Karam Group Pty Ltd v Earthmoving Contractors Pty Ltd & Ors

This case concerned an application for an interlocutory injunction to restrain the enforcement of an adjudication decision made under the Building Industry Fairness (Security of Payments) Act 2017. The applicant alleged that there were jurisdictional errors in the decision. The noteworthy aspect of judgment concerned whether the policy of the Act was to assign the risk that the builder might not be able to refund the money onto the contractor, and that this policy was relevant in the assessment of the balance of convenience. Brown J found that there was no such policy in circumstances where there was a prima facie case of jurisdictional error.

Brown J

9 February 2021

Background

Karam Group Pty Ktd (“Karam”) and Earthmoving Contractors Pty Ltd (“Earthmoving”) are parties to a design and construct contract by which Earthmoving was to perform certain works in relation to the construction of a building in Coorparoo. [2]. In August 2020, Earthmoving issued a payment claim under the Building Industry Fairness (Security of Payments) Act 2017 (“the Act”), and subsequently an adjudication decision was made in its favour. [3]. Karam filed an originating application seeking to set aside the adjudication decision on the basis of alleged jurisdictional errors and an interlocutory injunction restraining the enforcement of the adjudication decision until the originating application was determined. [4].

In accordance with settled principles, Brown J approached the question of whether to grant the interlocutory injunction by considering whether there was a prima facie case of jurisdictional error in the adjudication decision, and whether the balance of convenience favoured the grant of an injunction (citing Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57). [7].

Whether there was a prima facie case of jurisdictional error in the adjudication decision

The first alleged jurisdictional error was that the adjudication decision included payment for work on 31 August 2020, which was beyond the reference date nominated in the payment claim of 30 August 2020. [14]. Brown J observed that “[t]here is authority supporting the fact that a payment claim which includes work beyond the reference date is not a valid payment claim” (citing F K Gardner & Sons Pty Ltd v Dimin Pty Ltd [2007] 1 Qd R 10). [16]. Brown J considered that Karam had established a prima facie case on this issue. [27].

The second alleged jurisdictional error was that an amount awarded for delay was framed on a different basis by Earthmoving, such that the adjudicator was deprived of jurisdiction to decide the claim. [34]–[36]. Brown J agreed that the delay claim was made “on a different legal basis and was arguably not foreshadowed in the payment claim”. [40]. Accordingly, a prima facie case had also been established on this issue. [41].

The balance of convenience

The particularly noteworthy aspect of this case was the submission of Earthmoving that the policy of the Act “assigned the risk that the builder might not be able to refund the money, prima facie to the contractor”, and that this policy should be weighed in the balance of convenience. [46]. This reflected the supposed legislative intent of “pay now and argue later”. [46]. Thus, “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”. [48].

There was support for this argument in the decision of Daubney J in Wiggins Island Coal Export Terminal Pty Ltd v Sun Engineering Pty Ltd [2014] QSC 170 (“WICET”), which relied on a description of the legislative policy of predecessor legislation by Keane J in RJ Neller v Ainsworth [2009] 1 Qd R 390. [65]. However, in the subsequent decision of BRB Modular Pty Ltd v AWX Constructions [2015] QSC 222, Bond J considered that it was not correct that the policy of the Act assigned the risk that money would not be refunded, if jurisdictional error were subsequently established, onto the contractor in circumstances where “there is a prima facie case that the adjudication decision is void for jurisdictional error”. [67]. Jackson J had followed that approach in Low v MCC Pty Ltd [2018] QSC 6, where his Honour said that, with one exception, “there is no express policy of [the Act] that there must be a payment in respect of an invalid or possibly invalid adjudication decision”. [69].

Earthmoving contested the correctness of the later cases – and urged the adoption of the approach outlined in WICET – on the basis of dicta of the High Court in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1. [70]. However, Brown J considered that the comments in that case were “not directed to a decision which is open to review for jurisdictional error”. [70]. In her Honour’s view, the proper approach was as outlined by Bond J in BRB Modular. [72]. It was appropriate to consider the strength of the prima facie case, and the fact that an injunction would deny Earthmoving of the “right” to payment on the adjudication decision. [72].

In the result, her Honour considered that the balance of convenience favoured the refusal of an interlocutory injunction. [73]. Her Honour seemed to place particular emphasis on the fact that, although Karam had made out a prima facie case of jurisdictional error, the amount it had offered to pay into court “does not serve as security for the full amount of the adjudicated decision”. Further, there was “no evidence” that Earthmoving would be unable to repay the money if it did enforce the adjudication decision prior to the determination of Karam’s application for review. [74].

W Isdale