Runaway Bay Investments Pty Ltd as trustee for Runaway Bay Investments Unit Trust v GCB Constructions Pty Ltd and Ors

The respondent builder had obtained an adjudication certificate and had judgment entered in the District Court pursuant to s 31 Building and Construction Industry Payments Act 2004. The applicant sought to challenge the adjudicator’s decision on which the court's judgment was based. The builder applied for orders requiring the applicant to pay the money into court prior to determination of its challenge to the adjudicator’s decision. Lyons SJA noted that although the Act did not expressly require this outcome, the general policy of the Act, and other discretionary considerations, supported it.

Lyons SJA

11 December 2018

Background

In April 2017, the applicant and the respondent entered into a contract for the construction of a restaurant building at Runaway Bay. Following some payment issues, GCB Constructions Pty Ltd ("the builder") made an adjudication application pursuant to the Building and Construction Industry Payments Act 2004 ("BCIPA"). The adjudicator determined that Runaway Bay Investments Pty Ltd ("the principal") was required to pay the builder $61,054.44. [1].

Subsequently the builder obtained an Adjudication Certificate and had judgment entered in the District Court pursuant to s 31 of the BCIPA, which allows such a certificate to be filed in the court and enforced as a judgment debt. [7], [13].  By the time of this judgment, the amount had still not been paid. [2]. However, following the District Court judgment, the principal filed an originating application that sought to have the adjudicator's decision (on which the court's judgment was founded) declared void. [2].

This judgment concerned an application brought by the builder for an order that the principal be required to pay the disputed amount into court pending determination of its originating application. The order was sought pursuant to r 658 of the Uniform Civil Procedure Rules 1999 or the inherent jurisdiction of the court. [3].

The issue concerning s 31(4)(b) of the BCIPA

Section 31(4)(b) of the BCIPA provides that if a respondent "commences proceedings to have the judgment set aside" (that is, a judgment arising from the filing of an adjudication certificate), then it is "required to pay into court as security the unpaid portion of the adjudicated amount pending the final decision in those proceedings". [13].

The issue was that the principal's originating application was "not a proceeding of the type envisaged by s 31(4)" as it did not to have the judgment set aside. Instead, it sought to challenge the adjudicator's decision – an anterior step. [15]. Lyons SJA noted that this would have "essentially the same consequence" if successful: namely that the judgment debt would no longer be enforceable. For that reason, the builder argued that the present circumstances were analogous to that envisaged by s 31(4)(b) and that the same consequence should follow. [15].

Her Honour considered that the broader issue was whether, while not mandated by s 31(4)(b) of the BCIPA, the court should "nonetheless exercise its discretion and require payment into court pursuant to r 658 or the inherent jurisdiction of the Court". [17].

Resolution – ensuring that the policy of the BCIPA is not circumvented

Her Honour noted that previous comment had been made on this issue in other Supreme Court judgments. For example, in BRB Modular Pty Ltd v AWX Constructions Pty Ltd [2015] QSC 222, Bond J considered an argument that the policy of the Act indicates that the "price to be paid" to have a Court hear and determine a challenge to an adjudication certificate is to pay monies into Court as security. Further, it was asked rhetorically, "[w]hy … would the policy of the Act be any different simply because the dispute comes before the Court at a stage antecedent to the adjudication outcome being converted into a judgment debt?". His Honour said he found the argument "compelling". [24].

The principal sought to distinguish this and other cases on the basis that they involved applications for injunctive relief. [22], [25]. However, her Honour was not convinced by this, and essentially agreed with Bond J's observations as to the general policy of the BCIPA. [25].

Her Honour noted that the court had the power to make an order requiring payment into court, either pursuant to r 658 of the UCPR, or as part of the inherent power to "control and ensure the proper and fair use of its jurisdiction". [12], [28]. In considering whether to exercise the discretion, her Honour said that the policy of the BCIPA was relevant because "the Court is cautious to ensure not only justice between the parties but that legislation is not circumvented". [26]. Some other factual circumstances also supported an order requiring payment into court, including that the principal would not suffer prejudice by being required to do so. [29], [30].  

In the result, her Honour concluded that the principal should be required to pay the amount outstanding into court, as well as interest. [32].

W Isdale