New South Wales Supreme Court CITATION : Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd trading as Novatec Construction Systems [2009] NSWSC 416 HEARING DATE(S) : 1 and 4 May 2009 JURISDICTION : Equity Division Technology & Construction List JUDGMENT OF : Rein J at 1 EX TEMPORE JUDGMENT DATE : 5 May 2009 DECISION : 1. The defendant be permanently restrained from taking any steps to prosecute any adjudication of the second payment claim. 2. The defendant to pay the plaintiff's costs of the proceedings. CATCHWORDS : CONTRACTS – building, engineering and related contracts – other matters – Building and Construction Industry Security of Payment Act 1999 – second payment claim for items the subject of a previous claim – second claim is precluded by principles of estoppel and the provisions of the Act – appropriate for the Court to intervene prior to an adjudication determination to prevent such a claim from proceeding - ESTOPPEL – issue estoppel – adjudication under Building and Construction Industry Security of Payment Act 1999 LEGISLATION CITED : Building and Construction Industry Security of Payment Act 1999 CATEGORY : Principal judgment Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 362 Boutique Developments Limited v Construction and Contract Services [2007] NSWSC 1042 Bryanston Finance Ltd v de Vries (No. 2) [1976] Ch 63 Buying Systems (Australia) Pty Ltd v Tien Mah Litho Printing Co (PTE) [1986] 5 NSWLR 317 CASES CITED : Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 Energetech Aust Pty Ltd v Sides Engineering Pty Ltd [2005] 226 ALR 362 John Goss Projects v Leighton Contractors & Anor [2006] NSWSC 798 Lifestyle Retirement Projects No.2 Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 411 Walton v Gardiner (1993) 177 CLR 378 PARTIES : Perform (NSW) Pty Ltd (Plaintiff) Mev-Aus Pty Ltd t/as Novatec Construction Systems (Defendant) FILE NUMBER(S) : SC 55033/09 COUNSEL : Mr N A Nicholls (Plaintiff) Dr A J Greinke (Defendant) SOLICITORS : Wilkinson Building & Construction Lawyers (Plaintiff) Doyles Construction Lawyers (Defendant) 1 IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST Rein J Date of Hearing: 1 & 4 May 2009 Date of Judgment: 5 May 2009 55033/09 PERFORM (NSW) PTY LTD v MEV-AUS PTY LTD T/AS NOVATEC CONSTRUCTION SYSTEMS JUDGMENT (EX TEMPORE) 1. REIN J: In this matter Perform (NSW) Pty Ltd ("Perform"), for whom Mr Nicholls of counsel appears, was a formwork contractor on two buildings jobs, one on the Sydney Airport car park ("car park") and the other the City North Substation ("substation"). Perform hired formwork materials from the defendant company Mev-Aus Pty Ltd ("Mev"), for whom Dr Greinke of counsel appears. 2. There is no dispute that Perform accepted a quotation of 19 February 2007 from Mev addressed to somebody else: see p 10, tab 3 of the annexure to Mr Wilkinson's affidavit dated 29 April 2009 ("Mr Wilkinson's affidavit"), the plaintiff's solicitor, and that option (b) described as "MEVA FTA & HM" was chosen by Perform. There is no dispute that the contract was a construction contract within the meaning on the Building and Construction Industry Security of Payment Act 1999 ("the Act"), the contract being for the supply of goods for use in the projects. 3. In March 2008 a payment plan was served by Mev on Perform under the Act. 4. A payment schedule was sent in response and a determination by an adjudicator for $308,601 was made, which sum included an amount for cleaning and repair of items rendered by Perform to Mev: see tab 9 to Mr Wilkinson's affidavit. Nothing turns on this adjudication. 5. Subsequently, Mev served a further claim on Perform in July 2008 in relation to the car park: see tab 3 to Mr Wilkinson's affidavit. That claim was adjudicated by Mr Phillip Davenport: see tab 5 to Mr Wilkinson's affidavit. Mr Davenport determined the adjudication amount to be nil. 6. The claim in respect of the substation was also served and an adjudication occurred in relation to that. That was undertaken by a Mr Moore. Mr Moore also determined the adjudication amount in relation to the substation to be nil. 7. Mev served a second claim in relation to the car park and on Wednesday last week, Perform sought and obtained an interlocutory injunction precluding Mev from lodging that second claim for adjudication. Brereton J stood the matter over to the Construction & Technology List on Friday and the matter came before me on Friday afternoon. The matter was one of considerable urgency because it was agreed that the time for Mev to lodge any adjudication claim under the Act expired at 5:00pm on Friday. 8. By 3:45pm on Friday afternoon it became clear that the matter could not finish before 4:00pm and the parties came to an agreement that the orders made by Brereton J on Wednesday would be varied to allow Mev to lodge a claim, but on the basis that Mev would advise the nominating authority of the current proceedings and request that no adjudicator be appointed: see MFI 1. I stood the matter over to Monday to continue hearing submissions in relation to the matter, and I heard further submissions yesterday morning and afternoon. 9. Perform's case is that Mev, having lodged a claim and having had it adjudicated cannot lodge a further claim in respect of the same matters. 10. Dr Greinke accepts there is an overlap between the items the subject of the second claim and those that were the subject of the adjudicated claim, which I shall refer to as "the first claim". Mr Nicholls submits the second claim does not merely overlap but is identical to the first, except only for a difference in the amount claimed, the overall amount being claimed now being less than was claimed in the first claim. 11. Mr Davenport in his determination noted that there was a dispute as to whether certain printed terms and conditions had become part of the contract between Perform and Mev. These terms and conditions are found at p 23, tab 3 to Mr Wilkinson's affidavit. The adjudicator also noted that Perform asserted breach of contract by Mev, but he did not deal with either of these aspects. There was a lump sum price of $1.4 million which was paid by Perform and there was no dispute before Mr Davenport about it. 12. One issue between the parties centred on when the 24 week period of hire, for which the lump sum was payable, commenced. The relevance of this is that there was a type of late fee specified in the quotation which provided for fees at a higher rate and additional to the lump sum for every week beyond the 24 week period, and Mev claimed to be entitled to fees calculated in this manner. 13. Secondly, Mev claimed that Perform had not returned all of the equipment supplied by Mev to Perform and that it was entitled to treat items as "missing" and charged accordingly. 14. The third item was that Mev claimed to be entitled to charges of cleaning and repair when the items had been returned by Perform. 15. In relation to the 24 week period Mev claimed that that commenced on the date of delivery of the first load of equipment, that is, 20 July 2007. Perform's position was that the 24 week period only commenced when all of the equipment, and there were some 36 semi-trailers worth of equipment, had been delivered, i.e. 21 November 2007. 16. The learned adjudicator noted that it might have been open to Mev to assert entitlement to late hire fees on particular items of equipment that were held for longer than the 24 week period, but no such argument had been made by Mev and he rejected the contention that Mev was entitled to treat all equipment as on hire for 24 weeks from the date of the first delivery, 20 July 2007. 17. In relation to the missing equipment, the adjudicator noted that Perform disputed not returning the items, pointed to significant shortcomings in Mev's documents, and noted that Mev was seeking to claim both rental for non-returned items and, in effect, for missing items, effectively a "double dipping" as the adjudicator described it which Mev did not deny. In relation to this claim Mr Davenport said: "The claimant's submissions go around in circles without ever establishing, to my satisfaction, that the items claimed were not, in fact, returned". See p 6 of the adjudication, at tab 5 to Mr Wilkinson's affidavit. 18. The adjudicator rejected a contention that conditions 8 and 10 of Mev's terms and conditions made documents relied on by Mev conclusive evidence of the quantity of equipment returned, damaged and requiring repair or cleaning. He said that even if they did, Mev would have to establish that the documents relied on were those referred to in the terms and conditions. In relation to the claims for cleaning, the adjudicator noted that it was not clear that there was any contractual basis for the claim but he said in any event he was not satisfied that any cost was incurred. 19. The adjudicator noted the volume of documents and of the submissions of both parties and the repetitive nature of Perform's submissions, and he declined to apportion the adjudication fees. 20. Perform asserts that Mev's claim is simply a re-agitation of the first claim and Mev is not permitted to take such a course. Mev contends that the claims, although overlapping, are not identical and that there is no prohibition in the Act or by reason of any issue of estoppel or abuse of process to that effect impinging upon its right to lodge a second payment claim and proceed to adjudication. 21. There are then three questions for my determination: (1) Does the second claim deal with the same items that the first claim dealt with? (2) If so can Mev launch a second adjudication over the same items which have already been the subject of an adjudication or is it precluded, one, by the Act and, two, by virtue of the principle of issue estoppel and related concepts? (3) If the answer to (2) is in the affirmative, is it appropriate for the Court to intervene at an early stage prior to the adjudication taking place? 22. Dealing first with the similarity of the claims, in my view the second claim is clearly a claim covering the same items as were the subject of earlier invoices and dealt with by the adjudication of the first claim. The absence of further invoices does not detract from that categorisation and nor does the reordering indexes and enumeration of claims that has now been carried out for the purposes of the second claim. No items have been identified as new. In relation to missing items, the last date for return of which was 15 April 2008 in the second claim and 31 May 2008 in the first claim. This is not surprising because the date of the first claim was July 2008, well after either date. This view is reinforced by the content of the letter from Mev's solicitors enclosing the second claim: see p 7 of the letter from Doyles Construction Lawyers, Mev's solicitors, of 31 March 2009, at tab 8 to Mr Wilkinson's affidavit. 23. Perform argued that it was also relevant that on 8 May 2008 Mev closed the office to which Perform was required to return hire items. It may reinforce the point but I do not think it is necessary to consider whether that is so given the absence of any identified new items under any of the headings, that is, 'hire', 'late hire', 'cleaning', 'repair' or 'missing items'. 24. I now turn to the question of whether multiple applications can be made. 25. Perform relies on the recent decision of the Court of Appeal New South Wales in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 ("Dualcorp"). Macfarlan JA described at [18] a question before the Court in that case as: "Whether a person making a progress claim under ... ("the Act") who is dissatisfied with the determination of an adjudicator appointed to resolve disputes in relation to the claim may serve another claim and seek a redetermination of the same issues before the same, or another, adjudicator." 26. His Honour said at [18] that his conclusion was that: "this would be contrary to the intent of the Act and that it is precluded by the principles of issue estoppel". 27. In Dualcorp the subcontractor had made a claim in respect of four invoices and had a determination by the adjudicator that it was entitled to an amount of $75,509.43 (approximately ten percent of the claim). Dualcorp then issued a second payment claim for work the subject of the same six invoices and in the same amount. Dualcorp then issued a payment claim which Remo, the contractor, did not answer. Dualcorp purported to exercise its right to seek summary judgment based on the failure of Remo to respond with a payment schedule. 28. Quirk DCJ had declined to enter judgment for any amount other than the $75,509 on the basis that to allow the second claim in respect of the same work already agitated was barred because of "principles akin to res judicata at least or constituting an abuse of process". See Dualcorp at [31]. 29. Macfarlan JA gave consideration at [42] to whether the legislative intention: "was to confer upon adjudicators' determinations a sufficient degree of finality to attract the principles of res judicata, issue estoppel or of the more general concept of abuse of process". 30. His Honour set out some important features of the Act at [51] to [67]. Of particular relevance to the present matter are these: "52. First, the objects of the Act are relevant (see s 3). Clearly the overall intent of these is to provide a simple and quick means of contractors obtaining progress payments, with a mechanism being provided for the speedy resolution of disputes. It would be inconsistent with this objective to allow a claimant who was dissatisfied with an adjudication of its claim to obtain a reconsideration of the claim simply by serving another which was identical to, or included, the previous claim especially if there was no limit to the number of times that a claimant could seek to have this reconsideration occur. 53. Secondly, as earlier mentioned, under s 13(5) only one payment claim may be served in respect of each reference date under the construction contract. There is a qualification that the claimant may include in a payment claim an amount that has been the subject of a previous claim. However, taking into account the Act's objectives and its provisions, I do not consider that that qualification can, or should, be read as authorising the inclusion in a payment claim of an amount which has been the subject of an earlier adjudication. It would in my view be inconsistent with the carefully structured procedures as to adjudication and the provisions, which I am in the course of mentioning, pointing towards finality of adjudication determinations to give it that construction. ….. 58. Seventhly, whilst s 26 permits a new application for adjudication to be made, it narrowly defines the circumstances in which it may be made: that is, to circumstances where an adjudicator's notice of acceptance of appointment is not received within a defined time or the appointed adjudicator fails to determine the application within a defined time. It is implicit that new applications for determination may not be made in other circumstances. It would be curious if these constraints could be circumvented by the claimant simply lodging a new claim and basing a new application for adjudication on that claim, rather than on the earlier claim. ….. 60. These various provisions in my view indicate a legislative intent to render adjudication determinations relevantly conclusive. Such determinations do not conclude contractual rights. Section 32 expressly so provides. The Act however creates special statutory rights to progress payments. When a claim is made, a dispute arises and an adjudication determination resolves that dispute. I consider that determination to be final and binding between the parties as to the issues determined except to the extent that the Act allows the determination to be revisited. It would in my view be quite contrary to the scheme of the Act to permit claimants simply to resubmit the already adjudicated claims if they were dissatisfied with the adjudication. ….. 66. I agree with the approach taken by McDougall J [in Rothnere v Quasar & Ors [2004] NSWSC 1151 and John Goss Projects v Leighton Contractors & Anor [2006] NSWSC 798] to the construction of s 22(4). As his Honour points out, there are many issues of potential relevance to a progress claim which could not aptly be described as involving the determination of the value of the construction work. For example, s 11 of the Act provides that if the contract makes a relevant express provision, a progress payment becomes due and payable "on the date on which the payment becomes due and payable in accordance with the terms of the contract". If a claim for a progress payment were made prior to a date stipulated by the contract and an adjudicator rejected the claim because it was premature, that determination could not in my view be said to be, or involve, one as to the value of the construction work. 67. I do consider however that s 22(4) should be regarded as an exhaustive statement of the matters determined by an earlier adjudication which are binding on a subsequent adjudicator. For reasons I have given, I consider that the Act when read as a whole manifests an intention to preclude re-agitation of the same issues. Thus, if questions of entitlement have been resolved by an adjudication determination, those findings may not in my view be reopened upon a subsequent adjudication. Likewise, if no subsequent adjudication occurs but a claimant proceeds (as here) to seek judgment following upon the failure of the other party to serve a Payment Schedule the claimant should be denied judgment to the extent that what it seeks is inconsistent with findings of the adjudicator." 31. His Honour concluded that the principle of issue of estoppel was applicable. He did also say that the principle of abuse of process was probably also applicable but he did not see a need to reach a final view about that: see [68]. 32. Macfarlan JA rejected the view that s 22(4) of the Act limits the extent to which an adjudicator is bound by an earlier adjudication and disagreed with a view to that effect expressed by McDougall J in John Goss Projects v Leighton Contractors & Anor [2006] NSWSC 798. 33. His Honour said at [70]: "The view that the claimant once disappointed by an adjudicator can seek a different determination from another, or indeed from a succession of others, until a favourable decision is reached would in my view conflict with the policy of the Act to render adjudicators' determinations final on issues which they resolved, subject only to provisions of the Act conferring limited rights of correction of determinations". and then said at [71] and [72]: "71. Dualcorp asserts that this approach could produce unfair outcomes where a claim has not been the subject of adjudication on the merits but has been rejected for want of evidence. It was submitted that because of the unfairness that would flow from precluding a claimant bolstering its evidence on another adjudication, it cannot have been intended that adjudications would be conclusive. 72. I do not agree. It is not at all unusual that persons seeking remedies in court or other forums have a once only opportunity to bring forward evidence and submission in support of their claim. This is in fact the usual situation and is consistent with what the High Court said in D'Orta [D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1] referred to as the "central and pervading tenet of the judicial system ... that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances (at [34])." 34. Allsop P agreed that the appeal should be dismissed but he did so, not on the basis of estoppel, but rather on the basis that s 13(5) and s 22(4) of the Act precluded any second adjudication. 35. The President said: "13. I see no warrant under either the contract or the Act, s 8 for permitting a party in Dualcorp's position to create fresh reference dates by lodging the same claim for the same completed works in successive payment claims. That is not the intended operation of the last phrase of s 8(2)(b) ("and the last day of each subsequent named month"). 14. Here, the work had been done; Dualcorp, the subcontractor, had left the site; it claimed payment by six invoices; six weeks later it repeated that claim by reference to the same invoices and, in my view, in respect of the same reference date. Dualcorp was prevented from serving the second payment claim. The terms of s 13(5) are a prohibition. The words "cannot serve more than one payment claim" are a sufficiently clear statutory indication that a document purporting to be a payment claim that is in respect of the same reference date as a previous claim is not a payment claim under the Act and does not attract the statutory regime of the Act. 15. For these reasons, Dualcorp was not entitled to proceed to judgment on a claim founded on the operation of the Act premised on the second payment claim of 3 March 2008 being a payment claim under the Act." 36. Allsop P also agreed (see [16]) with Macfarlan JA that the Act as a whole generally manifests an intention to prevent repetitious re-agitation of the same issues. 37. Dr Greinke argued that the majority view in Dualcorp did not impugn the second claim because the adjudicator had not determined the value of work under the construction contract but only determined that Mev had not made out a claim for a progress payment and had done so by rejecting Mev's contention on how the delivery period was to be construed. He submitted that the adjudicator had not determined the claim based on this new approach to the contract since such a claim had not been advanced. He also submitted that the adjudicator had not determined whether items claimed as missing had been returned or how the clauses were to be construed, rather the adjudicator had not been satisfied on the basis of evidence relied on by Mev and he said that the adjudicator had not determined what the value of work or services under the contract was. 38. The adjudicator made a determination that the 24 week period did not commence on the date of the first delivery of items, and in my view that issue is clearly the subject of an issue estoppel. That is an issue which by the second claim Mev seeks to re-agitate, although it also brings an alternative claim based on the approach to the terms that the adjudicator favoured, that is that each item could be viewed separately and the 24 week period commence in relation to each delivery. However, in my view what the adjudicator determined was wider than that. He determined, for the purposes of the Act only, that Mev was not entitled to any payment in respect of the invoices previously rendered. What Mev seeks to do, apart from re-agitating the construction issue that was determined adversely to it by the adjudicator, is to make minor alterations to the amounts claimed, present an alternative basis to its claim, and bring another claim over the same subject matter of the first claim when no further work or services have been rendered or goods supplied between the date of the first claim and the second. 39. I should note that the reference date in the first claim is 30 June 2008 and in the second 31 July 2008. On the face of the matters, no discernable reason for altering the reference dates, other than perhaps to enable it to be said the reference date is different, is present. In my view this does not avoid the problem that is found in s 13 of the Act and to which reference has already been made. S 13(5) and (6) provide: "(5) A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract. (6) However, subsection (5) does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim." 40. Dr Greinke argued that to prevent a party from bringing a second claim for the same work would be unfair given the short timeframes involved in the Act. Prior to a payment claim being served a claimant has ample time to prepare its claim and it ought give careful consideration to such a claim before serving it. Further, it is to be expected that invoices or progress claims on which payment claims are based will be themselves accurate and properly founded. 41. The view expressed in Dualcorp by Allsop P is consistent with Macfarlan JA's approach to the Act, but I accept the majority did not base their decision on this ground but rather adopted a perception of the Act (shared with Allsop P) to found a conclusion based on estoppel, and to express a tentative view about abuse of process, although in this context Macfarlan JA's conclusion as expressed in [18] that allowing the claimant to serve another claim and seek a redetermination of the same issues would be "contrary to the intent of the Act", is relevant. 42. The contention that a party, having put forward a claim framed in a particular way, when the claim is rejected may serve another claim framed in a different way is in my view entirely inconsistent with the object of the Act and the principle of finality to which Macfarlan JA referred in Dualcorp. In my view the second claim is incompetent because it ventilates issues which have already been decided. As a further ground I respectfully adopt the approach of Allsop P and also find that it is incompetent because the Act permits only one payment claim to be made in respect of the same work, services or goods supplied. 43. I now deal with the question of whether the court should intervene at this stage. 44. Dr Greinke drew my attention to a number of decisions such as Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 362; Energetech Aust Pty Ltd v Sides Engineering Pty Ltd [2005] 226 ALR 362 ("Energetech"); Boutique Developments Limited v Construction and Contract Services [2007] NSWSC 1042 ("Boutique"); Lifestyle Retirement Projects No.2 Pty Ltd v Parisi Homes Pty Ltd [2005] NSWSC 411 ("Lifestyle") in which this Court has declined to injunct proceedings before an adjudicator on the basis that some element necessary for the compliance with the Act was missing, e.g. that the claim was not for services in relation to construction work: see Boutique; whether the claim was in time: see Lifestyle; whether the payment claimed infringed s 52 of the Trade Practices Act 1974 (Cth): see Energetech. 45. I accept these cases as establishing that where a party seeks to have a payment claim adjudicated this Court generally should leave issues that can be determined by the adjudicator, including matters that relate to jurisdiction, to the adjudicator. 46. None of these cases deal with the present situation, which is where an adjudication having been held and a determination given, the claimant seeks to propound a claim for the same works, goods or services. 47. In my view different considerations apply in this arena and for the following reasons: (1) The approach taken in Dualcorp is that a second claim is not one that is within the intent of the Act and on the approach taken by Allsop P, a second claim is not one permitted by the Act and hence is not governed by the Act. (2) As Mr Nicholls pointed out the remedy for abuse of process or issue estoppel is to apply for a dismissal or permanent stay of the proceedings, and there is no mechanism for such an application before an adjudicator. (3) The continuation of the claim or proceedings is the very matter which the party asserts is the abuse. It is required to expend time and money and "is vexed" with a fresh process when it ought not to be. (4) The intent of the Act is to provide a means of speedy determination of claims for payment to be made on an interim basis not to burden the parties to a construction contract with a prolonged quasi-litigious process. (5) I think it is important not to lose sight of the fact that a determination under the Act produces no final result. It is a scheme for interim payment only and a party who is unsuccessful before the adjudicator has rights and remedies at law to correct any deficiencies in evidence or arguments at a final hearing: see s 32 of the Act. 48. This Court certainly does have power to restrain proceedings within the Court and in other tribunals: see Walton v Gardiner (1993) 177 CLR 378 and Buying Systems (Australia) Pty Ltd v Tien Mah Litho Printing Co (PTE) [1986] 5 NSWLR 317 ("Buying Systems"). 49. It is a jurisdiction that should be exercised extremely sparingly: see Bryanston Finance Ltd v de Vries (No. 2) [1976] Ch 63 at 78 cited in Buying Systems, but that does not mean it should not be exercised when appropriate. 50. Where steps have been taken in breach of and/or against the intent of a statutory scheme I think it is part of this Court's function to step in and prevent that occurring. 51. In my view this is an appropriate case for intervention and the second claim ought not be permitted to proceed any further. Accordingly, I am of the view the relief which is sought by the plaintiff, should in broad terms, be granted but I will hear the parties on the precise form of orders that should be made. 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