Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 3)
[2021] QSC 238
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- Unreported Judgment
- Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 3)[2021] QSC 238
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Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 3)[2021] QSC 238
Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 3)[2021] QSC 238
SUPREME COURT OF QUEENSLAND
CITATION: | Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 3)[2021] QSC 238 |
PARTIES: | TOTAL LIFESTYLE WINDOWS PTY LTD ACN 148 838 665 (applicant) V ANIKO CONSTRUCTIONS PTY LTD ACN 622 863 932 (first respondent) AND COLIN HAMMON BOND (J1071042) (second respondent) |
FILE NO/S: | 7978/21 |
DIVISION: | Trial Division |
PROCEEDING: | Originating Application BS7978/21 |
ORIGINATING COURT: | Supreme Court (at Brisbane) |
DELIVERED ON: | 24 September 2021 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 13 August 2021 |
JUDGE: | Freeburn J |
ORDER: | The first respondent pay the applicant’s costs of the application. |
CATCHWORDS: | BUILDING AND CONSTRUCTION – QUEENSLAND BUILDING SERVICE – BUILDING INDUSTRY FAIRNESS (SECURITY OF PAYMENT) ACT 2017 (QLD) – PROGRESS PAYMENTS – ADJUDICATION OF DISPUTED PROGRESS PAYMENTS – LEGAL PROCEEDINGS – REMISSION – COSTS ORDER Where adjudicator considered defences not raised in the payment schedule – Where an adjudicator was found in a previous judgement to have made jurisdictional errors – where previous judgement found matter should not be remitted to the same adjudicator – whether matter should be remitted to a different adjudicator – Whether costs should be awarded on the standard basis. Uniform Civil Procedure Rules 1999 (Qld). Total Lifestyle Windows Pty ltd v Aniko Constructions Pty Ltd (No 2) [2021] QSC 231, followed. DJL v Central Authority (2000) 201 CLR 226, considered. Mills v Mills (No 2) [2008] QSC 334, applied. Tabtill Pty Ltd v Creswick [2012] QCA 78, applied. |
COUNSEL: | M Bland for the applicant K McAuliffe-Lake for the first respondent No appearance by the second respondent |
SOLICITORS: | QBM Lawyers for the applicant Short Punch & Greatorix for the first respondent |
- [1]On 10 September 2021, I delivered reasons in the substantive hearing of this application.[1] Two issues remain: whether the proceeding should be remitted to a different adjudicator, and costs.
Remission
- [2]In the 10 September reasons the view was taken that the court had power to remit the proceeding to the original adjudicator or to a different adjudicator.[2] Those reasons also expressed the view that there was little utility in remitting the proceeding to the (same) adjudicator for a third time. However, the reasons do not directly address the issue of whether the proceeding ought to be remitted to a different adjudicator.
- [3]The applicant, Total, seeks an order that the proceeding be remitted to another adjudicator. The first respondent, Aniko, resists such an order. Both parties filed written submissions.
- [4]Total submits that the court has jurisdiction to reconsider the question of whether to exercise the power to remit the proceeding back to a different adjudicator.[3] However, the question of whether the proceeding should be remitted to a different adjudicator does not appear to have been considered, or at least directly considered, in the substantive reasons.[4] There is, therefore, no need to vary or set aside[5] an order made on 10 September 2021 because the decision on that occasion was merely to declare parts of the raised adjudication decision to be void. There is no order to be varied or set aside.
- [5]Even if that view were wrong it would be appropriate for the Court to consider whether to vary or set aside the orders given that the issue of remission to a different adjudicator was not considered or directly considered in the reasons on 10 September 2021.[6]
- [6]As it happens though, it seems to me that it is not appropriate to remit the proceedings to another adjudicator. The following factors are relevant to the discretion to remit the proceeding to a different adjudicator.
- [7]First, as explained in the 10 September reasons, the parties have already endured four contested payment claims, three adjudications and two applications to the Supreme Court.[7] None of those determinations were final determinations. Thus, whilst Total may see an advantage in having a further adjudication the result of a further adjudication may be an award in their favour, at least in a provisional way, or a result in favour of Aniko, again in a provisional way, or a contested result. For reasons explained below, the likelihood of a contest about the quantum of Total’s claim is high.
- [8]In that sense, there is limited utility in having another adjudicator, yet again, consider the issues raised by the payment claim of 8 November 2019.
- [9]Second, on the other hand, there is also limited utility in the court merely declaring parts of the adjudicator’s decision to be void as beyond jurisdiction. Such a declaration, by itself, leaves neither party better off. From the point of view of Total, it would have successfully challenged the adjudicator’s decision as beyond jurisdiction, but then be faced with no decision or a ‘void’ where there was previously a decision that they were not entitled to any money pursuant to s 98(3) of the Building Industry Fairness (Security & Payment) Act 2017 (the Act).
- [10]There may be no practical difference between the adjudication decision which was that Total was entitled to ‘$0.00' and a declaration that the relevant paragraphs are beyond jurisdiction which has the effect of leaving a part of the dispute undecided.
- [11]Third, the context is important. There were three claims in Total’s payment claim of 8 November 2019:
- (a)payment for works undertaken by Total on Levels 13 and 14 of the building prior to the suspension of work - $53,533;
- (b)a claim for release of retention monies in the form of cash security pursuant to clause 18(c) of the contract - $60,989;
- (c)98(3) of the Act - $107,873 (or alternatively for $53,533).
- [12]Total’s challenge to the decision of the adjudicator related only to the third of those claims [i.e. claim (c) above]. And so, the court’s declaration as to the invalidity of the adjudication determination that ‘nil’ was owed by Aniko to Total in respect of claim (c) leaves intact the decisions of the adjudicator that Total was entitled to ‘nil’ for claims (a) and (b) (i.e. works on Levels 13 and 14 and release of retention monies).
- [13]Thus, the context is that, if the court was to remit the proceeding to a different mediator, the court would be remitting only one of three disputes between the parties.
- [14]Fourth, there are existing court proceedings between the parties. On 25 August 2021, Total commenced proceedings against Aniko in the Magistrates Court at Southport seeking ‘monies owing pursuant to the construction contract in the sum of $67,088’ and interest and costs. An affidavit filed on behalf of Aniko describes those proceedings as relating to Total’s ‘retention monies claim amount of $60,989.’
- [15]And so, there are already court proceedings on foot in respect of claim (b). Remitting the proceeding to a different adjudicator would have the effect that the parties would be litigating claim (b) in court and claim (c) in a further adjudication. Claim (a) is ‘in the wings.’
- [16]Fifth, the parties are no longer dealing with each other in respect of an on-going project. In fact, Total’s last involvement in the project was in May 2019. It is true that s 98(3) of the Act provides a remedy that is available irrespective of whether there is a continuing relationship between the parties. However, there is less need for the expeditious, interim determinations provided for by the Act,[8] and the recognised expertise of specialist adjudicators, where the relationship between the parties has ended except for slugging out their outstanding disputes.
- [17]Sixth, remitting the proceeding to another adjudicator is unlikely to resolve any disputes, even on an interim basis. In the event that work is ‘removed’ from the contract, s 98(3) of the Act entitles the party whose work is removed to recover its ‘loss or expense’. Total sought the following amounts for that ‘loss or expense’:
- (a)local hardware etc. procured prior to termination $ 9,425
- (b)offshore product procured prior to termination $24,412
- (c)legal costs $ 1,397
- (d)loss of profit and overhead recovery $65,090
- (e)demobilisation costs following suspension $ 4,300
- (f)employment/management costs during suspension $ 3,250
$107,873
- [18]As explained in the reasons of 10 September, the defences that Aniko did raise in its payment schedule five separate quantum disputes regarding Total’s claims of ‘loss or expense’.[9]
- [19]Thus, when another adjudicator hears the components of Total’s claim, there are likely to be disputes concerning many of the amounts claimed. All except two appear to relate to costs incurred either ‘before termination’ or ‘following suspension’ or ‘during suspension’. The focus of s 98(3) is on loss or expense incurred by reason of the removal of a segment of the work. Merely identifying certain costs as incurred prior to termination or during or following suspension says much about when the costs are incurred, but very little about those costs being incurred by reason of the removal of a segment of the work.
- [20]The legal costs claimed in item (c) may or may not be costs incurred by reason of the removal of some of the work. The loss of profit claimed in item (d) might be recoverable except that the calculation appears to be based on Total’s ‘budgeted’ project costs and its ‘budgeted’ profit and ‘budgeted’ overhead recovery. It is difficult to see the relevance of Total’s budgeted costs, profit and overhead recovery. That is especially so when it is likely that the budgeted costs, profit and overhead recovery are likely to have been estimated at the commencement of the project. Section 98(3) calls for proof of what the contractor lost by reason of the work being removed.[10]
- [21]I mention those quantum matters not for the purpose of deciding any of the issues raised but merely to illustrate that, at least on a preliminary view, there is likely to be a number of substantial disputes before the new adjudicator as to Total’s claims of loss and expense under s 98(3). The adjudicator will be required to decide those disputes. Given the history of the relationship between the parties, one party, or both of them, are likely to be dissatisfied with the adjudicator’s decision. Of course, any adjudication decision will be provisional. And so, either or both parties may well decide to litigate those substantial disputes.
- [22]Seventh, as counsel for Aniko points out, the claims made are not large claims. It can be inferred that the costs already spent, and the costs to be spent, are likely to be disproportionate to the amounts in issue.
- [23]Eighth, it is true that remitting the proceeding to a different adjudicator would bring a fresh and expert perspective to the dispute, or at least one part of the dispute.
- [24]Finally, weighing all those factors, it seems to me that referring claim (c) to another adjudicator would lead to the parties fighting claim (c) in an adjudication before a new adjudicator on a non-final basis, and separately contesting claim (b) in a Magistrates Court proceeding, with claim (a) either abandoned or to be prosecuted at a later point.
- [25]The fact that the remission of the dispute relates only to one of three components of the disputes, and the existence of the Magistrates Court proceedings are strong discretionary factors, especially having regard to the amounts at stake. In the circumstances, I decline to exercise the discretion to remit the proceeding to a different adjudicator. Remission to another adjudicator carries with it the grave risk of expanding the fronts of the battle.
Costs
- [26]Aniko contends that there should be no order as to costs, or that Aniko pay 50% of Total’s costs of the application. On the other hand, Total argues that it has been substantially successful in the litigation and thus it is entitled to an order for costs on the standard basis.
- [27]Aniko submits that Total was only partially successful because Total sought both a declaration that the relevant parts of the decision were void, and an order remitting the proceeding, and it has been successful in obtaining only the declaration. Whilst that is true, the substantive issue and the issue which required detailed consideration was whether the adjudicator had exceeded his jurisdiction. On that substantive issue Total succeeded.
- [28]The subsidiary issue of what should be done in the event that it was determined that the adjudicator had exceeded his jurisdiction did occupy some time – including further written submissions. The remission issue was a rather finely balanced issue of discretion, rather than the substantive issue.
- [29]Those considerations do not detract from two features – Total’s success on that substantive issue which invokes the principle that costs should follow the event, and the fact that Aniko came to Court to defend the adjudicator’s decision. In fact, it was the width of Aniko’s adjudication response which led to the adjudicator considering new defences that had not been included in Aniko’s payment schedule.
- [30]It is not an attractive or convenient course for courts to make costs orders in relation to issues.[11] And, it is inappropriate for the court to keep a register of the wins and losses.[12] In short, it is Total that enjoyed substantial success on the application which should be recognised by an award of costs in its favour.[13]
- [31]Aniko also argues that Total abandoned part of its claim. The good faith issue was abandoned after the hearing but before the reasons were delivered. There may well be cost consequences where a party makes a serious allegation, such as an allegation of a lack of good faith, only to abandon the allegation. However, in this case, the allegation of a lack of good faith was a rather muted allegation and overlapped with the other allegations of jurisdictional error. In paragraph 33 of Total’s written submissions, for example, the submission was explained in this way:
It follows that the process by which the adjudicator made his determination departed from section 88 to such an extent that he has failed to make a good faith attempt to perform the function specified by section 88 and thus committed another jurisdictional error.
- [32]The abandonment of that ground is not sufficient, in my view, to overcome the usual rule that costs follow the event. There were five issues that were argued both in writing and orally. Before the reasons were delivered Total decided to abandon the fifth issue – good faith. It did so after some correspondence with the lawyers for the adjudicator. However, Total succeeded on all four issues that it did argue.
- [33]In my view Total was substantially successful and is entitled to its costs of the application on the standard basis.
Footnotes
[1]Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 2) [2021] QSC 231.
[2] Total (No 2) at [112]-[118].
[3] Total’s submissions as to remission at [1].
[4] See the reasons of 10 September 2021 at [120].
[5] As to the power to set aside or vary an order see Uniform Civil Procedure Rules 1999 (Qld) r 667.
[6] There is power to rehear or review a case until judgment is drawn up, passed and entered: DJL v Central Authority (2000) 201 CLR 226 at [34]. Here, it was anticipated that the formal orders would be made after costs had been resolved.
[7] See the reasons of 10 September 2021 at [2].
[8] See the reasons of 10 September 2021 at [1].
[9] See the reasons of 10 September 2021 at [60].
[10] For example, the loss might be expressed as: this specific work on floors X, Y and Z were removed and the amount which would have been recovered at the contractual rates for that work was ABC.
[11] See the reasons of Applegarth J in Mills v Mills (No 2) [2008] QSC 334 at [23]; see also the cases at fn 7.
[12] Tabtill Pty Ltd v Creswick [2012] QCA 78 at [9], quoting Australian Prudential Regulation Authority v Holloway [2000] FCA 1245 at [51].
[13] Tabtill Pty Ltd v Creswick [2012] QCA 78 at [10].