Supreme Court New South Wales Medium Neutral Citation: Filadelfia Projects Pty Limited v Entirity Business Services Pty Limited & Anor (No 2) [2011] NSWSC 116 Hearing dates: 14 to 17 February 2011 Decision date: 04 March 2011 Before: Ball J Decision: The court orders that: 1. The first defendant be restrained from seeking or enforcing an Adjudication Certificate under the Building and Construction Industries Security of Payment Act 1999 (NSW) in respect of an adjudication determination of Adjudicator Sullivan dated 23 March 2010. 2. The plaintiff be at liberty to withdraw the sum of $500,000 from the controlled moneys account held by its solicitors and referred to in paragraph 2 of the short minutes of order made by consent by the court on 30 August 2010. 3. The first defendant pay the plaintiff's costs of the proceedings. Catchwords: CONTRACT - informal agreements - construction contracts - relevance of post contractual conduct in determining who the parties to the contract are - objective determination - contract found between builder and contractor, not developer and contractor. PROCEDURE - adjudication application under Building & Construction Industry Security of Payment Act 1999 - natural justice - failure to supply same documents to adjudicator and opposing party - denial of natural justice - whether relief should be refused in circumstances where conduct not deliberate and issue determined on the merits by the court - abuse of process - deliberately withheld relevant documents from adjudicator - no duty of full disclosure in adjudication process Legislation Cited: Building & Construction Industry Security of Payment Act 1999 (NSW) Industrial Relations Act 1996 (NSW) Payroll Tax Act 2007 (NSW) Workers Compensation Act 1987 (NSW) Cases Cited: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421 Fifty Property Investments v O'Mara [2006] NSWSC 428 Filadelfia Projects Pty Limited v Entirity Business Services Pty Ltd [2010] NSWSC 473 Garrard t/as Arthur Andersen & Co v Email Furniture Pty Limited (1993) 32 NSWLR 662 Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551 Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603 Shorten v David Hurst Constructions Pty Limited [2008] NSWSC 546 Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679 Towry Law plc v Chubb Insurance Co of Europe SA [2008] NSWSC 1352 Category: Principal judgment Parties: Filadelfia Projects Pty Limited (Plaintiff) Entirity Business Services Pty Limited (First Defendant) Master Plumbers and Mechanical Contractors Association of New South Wales (Second Defendant) Representation: Counsel: Mr M Rudge SC (Plaintiff) Mr I George (Plaintiff) In Person (First Defendant) No Appearance (Second Defendant) Solicitors: Veritas Legal (Plaintiff) In Person (First Defendant) No Appearance (Second Defendant) File Number(s): 2009/331921 Judgment Introduction 1In these proceedings the plaintiff, Filadelfia, seeks an injunction against the first defendant, Entirity, restraining Entirity from applying for an adjudication certificate in respect of a claim served by Entirity on Filadelfia on 18 February 2010 under the Building & Construction Industry Security of Payment Act 1999 ( the Act ). 2The claim relates to electrical work performed by Entirity at a residential unit development in Wahroonga which was being developed by Filadelfia. A critical issue between the parties is whether there was a construction contract within the meaning of the Act between Filadelfia and Entirity. Filadelfia contends it engaged a company known as Zebicon Pty Limited as the builder of the project and that Zebicon had subcontracted the electrical work to Entirity. Consequently, Filadelfia maintains that the construction contract for the electrical work was between Entirity as subcontractor and Zebicon as head contractor, not between Entirity and Filadelfia. 3The claim was the subject of an adjudication application under s 17 of the Act. The adjudicator resolved the question of who were the parties to the contract in favour of Entirity and determined that Filadelfia was liable to pay Entirity the sum of $414,361.58 excluding GST as at 25 February 2010 and interest on that amount at 9 per cent per annum from that date. 4Filadelfia then made an application for an interlocutory injunction restraining Entirity from applying for an adjudication certificate in respect of that amount. On 13 May 2010, McDougall J granted an interlocutory injunction. Subsequently on 30 August 2010, Hammerschlag J made orders by consent requiring Filadelfia to pay the sum of $500,000 into a controlled moneys account pending final determination of the proceedings. His Honour granted the interlocutory injunction for three reasons. First, his Honour held that there was a serious question to be tried concerning whether there was in existence a construction contract between Filadelfia and Entirity. As his Honour pointed out (applying the decision of the Court of Appeal in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421 at [53]), the existence of a construction contract is one of the basic and essential requirements for the existence of a valid adjudication determination and the court is not constrained by the adjudicator's finding on that issue: see Filadelfia Projects Pty Limited v Entirity Business Services Pty Ltd [2010] NSWSC 473 at [7]. 5Second, it was agreed between the parties that the adjudicator had not been provided with some material which was relevant to the question whether Filadelfia or Zebicon was the contracting party, although there was evidence that Filadelfia was not aware of that fact at the time. His Honour thought that that raised the question whether there had been a substantial denial of procedural fairness: see [2010] NSWSC 473 at [8]. 6Thirdly, his Honour thought that it may be arguable that the failure of Entirity to provide the adjudicator with relevant material was an abuse of process having regard to the pressures of time and other constraints which apply in relation to an adjudication determination in much the same way as it is incumbent on a party applying to the court for ex parte relief to place all material matters before the court: see [2010] NSWSC 473 at [9]. 7It is those issues which now require final determination. Was Entirity's contract with Filadelfia? 8On 5 February 2008, Filadelfia, as owner, and Zebicon, as builder, signed a building contract substantially in the form of the Housing Industry Association Limited's Plain Language Building Contract for New Home Construction. Filadelfia was 50 percent owned by Mr Tony Merhi through a company known as Stabla Pty Ltd and 50 percent owned by Zebigroup Pty Ltd, whose shareholders were Mrs Silvana Zerilli and Mr Frank Bilotta. It had two directors, Mr Merhi and Mr Bilotta. Its principal place of business at the time was at premises in Toongabbie. Zebicon was owned by Mrs Zerilli and Mr Bilotta. Mr Emanuel Zerilli, Mrs Zerilli's husband, was its sole director. Its principal place of business was at premises in Leichhardt. At the time, Mr Bilotta was employed as a construction manager with it. An administrator was appointed to Zebicon on 22 March 2010, although the administration is likely to finish shortly as a result of a deed of company arrangement. 9Clause 22.2 of the building contract provides: The Builder may subcontract any part of the Building Works but remains responsible for all of the Building Works . "Building Works" is defined in cl 1.1 to mean "the Building Works to be carried out, completed and handed over to the Owner in accordance with this Contract as shown in the Contract Documents and including Variations ". The work is described in the contract as: The construction of the three (3) residential flat buildings comprising fifty (66) [sic] Apartments in accordance with Development Consent No. 10732 of 2006, and the approved DA & CC plans and specifications. 10It is clear from these provisions that Zebicon was responsible for building the development. It could either do so itself or it could engage subcontractors to do so on its behalf. However, if it did the latter, it was still responsible for the work done by those subcontractors. This is not a case where Zebicon was engaged by Filadelfia to supervise contractors who were engaged directly by Filadelfia. 11The building contract was for a lump sum of $15,620,000. The total cost of the project was to be funded by ING Bank, which took a mortgage over the property. 12Mr Paul Barlow is the sole director and shareholder of Entirity. He, with leave, appeared on Entirity's behalf at the hearing. There is no suggestion that he or anyone else from Entirity knew of the terms of the building contract between Filadelfia and Zebicon. 13The possibility of Entirity performing the electrical works at the Wahroonga development was first raised by Ms Natalie Werch. Ms Werch was Zebicon's bookkeeper, although she also did bookkeeping work and other administrative tasks for Filadelfia and, in fact, the address given by Filadelfia as its principal place of business at the time was also Ms Werch's residence. Ms Werch also owned a company known as ACA Communications Pty Ltd. It appears that Ms Werch was a friend of, or acquainted with, Ms Hyde, who is Mr Barlow's sister and who is employed as Entirity's office and administration manager. 14In March 2008, Entirity was doing some work for ACA Communications on the NSW central coast. While Mr Barlow was working on that project, Ms Werch suggested to him that Entirity may be interested in doing the electrical work for the Wahroonga project and subsequently she spoke both to Mr Bilotta and Mr Zerilli about that possibility. 15On 4 April 2008, Ms Werch telephoned Mr Barlow and asked if he could arrange for a technician from Entirity to do some preliminary work at the Wahroonga site, which he did. 16On or about 9 April 2008, Ms Hyde prepared an invoice for the preliminary work performed by Entirity. Originally, the draft invoice was addressed to ACA Communications. However, at about the time the invoice was prepared, Ms Werch telephoned Ms Hyde and asked her to address the invoice to Zebicon. Ms Hyde amended the draft invoice by hand. A final invoice was prepared from that amended draft. It is dated 9 April 2008 and is addressed to Zebicon. 17On 18 April 2008, Ms Werch emailed Mr Barlow a set of tender drawings for the project. It is unclear whether Mr Barlow met with either Mr Bilotta or Mr Zerilli before that time. In addition, there is a dispute about whether Mr Zerilli at some point also handed Mr Barlow a copy of the tender drawings. Nothing, however, turns on the resolution of these matters. 18At the time that Mr Barlow was provided with a copy of the drawings, Filadelfia had lodged an amended development application to combine two of the buildings that comprised the project into one. The amended DA did not involve any significant changes to the carpark for the development or alter the number of units to be built. Ultimately, the amended DA was the subject of an application by Filadelfia to the Land and Environment Court which failed and the amended development did not proceed. However, at the time the electrical works were put out for tender, it was expected that the amended DA would be approved. Consequently, the plans provided to Mr Barlow were the amended plans. Those plans indicated that they had been prepared for Filadelfia. 19Entirity submitted four proposals for the electrical work in all. Each proposal was described as being "for Filadelfia Pty Ltd". Mr Barlow gave evidence, which I accept, that he handed a copy of the first version of the plans to Mr Bilotta at the offices at Leichhardt at a meeting which occurred on 16 May 2008. The likelihood is that Mr Zerilli was also present at that meeting. That was Mr Bilotta's evidence, and Mr Zerilli gave evidence that he attended a number of meetings with Mr Barlow. The meeting was held in Zebicon's offices. Mr Zerilli had overall responsibility for the contractual administration of the project whereas Mr Bilotta was the project manager on site. It is natural in those circumstances that Mr Zerilli would attend a meeting in which an important contractor presented its proposal. 20Following discussion of the proposal, Mr Barlow agreed to submit an amended proposal. There is a dispute about what happened next and, in particular, the extent of Mr Barlow's dealings with Mr Bilotta and Mr Zerilli. Mr Barlow says that he dealt principally with Mr Bilotta and that it was Mr Bilotta who was responsible for awarding the contract for the electrical work. On the other hand, both Mr Bilotta and Mr Zerilli say that Mr Zerilli was principally responsible for awarding the contract for the electrical works and that it was Mr Zerilli who had most of the meetings with Mr Barlow. In my opinion, little turns on the resolution of this dispute. Mr Barlow attached significance to the issue because it was his submission that he dealt with Mr Bilotta as a representative of Filadelfia. But even if Mr Barlow dealt principally with Mr Bilotta, it does not follow that Mr Barlow was dealing with Filadelfia. Mr Bilotta was employed as the project manager for the Wahroonga site by Zebicon. It is to be expected that he would have dealings with subcontractors in that capacity. On the other hand, if the true position is that Zebicon was a project manager acting on Filadelfia's behalf, then there is nothing surprising if Mr Zerilli had extensive dealings with Mr Barlow as the director of Zebicon acting in that capacity. In any event, the likelihood is that Mr Barlow had significant dealings with both Mr Bilotta and Mr Zerilli. Each played an important role in relation to the project and each had an interest in the selection of the contractors who were going to perform the work. It is also relevant that Mr Barlow had some contact with Mr Sanchez who described himself in emails he sent to Mr Barlow as "Construction Manager Zebicon Pty Ltd", although there is also evidence that, on occasions, Mr Sanchez sent correspondence to others on behalf of Filadelfia. 21There are two other events that occurred before or at the time the contract was awarded to which particular significance was attached during the course of the hearing. 22The first of those is that Mr Barlow says that, when he presented the first version of Entirity's proposal to Mr Bilotta, Mr Bilotta gave him a copy of a quote for the electrical work at Wahroonga dated 18 September 2007 from Citigroup Electrical Pty Ltd. That quote described the "customer" as "Filadelphia P/L" [sic]. It was for an amount of $675,000 plus GST. Mr Barlow says that Mr Bilotta told him that he needed to do better than that quote. Mr Barlow places some significance on this evidence because according to him it points to Filadelfia being the contracting party. Mr Bilotta disputes that evidence. As I have said, Mr Zerilli does not refer to this meeting specifically in his affidavit. I prefer the evidence of Mr Bilotta on this issue. The quote from Citigroup Electrical was an old one which was given before Filadelfia entered into its contract with Zebicon. Mr Bilotta had sought or had been given quotes by a number of other entities at about the time Mr Barlow presented his first quote. In particular, on 13 May 2008 (3 days before Mr Barlow presented his first quote), Multi Purpose Electrical Services Pty Ltd faxed Mr Bilotta its quote. That quote, which was addressed to Zebicon, was for an amount of $625,000 plus GST. It strikes me as implausible that Mr Bilotta would provide Mr Barlow with an out of date quote for an amount that was more than a recent quote that had been provided to Mr Bilotta and would ask Entirity to better that out of date quote. 23The second matter is of much greater significance. On 6 June 2008, Mr Barlow attended the Leichhardt offices to present the final version of his quote. Some time between then and 25 June 2008, when Entirity commenced work at the site, Mr Zerilli says there was a meeting with Mr Barlow at which Ms Werch may also have been present and at which Mr Zerilli told Mr Barlow that Entirity had been successful in tendering for the work. Mr Zerilli says that, during that meeting, there was a conversation to the following effect: Mr Zerilli You keep putting Filadelfia on the proposal, you need to change that. You are aware that if you are to be engaged, you are to be engaged as a subcontractor by Zebicon, the builder. Filadelfia is the developer. Mr Barlow I have Filadelfia on the proposal as the drawings are in the name of Filadelfia and not Zebicon. Mr Zerilli It's common for the plans to be in the name of the developer, Entirity is being engaged by Zebicon, the builder. You need to change it. Mr Barlow Okay. 24Mr Barlow denies this conversation. He does not explain in his evidence the circumstance's in which he says Entirity's quote was accepted except that he says it was accepted by Mr Bilotta. 25I prefer Mr Zerilli's evidence in relation to this issue. There are a number of reasons for that. 26First, Mr Zerilli's evidence is consistent with the objective facts. There is no doubt that Zebicon had entered into a building contact with Filadelfia. Mr Barlow submitted that that contract was a sham. The basis for that submission was that the contract called for a development of three buildings whereas the work for which Entirity was asked to tender called for two. But that does not make the contract a sham. Zebicon was required under the contract to build three buildings. It was hoped by Filadelfia that there would be a variation to that contract following the approval of an amended DA. That approval was never granted and, as a consequence, Zebicon proceeded to build the project in accordance with its contractual obligations. That, of course, entailed a revision to the work that Entirity was required to do and, on 3 October 2008, Ms Werch sent Mr Barlow revised plans describing that work. Mr Barlow also submitted that these facts meant that Entirity's contract could not be with Zebicon because the work that Zebicon was required to perform was different from the work that Entirity was required to perform. But again, when looked in context, I do not think that that demonstrates that Zebicon did not engage Entirity. Entirity was engaged on the basis of an anticipated change in the building work; and it is clear that, as between Filadelfia and Zebicon, that changed work would be performed by Zebicon. It is entirely consistent with that that Zebicon would give Entirity a copy of the plans that reflected the work that Zebicon would be required to undertake either directly or through its subcontractors. 27Second, and connected to the first point, I think that the likelihood is that Mr Zerilli would have been conscious of the contractual relationships between the parties and that he would have regarded them as being of some significance. It is clear that Mr Zerilli had substantial experience in the construction industry. He, no doubt, would have wanted Zebicon to get paid and he would no doubt have been conscious that Zebicon would need to establish not only to Filadelfia but, more importantly, ING Bank that Zebicon had performed its work in accordance with the construction contract and its legal obligations. Consequently, I think that it would be of some significance to Mr Zerilli that Zebicon received invoices addressed to it so that it could submit those invoices in support of any payment claims it made; and it would be natural for him to raise that issue with Mr Barlow at the time that he told Mr Barlow that Entirity had been awarded the contract. On the other hand, at the time, it would have been of no significance to Entirity whether it was engaged by Zebicon or Filadelfia, and consequently it would not be surprising if Mr Barlow paid little attention to the issue. 28Third, the contractual relationships between the parties would also have been of some significance to Mr Bilotta. He, like Mr Zerilli, had substantial experience in the construction industry. He was no doubt aware that Filadelfia was obliged to pay Zebicon under the construction contract and relied on ING Bank to fund those payments. It seems unlikely that he would have said anything to Mr Barlow that committed Filadelfia to paying Entirity. Again, it seems natural in those circumstances that he would have left the final contractual negotiations to Mr Zerilli. 29Fourth, it is clear that Mr Barlow was aware of Zebicon. He had received emails from Mr Sanchez who described himself as a construction manager with Zebicon. He attended meetings at Zebicon's offices. He accepts that he was told by Ms Werch that Entirity should make its invoices out to Zebicon, which is what it did. Ms Hyde gave evidence that Ms Werch made a similar request of her. However, neither Mr Barlow nor Ms Hyde suggest that they queried this instruction. On the contrary, it seems clear that Entirity had no difficulty in complying with it. The most plausible explanation of this fact is that Mr Barlow had been told that Zebicon was the builder. 30Fifth, it is clear that the other electrical contractors who tendered for the work were told that Zebicon was the builder, since they addressed their quotes to it. In those circumstances, it seems likely that Entirity was given the same information. 31After the contract was awarded, Entirity commenced work in late June 2008. The first part of the work was performed on the carpark while Filadelfia was waiting for approval to its amended DA. Work was then suspended for approximately three months pending that approval. When that approval was refused work recommenced some time in October 2008 in accordance with the original plans. As I have said, all Entirity's invoices were addressed to Zebicon. All payment schedules and remittance advices were sent by Zebicon and all payment certificates were issued by Entirity to Zebicon except one. The exception was that on 1 September 2009 Entirity issued a payment certificate certifying a payment "from Leading Ceramics Pty Ltd for Zebicon Pty Ltd". Leading Ceramics was Mr Zerilli's company and it made the payment in circumstances where, by that time, Zebicon was in financial difficulties for reasons unassociated with the Wahroonga project. In addition, Mr Barlow signed a number of statutory declarations which formed part of the subcontractor's statements provided under the Workers Compensation Act 1987, the Payroll Tax Act 2007 and the Industrial Relations Act 1996. In those statutory declarations, Mr Barlow certifies that Entirity had a contract with Zebicon. 32On 15 September 2009, Zebicon served notice of termination of the contract on Entirity. Entirity replied to that letter on 17 September 2009 in a letter drafted by its solicitors. That reply disputed Zebicon's right to terminate the contract. Entirity sent a further letter to Zebicon on 22 September 2009, again drafted by its solicitors, asserting that Zebicon had repudiated the contract and giving notice that Entirity accepted the repudiation and terminated the contract itself. Nowhere do the letters sent by Entirity say that Entirity's contract was with Filadelfia and not Zebicon. 33Mr Barlow tried to deal with this material principally in two ways. 34First, he submitted that Entirity was forced to provide the documents it did in order to get paid; and Ms Hyde gave evidence to that effect. 35Second, Mr Barlow said that it only became apparent to him after Entirity sent its letters dated 17 and 22 September 2009, and after examining all the facts, that the contract was with Filadelfia and not Zebicon. Underlying this submission was the view that Entirity had made its proposals to Filadelfia, the last of those proposals had been accepted and that, as a result, the contract must have been with Filadelfia. 36I do not accept either of these submissions. 37I do not think that Entirity was forced to provide documents that it knew to be false in order to get paid. There is no contemporaneous evidence that suggests that that was the case. In addition, the submission is inconsistent with Mr Barlow's evidence that he did not appreciate that the contract was with Filadelfia until after it was terminated. 38There are two principal difficulties with Mr Barlow's second submission. First, it is inconsistent with the finding that I have made that Mr Zerilli explained to Mr Barlow that Zebicon was the builder. Second, it is clear that post-contractual conduct can be taken into account in determining whether a contract was formed: see, for example, Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551 at 14,569-70 per Kirby P; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25]. Necessarily, that extends to the question whether it was formed between particular parties, since contracts do not exist in the abstract. It is equally clear that the question whether there is a contract is to be determined objectively and not by reference to the subjective intention of the parties: see, for example, Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603 at [262]-[265] per Campbell JA. Looking at the position objectively, and even leaving aside the conversation between Mr Zerilli and Mr Barlow at the time that Mr Barlow was told that Entirity had been successful, the position was that Entirity performed work on the site at Wahroonga. It was paid by Zebicon for that work and it acknowledged that Zebicon was paying it for that work. It complied with the obligations imposed on a subcontractor. In my opinion, that evidence points clearly to the existence of a contract between Entirity and Zebicon. 39Having regard to the conclusions I have reached, it is strictly unnecessary for me to express a view on the other issues in the case. However, since I heard evidence and submissions in relation to them, I think that I should say something about them. Factual background to other issues 40Entirity made two claims under the Act. The first claim was served on Filadelfia on 10 December 2009. That claim was supported by a large number of folders including two marked "EBS5" and "EBS6". Those folders contained the correspondence between the parties. During the course of preparing those folders, two things happened which are of relevance to this aspect of the case. First, Entirity decided to remove a number of documents from them and to insert in their place pages marked "This page has" - or where consecutive pages were removed, "these pages have" - "been intentionally left blank". The page numbers of the pages removed were then identified on the top right hand corner of the inserted pages. The documents that were removed were the subcontractor's statements and the payment certificates provided by Entirity. Second, Entirity created duplicate sets of EBS5 and EBS6 from which the documents were not removed. How that came about is not important. What is important is that, at the time that Entirity lodged its first adjudication application, the version of EBS5 and EBS6 that was provided to the adjudicator did not include the excluded pages but the version that was provided to Filadelfia's solicitors did. Ms Hyde gave evidence, which I accept, that that resulted from an error on her part. That adjudication application was out of time and did not proceed. The adjudicator returned the documents in support of the application to Entirity. Entirity then served a second claim on Filadelfia and subsequently lodged an adjudication application based on that claim. That adjudication application is the application that is the subject of these proceedings. 41The parties accept that the version of EBS5 and EBS6 provided to the adjudicator in support of the second adjudication application did not include the excluded pages. There is a dispute between the parties about whether the copies of EBS5 and EBS6 which were served on Filadelfia in support of the second claim and in support of the second adjudication application included the excluded documents. Entirity submits that they did not. Filadelfia, on the other hand, submits that they did. 42Entirity's case on this aspect has two limbs. First, it relies on evidence from Ms Hyde and Mr Russell Barlow (who is Mr Barlow's father and who was assisting in the collation of material for the second adjudication application) about how the documents in support of the second adjudication application were prepared to demonstrate that the wrong versions of EBS5 and EBS6 could not have been provided to Filadelfia. Second, Mr Barlow submitted that what must have happened was that Filadelfia's solicitors confused the versions of EBS5 and EBS6 which were served in support of the first adjudication application (which contained the excluded documents) with the version served in support of the second adjudication application (which he says did not). 43Mr Bazouni, who was the employed solicitor with Veritas Legal and who was responsible for preparing Filadelfia's response to the second adjudication application, denies that he confused documents served in support of the first adjudication with documents served in support of the second. He says that the documents in support of the second adjudication application were delivered to Veritas Legal's offices in sealed boxes by Mr Zerilli and that, at the time that happened, Mr Zerilli took away the documents in support of the first adjudication application. Mr Zerilli agrees that that happened, although he says (and Mr Bazouni denies) that he returned those documents a few days later. Mr Bazouni's evidence was supported by an affidavit sworn by Mr Qutami, the responsible partner, although Mr Qutami was unavailable for cross-examination due to ill health. 44I prefer the evidence of Mr Bazouni in relation to this issue. He was adamant that he worked from the documents served in support of the second adjudication application. He was obviously very familiar with the documents. It is difficult to see how an earlier version of EBS5 and EBS6 could get mixed up with the material served in support of the second adjudication application without that fact coming to Mr Bazouni's attention at some stage. On the other hand, Ms Hyde admitted in cross-examination that she had very little to do with compiling the documents for the second adjudication application and Mr Russell Barlow's role was limited to an administrative one. It seems more plausible that he substituted the wrong folders than that Mr Bazouni did. It also seems that there would be greater opportunity for that to happen. Mr Barlow was working with several sets of the documents. On the other hand, the uncontested evidence is that Mr Bazouni handed over the documents relating to the first adjudication application at the time that he took possession of the documents relating to the second adjudication application. It seems plausible, having regard to the strict deadline on preparing a response, that he would have started working on those documents almost immediately. There is no reason to suppose that he started using a second set, even assuming the documents relating to the first adjudication application were returned to the offices of Veritas Legal a few days later as Mr Zerilli suggests. 45I should add that it was not put to any witness that it was a deliberate decision of Entirity to provide a different version of the documents to the adjudicator and to Filadelfia and Filadelfia did not submit that that was the case. In those circumstances, the only conclusion that can be drawn was that a different version was supplied to Filadelfia by mistake. Was Filadelfia denied natural justice? 46The first question is whether Filadelfia was denied natural justice because it was not supplied with the same documents as those supplied to the adjudicator. 47There can be no doubt that the requirements of natural justice apply to an adjudication determination, that a denial of natural justice will render an adjudication determination a nullity and that, in the context of an adjudication determination, natural justice requires that a party who provides the adjudicator with material must provide the opposing party with the same material: Fifty Property Investments v O'Mara [2006] NSWSC 428 at [44]-[45] per Brereton J; Shorten v David Hurst Constructions Pty Limited [2008] NSWSC 546 at [21]-[22] per Einstein J. The denial of natural justice does not have to affect the result in order for the determination to be a nullity. As Brereton J explained in Fifty Property Investments v O'Mara at [53]: The result of a denial of natural justice is that the decision is void, even if the decision would not have been affected by any submissions which might have been made had an opportunity to make them been afforded. While, as a matter of discretion, relief may be declined if it can be shown that the denial of natural justice could not possibly have made a difference to the outcome, all that a plaintiff need establish is that the denial of natural justice deprived it of the possibility of a better outcome, and in order to negate that possibility it is necessary to conclude that a properly conducted adjudication could not possibly have produced a different result ... 48In my opinion, however, this is one of those cases where the court ought to refuse relief even though there has been a denial of natural justice. There are two interrelated reasons. First, although it is true to say that there has been a denial of natural justice in relation to the adjudication determination, there has not been a denial of natural justice in relation to the question whether there is a contract between Filadelfia and Entirity. There has been a full hearing on the merits in relation to that question. Secondly, it was always open to Filadelfia to have a full hearing on the merits before the court. If it succeeded in convincing the court that there was no contract, the question whether it was afforded natural justice in relation to that issue in the hearing before the adjudicator does not arise. On the other hand, if Filadelfia had failed before the court, the effect of its application based on a denial of natural justice would be to seek a remedy from the court on the basis that it had lost an opportunity to convince the adjudicator of a proposition which the court has held, after a hearing on the merits, was wrong. In my opinion, it is not appropriate for the court to give relief in those circumstances, even accepting that there was a denial of natural justice in the hearing before the adjudicator. The position may well be different if the denial of natural justice arose from deliberate conduct on the part of Entirity. However, as I have said, in this case, it was not submitted on behalf of Filadelfia that Entirity had deliberately provided different versions of the supporting documents to the adjudicator and to Filadelfia. Was there an abuse of process? 49There can be no doubt that Entirity deliberately withheld relevant information from the adjudicator. Indeed, it appears to have gone to some trouble to ensure that that material was not put before the adjudicator. This is not simply a case where it decided not to go to the additional trouble of collecting together relevant material to place before the adjudicator. The question remains whether that can be characterised as an abuse of process. 50It is well established that a party which makes an ex parte application owes a duty of candour - that is, a duty to disclose all material facts relevant to the application which are known to the party. The duty is imposed on the party itself. It is not simply a professional obligation owed by the parties' legal representatives. The duty applies in relation to any application for an order which involves the exercise or quasi judicial power: see Garrard t/as Arthur Andersen & Co v Email Furniture Pty Limited (1993) 32 NSWLR 662. The reason for the rule was explained by Isaacs J in Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679 at 681-2: The law in such a case is well established. There is a primary precept governing the administration of justice, that no man is to be condemned unheard; and therefore, as a general rule, no order should be made to the prejudice of a party unless he has the opportunity of being heard in defence. But instances occur where justice could not be done unless the subject matter of the suit were preserved, and, if that is in danger of destruction by one party, or if irremediable or serious damage be imminent, the other may come to the Court, and ask for its interposition even in the absence of his opponent, on the ground that delay would involve greater injustice than instant action. But, when he does so, and the Court is asked to disregard the usual requirement of hearing the other side, the party moving incurs a most serious responsibility. Dalglish v Jarvie ..., a case of high authority establishes that it is the duty of a party asking for an injunction ex parte to bring under the notice of the Court all facts material to the determination of his right to that injunction, and it is no excuse for him to say he was not aware of their importance. Uberrima fides is required, and the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fall. 51In my opinion, an adjudication determination is a type of quasi judicial process which attracts the operation of the principle stated by Isaacs J. A determination involves an order requiring a party to pay a sum of money depending on the establishment of various facts and, in some cases, principles of law. 52However, I do not think that the application in this case can be equated to an ex parte application. It is true that the Act imposes a very tight timetable. Nonetheless, it provides a mechanism by which the respondent has an opportunity to be heard. That opportunity was exercised in this case. Had Filadelfia been served with the same set of material as the adjudicator, it would have had the opportunity - an opportunity I have no doubt it would have exercised - to draw the adjudicator's attention to the material that had been excluded from EBS5 and EBS6. In those circumstances, it seems to me that the rationale for the principle of full disclosure does not apply. 53It is true, of course, that Filadelfia was deprived of that opportunity because it was not provided with the same set of material as was provided to the adjudicator. That, however, seems to me to go to the question whether Filadelfia was afforded natural justice, not whether Entirity owed a duty of full disclosure. As I have said, in the special circumstances of this case, it seems to me that Filadelfia was not denied natural justice. Orders 54The court orders that: (1)The first defendant be restrained from seeking or enforcing an Adjudication Certificate under the Building and Construction Industries Security of Payment Act 1999 (NSW) in respect of an adjudication determination of Adjudicator Sullivan dated 23 March 2010. (2)The plaintiff be at liberty to withdraw the sum of $500,000 from the controlled moneys account held by its solicitors and referred to in paragraph 2 of the short minutes of order made by consent by the court on 30 August 2010. (3)The first defendant pay the plaintiff's costs of the proceedings. ********** 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. Decision last updated: 07 March 2011