New South Wales Supreme Court CITATION : Chase Oyster Bar v Hamo Industries [2010] NSWSC 1167 HEARING DATE(S) : 24 September 2010 JURISDICTION : Equity Division Technology & Construction List JUDGMENT OF : McDougall J at 1 EX TEMPORE JUDGMENT DATE : 24 September 2010 (1) Order that the determination of the second defendant made on 18 March 2010 be quashed. (2) Order that the amount of $122,366.36 paid into court by the plaintiff on 31 March 2010 be repaid, with any accrued interest, to the plaintiff. (3) Order the first defendant to pay the plaintiff's costs to date; otherwise make no order as to costs to date. (4) Grant leave to the first defendant to file a cross-claim. DECISION : (5) Direct that any cross-claim be filed and served by 1 October 2010. (6) Direct that any defence to that cross-claim be filed and served by 8 October 2010. (7) Stand the proceedings over for directions on 15 October 2010. (8) Reserve liberty to the plaintiff and the first defendant to apply for an order for costs in respect of any additional costs incurred by the intervention of St Hilliers Contracting Pty Ltd and Dualcorp Civil Pty Ltd. Any such application to be made by notice of motion filed and served no later than 8 October 2010 returnable for 15 October 2010. (9) Reserve liberty to the first defendant, if so advised, to make application for an order under the Suitors' Fund Act. CATCHWORDS : ADMINISTRATIVE LAW - prerogative writs and orders - certiorari - where s 17(2)(a) of Building and Construction Industry Security of Payment Act nor complied with - whether relief in the nature of certiorari against adjudicator's determination should be granted - discretionary considerations - certiorari granted - Supreme Court Act 1970 (NSW) s 69. Building and Construction Industry Security of Payment Act 1999 (NSW) LEGISLATION CITED : Suitors' Fund Act Supreme Court Act 1970 (NSW) CATEGORY : Consequential orders Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 CASES CITED : Chase Oyster Bar v Hamo Industries [2010] NSWCA 190 Kell & Rigby Pty Limited v Guardian International Properties Pty Ltd [2007] NSWSC 554 Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 Chase Oyster Bar Pty Ltd (First Plaintiff) Cheryl Fran (Second Plaintiff) PARTIES : Paul Della Marta (Third Plaintiff) Hamo Industries Pty Ltd (First Defendant) Peter Finnane (Second Defendant) FILE NUMBER(S) : SC 2010/76539 COUNSEL : B DeBuse (Plaintiff) B D Hodgkinson SC / C A Bolger (Defendants) Watson & Watson (Plaintiffs) SOLICITORS : Fordham Lawyers (First Defendant) MBA Lawyers (Second Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST McDOUGALL J 24 September 2010 (ex tempore – revised 24 September 2010) 2010/76539 CHASE OYSTER BAR PTY LTD v HAMO INDUSTRIES JUDGMENT 1 HIS HONOUR: The Court of Appeal gave judgment this morning on three questions concerning, in substance, whether, as a result of the decision of the High Court of Australia in Kirk v Industrial Court of New South Wales (2010) 239 CLR 531, it was open to this Court to grant relief in the nature of certiorari where an adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) committed a jurisdictional error. See Chase Oyster Bar v Hamo Industries [2010] NSWCA 190. 2 The answers that the Court of Appeal gave made it plain that this Court had not lost its power to grant such relief, in the case of jurisdictional error, and that to the extent that the decision of the Court of Appeal in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 may have decided otherwise, it could not stand in the light of the reasoning in Kirk. 3 The Court of Appeal decided, further, that the requirements of s 17(2)(a) of the Act were an essential condition of jurisdiction, so that if they were not complied with in a particular case, the adjudicator had no power to hear and determine an adjudication application brought in the absence of that statutory requisite. 4 Finally, for present purposes, the Court of Appeal decided that, in the present case, the requirements of s 17(2)(a) had not been satisfied and it was not bound by the adjudicator's erroneous finding to the contrary. 5 The matter has now returned for the making of final orders. Mr Debuse of counsel, for the plaintiff (Chase), submitted that his client should have the relief it claimed: an order under s 69 of the Supreme Court Act 1970 (NSW) quashing the determination, an order returning to it the amount it had paid into court and its costs. 6 Mr Hodgkinson of Senior Counsel, who appeared with Mr Bolger of counsel for the first defendant (Hamo), submitted that the Court should, as a matter of discretion, withhold the grant of relief. He pointed to the fact that, on the reasoning of the Court of Appeal, the invalidity of the adjudication application, and hence of the determination, did not deprive his client of its right to proceed under s 15(2)(a)(i) of the Act to recover the amount claimed as a debt. That is certainly consistent with the view that I expressed, in the reasoning of the Court of Appeal, at [216]. It is also, I think, consistent with the reasoning of Bergin J in Kell & Rigby Pty Limited v Guardian International Properties Pty Ltd [2007] NSWSC 554. See her Honour's reasons at, in particular, [25] and [26]. 7 In those circumstances, Mr Hodgkinson submitted, the fact that his client had a statutory right to sue for a debt, and that there were very limited defences (see s 15(4) of the Act) suggested that, as a matter of discretion, relief under s 69 should be withheld. 8 Mr Hodgkinson submitted, further, either that his client should be permitted to claim judgment for the debt without the need to file any formal process or, alternatively, that his client should have an opportunity to assert its right by way of cross-claim. 9 For the reasons that I gave in the Court of Appeal at [268] to [284], I think there is a general discretion to grant or withhold prerogative relief, or relief in the nature of prerogative relief, and that the discretion is relatively uncontrolled or, in other words, is wide. However, I think, the exercise of the discretion must take into account both the policy underlying prerogative relief (as to which see my reasons at [279] to [281]) and the statutory context in which the application (in this case, under s 69) arises. 10 The general proposition, in relation to prerogative relief or its statutory equivalent, is that it was developed to prevent excess of jurisdiction. Thus, it exists to prevent a tribunal or inferior court from assuming a jurisdiction that it does not have, or from acting in excess of the jurisdiction that it does have. (This is not intended to be an exhaustive statement of the reasons for and limits of prerogative relief or its statutory equivalents.) 11 In those circumstances, it seems to me, the fact that there may be an alternative right to sue for a debt is not a relevant discretionary consideration where a case is made out otherwise for the grant of relief. The sorts of things that might justify the exercise of the discretion include those referred to in the Court of Appeal's reasons: for example, where the claimant has exercised its right to suspend work, relying on the determination and on s 24(1) of the Act. It does not seem to me that the fact that the claimant has in effect chosen to go down the path of adjudication, but has failed to do so in accordance with a relevant jurisdictional requirement, is of itself something that should enliven any discretion; even where, as I think is the case, there may well be an alternative course still open under s 15(2)(a)(i). 12 For those reasons, I think that it is appropriate now to grant relief in the nature of certiorari. 13 That leaves the question of costs, the question of the money paid into court and the question of future progress. To an extent those matters are related. 14 Dealing with the last matter first: I think it is appropriate to give Hamo leave to file a cross-claim, relying on its asserted statutory entitlement under s 15(2)(a)(i). In the circumstances of this case that should be done relatively quickly, and the defence to cross-claim should be filed equally quickly. 15 Mr Hodgkinson submitted that the money paid into court should remain in court at least until his client had decided whether it wished to make an application by way of, or equivalent to, a freezing order. I do not think that this is the correct way to look at it. The money was paid into court pursuant to a general practice that developed, where respondents sought to challenge determinations of adjudicators, designed to protect the interests of claimants who, prima facie, were entitled to the fruits of their success before the adjudicator. The practice took into account, by analogy, the requirements of s 25(4)((b) of the Act. The whole purpose of the requirement to pay into court, which was the price of restraining enforcement on the determination, was to ensure that the claimant was able to recover if the challenge to the determination failed. In circumstances where the challenge to the determination had succeeded, it seems to me that the purpose for requiring payment in has been exhausted. 16 For those reasons, I think that Chase should have its money back. 17 That leaves the question of costs. The challenge to the determination was a discrete point. Hamo may well decide to file a cross-claim, and it may well succeed, with costs on that cross-claim. If it does, then any costs that are ordered in its favour could be ordered to be set off against any costs that are payable to Chase in respect of its right, consistent with the decision of the Court of Appeal, to have the adjudicator's determination quashed. I do not think that the prospect that Hamo may file, and succeed in prosecuting, a cross-claim is a sufficient reason for declining to order costs on what I think is the discrete event of success on the challenge to the determination. 18 I wish to make it clear that in giving relief to the extent I am about to do, it should not be thought that I am trying finally to resolve all matters in dispute between the parties. In particular, it should not be thought that the questions to which I have referred already, of dealing with the cross-claim and (should it arise) of ordering a costs offset, have in some way been overtaken by those orders. 19 I make the following orders: (1) Order that the determination of the second defendant made on 18 March 2010 be quashed. (2) Order that the amount of $122,366.36 paid into court by the plaintiff on 31 March 2010 be repaid, with any accrued interest, to the plaintiff. (3) Order the first defendant to pay the plaintiff's costs to date; otherwise make no order as to costs to date. (4) Grant leave to the first defendant to file a cross-claim. (5) Direct that any cross-claim be filed and served by 1 October 2010. (6) Direct that any defence to that cross-claim be filed and served by 8 October 2010. (7) Stand the proceedings over for directions on 15 October 2010. (8) Reserve liberty to the plaintiff and the first defendant to apply for an order for costs in respect of any additional costs incurred by the intervention of St Hilliers Contracting Pty Ltd and Dualcorp Civil Pty Ltd. Any such application to be made by notice of motion filed and served no later than 8 October 2010 returnable for 15 October 2010. (9) Reserve liberty to the first defendant, if so advised, to make application for an order under the Suitors' Fund Act . ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.