Filadelfia Projects Pty Limited v EntirITy Business Services Pty Limited [2009] NSWSC 1468 (23 December 2009)

Last Updated: 4 January 2010

NEW SOUTH WALES SUPREME COURT

CITATION:

Filadelfia Projects Pty Limited v EntirITy Business Services Pty Limited [2009] NSWSC 1468

JURISDICTION:

FILE NUMBER(S):

331921/09

HEARING DATE(S):

23 December 2009

EX TEMPORE DATE:

23 December 2009

PARTIES:

Filadelfia Projects Pty Limited (Plaintiff)

EntirITy Business Services Pty Limited (Defendant)

JUDGMENT OF:

Gzell J

LOWER COURT JURISDICTION:

Not Applicable

LOWER COURT FILE NUMBER(S):

Not Applicable

LOWER COURT JUDICIAL OFFICER:

Not Applicable

COUNSEL:

S Goldstein (Plaintiff)

D Feller SC/A Kostopoulos (Defendant)

SOLICITORS:

Veritas Legal (Plaintiff)

CATCHWORDS:

ADMINISTRATIVE LAW - Particular Tribunals or Bodies - Injunctions sought to restrain the defendant from seeking adjudication of a payment claim under the Building and Construction Industry Security of Payment Act 1999 - plaintiff party to contract with third party who subcontracted to defendant - claims made by defendant on third party under the Act - upon termination of subcontract, defendant made claim upon plaintiff - whether an abuse of the processes of the Act

LEGISLATION CITED:

Building and Construction Industry Security of Payment Act 1999

CATEGORY:

Procedural and other rulings

CASES CITED: Urban Traders v Paul Michael [2009] NSWSC 1072

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

Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWSC 416

Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27 ; (2006) 226 CLR 256 Ridgeway v The Queen [1995] HCA 66; (1995) 184 CLR 19

TEXTS CITED:

DECISION:

Application dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

GZELL J

WEDNESDAY 23 DECEMBER 2009

331921/09 FILADELFIA PROJECTS PTY LIMITED v ENTIRITY BUSINESS SERVICES PTY LIMITED

E X TEMPORE JUDGMENT

1 Filadelfia Projects Pty Limited has been given leave to file a summons seeking final orders in the form of a declaration that there was no construction contract between it and EntirITy Business Services Pty Limited and an order that EntirITy be permanently restrained from seeking adjudication of a payment claim dated 10 December 2009.

2 What is sought today is an order that EntirITy be temporarily restrained from seeking adjudication of the payment claim.

3 Filadelfia was party to a contract with Zebicon Pty Ltd which subcontracted to EntirITy. Filadelfia was not a party to that subcontract. Payment claims were made by EntirITy to Zebicon for 15 months. Payment schedules were issued and payments were made to EntirITy.

4 The subcontract between EntirITy and Zebicon was terminated in September 2009 and a payment claim was made on 10 December 2009 on Filadelfia asserting for the first time that Filadelfia had a contract with EntirITy.

5 Filadelfia has until tomorrow to determine whether or not to file a payment schedule.

6 There are some recent authorities that injunctions can issue with respect to matters coming within the Building and Construction Industry Security of Payment Act 1999 where there has been an abuse of process.

7 Filadelfia argues that it is an abuse of process to serve documents under the Building and Construction Industry Security of Payment Act on it as it was not party to a construction contract for the purposes of the Act.

8 In Urban Traders v Paul Michael [2009] NSWSC 1072 , McDougall J recently analysed those cases that have founded an injunction on an abuse of process.

9 As McDougall J pointed out at [38], Allsop P in Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 described the essence of the abuse of process in that case as 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; 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 was dissatisfied with the result of the first adjudication; or repetitious re-agitation of the same issues.

10 In Urban Traders at [28] McDougall J analysed the reasons given by Rein J in Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd [2009] NSWSC 416 at [47] for concluding that re-agitation of claims made in an earlier adjudication was an abuse of process. McDougall paraphrased those reasons thus:

“(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."

11 McDougall J points out at [41] of Urban Traders that it does not follow from the decisions that every repetition in a subsequent payment claim of a claim made in an earlier payment claim must amount to an abuse of process, even if that earlier payment claim had been the subject of an adjudicator's determination. The relevant concept is not abuse of process at large, it is the abuse of processes of the Act, specifically the processes of the Act designed to ensure that builders and subcontractors receive prompt and progressive payment for construction work performed or related goods and services provided.

12 In Urban Traders at [61] McDougall J concluded that he should grant an injunction with respect to reagitated variation claims.

13 It was submitted that the concept of an abuse of process requires further consideration. The majority in Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27 ; (2006) 226 CLR 256 at 265 [9] said:

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

14 At 266-267 [14] the majority cited with approval what Gaudron J had said in Ridgeway v The Queen [1995] HCA 66; (1995) 184 CLR 19 at 74-75 that the powers to prevent an abuse of process had traditionally been seen as including a power to stay proceedings instituted for an improper purpose as well as proceedings that were frivolous, vexatious or oppressive, notwithstanding that there is no very precise notion of what is vexatious or oppressive or what otherwise constitutes an abuse of process.

15 What is put in support of the application is that non-parties should not be burdened with performance under the Act. The payment claim was comprised in 29 lever arch files and the difficulty will arise with respect to the adjudication response.

16 There is, however, in my view a vast difference between the founding of an abuse of process on the non-authorised repetitious appeal to the processes of the Building and Construction Industry Security of Payment Act and the factual determination in this case of whether Filadelfia is a party to a construction contract that would enliven an adjudicator's jurisdiction under the Act.

17 While it may be so that similar burdens may be suffered if the question is not determined before the necessity to lodge an adjudication response arises, that does not mean that lodging adjudication documents under the Act against a person who turns out not to be a party to a construction contract is itself an abuse of process.

18 The question whether Filadelfia is party to a construction contract for the purposes of the Building and Construction Industry Security of Payment Act will be determined under the summons filed today in due course.

19 Because I am of the view that the service on Filadelfia of the payment claim of 10 December 2009, purportedly under the Building and Construction Industry Security of Payment Act , was not an abuse of process, I dismiss paragraph 1 of the summons. The plaintiff must pay the defendant's costs.

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LAST UPDATED:

31 December 2009