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SUPREME COURT OF QUEENSLAND
Karam Group Pty Ltd v Earthmoving Contractors Pty Ltd & Ors  QSC 10
KARAM GROUP PTY LTD
EARTHMOVING CONTRACTORS PTY LTD
PAUL JASON HICK
BS 482 of 2021
Supreme Court of Queensland at Brisbane
9 February 2021
28 January 2021
The order of the Court is that:
EQUITY – EQUITABLE REMEDIES – INJUNCTIONS – INTERLOCUTORY INJUNCTIONS – RELEVANT CONSIDERATIONS - where the Applicant applies for interlocutory injunctive relief restraining enforcement of an adjudication decision; where the Applicant proposes that an amount of an adjudication decision be paid into court which includes amount paid in respect of sub-contractor’s charges; where the Applicant seeks orders for restraint from filing an adjudication certificate in respect of adjudication decision - whether an injunction should be granted; whether there is a prima facie case; whether the applicant is entitled to the final relief sought; whether the balance of convenience favours the making of the interim orders
Building Industry Fairness (Security of Payments) Act 2017 (Qld)
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
M Steele for the Applicant
B E Codd for the First Respondent
McInnes Wilson Lawyers for the Applicant
Construct Law Group Pty Ltd for the First Respondent
- The applicant, Karam Group Pty Ltd (the Applicant), filed an originating application seeking to set aside an adjudication decision of the third respondent made on 18 December 2020 under the Building Industry Fairness (Security of Payments) Act 2017 (the BIFA), in favour of the first respondent, Earth Moving Contractors Pty Ltd (the First Respondent).
- The Applicant as developer and the First Respondent entered into a design and construct contract whereby the first respondent was to perform bulk earthworks, construct basement walls, temporary rock anchoring systems and other site remediation and preparation works in relation to the construction of a building in Coorparoo.
- On 31 August 2020 the First Respondent issued a purported payment claim in the amount of $2,838,952.76 (including GST). A payment schedule was issued by the Superintendent on 9 September 2020 for an amount of $47,529.15 (including GST). In September a subcontractor’s charge was issued by Queensland Pre-Stressing (QPS). The First Respondent accepted it was liable to pay QPS on 2 October 2020. The Applicant paid an amount of $45,303.09 into Court in respect of the QPS charge under s 126 of the BIFA. An adjudication application was lodged by the First Respondent on 22 October 2020 and an adjudication response was filed on 27 November 2020. The third respondent delivered an adjudication decision on 18 December 2020 (the adjudication decision) and found that an adjudicated amount of $2,218,619,17 (incl GST) plus interest plus the third respondent’s fees.
Applications to be determined
- There are two applications before the Court. The present application made by the Applicant is for interlocutory injunctive relief restraining enforcement of the decision. In particular, the Applicant seeks orders that it pay into court the adjudicated amount of the decision ( deducting amounts it contends have already been paid) and that the First Respondent be restrained, until the originating application is determined, from filing an adjudication certificate in respect of the decision, to prevent it from enforcing the decision. It also seeks directions as to the conduct of the matter.
- The first respondent seeks order that the applicant pay the adjudicated amount determined to be payable to it by the adjudicator in his decision made on 18 December 2020 and other directions as to the conduct of the matter.
- The second and third respondents have not taken any role in the present application.
- Establishing a prima facie case does not require the applicant to show that it is more probable than not that at trial it will succeed; it is sufficient that the applicant shows a sufficient likelihood of success in the circumstances to justify, in the circumstances, the preservation of the status quo pending the trial. In the present case, the Applicant contends that there is a prima facie case that the decision should be set aside on the basis of jurisdictional error, or on the basis of fraud.
Prima facie case
- The BIFA like the Building and Construction Industry Payments Act 2004 which it repealed establishes a statutory-based scheme of rapid adjudication for the interim resolution of “payment on account” disputes involving building and construction work contracts. The rapid adjudication does not extinguish a party’s ordinary contractual rights to obtain a final resolution of a payment dispute by a court or tribunal.The Court has jurisdiction to declare an adjudication decision invalid and void for jurisdictional error pursuant to its inherent jurisdiction.
- The Applicant claims there are two jurisdictional errors which affect the adjudication decision. The Applicant contends that insofar as the First Respondent’s purported payment claim included construction work done and amounts incurred on 31 August 2020, that was after the available reference date nominated on its payment claim, namely 30 August 2020, which was acted upon by the third respondent as the relevant reference date. It contends therefore that the First Respondent had no entitlement to a progress payment in respect of that construction work and those amounts incurred after 30 August 2020 which constitutes a jurisdictional error and the whole decision is liable to be set aside.
- Secondly, the Applicant contends that part of the First Respondent’s adjudication application proceeded on a different basis than that set out in the payment claim insofar as the payment claim did not seek any amount in relation to a delay claim in item XI.A, whereas the adjudication application using the same description “XI.A” claimed amounts of $56,000 and $137,504.36 for delay. It contends that the First Respondent was advancing a different contention in relation to item XI.A in the adjudication application from the payment claim, which was accepted and acted upon by the adjudicator. It contends that the adjudicator who was aware of the difference, did not have jurisdiction to proceed to consider the delay claim in the adjudication application when it was not the subject of the purported payment claim and in doing so made a jurisdictional error.
- There is an allegation that the first respondent has obtained the adjudication decision by fraud in respect of claims with respect to latent conditions in respect of a need to remove excess water from site because of an alleged leak. The Applicant submits that it is “presently investigating serious allegations relating to the respondent’s claim in respect of alleged latent conditions (related to water leaks in QUU Infrastructure) valued at more than $1.6 million in the Decision”. The allegation is that the First Respondent knowingly used the Applicant’s water and claimed for associated dewatering and treatment costs on the basis that the water removed was a latent condition, when the first respondent altered one of the existing meters on site to use and used significant amounts of water from a tap fitted to the missing meter and water from another meter on site, rather than there being an unidentified leak. While not a jurisdictional error, the Applicant relies on the fact that if there is evidence that an adjudication decision has been obtained by fraud, the decision is liable to be set aside.
- The First Respondent contends that the Applicant has not established that it has a prima facie case in relation to any of the three grounds raised.
- The First Respondent does not cavil with the contention of the Applicant that the reference date is a jurisdictional fact, and a statutory condition to serving a payment claim, which is in turn a precondition to an adjudication application. However, it contends that notwithstanding the reference date nominated in the payment claim was 30 August 2020, the payment claim, which it accepts did contain work carried out on 31 August 2020, was issued on 31 August 2020 and served on 31 August 2020. The First Respondent contends that by reference to the terms of the contract, the relevant reference date for making the payment claim was in fact 31 August 2020, notwithstanding the reference on the payment claim to the reference date being 30 August 2020. It contends 30 August 2020 fell on a Sunday and therefore the deeming provision operated to extent that time to the Monday, 31 August 2020. Thus the jurisdictional fact, namely the reference date for the payment claim, did exist. There was therefore no jurisdictional error in work carried out on 31 August 2020 being included in the payment claim, the subject of the adjudication decision. In that regard, the First Respondent points to the fact that a payment claim under s 68 of the BIFA does not need to specify the particular reference date. Thus, the fact that the payment claim referred to 30 August 2020, is therefore not a jurisdictional error. The First Respondent contends that it is the existence of the reference date, which is the relevant jurisdictional fact, and which is a precondition to the statutory authorisation to serve the claim.
- The Applicant responds that any deeming provision in the contract would have to be read in conjunction with BIFA pursuant to which the reference date is to be determined, relying upon the decision of the Court of Appeal in All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd. It contends that the deeming provisions would not apply as there is nothing required to be done for the deeming provision to operate. The dates in item 33 of the contract simply set a time. They do not require any act to be done to which the deeming provision could apply. In any event, if 31 August 2020 is the correct reference date, that was not adopted by the adjudicator and by accepting 30 August 2020 as the reference date, the adjudicator misconstrued a jurisdictional fact.
- It is correct, as the First Respondent submitted, that s 68 of the BIFA does not require the payment claim to specify the reference date, even though it is a statutory condition that there be a reference date for a party to be entitled to a progress claim, and therefore for the making of a payment claim. There is authority supporting the fact that a payment claim which includes work beyond the reference date is not a valid payment claim.
- If a decision is challenged on the basis that the jurisdictional fact does not exist, the Court may itself enquire whether the jurisdictional fact does exist unless the statute precludes that approach. It is uncontroversial that the existence of a valid reference date is a jurisdictional fact. The nomination of a patently incorrect reference date in a payment claim does not necessarily deprive an adjudicator of jurisdiction.
- A reference date is defined under s 67(1) of the BIFA:
“…as date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out, or related goods and services supplied, under the contract;…”
- Section 70 of the BIFA provides that:
“From each reference date under a construction contract, a person is entitled to a progress payment if the person has carried out construction work, or supplied related goods and services, under the contract.”
- Section 75 of the BIFA provides that a person who is or claims to be entitled to a progress payment may give a payment claim to the person who, under the relevant construction contract, is or may be liable to make the payment.
- Section 84 of the BIFA provides for the adjudicator to decide whether or not he or she has jurisdiction to adjudicate the application.
- Item 33 of the contract between the Applicant and First Respondent provides that the times for progress claims are the “15th and 30th” days of each month apart from February, and “15th and 29th” days of February. Under clause 1 of the contract, “time for doing any act or thing under the Contract shall, if it ends on a Saturday, Sunday or Statutory or Public Holiday, be deemed to end on the day next following which is not a Saturday, Sunday or Statutory or Public Holiday.” Clause 37.1 of the Contract provides that:
“The Contractor shall claim payment progressively by submission of a progress claim:
- (a)At the times stated in Item 33 after the time for commencement until the date of practical completion….”
- In All Seasons Air Pty Ltd v Regal Consulting Services, deeming provisions of a contract as to service of a progress claim at an earlier date than the date upon which a progress claim could be made, did not operate to provide that a payment claim had been served on and from a reference date which was a later date. The facts in that case were, however, quite different to the present and it is of limited relevance the Applicant.
- Item 33 of the contract specifies the times for a contractor to claim payment. On one construction of clause 37.1, item 33 provides the time on which the progress claim may be submitted and does require the doing of an act to which the deeming provision would apply. However, there is also another construction open, namely that item 33 provides for the time payment may be claimed, rather than for the act of submission, to which the deeming provision may operate. That is supported by the fact that different dates are specified in relation to February.
- If the deeming provision in clause 1 does apply, it is arguable that 31 August 2020 is a date “worked out under the contract as the date on which a claim for a progress payment may be made for construction work.”
- Even if the deeming provision in clause 1 did apply it may be limited to permitting service of the progress claim on 31 August 2020, it remains arguable that it does not necessarily permit payment to be claimed for work beyond the date specified in item 33 and operate to change the reference date from 30 August 2020.
- While there are arguments in favour of both the Applicant and the First Respondent, I am satisfied that the applicant has established it has a prima facie case of a jurisdictional error insofar as the payment claim includes work for which the First Respondent had no entitlement to make a payment claim for, namely work done on 31 August 2020, which was after the prima facie reference date of 30 August 2020. In particular the fact item 33 does nominate times not acts and the reference to particular dates in February support the Applicant’s contention such that there is a sufficient likelihood of success.
- The adjudicator expressly found that the correct reference date was 30 August 2020 as nominated by the First Respondent at the time, in determining he had jurisdiction. Even if the correct reference date was 31 August 2020, the adjudicator has arguably committed a jurisdictional error in determining he had jurisdiction on the basis the reference date was 30 August 2020, as submitted by the Applicant in reply. That will depend on the construction of the BIFA.
- I am satisfied that the Applicant has established it has a sufficient likelihood of success and that it does have a prima facie case that the adjudicator has made a jurisdictional error and the adjudication decision is liable to be set aside.
Potential Allegations as to fraud
- As to the question of potential fraud, Jason Karam, the director of the Applicant has deposed to evidence which may suggest fraud by the First Respondent in relation to its claim for a purported latent condition arising from alleged Queensland Urban Utilities leaking pipes, which is said to have come to his attention in January 2021. The amount awarded in the adjudication decision is some $1.6 million.
- The Applicant states that the fist respondent was to supply its own non-recycled water, which is not town water. Jason Karam states that a water meter that was missing and fitted with a tap while the First Respondent was on site, was not missing when the First Respondent took possession of the site. There is evidence showing where a tap had been fitted to a Queensland Urban Utilities water line leading into where a missing water meter should have been and of water being used by the First Respondent or its agents, and water leaking down the wall where the meter was fitted. Jason Karam has attached photographs which he contends shows the First Respondent was using the Applicant’s town water from the tap fitted to the water line where the missing water meter was, as well as from another water meter. He also provides evidence suggesting that the town water used was three times the monthly average between August 2019 and September 2020. Photographs also show the First Respondent or its agents using that water from that meter. Based on his investigations he believes the First Respondent has claimed for, and been paid, to supply water to the Applicant which was the Applicant’s own town water and for removal of excess water as a result of an unidentified leak which was in fact the result of the first respondent using water from the missing water meter and another water meter.
- The First Respondent’s response was that even if the Applicant was correct, it was a non-jurisdictional error on the face of the record, and the Supreme Court’s jurisdiction is to make an order in the nature of certiorari for such an error. The Applicant, however, raises a different case and contends that a decision obtained fraud is liable to be set aside, as was discussed by McMurdo J in Hansen Yuncken v Ericson t/a Flea’s Concreting, rather than jurisdictional error. The claim does not appear to be presently raised in the relief sought in the originating application.
- If fraud was established in the making of the claim that part of the adjudication decision which was affected by fraud would be liable to be set aside, not necessarily the whole claim. On the present state of evidence, while there is some evidence identified by the Applicant to support its allegations that it did use water on site which was town water for which it may have made a claim based on a latent condition, the evidence of whether it was done with knowledge attributable to the First Respondent, it is not presently sufficient to establish that the Applicant has any likelihood of success on the basis that it obtained the adjudication decision in respect of this part of the claim by fraud.
- As to the third ground relied upon by the Applicant in respect of the First Respondent’s delay claim, the First Respondent contends that the only substantive difference between the payment claim and the adjudication application was that the payment claim included amounts which upon proper consideration in the adjudication application, were not maintainable and that those amounts were relinquished. It contends that the fact the claim may have been framed in terms of a claim for variations in the payment claim as opposed to a claim for delay in the adjudication application is not a substantive difference, and that the latter was not a new claim. In that respect, the First Respondent referred to the fact that a payment claim under s 68 of the BIFA only requires a payment claim to state the amount claimed and the identification of the work claimed, rather than how the amounts making up the amount claimed were constituted, unlike in the case of a payment schedule. It also points to the fact that the amounts relating to the claim are small, $56,000 and $137,504.36 of the adjudication decision, which is in excess of $2 million. Even if the Applicant was successful, the First Respondent submits that s 100(4) of the BIFA permits severance of that part of that adjudication decision.
- The payment claim contains schedules which were referred to in the payment claim itself as the “justification worksheet”. The worksheet did not include any specific amounts for XI.A in respect of delays due to the “WUU leak and well holes”. It did include amounts for additional dewatering and water treatment costs, additional site supervision, project management costs and additional site overheads for plant and equipment attributed to the latent condition as outlined in XI.I ‑ XI.VI.
- The adjudicator noted that the Applicant contended the amount in XI.A was raised for the first time in the adjudication application. However, the adjudicator considered that while that the First Respondent had reframed its purported adjudication application, the basis of what was claimed was contained in the payment claim as variation claims. The adjudicator therefore rejected the argument of the Applicant that the claims for delays was on a different basis than that previously advanced and that the adjudicator was deprived of jurisdiction to decide the claims.
- While it may be accepted that a payment schedule requires more detail than a payment claim, the payment claim must reasonably identify the construction work to which it related such that the basis of the claim is reasonably comprehensible to the responding party.
“50. …. He said that when an adjudication application put a claim on a basis that had not been advanced in the payment claim, the adjudicator, as a matter of jurisdiction, could not deal with it; and there would also be denial of natural justice (at ). That was because (as his Honour explained at ), s 20(2B) would prevent the respondent from including in its adjudication response any reasons relating to the new claim; but it could not deal with a new claim except by doing that which was prevented by s 20(2B). To determine such a new claim upon a basis that the respondent could not answer was, his Honour said, a denial of natural justice.
- In some cases, the point will be clear. For example, the particular challenge in John Holland was clearly grounded because the claimant, for the first time in its adjudication application, raised an alternative contractual basis for a particular entitlement. But in other cases, as Einstein J pointed out, there will be questions of fact and degree involved: for example, when no new basis is advanced for a claim but further documentation or other material is relied upon in support of it. The test would appear to be whether s 20(2B) would prevent the respondent from dealing with that new material; and, if it did, whether that would amount to a denial of natural justice (see, for example, at ,  and )…..”
- There are similar restrictions in the provisions with respect to payment schedules and the adjudication response in the BIFA, to those considered by Einstein J in John Holland, and McDougall J in Contrax Plumbing & Ors, such that those decisions still arguably have application to the BIFA.
- There is a clear difference in the way the claim is formulated in the payment claim, as opposed to the adjudication claim in respect of delay. Although the payment claim in XI.A says that “(in the alternative to Variation Claims X and XI above),” it does not state any amounts, nor identify whether the alternative claim is to all of the Variation Claims or only part. The contention of the First Respondent is that the adjudication claim, in substance, contains the same claim as the variations claim characterised as a delay claim which claims less than that in the payment claim for the same items. That has some support from the fact that it is stated to be in the alternative to those claims in the payment claim, and the similarity in the amounts claimed. However, the delay claim is made on a different legal basis and was arguably not foreshadowed in the payment claim. Whether the delay claim in the adjudication claim has been sufficiently raised in the payment claim will depend upon an examination of the documents referred to in XI.A, potentially surrounding circumstances, and the legal basis of each claim. It is not a matter which I can determine on the present evidence.
- Given the omission in the payment claim of any amounts for the delay claim and the lack of specificity in stating that it was alternative to the variation claims, the delay claim was arguably not sufficiently raised by the payment claim, in which case the adjudicator should not have considered the claim and there was a jurisdictional error by the adjudicator in proceeding to do so. I am satisfied in that regard that there is a prima facie case presently established by the Applicant, noting that the Court does not have to be satisfied that it is more probable than not that the Applicant will succeed at trial but that there is a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial. However, I do consider there is substance in the First Respondent’s argument and do not regard the prima facie case as a strong case.
Balance of convenience
- The principles of determining where the balance of convenience lies were conveniently stated by Bond J in BRB Modular Pty Ltd v AWX Constructions Pty Ltd & Ors. Normally the factors that are required to be considered are controversial. However, that is not the case in the present case.
- As to the balance of convenience, the Applicant relies on three matters, namely:
- (a)that the First Respondent’s interests are protected by the Applicant’s offer to pay an amount into court which provides security for the claim that wouldn’t otherwise be available. It saves the First Respondent having to take steps for the enforcement of the decision;
- (b)that the Applicant seeks determination of the originating application in a relatively short time, taking into account the ability of the Applicant to undertake necessary investigations and religious obligations of its director; and
- (c)that if the orders are not made, the Applicant will lose any real protection irrespective of the outcome of the substantive proceeding, because the First Respondent will be able to file the adjudication certificate as a judgment debt and take enforcement action in respect of the adjudicated amount.
- Conversely, the First Respondent submits that the balance of convenience favours a refusal of the injunction. It submits that even if the Court is satisfied that there is a prima facie case, the strength of the case is not sufficient to overcome the policy of the BIFA, described as pay now and argue later. Further it contends that the amount which the Applicant seeks to pay into Court is insufficient to meet the adjudication decision in the event that the Applicant is unsuccessful since it does not contain a proper calculation of interest and seeks to partition amounts payable by reference to the District Court proceedings relating to a charge asserted by a third party. It contends that the injunction should not be granted unless the Applicant pays the maximum potential amount for which it is liable to pay under the adjudication decision, and gives the usual undertaking as to damages. Further it claims that there is no evidence that the First Respondent cannot repay the monies.
- The First Respondent contends that there are two lines of authority in respect of the balance of convenience in the context of considering an application for an interlocutory injunction in relation to legislation in the nature of the BIFA.
- The First Respondent contends that the correct approach is that identified by Daubney J in Wiggins Island Coal Export Terminal Pty Ltd v Sun Engineering (Qld) Pty Ltd (WICET), and P Lyons J in Sunshine Coast Regional Council v Earthpro Pty Ltd & Ors, in applying the statements of Keane J in RJ Neller Building Pty Ltd v Ainsworth, which referred to the policy of the Building and Construction Industry Payments Act 2004 (Qld) (the BCIPA), the preceding Act to the BIFA, being one which assigned the risk that the builder might not be able to refund the money, prima facie to the contractor, in determining the balance of convenience. According to the First Respondent, there is a legislative intent of “pay now and argue later” with the pay now component directed at the payment to the claimant, and not a payment into Court, addressed by the Court in Neller. The First Respondent submits that by reason of the High Court’s obiter in Probuild, the criminalisation of the act of failing to pay an adjudicated amount in s 90 of the BIFA and the granting of the power to caveat real property upon non-payment of an adjudicated amount, in part 6A of the BIFA, the weighting of the legislative intent assumes a pillar in addressing the balance of convenience consistent with the decisions of Daubney J in WICET, and P Lyons J in Sunshine Coast Regional Council v Earthpro Pty Ltd & Ors.
- The First Respondent contends , that a decision of Bond J in BRB Modular Pty Ltd v AWX Constructions Pty Ltd & Ors, that there is no policy of “pay now, argue later” or to assign the risk to a contractor of a builder not being able to repay an adjudicated amount where there a prima facie case of jurisdictional error can no longer be correct in light of the High Court decision of Probuild Construction (Aust) Pty Ltd v Shade Systems Pty Ltd.
- Thus, the First Respondent contends that even if there is a prima facie case it is not sufficient to overcome the policy of the Act and the injunction should be refused.
- The First Respondent further contends that by paying the money into Court in respect of the Applicant’s liability to various subcontractors’, under s 126 of the BIFA, the Applicant has admitted liability to pay the First Respondent the sums in question and the present application is in the nature of an abuse. It also contends that the hearing date, which was obtained without consultation, is in jeopardy given the Applicant has identified its grounds of claim late in this application and the allegation of fraud is yet to be properly articulated.
Where does the Balance of convenience lie?
- A determination of this matter finally in a short timeframe would favour the grant of the injunction. The hearing of the originating application has been set down for 13 April 2021. There is some controversy as to how that occurred, as it was without the First Respondent’s consent having been obtained or any hearing. Be that as it may it has been set down for hearing. The fact that the fraud allegations are matters to still be investigated, and if raised in all likelihood will require the calling of evidence which could jeopardise the hearing date, is a real risk given that it will require proof of various factual allegation. That decreases the weight that might otherwise be attached to a date having been allocated for the hearing in 2 and a half months in favour of the granting the injunction, as there is a real possibility of the determination of the originating application being delayed.
- An offer to pay the amount of an adjudication into the Court generally favours the grant of an injunction. There is, however, controversy as to whether the amount to be paid into the Court can be regarded as being for the amount of the adjudication decision. The amount offered to be paid by the Applicant into Court is $1,421,245,31. The basis of the calculated amount is set out in letter of the Applicant’s solicitors to the First Respondent solicitors dated 25 January 2021: namely the adjudicated amount is $2,218,619,17 from which the Applicant deducts $47,529.15, paid by the Applicant to the First Respondent and an amount of $749,844.71, which the Applicant paid into the District Court under s 126 of the BIFA as a result of notices of claim of subcontractors charges over money payable to the First Respondent.
- The adjudication decision awarded the First Respondent $2,218,619.17 plus GST plus interest. The amount proposed to be paid by the Applicant into Court does not appear to include a calculation of interest, nor a calculation for the adjudicator’s fees given the terms of the letter of the Applicant’s solicitors dated 25 January 2021.
- The amount the First Respondent calculates it is entitled to recover is $2,304,105.52 which is calculated as set out in  of the First Respondent’s submissions. While the First Respondent deducts the amount of $47,529.15, it makes no deduction for the amounts paid into the District Court by the Applicant which it contends should not be taken into account as part of the adjudicated amount. It also includes amounts for interest and for an amount in respect of the adjudicator’s fees. It calculates the interest that is payable up until 2 February 2021 to be $85,193.18.
- The amount that has been paid into the District Court pursuant to s 126 of the BIFA is on the basis that it is money that the Applicant would be obliged to retain money that is or is to become payable by the person under the Contract to satisfy the claim “until the court in which the claim is heard makes an order about to whom and it what way money is to be paid” (s 126(2) of the BIFA). The monies may be paid out only under the order of the Court. The payment into Court discharges the person from all further liability relating to the amount and of the costs of any proceeding in relation to that amount (see s 126(5) of the BIFA).
- As those monies are payable to the First Respondent under the adjudication decision unless it is set aside, the Applicant contends they were paid into Court in accordance with s 126 and should be taken into account in the payment of the amount owing under the adjudication decision. The amount of $45,303.09 was paid prior to the adjudication decision, and does not appear to be part of the amount payable under the adjudication decision to which the subcontractor’s charge would attach. I will address the position in respect of $704,541.62 paid into the District Court below.
- The fact that the amount proposed to be paid into Court is less than the adjudicated amount is a factor which would reduce the weight of this factor in favour of granting of an injunction. A number of decisions of this Court have held that there was a policy evinced by s 31(4)(b) of the BCIPA that there must be a payment in respect of an invalid or possibly invalid decision. That provision required payment into court of an unpaid portion of the adjudicated amount pending a final decision as security when an adjudication decision has been filed as a judgment for a debt and a respondent to a payment claim commences proceedings to set it aside. Consistent with the purpose of s 31(4)(b) of the BCIPA, it has been held by the Court that it the policy of the Act that a payment be made into court in respect of an application to set aside a judgment debt arising from an adjudication decision, extends to an application for a declaration and permanent injunction even though it is not an order to set aside a judgment, which are of the same effect and is a relevant consideration in the determination of an application for an interlocutory injunction. Section 31(4)(b) of the BCIPA is mirrored in s 93(4)(b) of the BIFA.
- While the Applicant contends the money paid into the District Court has been paid on the basis that it is monies payable to the First Respondent under the adjudication decision, which is the stated basis of the payment, and should be accounted as such, it does not automatically follow that those monies paid should be regarded in the same way as if they were part of the whole amount paid into Court in respect of this application.
- There was no obligation upon the Applicant to pay the monies into the District Court pending the outcome of the present application. They could have retained the amount, pending the outcome of the present proceeding in accordance with s 126(2) of the BIFA, albeit that it would expose them to potential costs of the District Court proceedings by not paying the monies into the Court. How the monies are paid out will depend upon the District Court making a final determination in respect of the proceedings arising out of the subcontractors’ charge if the proceedings progress and the subcontractor proves its claim and the Court orders that the monies be paid to the subcontractor. The payment of those monies will not depend upon the outcome of the present proceedings. Even if the subcontractors are unsuccessful in their proceedings, the monies would not automatically be paid to the First Respondent without an order of the Court. Given s 200 of the BIFA, which does not affect any right a party may have under a contract, the Applicant may contend that the monies are not payable to the First Respondent under the contract even if the Applicant is not successful in this proceeding.. While the amount of $704,5441.62 which is said to have been payable by reason of the adjudication decision, the First Respondent may be left in a position of having to argue its entitlement to the monies to be retained in the District Court if the proceedings against it are unsuccessful and this proceeding has not resolved. There are a number of potential hurdles which may arise in the operation of the BIFA in respect of the subcontractors’ charges. To that extent, the monies paid into the District Court cannot necessarily be regarded as providing security to the Applicant in respect of the adjudicated decision if the Applicant is unsuccessful, in the same way as monies paid into Court in respect of the whole amount of the adjudicated decision.
- While I accept that the Applicant has paid the monies into the District Court on the basis of the adjudication decision, I am not persuaded that the monies paid into the District Court should be treated as if they were, in effect, part of the payment into Court in respect of the adjudicated decision. There may be arguments to demonstrate that to be the case, but those arguments have not been explored in the context of this application.
- While the payment into Court by the Applicant favours the granting of an injunction, I consider that the proposed amount to be paid into Court is less than the adjudicated amount, even aside from the amount of $704,544.62. No provision is made for interest. Further, the amount of $45,303.09 does not appear to be attributable to the monies payable under the adjudication decision. Thus, the offer to pay money into Court is of some weight in favour of the grant of the injunction but it is limited, given I do not consider it offers security for the whole amount of the adjudicated amount in the event that the Applicant is unsuccessful, given the uncertainty created by paying the monies into Court under s 126 of the BIFA.
- While there had been some contention that the Applicant would not provide any undertaking as to damages, its proposed order provides for such an undertaking. The worth of such an undertaking has not been subject of challenge, although I have not been directed to evidence of its worth. In the present case, there is a risk that the First Respondent may not get paid its money if it ultimately succeeds, given the proposed payment into Court is not sufficient to meet all of the amount of the adjudicated decision and interest. The only other apparent loss that it may potentially suffer is the cost of being kept out of the money payable under the adjudication decision. The offering of the undertaking goes someway to alleviating that risk and gives some weight to the grant of an injunction.
- Dealing with the contention that the payment of monies into the District Court is an admission that the monies are payable by the Applicant to the First Respondent and is inconsistent with the relief sought in the originating application, at least to the extent of the amount paid into the District Court, no authority was cited for that contention. The payment into Court protects the Applicant from further liability in relation to that amount and the costs of the proceeding. As was submitted by the Applicant, until the adjudication decision is set aside, it is treated as having effect, and there is a decision, pursuant to which money is payable to the First Respondent to which s 126 of the BIFA may apply. At best, assuming for present purposes that the money the subject of the adjudication decision is money which the Applicant is “obliged to pay” to a “contractor under the contract”, it is not an admission that the monies under the adjudicated decision are payable to the First Respondent in circumstances where the Applicant’s rights under a contract are retained under s 200 of the BIFA and it may ultimately be challenged in substantive proceedings. I do not consider that the payment of the monies into the District Court constitutes an admission of liability or supports a suggestion of an abuse of process by the Applicant, relevant to the assessment of the balance of convenience.
- The Applicant relies on the fact that there are outstanding subcontractors’ charges as a result of the First Respondent not paying them for work done as evidence that the First Respondent may not be able to repay the monies if the injunction is granted. There is however evidence that the First Respondent disputes any liability to the subcontractors. There is nothing to suggest that the dispute is anything other than genuine. Whether that dispute is well founded or not is not the subject of evidence before me. There is no other evidence suggesting that the First Respondent will not be in a position to repay the monies or that the monies are not recoverable. I accept there is some risk that the First Respondent may not be able to repay the monies if the Applicant is successful, but it is not a matter of significant weight favouring the grant of the injunction.
- Turning now to the question of whether there is a legislative policy of the BIFA that monies paid over pursuant to an adjudication decision may ultimately not be repaid if the adjudicator’s decision is a risk assigned to the contractor, such that an injunction should be refused, even if a payment is proposed to be made into court on discretionary grounds.
- Support for this view in the decision of Daubney J in WICET, which was followed by P Lyons J in Sunshine Coast Regional Council v Earthpro Pty Ltd & Ors. In this regard, both decisions relied on the legislative policy of the BCIPA as described by Keane J in RJ Neller v Ainsworth. Justice Peter Lyons however recognised that the policy could be overcome in a particular case such as where there is a strong prima facie case.
- Archer J in Sandvik Mining and Construction Australia Ltd v Fisher, considered that the Western Australian Act which is similar to the BIFA disclosed a “pay now argue later” system, which was not limited to non-jurisdictional errors. Her Honour did however accept that the policy was only one factor in the evaluation of whether to grant injunctive relief. Her Honour did not however consider the analysis of Bond J in BRB Modular Pty Ltd v AWX Constructions, in relation to the policy of the Act in relation to cases where there was a prima facie case of jurisdictional error, although she referred to the decision in another context.
- Bond J in BRB Modular Pty Ltd v AWX Constructions,considered the role of the policy of the Act in considering the balance of convenience and stated that:
“I accept the observations (as I am bound to do) by Keane JA in R J Neller about the policy of the Act, but I think, contrary to Daubney J, that the observations by Keane JA in R J Neller at  and  were directed to circumstances in which there was a valid decision by an adjudicator. It does not seem to me to be correct to observe that there is anything in the Act which reveals a policy to attribute the risk to which Keane JA adverts in R J Neller at  as a risk that should be borne by the paying party in circumstances where there is a concession that there is a prima facie case that the adjudication decision is void for jurisdictional error. The intention of the Act – and in particular the intention revealed in ss 31 and 100 of the Act, to which Keane JA adverted in R J Neller at  – must be taken to be an intention revealed in relation to decisions of an adjudicator, made within jurisdiction.
The policy of the Act described by Keane JA in R J Neller only applies in its full force to valid adjudication decisions. To my mind, it could not possibly be intended to be the policy of the Act that the risk is so passed in relation to decisions which are void and liable to be quashed by the Courts. It follows that I respectfully disagree with the approach taken by Daubney J in the WICET decision. It seems to me that the appropriate analytical significance of the Act’s policy in cases such as the present is that the policy characterises the nature of the right that is in question in the interlocutory injunction application. So if, on an interlocutory injunction application of this nature, the applicant has established a prima facie case that the adjudication decision is void for jurisdictional error, in considering the question which arises on the balance of convenience, in considering where the lower risk lies, it is appropriate to consider the fact that granting an injunction would deny to someone a right, the nature of which is that described by Keane JA in R J Neller. The way in which this plays out in the exercise of the discretion is in the balancing process described by Hansen J in Kellogg Brown & Root Pty Ltd.
- Bond J particularly found that the view that the policy of the Act was not to be regarded in the way Daubney J stated in WICET, and found that such a view was supported by the provision for payment into Court if a respondent sought to set aside an adjudication certificate which had been filed as a judgement for debt under s 31(4)(b) of the BCIPA. That provision has been replicated in s 93(4)(b) of the BIFA. In my view, the inclusion of that provision remains a powerful factor weighing against a policy that a contractor carries the risk that monies paid over pursuant to an adjudicator’s decision may not ultimately be repaid even if there is a prima facie case the decision is liable to be set aside. I also consider, like his Honour, that the observations of Keane J in RJ Neller, as to the policy of the BCIPA were directed to circumstances in which there was a valid decision by an adjudicator.
“ The respondent’s reliance on the policy of BCIPA raises a question of principle. There is no doubt that the overall policy of BCIPA is to ensure an entitlement to progress payments under all construction contracts and the prompt receipt of the amount of that entitlement by the process of establishing any amounts that are due under the terms of the Act upon the making of a payment claim or the making of an adjudication decision. However, there is also no doubt that some purported progress claims and adjudication decisions may be invalid and of no effect in law. With one exception, there is no express policy of BCIPA that there must be a payment in respect of an invalid or possibly invalid adjudication decision.
 The exception is in s 31(4) of BCIPA.
 Against all that, the respondent submits that the policy of BCIPA does support dismissal of the present application on discretionary grounds, relying on Wiggins Island Coal Export Terminal Pty Ltd v Sun Engineering (Qld) Pty Ltd (“WICET”). I accept that case suggests that an interlocutory injunction of the present kind should be refused because of the policy of BCIPA, as reflected or explicated in R J Neller Building Pty Ltd v Ainsworth, and that WICET was followed in Sunshine Coast Regional Council v Earthpro Pty Ltd.
 On the other hand, WICET was not followed in BRB Modular Pty Ltd v AWX Constructions, where the logic of some of the reasoning I have set out above was accepted, as it was in Filadelfia Projects Pty Ltd v EntirITy Business Services Pty Ltd and Nazero Group Pty Ltd v Top Quality Construction Pty Ltd.” (footnotes omitted)
- Counsel for the First Respondent contended that the approach contained in WICET, should be adopted by this Court as the proper approach in light of dicta of the High Court in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd, followed in Maxcon Constructions Pty Ltd v Vadasz, neither of which were referred to Jackson J in Low. Both cases, however, were considering whether relief could be granted by way of an order for certiorari to quash an adjudicator’s determination for an error of law on the face of the record under similar legislation to the BIFA in New South Wales. While Counsel for the First Respondent accepted that the Court in Probuild concluded that an error of law on the face of the record within jurisdiction was not a basis for an order in the nature of certiorari under the NSW legislation, he contends that the ratification of the legislative assignment of risk conclusion of Keane JA in RJ Neller was plain, and appeared to be the reverse of the conclusion of Bond J in BRB Modular. I do not agree. While the majority in Probuild did refer to the statements of Keane J in R J Neller that the risk that the party placed at an advantage by an underpayment or overpayment may later become incapable of meeting such an order is a risk that is assigned to the other party, it was in the context of considering the argument that it was absurd that a manifestly erroneous determination in the sense that it is affected by non-jurisdictional error of law may stand and be excluded from review. The comments of the majority are not directed to a decision which is open to review for jurisdictional error.
- The First Respondent also contends that there is further support for the policy of “pay now argue later” under the BIFA in this context and relies on s 90 of the BIFA which provides that a respondent may be liable to pay a penalty if it doesn’t pay the amount to a claimant within five days of the time provided in subsections (a) or (b). The exposure to a penalty would be more likely to be premised on the decision not being afflicted by jurisdictional error given that the adjudication decision may not be a decision at all, rather than supporting a policy that the respondent is obliged to pay notwithstanding that there is a jurisdictional error. That is particularly so, given the inclusion of s 93(4)(b) of the BIFA. Similarly Part 6A of the BIFA, which permits a charge over a property where there has not been payment of the adjudicated amount and payment under s 90 of the BIFA and that there has been an adjudicator’s certificate filed as a judgment for a debt under s 93 of the BIFA, doesn’t suggest the policy of the BEFIA operates in the way contended by the First Respondent.
- In my view the proper approach to the policy of the BIFA in this context is as outlined by Bond J in BRB Modular. In BRB Modular the prima facie case had been conceded unlike the present case. The strength of the prima facie case must be considered in the context of the balance of convenience, and the fact that granting an injunction would deny the First Respondent the right as described by Keane JA in RJ Neller.
- In the present case, I consider that the balance of convenience or the lower risk of justice favours a refusal of the injunction. While I have found that the Applicant has a prima facie case in respect of its contention that the claim included construction work for which there is no reference date, and that the delay claim was not a claim the adjudicator had jurisdiction to consider, neither is what I would presently describe as a strong case, given the First Respondent has raised arguments to the contrary. The delay claim also only affects part of the adjudication amount and may be severed. In relation to the allegations of fraud which are still being investigated, I am not satisfied that the evidence presently raises a prima facie case.
- While the Applicant has offered to pay the adjudication amount into Court, which favours the grant of the injunction, it is not for the full amount of the adjudicated decision and would not secure the payment of the adjudicated decision if the Applicant is unsuccessful. Given I am not persuaded that the monies paid into the District Court can be treated in the same way as if they had been paid into this Court in respect of the present proceeding, the proposed payment into court does not serve as security for the full amount of the adjudicated decision. That reduced the weight of the Applicant’s argument that the First Respondent will have the benefit of the fact that payment into Court will alleviate the Applicant from having to take enforcement proceedings. While the Applicant has offered an undertaking as to damages, I am not able to determine whether it would cover the full extent of the shortfall in addition to matters such as interest. There is no evidence that the First Respondent cannot repay the money if it does enforce the decision prior to the judicial review application being determined. I accept however that if the monies are paid to the First Respondent in circumstances where the decision proves to be void, the Applicant may have to sue for the return of any monies that it has paid over. There is a real risk that the short time frame for the hearing may not be sufficient, and the determination of the matter delayed.
- Having considered all of the above matters, I consider the balance of convenience weighs against the grant of an injunction. I therefore refuse the Applicant’s application.
- As to the First Respondent’s application that the Applicant should not be able to maintain its jurisdictional challenge whilst “flouting its obligations under the Act”, and should be obliged to pay the amount of the adjudicated decision to the First Respondent to maintain the judicial review application. It contends that if the injunction is refused it has a prima facie entitlement to the monies.
- Any prima facie entitlement arises by the operation of the BIFA. The First Respondent has an enforcement process available to it under the BIFA. While the decision of Runaway Bay Investments Pty Ltd v GCB Construction, lends some support to the fact that Court has the power to make such an order, in that case judgment had been entered in the District Court before the Applicant commenced proceedings for a declaration that parts of the adjudication decision were void. In that case however, the Court ordered that payment be made into the Court, consistent with the policy evinced in s 34(1) of the BCIPA and not to the respondent, as is sought in the present case. I do not consider there is a compelling argument to favour the First Respondent being able to circumvent those processes in order to enforce the decision, particularly given I have found that the Applicant has established a prima facie case. There may also be arguments available to the Applicant that any enforcement for the “unpaid” part of the judgement does not extend to the amounts paid into the District Court.
- The First Respondent also seeks directions that the proceeding be placed on the commercial list and the matter should proceed by way of pleadings, given the fact that the hearing was set down without consultation and in light of the fraud allegations.
- I consider it is premature to place this matter on the commercial list and have the matter proceed by way of pleadings until the Applicant has determined it will proceed with the fraud allegations. I consider that the Applicant should be directed to provide further evidence and an outline of argument by 15 February 2021. If the Applicant determines it will pursue the fraud allegations, it should also provide a statement of facts and contentions in relation to that claim. That will allow the First Respondent to ascertain whether the matter can proceed to hearing on 13 April 2021 or whether it considers it will make an application to have the hearing date vacated and other directions made. I will include a direction that the First Respondent should provide its outline and affidavit evidence by 15 March 2021 in the event so that if the First Respondent does not make and application, the matter will be ready for hearing.
- I will order that:
- The Applicant file and serve its outline of argument, including grounds of review, save in respect of any fraud allegations, in respect of which it must file and serve a statement of facts and contentions relied upon by 4pm on 22 February 2021.
- The Applicant is to file and serve any affidavit material on which it intends to rely by 4pm on 22 February 2021.
- The First Respondent is to file its outline of argument and any response to any statement of facts and contention by 4pm on 22 March 2021.
- The First Respondent is to file and serve any affidavit material on which it intends to rely by 4pm on 22 March 2021.
- That the matter be listed for further directions in the week of 22 March 2021 in the applications list on a date agreed between the parties.
- That the applications of the Applicant and the First Respondent otherwise be dismissed.
- I will hear the parties as to costs.
 An alternative formulation is “serious question to be tried” but for the present purposes it makes no material difference.
 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, .
 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57,  per Hayne J.
 Northbuild Constructions Pty Ltd v Central Interior Linings Pty Ltd  1 Qd R 525 at .
 BIFA s 100
 Northbuild Constructions at .
 Building Industry Fairness (Security of Payment) Act 2017 (BIFA), ss 70 and 75(1).
 Minister for Commerce v Contrax Plumbing & Anor  NSWSC 823, .
 Hansen Yuncken v Ericson t/a Flea’s Concreting  QSC 327.
 Clause 37.1 of the Contract, DCH-02; Affidavit of Ho; Item 33 and clause 1 of the Contract, DCH-02.
  NSWCA 289.
 FK Gardner & Sons Pty Ltd v Dimin Pty Ltd  QSC 243 at  and 
 Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010)78 NSWLR 393 at  and .
 Southern Ham Breakfast Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 340 ALR 193.
 Mc Nab Developments (Qld) Pty ltd v MAK Construction Services Pty Ltd  QSC 293 at , by reference to the preceding Act to the BIFA which does not appear materially different in this respect.
  NSWCA 289.
 FK Gardner & Sons Pty Ltd v Dimin Pty Ltd  QSC 243 at  and .
 DCH-01 Affidavit of Ho, p 25 at ; Cf McNab Developments (Qld ) Pty Ltd v MAK Construction Services Pty Ltd & Ors at  – .
 See Kirk v The Industrial Court of New South Wales (2010) 239 CLR 539 at . However, the existence or non-existence of a jurisdictional fact is generally a matter to be determined by the Court: Perrinepod Pty Ltd Georgiou Building Pty Ltd  WASCA 217 at  – .
 Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340.
 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1.
  QSC 327 at . As to what must be established: see .
 Hansen Yucken at ,  -  and  - .
 See Adjudication Decision, .
 Adjudication Decision,  and .
 T & M Buckley Pty Ltd v 57 Moss Road Pty Ltd  QCA 381 at .
  NSWSC 823.
 John Holland Group Pty Ltd & Anor v Commissioner of Taxation  FCAFC 82.
 BIFA, s 82(2) .
 John Holland Group Pty Ltd & Anor v Commissioner of Taxation  FCAFC 82.
  NSWSC 823.
  QSC 222
  QSC 170.
  QSC 271.
  Qd R 390 at  and .
  1 Qd R 390 at  and  which the First Respondent contends was “ratified” by the High Court in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 46 at  and adopted by Archer J in Sandvik Mining and Construction Authority Pty Ltd V Fisher  WASC 352 at  - ,  and  - .
 RJ Neller Building Pty Ltd v Ainsworth  1 Qd R 390.
 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1.
  QSC 170.
 Sunshine Coast Regional Council v Earthpro Pty Ltd & Ors  QSC 271.
  QSC 222, which was adopted by Jackson J in Low v MCC Pty Ltd  QSC 6.
 (2018) 264 CLR 1.
 Consisting of two separate amounts $45,303.09 paid into District Court proceeding BD3415/20 on 26 November 2020 (Affidavit of Sawford, CFI18, CRS 43) and $704,541.62 for proceeding 3415/20 on 28 January 2021 (Affidavit of Sean Roberts, filed by leave 28 January 2021).
 It was separately included as part of previous offers in correspondent but not in the proposed order placed before the Court by the Applicant.
 The position may be different if an order is made under s 141 of the BIFA.
 See CRS 43 to the Affidavit of Sawford CFI 18
 BRB Modular Pty Ltd v AWX Constructions Pty Ltd & Ors  QSC 222 at  – .
 Affidavit of Sean Roberts filed by leave
 BIFA, s 126(5).
 Albeit, if affected by jurisdictional error it may not be a decision at all: BMA Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd  1 Qd R 228.
 Wiggins Island Coal Export Terminal Pty Ltd v Sun Engineering (Qld) Pty Ltd  QSC 170.
  QSC 271, following Daubney J in Re Wicet (No 3)  QSC 271.
  Qd R 390 at -.
  WASC 352 at .
  QSC 222.
  QSC 222.
  Qd R 390.
  QSC 6.
 At  and .
 (2018) 264 CLR 1 at .
 (2018)264 CLR 46.
 Low v MCC Pty Ltd  QSC 6.
  QSC 292.
 At .
 At .
- Published Case Name:
Karam Group Pty Ltd v Earthmoving Contractors Pty Ltd & Ors
- Shortened Case Name:
Karam Group Pty Ltd v Earthmoving Contractors Pty Ltd
 QSC 10
09 Feb 2021
- Selected for Reporting: