Urban Traders v Paul Michael [2009] NSWSC 1072 (15 October 2009)

Last Updated: 19 October 2009

NEW SOUTH WALES SUPREME COURT

CITATION:

Urban Traders v Paul Michael [2009] NSWSC 1072

JURISDICTION:

Equity Division

Technology & Construction List

FILE NUMBER(S):

55081/09

HEARING DATE(S):

22 September 2009

JUDGMENT DATE:

15 October 2009

PARTIES:

Urban Traders Pty Limited (First Plaintiff)

J A Westaway & Son Pty Limited (Second Plaintiff)

Paul Michael Pty Limited (Defendant)

JUDGMENT OF:

McDougall J

LOWER COURT JURISDICTION:

Not Applicable

LOWER COURT FILE NUMBER(S):

Not Applicable

LOWER COURT JUDICIAL OFFICER:

Not Applicable

COUNSEL:

Dr A J Greinke (Plaintiffs)

S Goldstein (Defendant)

SOLICITORS:

Cara Marasco & Company (Plaintiffs)

CCS Legal Pty Ltd (Defendant)

CATCHWORDS:

BUILDING AND ENGINEERING CONTRACTS – Building and Construction Industry Security of Payment Act – whether valid payment claim – whether payment claim sought to reagitate issues decided in earlier adjudication determination – whether issue estoppel arises from adjudication determination – whether payment claim sought to reagitate issues raised in previous payment claim – whether statutory right to payment enlivened – whether issue estoppel arises from statutory right – whether abuse of process – whether adjudicator can determine claims for lost profit or cost of re-pricing or interest – whether issues appropriate to be determined by an adjudicator.

LEGISLATION CITED:

Supreme Court Act 1970

The Building and Construction Industry Security of Payment Act 1999

CATEGORY:

Principal judgment

CASES CITED:

Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 ; (2006) 226 CLR 256

Brodyn Pty Ltd v Davenport [2004] NSWCA 394 ; (2004) 61 NSWLR 421

Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 ; (2005) 64 NSWLR 448

Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd (2005) 21 BCL 312

Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd [2005] NSWCA 228 ; (2005) 63 NSWLR 385

Dewhirst v Edwards [1983] 1 NSWLR 34

D’Orta Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1

Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69

Isis Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714

Kembla Coal and Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628

Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140

Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In Liq) [2005] NSWCA 409 ; (2005) 64 NSWLR 462 Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWSC 416

Quasar Constructions v Demtech Pty Ltd [2004] NSWSC 116

Ridgeway v The Queen (1995) 184 CLR 19

The Administration of the Territory of Papua and New Guinea v Daera Guba [1973] HCA 59 ; (1973) 130 CLR 353

The University of Sydney v Cadence Australia Pty Limited [2009] NSWSC 635

Walton v Gardiner [1992] HCA 12 ; (1993) 177 CLR 378

TEXTS CITED:

DECISION:

See paragraphs [122] to [125] of the judgment.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

TECHNOLOGY & CONSTRUCTION LIST

McDOUGALL J

15 October 2009

55081/09 URBAN TRADERS PTY LTD v PAUL MICHAEL PTY LTD

JUDGMENT

1 HIS HONOUR : The Building and Construction Industry Security of Payment Act 1999 (the Act) was enacted for the benefit of builders and subcontractors. Its objects are, in brief, to give those who carry out construction work a right to receive regular progress payments, and a statutory mechanism for enforcing that right. Unfortunately, as has been demonstrated in a number of recent cases, attempts to enforce that statutory right may be oppressive. The essential question for decision in this case is whether an attempt by the defendant (the builder) to engage the mechanisms of the Act is an abuse of process, or otherwise liable to be restrained at the suit of the plaintiffs (the proprietors).

Background facts

2 The proprietors and the builder made a contract on 22 March 2007 (the contract). By that contract, the builder undertook to construct for the proprietors a building at Bayview.

3 On 20 June 2008, the builder served a payment claim, known as payment claim 18, on the proprietors. The claimed amount comprised both work under the contract and variations. It claimed an amount of $1,172,706.00 (inclusive of GST).

4 On 7 July 2008, the proprietors provided a payment schedule. The scheduled amount was, in effect, nil: the assessment by the proprietor’s superintendent (which comprised the payment schedule) asserted that the builder had been overpaid an amount in excess of $281,000.00.

5 The dispute thereby constituted was referred to adjudication. The adjudicator concluded that the adjudicated amount (including GST, but exclusive of interest and costs) was some $357,925.59. (I have taken this figure from the determination. The affidavit of the builder’s sole director, Mr Charles Michael, asserts that the adjudicated amount was $379,475.71. I am not sure where this comes from. No one has suggested that the apparent discrepancy has any significance.)

6 The proprietors did not pay the adjudicated amount. On 25 August 2008, the builder served on the proprietors notice of its intention to suspend work (see s 24(1)(b) of the Act). On 29 August 2008, the proprietors still not having paid the adjudicated amount, the builder suspended the works (see s 27(1) of the Act).

7 On 26 September 2008, the builder obtained an adjudication certificate for the adjudicated amount. That certificate has been filed in the District Court of New South Wales. The builder has recovered judgment for the adjudicated amount together with interest: somewhat in excess of $380,000.00. The judgment debt has not been paid.

8 Negotiations between the parties thereafter led nowhere, although on 19 November 2008, the builder, at the request of the proprietors, submitted a lump sum price for a revised scope of works. That revised price was not accepted. On 24 November 2008, the proprietors served notice on the builder purporting to take the remaining works under the contract out of the hands of the builder. They relied on cl 39.4 of the contract. Quite how they could have done so, in circumstances where the builder had exercised a statutory right to suspend work under the contract, is not clear.

9 The proprietors have now retaken possession of the site. The builder has treated this, against the background that I have briefly recited, as a repudiation. The reality is that, one way or another, the contract has come to an end.

10 In the meantime, the builder served further payment claims. One, known as payment 19, was served on about 18 July 2008. To some extent, that payment claim repeats claims that had been the subject of payment claim 18. Of course, the adjudicator had not given his determination on payment claim 18 by 18 July 2008.

11 There is a dispute as to whether the proprietors provided a payment schedule within time (or at all) in response to payment claim 19. If they did not then the statutory consequence is that they are liable to pay the claimed amount, $1,980,759.00 (inclusive of GST) (see s 14(4) of the Act).

12 On 29 January 2009 – i.e., well after the adjudicator had given his determination, and whilst the builder’s suspension of works was in force – the builder served a further payment claim, known as payment claim 20. The claimed amount was $1,389,796.00. To some extent again, there is an overlap between the amount claimed by payment claim 20 and the amounts claimed by payment claims 18 and 19.

13 The proprietors provided a payment schedule to payment claim 20. The scheduled amount was nil. The builder did not seek adjudication of the dispute in relation to that payment claim.

14 On 28 August 2009, the builder served yet another payment claim, known as payment claim 21. The claimed amount was $9,258,726.00. Again, there is to some extent an overlap between the claimed amount and payment claims 18, 19 or 20 (and, in some cases I think, all of them). It will be necessary to return, in more detail, to the extent of the overlap.

15 The proprietors provided a payment schedule, again with a scheduled amount of nil. The builder wishes to refer the dispute thereby constituted to adjudication. The proprietors say that this should not happen. They rely on eight arguments.

The issues

16 The reasons why, it is said, payment claim 21 is an abuse of process are set out in para 15 of the proprietors’ Amended Technology and Construction List Statement:

15. The service of Claim 21 was, and the referral of Claim 21 for adjudication would be an abuse of process or otherwise should be restrained as invalid for reason that:

15.1 Claim 21 claims for the same work carried out in relation to, and being the subject of Claim 18, Claim 19 and/or Claim 20;

15.2 Claim 21 seeks improperly to re-agitate issues in respect of which the defendant was unsuccessful under the Determination or is subject to an issue estoppel or res judicata thereby;

15.3 the defendant claims for losses and expenses said to arise from a suspension of works under section 27(2A) of the Act, but such a claim is not a claim for the value of construction work carried out under section 9;

15.4 the defendant claims for lost overhead and profit, but this is not a claim for a progress payment within the meaning of section 8 of the Act;

15.5 the defendant claims for interest in relation to payment claim 19, but such a claim is not a claim for a progress payment within the meaning of section 8 of the Act;

15.6 the defendant’s claim for interest in relation to payment claim 19 is subject to merger by section 15 of the Act or by judgment;

15.7 the claim for repricing of works is not a claim for construction work within the meaning of section 9 of the Act, and does not arise under any agreement with the plaintiffs;

15.8 an adjudicator lacks jurisdiction to determine the above claims accordingly.

17 Dr A J Greinke of counsel, who appeared for the proprietors, identified the essential issues as follows:

(1) payment claim 21 was, and an adjudication application founded upon it would be, an abuse of process to the extent that it sought to reargue particular items that had been dealt with by the adjudicator in the context of payment claim 18;

(2) alternatively, the adjudicator’s determination of the items in question created an estoppel preventing their reagitation;

(3) to the extent that payment claim 21 included a claim for damages for profits lost when the works were taken out of the hands of the builder, it was not a claim for “an amount... due for construction work carried out...” (see the definition of “claimed amount” in s 4 of the Act);

(4) if, as the builder contended, the proprietors were liable under s 14(4) of the Act for the amount claimed by payment claim 19, it was an abuse of process for the builder to reagitate the same claims in progress 21, or in an adjudication application founded on it;

(5) alternatively, the statutory liability created by s 14(4) (on the same assumption) created a “procedural estoppel... akin to an estoppel by judgment” (T43.19), or operated “akin to a merger” (T43.39);

(6) alternatively again, if the proprietors were not liable under s 14(4) of the Act for the amount claimed by payment claim 19, the claim for interest based on the non-payment of the amount claimed by that payment claim must fail;

(7) to the extent that payment claim 21 sought payment for the cost of repricing the works, there was no entitlement; further, because the alleged entitlement arose out of “without prejudice” negotiations, the proprietors could not defend the claim without going into those negotiations; and

(8) whether the proprietors’ conduct debarred them from obtaining the relief sought. (This, of course, was an issue raised by the builder, not by the proprietors.)

Abuse of process and issue estoppel in the context of the Act

18 Before I turn to the issues, I will refer to the authorities on which the parties relied, and set out my understanding of the principles to be derived from them.

19 The doctrines of estoppel by res judicata and issue estoppel are founded on the principle that controversies, once resolved by a court or tribunal of competent jurisdiction, should not be reopened except in limited circumstances: D’Orta Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1 at 17 [34] . Estoppels may arise from the decisions of judicial tribunals, domestic tribunals (including arbitrators and others given authority, by consent of the parties or otherwise, to hear and determine disputes) and in some cases administrative tribunals. See Spencer Bower, Turner and Handley, Res Judicata (third edition, 1996) at 25; and, as to administrative tribunals, the judgments of Barwick CJ and Gibbs J (with whom, on this point, Menzies and Stephen JJ agreed) in The Administration of the Territory of Papua and New Guinea v Daera Guba [1973] HCA 59 ; (1973) 130 CLR 353 at, respectively, 403 – 404 and 453 – 454.

20 In Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 , the Court of Appeal considered a situation where a builder, having obtained adjudication on four invoices and been dissatisfied with the outcome, made a further adjudication application based on those four invoices and two others. The proprietor did not serve a payment schedule. The builder sought summary judgment in the District Court. The primary judge declined to give summary judgment because to do so “is barred because of principles akin to res judicata at least or constitutes an abuse of process” (see her Honour’s reasons quoted by Macfarlan JA at [31]). The Court of Appeal upheld her Honour’s decision.

21 Macfarlan JA, with whom Handley AJA agreed, held that on the proper construction of the Act, an adjudicator’s determination possessed a sufficient degree of finality to raise an issue estoppel precluding subsequent reagitation (in another adjudication) of the same issue: see, in particular, at [68] to [70]. However, as Macfarlan JA pointed out at [68], an adjudicator’s determination does not attract the principles of res judicata, because “the analogy between an adjudicator’s determination and a completed cause of action is an incomplete one”. Thus, as his Honour said (again at [68]), “[i]t is best that the applicable principles be recognised to be those of issue estoppel”.

22 The conclusion, that the determinations of adjudicators attract the principles of issue estoppel, was based upon considerations of finality. This is apparent from the review of those principles undertaken by Macfarlan JA: see (under the general law) at [42] to [50] and (under the Act) at [51] to [62]. That review led his Honour to the conclusion that the legislature intended to render the determinations of adjudicators “relevantly conclusive”: i.e., conclusive as to entitlements to progress payments. As his Honour said at [60], where a dispute is resolved by determination, the intention of the Act is that the “determination... 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”.

23 Further, Macfarlan JA said that to permit reagitation, in a subsequent adjudication, of issues decided in an earlier adjudication might amount to abuse of process: see, in addition to the paragraphs that I have referred to, his Honour’s reasons at [71]. I return to this at [28] below.

24 Allsop P agreed that reagitation, in a subsequent adjudication, of issues decided in an earlier adjudication might be an abuse of process: see his Honour’s reasons at [2], [13] and [16]. His Honour would have reserved consideration of the applicability “of principles of estoppel to prevent any apparently abusive operation of the Act not specifically covered by” its relevant provisions: see, again, at [16].

25 In Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWSC 416 , Rein J held at [41] that the ground of the decision of the majority (Macfarlan JA and Handley AJA) in Dualcorp was based on estoppel.

26 In The University of Sydney v Cadence Australia Pty Limited [2009] NSWSC 635 , Hammerschlag J was faced with a submission that the majority holding in Dualcorp on issue estoppel was obiter. His Honour said at [46] that he had “significant doubt” that it was. I agree, as I agree with the analysis of Rein J on this point. In my view, Macfarlan JA and Handley AJA decided the matter on the basis that there was an issue estoppel even though an adjudicator’s determination could not give rise to res judicata. I think, reading the judgment of Macfarlan JA, it is clear that his Honour decided the matter on the basis of issue estoppel, and that what his Honour said about abuse of process was obiter.

27 In any event, this is in my view academic, because even if the majority view on issue estoppel were obiter, I agree with Hammerschlag J in Cadence at [47] that it is for someone other than a first instance judge to say that their Honours’ view is plainly wrong, and should not be followed.

28 Rein J concluded in Perform that there was an issue estoppel, and that there was also an abuse of process, because the builder in that case had sought to reagitate, in a subsequent adjudication, claims decided by an earlier adjudication. In those circumstances, his Honour said, the Court could and should intervene to prevent the later adjudication from proceeding. His Honour gave five reasons for that at [47]. I paraphrase those reasons as follows:

(1) a subsequent payment claim seeking to reagitate matters determined in an earlier adjudication “is not... within the intent of the Act” and “is not... permitted by the Act”, and hence is not a payment claim for the purposes of the Act;

(2) the remedies for abuse of process or issue estoppel are dismissal or permanent stay, remedies that an adjudicator cannot grant;

(3) it is no answer to say that the respondent can raise the issue estoppel before the adjudicator, because requiring, or leaving, the respondent to do that is the very abuse that ought to be restrained;

(4) the Act aims to provide a speedy determination of claims for payment on an interim basis, not to burden parties to construction contracts with a repetitious and quasi-litigious process; and

(5) a determination under the Act is not final, but a means of enforcing interim payment; an unsuccessful party (claimant or respondent) retains all of its rights and remedies at law.

29 Thus, his Honour said at [50], “[w]here steps have been taken in breach of and/or against the intent of a statutory scheme... it is part of this Court’s function to step in and prevent that occurring.”

30 Hammerschlag J was faced with the same issue in Cadence . His Honour said that the considerations enunciated by Rein J in Perform favoured the grant of injunctive relief to prevent the proceedings continuing where there was abuse of process.

31 As I have noted, the decision in Dualcorp concerned four only of the six claims that were put before the second adjudicator. The primary judge entered summary judgment in respect of the two claims that were not repetitious. The Court of Appeal upheld her Honour in this. As Macfarlan JA said at [73], “the primary judge was correct to refuse summary judgment in respect of the amounts which were the subject of the four invoices referred to in the [first] adjudicator’s determination”. Further, his Honour said at [74] “the primary judge was correct in the course she took”.

32 In Perform , it appears from Rein J’s reasons at [22] that there was a complete correspondence between the first and second claims, in the sense that the second claim raised nothing that had not been raised in the first.

33 There was no such exact correspondence in Cadence . However, Hammerschlag J said at [5],

“even though [the second claim] is not exactly the same as the earlier claim, a substantial and unseverable part of it has already been adjudicated”. His Honour’s reasons at [13], [17], [19] and [20] show why this is so. Accordingly, his Honour held that the adjudication should not go forward. It does not follow that his Honour would have made the same order if the repetitious claims were not “substantial and unseverable”.

34 The concept of abuse of process requires some further consideration. Gleeson CJ, Gummow, Hayne and Crennan JJ said in Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 ; (2006) 226 CLR 256 at 265 [9] :

“What amounts to abuse of court process is insusceptible of a formulation comprising closed categories. Development continues.”

35 The width of the concept is explained in the following paragraphs of their Honours’ reasons. As they said at [14] and following, one category of abuse of process is the use of a court’s procedures in a way that is frivolous, vexatious or oppressive; although it may be noted, as Gaudron J said in Ridgeway v The Queen (1995) 184 CLR 19 at 74, “there is no very precise notion of what is vexatious”.

36 In Walton v Gardiner [1992] HCA 12 ; (1993) 177 CLR 378 , Mason CJ, Deane and Dawson JJ said at 393 that the institution or maintenance of proceedings in a court would constitute an abuse of process “if they can be clearly seen to be foredoomed to fail” or “if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings”. Although their Honours gave no examples of proceedings “foredoomed to fail”, proceedings bound to fail by application of the doctrine of issue estoppel would fall into this category.

37 Further, as Rein J noted in Perform at [48], it is also clear from the decision in Walton that this Court has power to restrain proceedings not only in the Court itself but also in other tribunals where those proceedings are an abuse of process. That follows from s 23 of the Supreme Court Act 1970 , which gives this Court “all jurisdiction which may be necessary for the administration of justice in New South Wales”. Although in Walton the majority talked of the supervisory jurisdiction of the Court of Appeal under that section, by s 40 of the Supreme Court Act the court may be constituted (and in proceedings in any division and in business arising out of proceedings in a division is constituted) by a single judge.

38 In the context of the Act (i.e., when asking whether there has been an abuse of the processes established by the Act), the essence of abuse of process is what Allsop P in Dualcorp described as:

(1) the “repetitious use of the adjudication process to require an adjudicator or successive adjudicators to execute the same statutory task in respect of the same claim on successive occasions” (at [2]);

(2) the use of the Act “to re-ignite the adjudication process at will in order to have a second or third or fourth go at the process provided by the Act merely because [the claimant] is dissatisfied with the result of the first adjudication” (again, at [2]); or

(3) “repetitious re-agitation of the same issues” (at [16]).

39 Similarly, in Perform , the essence of Rein J’s reasons for concluding that there was an abuse of process was that, where an adjudication had been conducted and a determination given, the dissatisfied claimant sought to propound a claim, differently framed, for the very same works, goods or services (see at [42], [46]).

40 Again, in Cadence at [56], Hammerschlag J made it clear that the abuse of process lay in the fact that the claimant was seeking to re-agitate a payment claim that had been made and adjudicated upon.

41 It does not follow from the decisions to which I have referred that every repetition, in a subsequent payment claim, of a claim made in an earlier payment must amount to an abuse of process. That is so even if that earlier payment claim has been the subject of an adjudicator’s determination. The relevant concept is not abuse of process at large. It is abuse of the processes of the Act: specifically, the processes of the Act designed to ensure that builders and subcontractors (and of course others) received prompt and progressive payment for construction work performed or related goods and services provided. The question of whether there has been an abuse the processes of the Act must take into account relevant provisions of the Act. Specifically:

(1) s 13(6) of the Act recognises that a claimant may include in a payment claim an amount that has been the subject of a previous payment claim; and

(2) s 22(4) of the Act deals, to an extent, with a repeated claim by providing that if particular construction work or related goods and services have been valued by an adjudicator, an adjudicator in a subsequent adjudication application is to give them the same value unless satisfied that the value has changed since that previous determination.

42 Further, whether or not the repetition of a claim amounts to an abuse of process requires consideration of all relevant contextual facts. In addition, it requires consideration of the reasons why the courts intervene to prevent abuse of process. Those reasons include intervention to prevent a person from being vexed by having to reargue an issue already authoritatively decided. Thus, in deciding whether a repetition of a claim amounts to abuse of process, it may be relevant to take into consideration whether, because of fresh claims that are advanced, the respondent will be required to defend itself in any event.

43 I do not think that it is possible to state in some exhaustive fashion what combination of factors, including repetition, will lead to the conclusion that there is an abuse of process. (See, as to this, French CJ, Gummow, Hayne and Crennan JJ in Jeffery & Katauskas Pty Limited v SST Consulting Pty Limited [2009] HCA 43 at [27].) My concern is simply to make it clear that, in my opinion, it would be inconsistent with the provisions of the Act to which I have referred above to hold that repetition, by itself and without more, always amounts to abuse of process.

First and second issues: abuse of process, issue estoppel

The reagitated claims

44 There is no doubt that payment claim 21 sought to reagitate a number of items that had been dealt with by the adjudicator in his determination of the dispute arising from payment claim 18.

45 The work under the contract was broken down into some 57 items. There were in addition claims made for some 67 variations. Mr S Goldstein of counsel, who appeared for the builder, prepared a spreadsheet which showed that:

(1) some 24 of the amounts claimed for variations had been dealt with by the adjudicator under the rubric of payment claim 18;

(2) the amounts rejected by the adjudicator in respect of those 24 variations, and sought to be reagitated under the rubric of payment claim 21, totalled $685,217.00; and

(3) there was no such reagitation in the case of the items of work under the contract for which a claim was made in payment claim 21.

46 For clarity, I note that payment claims 18 and 21 did not extend to all 57 categories of work (no doubt because work was incomplete when the contract was suspended, and when it came to an end). Nor did they include claims for all 67 variations.

47 Dr Greinke did not dispute the accuracy of Mr Goldstein’s summary of the evidence, nor did he take me in detail to the exhibits in a way that would enable me to review the summary for myself. I propose to treat Mr Goldstein’s summary as accurate.

48 The amount for reagitated variations, $685,217.00, may be compared with a total claim of $8,417,023.00. (Those figures, and the other figures that I set out in this paragraph, all exclude GST.) In other words, the claims advanced by payment claim 21 that have not been advanced by earlier payment claims total $7,731,806.00. If (to acknowledge for the moment Dr Greinke’s other arguments) one subtracts the amounts claimed for loss of profit and cost of repricing, this last figure becomes $4,311,070.00.

49 The total of the reagitated variations thus is about 8% of the total amount of the claim, or about 16% of the claim adjusted by subtracting the claims for loss of profit and cost of repricing.

50 The reagitated claims fall into two broad principal categories. The first category comprises claims where the adjudicator allowed an amount for the work carried out, but rejected (for reasons that he gave) an associated claim for delay costs. There are, I think, some ten claims (variations known as V1 to V4 and V10 and V15) in this category.

51 The second category comprises claims rejected entirely on the basis that there were no supporting documents, and (in most cases) no explanation of the basis of the claim. There are some 23 claims in this category (V5 and V16 to V37). In some cases, the adjudicator also rejected the delay cost component, apparently as a separate ground (V16 to V37).

52 There appears to be one claim that was rejected for a different ground (V38). I do not think that anything turns on this.

53 All those rejected claims made their way back into payment claim 21. For those where part had been allowed and the delay cost component had been rejected by the adjudicator, only the delay cost component (renamed “Time Based Cost”) was claimed. For those rejected in their entirety, the entire amount was claimed, although in most cases the claim was broken up into “Value of Work Completed” and “Time Based Costs”.

54 Thus, as I have said, it is plain, in respect of the claims to which I have referred, that the builder seeks by payment claim 21 to reagitate the claims rejected by the adjudicator in relation to payment claim 18.

55 The builder, through its sole director Mr Charles Michael, has offered a somewhat amorphous promise: that it “will not, in any subsequent adjudication application, reagitate any issue that have [sic] been determined by [the adjudicator], specifically relating to variations 1-38”.

The competing submissions

56 Dr Greinke submitted that, to the extent of the overlap, the case fell completely within the principles developed in Dualcorp , Perform and Cadence . Thus, he submitted, the adjudication should not proceed.

57 Mr Goldstein appeared to accept that there was an impermissible attempt to reagitate matters decided by the adjudicator. However, he pointed to his client’s statement that it would not press the claims in any adjudication founded on payment claim 21. Further, Mr Goldstein submitted, it was clear from those three decisions that if there were to be some sort of stay, it should extend only to the reagitated claims.

Decision

58 The majority view in Dualcorp requires the conclusion that the decision of the adjudicator on the claims in question creates an estoppel, the effect of which is that those same claims may not be reagitated in a subsequent adjudication.

59 Were it necessary to do so, I would conclude also that the reagitation of the claims in question amounts to an abuse of process, insofar as that concept is capable of application to the scheme of interim dispute resolution contained in the Act. That is so for at least three reasons. First, the claim, being barred by issue estoppel, is foredoomed to fail. Secondly, the builder seems to be doing no more than seeking, from a second adjudicator, a better result than it got from the first. There is nothing in payment claim 21 to suggest that there are some new circumstances or material that might warrant reconsideration of the claims in question. Thirdly, the builder has obtained judgment for the amount determined by the first adjudicator. In essence, it now seeks to reopen the basis on which it obtained that judgment.

60 However, the claims in question are not the major part of the claims raised by payment claim 21: either in absolute terms or (and again acknowledging for the moment Dr Greinke’s other submissions) those claims shorn of the claims for loss of profit and cost of repricing. Further, in my view, they are readily severable. It is easy enough to go through payment claim 21 and, by comparing it with a table helpfully annexed to the adjudicator’s determination, to identify the variations that are sought to be reagitated.

61 It follows, in my view, that any adjudication should proceed on the basis that the builder is not to propound, and the adjudicator is not required to (and should not) consider the reagitated variation claims.

62 Essentially for the reasons given by Rein J in Perform at [47] (which I have paraphrased at [28] above), I think that it is appropriate to prevent those reagitated claims from going forward, rather than to leave it to an adjudicator to seek to deal with them.

63 Dr Greinke submitted that it was not clear that a claimant could “withdraw” part of its claim. I do not see why this is so. I would have thought an adjudicator who was told that specifically identified claims were not pressed, and should not be decided, would not enter upon their consideration: particularly if the reasons for doing so had been explained (as I hope they have) in a judgment of this Court. In any event, given that I propose to grant appropriate injunctive relief (the substance of which I outline in the following paragraph), it does not seem to me to matter a great deal whether or not any part of a claim can be “withdrawn”.

64 I do not regard the builder’s statement of intention as particularly satisfactory. Accordingly, it seems to me, appropriate relief on this ground would be an injunction restraining the builder from prosecuting or seeking a determination on, or enforcing any determination to the extent that it includes an amount for, the variation claims in question.

Third issue: claim for loss of profits

65 Payment claim 21 consisted of a letter, a breakdown of the claimed amount and attachments purporting to support the claimed amount. By the letter, the builder said that the claimed amount included some five elements:

1. Contract Works;

2. Variation works including time based costs;

3. Costs of suspension and demobilisation;

4. Compensable losses and expenses, pursuant to S.27(2A) of the Act; and

5. Interest on overdue contract payments.

66 However, having gone through the relevant events (at least, as it perceived them), the builder put the bases of claim as including the following elements:

(1) the value of the contract sum represented by the percentage of works completed;

(2) variations;

(3) suspension costs;

(4) lost profit;

(5) interest; and

(6) the cost of repricing the works.

67 I set out in detail the claim for suspension costs and lost profit:

3. Suspension costs: Paul Michael incurred losses and expenses as a result of the Principals’ failure to pay and the resulting suspension. Those losses and expenses included:

a. The initial demobilisation following the suspension;

b. Employment costs, preliminaries and project related overheads during the suspension period; and

c. Final demobilisation costs once Paul Michael was excluded from the Site.

Paul Michael is entitled to be reimbursed for its losses and expenses on three alternate bases: Firstly, the acts of taking work out of Paul Michael’s hands, and the failure to pay either the adjudicated amount or the deemed certified amount, constituted acts, defaults or omissions of the Superintendent and/or the Principals that gave rise to circumstances in which the Superintendent, acting reasonably and in good faith, should have directed Paul Michael to suspend the carrying out of the whole of the works under the Contract thereby entitling Paul Michael to payment in accordance with the contractual provisions.

Alternatively, the costs of suspension are costs which are the result of the Principals purporting to take the remaining scope of work out of Paul Michael’s hands. But for that action, Paul Michael would have been entitled to recover the costs of suspension under the progress payment provisions of the contract on a month by month basis. Once the Principals took the remaining work out of Paul Michael’s hands, depriving Paul Michael of the opportunity to recover its suspension costs, its losses and expenses associated with the maintaining the [sic] site during the suspension crystallised. Paul Michael is entitled to and claims recompense for those losses and expenses.

In the third alternative, the Principals’ failure to pay, take over of the works and eventual eviction of Paul Michael from the Site, constituted a direction to vary the works.

The costs claimed under this head of claim are contained in Table C and D.

4. Lost profit: Paul Michael is entitled to be reimbursed the losses and expenses it has incurred as a result of the Principals taking over or removing the remaining work under the Contract while Paul Michael was exercising its right to suspend under the Act. The removal of the work from Paul Michael’s scope caused Paul Michael to lose the contribution to overhead and profit incorporated in the pricing of the unfinished portions of the work, which at the time Paul Michael was excluded from its Site, had a value of approximately $26.3m, less the amount paid to date of $7.3m.

Paul Michael has calculated the lost contribution to profit and overhead (OHP) on three alternate bases, as described in Table E .

Paul Michael’s entitlement to its lost overhead and profit arose when the remaining works were taken from its hands. That date was 24 November 2008. The date for payment of that amount was 10 business days after the entitlement rose. Paul Michael is entitled to interest at a rate of 10% until 5 March 2009 and thereafter at a rate of 9% calculated from 8 December 2009 to the date on which the amount is paid. The amount claimed at the date of this claim is shown in Table E.

68 Table C (referred to in relation to suspension costs) can be ignored. Table D (likewise referred to in relation to suspension costs) set out some 15 items of claimed costs relating to the suspension of the works from 25 August 2008 to 23 March 2009 (i.e., from the date of suspension to the date when the proprietors retook possession). Table E set out a claim for “amount of lost profit due to removal of the remaining scope of work” on three alternative bases, together with a claim for interest on lost overhead and profit.

The statutory entitlement to suspension costs

69 As I have noted, s 27(1) of the Act gives to a builder an entitlement, in certain circumstances, to suspend the works. Section 27 also provides for the consequences. Of particular relevance, s 27(2A) gives a right to be paid for certain loss and expenses:

27 Claimant may suspend work

(1) A claimant may suspend the carrying out of construction work (or the supply of related goods and services) under a construction contract if at least 2 business days have passed since the claimant has caused notice of intention to do so to be given to the respondent under section 15, 16 or 24.

...

(2A) If the claimant, in exercising the right to suspend the carrying out of construction work or the supply of related goods and services, incurs any loss or expenses as a result of the removal by the respondent from the contract of any part of the work or supply, the respondent is liable to pay the claimant the amount of any such loss or expenses.

...

70 That right is referred to expressly in s 13(3):

13 Payment claims

...

(3) The claimed amount may include any amount:

(a) that the respondent is liable to pay the claimant under section 27 (2A), or

...

The competing submissions

71 Dr Greinke appeared to acknowledge that the claim for suspension costs, referred to in item 3 of the letter and (relevantly) table D, was capable of falling within s 27(2A) of the Act. However, he submitted, the claim for lost profit was not.

72 Dr Greinke submitted, basing himself on the decision of Barrett J in Quasar Constructions v Demtech Pty Ltd [2004] NSWSC 116 , that a claim for damages for breach of contract was not a claim for payment “for construction work”. He submitted that in this case it was plain, on the face of the claim for lost profit, that it could not be a claim for the cost of construction work; there was not, he submitted, any need for the Court to consider any disputed question of fact.

73 Mr Goldstein submitted that the claim for lost profit could be a claim for “loss or expenses as a result of the removal by the respondent from the contract or any part of the work”. Thus, he submitted, it was a matter for the adjudicator. Mr Goldstein relied on my decision in Kembla Coal and Coke Pty Ltd v Select Civil Pty Ltd [2004] NSWSC 628 , and on the decision of the Court of Appeal in Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd [2005] NSWCA 228 ; (2005) 63 NSWLR 385. That was an appeal from my decision in Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd (2005) 21 BCL 312, in which I had taken the same approach as I had taken in Kembla Coal and Coke ; the Court of Appeal affirmed my decision.

Decision

74 In Coordinated Construction, Hodgson JA (with whom, on this point Ipp and Basten JJA agreed) said at 397 [40] that the word “for” in the phrase “for construction work” should not be construed narrowly. Thus, his Honour said at [41], the question of whether or not a particular amount was characterised by the contract as “damages” or “interest” could not be conclusive as to whether or not it was “for construction work carried out or for related goods and services supplied”. On the contrary, his Honour said, “any amount that a construction contract requires to be paid as part of the total price of construction work is generally... an amount due for that construction work, even if the contract labels it as “damages” or “interest”.”.

75 In this case, the right to compensation given by s 27(2A) is recognised by s 13(3). Section 13(3)(a) makes it clear that the claimed amount (which, I repeat, is a defined term meaning, relevantly, “an amount... claimed to be due for construction work carried out”) may have an extended meaning. In those circumstances, the question is not so much whether the amount claimed is “for construction work carried out” but, rather, whether it is a claim for “loss or expenses [incurred] as a result of the removal by the respondent from the contract of any part of the work or supply”.

76 In principle, it seems to me, where a respondent (proprietor) wrongfully removes the work from the claimant (contractor) – i.e., in effect, breaches or repudiates the contract – the loss incurred “as a result of” that removal may extend to loss of profit that would have been earned had the claimant been left to carry out the work removed.

77 The remedy of suspension of work is part of the panoply of remedies given by the Act to builders and subcontractors to enforce their statutory right to prompt payment of progress claims. The right to suspend work would lose much of its efficacy if a proprietor could, with impunity and without cost, react to the suspension by withdrawing the work from the builder. Thus, s 27(2A) gives the builder a right to recover losses or expenses incurred as a result of the removal of any work; and s 13(3)(a) means that those losses or expenses can be made the subject of a payment claim and, in the event of dispute, an adjudication application.

78 It is trite to observe that the Act is remedial legislation, enacted for the benefit of builders and subcontractors; and that it should be given a liberal construction, to the extent that its language will permit. In my view, to construe the reference to “loss or expense” incurred “as a result of the removal... of any part of the work” narrowly, so as a priori to exclude any claim for lost profit on the removed work, is not consistent with the evident intention of the Act. Nor is it an approach dictated, despite that evident invention, by the intractable language of s 27(2A).

79 In short, whether or not a claim for loss of profit falls within s 27(2A) is either a question of fact or a mixed question of fact and law, and one that (in the event of dispute) can be referred to and determined by an adjudicator.

80 It follows that no ground has been made out for preventing the claim of loss of profit from going forward. Nor (having regard to Dr Greinke’s acceptance of the proposition that the claim for “suspension costs” was capable of failing within s 27(2A)), is there any reason for preventing this aspect of the claim from going forward.

Fourth and fifth issues: payment claim 19 and s 14(4) of the Act

81 Section 14(4) provides as follows:

14 Payment schedules

...

(4) If:

(a) a claimant serves a payment claim on a respondent, and

(b) the respondent does not provide a payment schedule to the claimant:

(i) within the time required by the relevant construction contract, or

(ii) within 10 business days after the payment claim is served,

whichever time expires earlier,

the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates.

82 Where a respondent comes under a liability pursuant to s 14(4), the claimant may (but is not bound to) enforce that liability either by adjudication or by proceedings in a court of competent jurisdiction (see s 15(2)).

The competing submissions

83 Dr Greinke took as his starting point an assumption that, as the builder alleged, there had been no payment schedule provided in response to payment claim 19. On that assumption, he submitted, the proprietors were liable for the amount of the payment claim (see s 14(4) of the Act). In those circumstances, he submitted, it was not open to the builder to include, in payment claim 21 (or, for that matter, in payment claim 20) the amount claimed by payment claim 19. That was so, Dr Greinke submitted because s 14(4) should be regarded as the statutory equivalent of an adjudicator’s determination. Thus, he submitted, it was attended by the consequences identified by the Court of Appeal in Dualcorp, by Rein J in Perform and by Hammerschlag J in Cadence :

(1) there was an estoppel, equivalent to an issue estoppel, arising out of the s 14(4) deemed determination; or

(2) it was an abuse of process, or outside the scheme of the Act, to re-agitate in a subsequent payment claim something that had been “decided” by the deemed determination arising from s 14(4).

84 When asked to identify the estoppel on which he relied, Dr Greinke did so in terms of some generality (T42.19-34; T43.18-.27; T43.39-.41):

...But if the Act provides for a liability and the ability to enter a judgment that in itself, I submit, creates a similar form of estoppel in relation to the work the subject of that particular payment claim.

HIS HONOUR: What sort of estoppel is it?

GREINKE: It could be a form of estoppel, but be akin to an estoppel by judgment or similar to an adjudication. The only difference is –

HIS HONOUR: There is no judgment and no determination.

GREINKE: No, your Honour, but the effect under the Act provides for a liability for a progress claim, and it would be inconsistent with the principles of the Act to say one can take a default judgment under the Act and make a further payment claim in respect of those same rights

...

GREINKE: Yes, your Honour, but in this case –

HIS HONOUR: There was a statutory determination of liability at the very most.

GREINKE: Yes, your Honour, and I say that that liability itself creates a form of estoppel in that one can see an analogy.

HIS HONOUR: Which would be good enough you have to use the kind of estoppel form. Is it a legal estoppel or equitable estoppel which formed?

GREINKE: It would be a procedural estoppel akin to an estoppel by judgment.

In part in the sense that this is analogous to a default judgment having been entered in the Court because of the lack of a defence. That creates an estoppel as between the rights between the parties even though there has been no determination of those rights as between the two parties. The schemer [sic] of the Act in providing for the liability to accrue does not contemplate that the party will then re-agitate that same work in progress in a subsequent payment claim and subsequent adjudication.

...

The other analogous argument would be an analogy akin to a merger argument in that once the liability under the Act has been triggered the parties rights in relation to the work the subject of that payment claim had become merged in the statutory liability in an analogous way for the rights of parties being merged in the judgment. And again that can be by default without an adjudication on the merits.

85 Mr Goldstein submitted that it was permissible to include, in a payment claim, an amount that had been the subject of a previous claim: see s 13(6) of the Act. Thus, he submitted, in circumstances where there had been no adjudicator’s determination on the previous payment claim, it could not be an abuse of process, or outside the scheme of the Act, for his client to do as it had done.

86 In any event, Mr Goldstein submitted, the s 14(4) liability was inchoate until steps were taken to enforce it by pursuing one of the alternatives specified in s 15(2) of the Act. He noted that his client had not done so at the time payment claim 21 was served. Indeed, on the evidence, it appears not to have done so to this date. Mr Goldstein submitted that there could only be an abuse of process if his client, having obtained the benefit of s 14(4):

(1) took steps to enforce the liability created by s 14(4), pursuant to one or other of the alternatives set out in s 15(2); and

(2) having done so, thereafter sought to reagitate the same claim in a subsequent payment claim.

Decision

87 In any given case, the ultimate issues determined by adjudicators are the entitlement (if any) to a progress payment, and the amount of any entitlement. In reaching a conclusion on those ultimate issues, adjudicators will, in the ordinary course of the things, decide subsidiary issues along the way to their ultimate conclusions. Because there is no final determination of contractual rights, there is no res judicata. But because there is a sufficiently final determination of an interim and statutory right – to receive a progress payment – there is sufficient finality to attract the principle of issue estoppel.

88 Without intending to state comprehensively the circumstances in which a determination of a dispute will give rise to an issue estoppel, there must be, among other things, a decision on that dispute, by a court or other tribunal authorised to decide it, which has the requisite degree of finality.

89 By contrast, a liability arising under s 14(4) of the Act involves no reference to, or determination by, any decision-making body. Thus, one element associated with issue estoppel – a decision – is missing.

90 Further, I think, a liability arising under s 14(4) does not have the requisite degree of finality. If the liability is to be enforced, it must be through one of the two alternative mechanisms set out in s 15(2) of the Act. If the claimant proceeds down the first path – suing in a court of competent jurisdiction – judgment is not automatic. First, the claimant must establish the circumstances set out in s 15(1) of the Act (see s 15(4)(a)). Secondly, the respondent may defend the suit, although on limited grounds not including “any defence in relation to matters arising under the construction contract” (see s 15(4)(b)).

91 If the claimant proceeds down the second path – adjudication – then it must notify the respondent of its intention to do so, and give the respondent an opportunity to provide a payment schedule (see s 17(2)). If the respondent avails itself of that opportunity, then whatever dispute is raised by that payment schedule may be resolved in adjudication in the usual way (see s 22(2), noting in particular para (d)).

92 By contrast, enforcement of a determination is simpler: an adjudication certificate is filed as a judgment for a debt in a court of competent jurisdiction, and is enforceable accordingly (s 25(1)). True it is that the judgment may be set aside in certain circumstances (see s 25(4)). But in proceedings to set the judgment aside, the respondent may not, among other things, challenge the adjudicator’s determination (see s 25(4)(a)(iii)).

93 Thus, in my view, there are significant differences between a liability arising under s 14(4) on the one hand, and a liability arising under an adjudicator’s determination on the other. The essential qualities of determinations that give rise to issue estoppel are lacking from a statutory liability arising under s14(4). It is no answer to this to say that s 14(4) has the effect of, or should be deemed to be, an adjudicator’s determination. The existence of issue estoppel is something determined by analysis of what it is that is said to give rise to the estoppel, not by the application of verbal formulae.

94 In the present case, there has been no adjudication of the claim raised by payment claim 19. It is not a case where the builder is seeking to have another adjudicator do what a previous adjudicator failed to do to its satisfaction. It is not a case where the builder is seeking to use the processes of the Act repetitiously, in an attempt to get a better outcome. On the contrary, if the builder’s contention – that no payment schedule was provided in response to payment claim 19 – is correct, it has obtained the best outcome that it can get, in respect of the particular payment claim. That is because, by operation of s 14(4), the proprietors are liable for the amount claimed. The builder cannot do better than that in any adjudication. By repeating the claim in a subsequent payment claim, the builder gave the proprietors another opportunity to provide a payment schedule. In that payment schedule, the proprietors were entitled to answer not only the fresh aspects of the claim, but also those aspects that (as permitted by s 13(6)) had been included in the earlier payment claim.

95 What has happened in this case is far removed from the concept of abuse of process, in relation to the Act, that emerges from the authorities to which I have referred.

96 I conclude that the builder is not barred, by issue estoppel or some analogous form of estoppel or by the concept of abuse of process, from claiming, under payment claim 21, entitlements that were claimed under payment claim 19; and that this is so whether or not a payment schedule was provided in time in response to payment claim 19.

97 There is a separate, and minor, dispute in relation to payment claims 19 and 21. Dr Greinke submitted that the builder had not accounted, in payment claim 21, for the amounts earlier claimed under payment claims 18 and 19, nor for the alleged statutory liability under s 14(4) in respect of payment claim 19. That is correct as a matter of fact. However, it was open to the proprietors, in their payment schedule provided in response to payment claim 21, to point out the deficiencies, or whatever element of double-counting there may be.

98 I am not to be taken as condoning the form of payment claim 21, either in this respect or in relation to what I regard as the unsatisfactory way in which (if at all) it identifies the construction work to which the progress payment claimed related (s 13(2)(a)). I deal with this in the penultimate section of these reasons. For present purposes, it is sufficient to say that the failure (if it be a failure) to account properly for earlier claims or liabilities does not, of itself, provide a reason for preventing payment claim 21 from going forward to adjudication. On the contrary, it is something that (if raised by the payment schedule) the adjudicator can deal with.

Sixth issue: interest

The formulation of the claim for interest

99 The claim for interest is the fifth of the heads of claim identified in payment claim 21 (see at [65] above). The payment claim stated that the claim for interest arose in the following way:

5. Interest: Pursuant to the terms of the Contract, the Superintendent’s failure to issue a progress certificate within 14 days of receiving Progress Claim 19 means that Progress Claim 19 is deemed to be the progress certificate. Payment of the amount of Progress Claim 19 was due 21 days after it was served on the Superintendent and the Principals. The Principals have not paid the amount due and payable under Progress Claim 19. An interest rate of 18 per cent per annum applies to that unpaid amount. Further calculations and supporting information is contained in Table F .

100 Clause 20 of the contract required the proprietors to ensure that at all times there would be a superintendent, and that the superintendent would fulfil all aspects of its role and functions reasonably and in good faith.

101 By cl 37.1 of the contract read in conjunction with item 28 of the schedule to it, the builder was to make monthly progress claims on the fifteenth day of each month. Those claims were to be given to the superintendent. By cl 37.2, the superintendent was required, within 14 days of receipt of a progress claim, to provide a progress certificate stating its opinion of the amount payable in respect of the progress claim, and a further certificate dealing with retentions and the like. Also by cl 37.2, if the superintendent did not issue a progress certificate within 14 days of receipt of a progress claim, “that progress claim shall be deemed to be the relevant progress certificate ” (italics in the original: to denote a defined term).

102 Further, by cl 37.2, the proprietors were required to pay the balance of the progress certificate (after deducting retentions and other certified matters) within seven days of receipt of the certificates from the superintendent.

103 By cl 37.5 read in conjunction with item 30 of the schedule, interest was payable at the rate of 18% per annum “after the date of default in payment”.

104 It is the builder’s case (disputed by the proprietors) that the superintendent did not issue a progress certificate within 14 days of receipt of payment claim 19 (or at all).

The competing submissions

105 Dr Greinke, referring to the claim for interest, submitted that:

(1) if there were no payment schedule, then any right to interest “merged in the right to judgment created in s 15(2)(a)(i)”; or

(2) if a payment schedule had been provided in time, then there was no default in payment and thus no right to interest.

106 Mr Goldstein submitted that this was a matter that could and should be left to the adjudicator.

Decision

107 It is not necessary to deal with this issue in detail. There is a question of fact – was a payment schedule provided in time? There is a question of law – what, in the factual circumstances that may be found by the adjudicator, is the effect of the relevant contractual provisions? I see no reason why those matters should not be left to an adjudicator to determine. That is the mechanism provided by the Act.

Seventh issue: claim for cost of repricing

108 Nor is it not necessary to deal with this issue in detail. Dr Greinke submitted that there was no contractual entitlement to be paid, or alternatively, no contractual entitlement that could be proved except by reference to without prejudice negotiations. Alternatively, he submitted, the claim was not one for the value of construction work. He did however concede that it might be a claim for the value of related goods or services.

109 All of those matters, and others raised by Dr Greinke may be correct. They can be dealt with by the adjudicator.

Eighth issue: conduct

110 The conduct relied upon was the proprietors’ failure to pay, or to give security for, the judgment referred to at [7] above. Mr Goldstein submitted that this amounted in effect to “unclean hands”, so as to debar the proprietors from obtaining equitable relief. Dr Greinke submitted that it did not.

111 In Dewhirst v Edwards [1983] 1 NSWLR 34 , Powell J pointed out at 51 that if the defence of clean hands were to operate, the impropriety complained of must “have an immediate and necessary relation to the equity sued upon”. Although His Honour’s observations were obiter (as is apparent from the commencing words of the sentence from which I have taken the words quoted), the principle is established clearly by the authorities to which his Honour referred.

112 The principle was considered by Young J in FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552 at 557ff. His Honour said at 561 (after a detailed survey of the authorities, including the decision of Powell J in Dewhirst ) that “the more one examines the rule in its application in the cases, the more one can see that it is only if the right being sought to be vindicated by the plaintiff in a court of equity, is one which if protected, would mean the plaintiff was taking advantage of his own wrong, that the court will... debar him from relief...”.

113 In this case, there is no real relationship – let alone an “immediate and necessary” one – between the relief sought and the conduct in question. Nor can it be said that the proprietors’ action, in seeking to be protected from what I have concluded is to a limited extent an abuse of process, constitutes an attempt by them to take advantage of their own wrong.

114 Thus, whilst accepting that the relief sought is in part equitable (insofar as it includes a prayer for an injunction), I do not think that the proprietors, if otherwise entitled (as I conclude they are), to that relief should not receive it through application of the doctrine of clean hands.

A final question

115 I referred at [98] above to a concern as to whether payment claim 21 identified the construction work to which the progress payment claimed by it related. That question was raised in argument. It is not however an issue raised in the proprietors’ Amended Technology and Construction List Statement. Mr Goldstein took this point, as he was entitled to do. Had the point been raised, it is possible that evidence could have been adduced to show that, whatever impression that I might have of the form of payment claim 21 and its comprehensibility, it was perfectly comprehensible to the parties having regard to the history of their dealings. See the decision of Palmer J in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 at [72] and following; and see also my decision in Isis Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714 at [36] – [37] (my decision was approved on appeal: Clarence Street Pty Ltd v Isis Projects Pty Ltd [2005] NSWCA 391 ; (2005) 64 NSWLR 448.)

116 The consequences of the alleged deficiencies (assuming that they were made good) is by no means clear. When Hodgson JA stated (in a non-exclusive way) the basic and essential requirements for the existence of a valid adjudicator’s determination (see Brodyn Pty Ltd v Davenport [2004] NSWCA 394 ; (2004) 61 NSWLR 421 at 441 [53] ), his Honour at [54] excepted, among other things, the “more detailed requirements” of “s 13(2) as to the content of payment claims”. I note that his Honour’s judgment commanded the support of Mason P and Giles JA.

117 In Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (In Liq) [2005] NSWCA 409 ; (2005) 64 NSWLR 462 , Hodgson JA said at 474 [34] that “a document which purports to be a payment claim does not fail to be a payment claim, within the meaning of the Act, merely because it can be seen, after a full investigation of all the facts and circumstances, not to successfully identify all of the construction work for which payment is claimed”. However, it appears, his Honour thought that there might be a limiting case where a payment claim could be seen on its face not to be compliant with s 13(2)(a). His Honour said at 475 [36] that “I do not think a payment claim can be treated as a nullity for failure to comply with s 13(2)(a) of the Act, unless the failure is patent on its face; and this will not be the case if the claim purports in a reasonable way to identify the particular work in respect of which the claim is made”.

118 In the same case, Santow JA said at 477 [47] “that the identification requirement in s 13(2)(a) of the Act is not to be made so demanding as to preclude a summary judgment in an appropriate case”. However, his Honour said, he did not agree “that a payment claim cannot be treated as a nullity “unless the failure is patent on its face”.” It follows, his Honour said at 477 [48], “that there must be sufficient specificity in the payment claim for its recipient actually to be able to identify a “payment claim” for the purpose of determining whether to pay, or to respond by way of a payment schedule indicating the extent of payment, if any”. That was, his Honour said, “a relatively undemanding test, though still one with some content”.

119 Ipp JA put the matter in a way that is, I think, consistent with the approach of Hodgson JA. His Honour said at 484 [76] that “[p]rovided that a payment claim is made in good faith and purports to comply with s 13(2) of the Act, the merits of that claim, including the question whether the claim complies with s 13(2), is a matter for adjudication...”.

120 In the present case, I need do no more than say that the proprietors appear to have understood the payment claim sufficiently to enable them to provide a payment schedule, because they did so. The sufficiency of the claim, and of the answers to it given by the payment schedule, are thus matters for an adjudicator if the builder elects to seek adjudication.

121 In those circumstances, I do not propose to deal further with this “non-issue”.

Conclusion and orders

122 The proprietors’ challenge to payment claim 21 succeeds to the extent indicated at [61] to [64] above. The builder should be restrained from advancing those claims in any adjudication, from seeking a determination on them, and from enforcing any determination to the extent that it deals with those claims. Otherwise, the proceedings should be dismissed.

123 My tentative view as to costs is that the proprietors, having succeeded only to a limited extent (an extent effectively conceded by the builder in Mr Michael’s affidavit), should pay the builder’s costs. I will however hear argument on that point if the parties are unable to agree.

124 I direct the parties to bring in short minutes of order to give effect to these reasons. The parties are to submit agreed orders, or competing versions of the orders sought, by 2 November 2009.

125 I list the proceedings for the making of final orders at 9:30am on 5 November 2009. I will resolve any dispute as to the orders sought (including as to the proper order for costs) on that occasion.

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LAST UPDATED

16 October 2009