 and 8 of the BCIP Act.
[4] See also Northbuild Construction Pty Ltd v Central Interior Lightings Pty Ltd [2012] 1 Qd R 525, 550 at [66].
[5] [2014] QSC 63 at [83].
[6] See r 260A of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR).
[7] See r 681(1) of the UCPR.
[8] See [2014] QSC 63 at [35]-[36].