Woonona-Bulli RSL Memorial Club Ltd v Warrane-Design Construct Fit-Out Pty Ltd

1. [1]

   This judgment relates to a notice of motion filed on 23 April 2025 in which the applicant seeks a stay of part of an order made by Rees J on 17 April 2025. The notice of motion was filed on the same day as the notice of appeal, which claims that the primary judge erred in making an order concerning the payment out of monies paid into Court.

2. [2]

   Before addressing the stay application, it is necessary to set out the rather complex history of the proceedings.

Relevant chronology

1. [3]

   The proceedings arise from disputes concerning the conversion of the applicant Club’s existing bowling green to car parking and an upgrade of an existing car park. On 7 December 2023, the Club entered into contract with the respondent (Builder) in relation to the works (Contract). Shortly thereafter, the Builder entered into a sub-contract with All Civil Solutions Group Pty Ltd (Sub-Contractor) for virtually all of the works.

2. [4]

   The Sub-Contractor subsequently served on the Club three debt certificates issued by the District Court under s 7 of the Contractors Debts Act 1997 (NSW) (CD Act). The debt certificates are dated 16 August 2024, 13 December 2024 and 13 February 2025 (Debt Certificates). The effect of their service on the Club was, under s 8 of the CD Act, to assign to the Sub-Contractor the Club’s obligation to pay money owed to the Builder under the Contract in the amounts specified in the Debt Certificates.

3. [5]

   In response to the Debt Certificates, the Club paid to the Sub-Contractor amounts that it would otherwise have been obliged to pay to the Builder. These payments were made on 12 September 2024, 20 December 2024 and 31 January 2025.

4. [6]

   For convenience, I set out a table prepared by Stevenson J (see at [10] below) containing the dates of the Debt Certificates, the amounts of those Debt Certificates, the amounts paid by the Club to the Sub-Contractor, and the balance outstanding at particular points in time:

5. [7]

   The final line of the table indicates that, as at 13 February 2025, the Club owed the Sub-Contractor $1,200,670.24.

6. [8]

   It is also necessary to note as part of the chronology that, on 25 January 2025, the Builder obtained an adjudication determination against the Club under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA). On 3 February 2025, the Builder filed the adjudication certificate in the Supreme Court. Judgment was entered in favour of the Builder against the Club for $2,141,780.73 (Judgment). The Judgment was made in proceedings 2025/44205.

7. [9]

   On 20 February 2025, the Club commenced separate judicial review proceedings (2025/68603), seeking to quash the adjudication determination to the extent of $1,030,281.79 (SOPA Proceedings).

8. [10]

   On 25 February 2025, the Club filed a notice of motion in proceedings 2025/44205 seeking an order staying the Judgment. That notice of motion was determined by Stevenson J on 27 February 2025 (see Warrane Design Construct Fit-Out Pty Ltd v Woonona Bulli RSL Memorial Club Ltd [2025] NSWSC 123). His Honour found that the Judgment overstated the amount due by the Club to the Builder in the amount of $1,200,670.24, being the balance owing to the Sub-Contractor as a result of the assignments produced by service of the Debt Certificates. His Honour noted that the amount of $941,110.49 under the Judgment remained owing by the Club to the Builder. Noting that the SOPA Proceedings were fixed for final hearing on 6 March 2025, Stevenson J ordered that the Judgment be stayed to the extent of $1,200,670.24, but that the Club should pay into Court $941,110.49 to abide the outcome of those proceedings.

9. [11]

   The SOPA Proceedings were heard by Rees J on 6 March 2025. On 27 March 2025, her Honour delivered judgment (see Woonona-Bulli RSL Memorial Club Ltd v Warrane-Design Construct Fit-Out Pty Ltd [2025] NSWSC 271). As noted above, the SOPA Proceedings were numbered 2025/68603. Her Honour dismissed the Club’s judicial review challenge, with costs.

10. [12]

    The SOPA Proceedings returned to Rees J on 3 April 2025 for the purpose of determining the following two issues:

11. [13]

    Her Honour delivered judgment on 16 April 2025 (see Woonona-Bulli RSL Memorial Club Ltd v Warrane-Design Construct Fit-Out Pty Ltd (No 2) [2025] NSWSC 365). This judgment was delivered as part of the SOPA Proceedings, being 2025/68603.

12. [14]

    In her Honour’s reasons for judgment, after noting the inter-action between the CD Act and the SOPA and setting out the background history, Rees J noted that, on 29 November 2024, the Builder submitted Progress Claim 13 to the Club in the amount of $2,203,564.59. Her Honour then summarised various events, including service of the Debt Certificates and various payments made by the Club, including the amount of $81,978.47 which the Club paid to the Sub-Contractor in respect of the Builder’s Progress Claim 13. This left $1,020,980.40 of the certified debt unpaid.

13. [15]

    Her Honour noted the Builder’s success in obtaining an adjudication determination in the amount of $2,094,018.14. Her Honour then explained that, on 24 January 2025, the Club and the Builder agreed that the Club would resolve the Builder’s Progress Claim 14, in the amount of $284,318.94. Her Honour said at [23]:

14. [16]

    Her Honour noted that the Builder obtained an Adjudication Certificate and Judgment for the unpaid portion of the adjudicated amount. Her Honour noted at [25] that the evidence did not reveal whether the Judgment sum included or excluded the amount of $81,978.47 already paid by the Club to the Sub-Contractor, but her Honour presumed that it was not included.

15. [17]

    After providing further background information, her Honour noted at [31] that the Sub-Contractor had received no further payment from the Club or the Builder in respect of the unpaid portion of the Debt Certificates, being in the amount of $1,200,670.24. Her Honour also noted that the adjudication determination stood in the amount of $2,094,018.14. Her Honour identified the relevant question as being what should be done with the $941,110.49 paid into Court in accordance with Stevenson J’s orders.

16. [18]

    After summarising the parties’ respective submissions, Rees J explained at [42]-[44] why she considered that the funds paid into Court should be paid to the Builder, apart from the amount of $81,978.47 which she considered the Club would be entitled to receive if the Judgment sum did not allow for this amount to be paid by the Club to the Sub-Contractor:

17. [19]

    The following day, on 17 April 2025, Rees J made the following orders:

18. [20]

    After hearing from the parties regarding final orders, Rees J made the following orders and directions on 24 April 2025 in the SOPA Proceedings:

19. [21]

    Her Honour gave ex tempore reasons for the orders dated 24 April 2025, including for refusing the Club’s application for a stay in the amount of $284,318.94, which the Club contended ought not to be paid to the Builder (see Woonona-Bulli RSL Memorial Club Ltd v Warrane-Design Construct Fit-Out Pty Ltd (Supreme Court (NSW), Rees J, 24 April 2025, unrep). Her Honour noted that the Club had filed a notice of appeal the previous day. She described the ground of appeal as not articulating any legal error but rather suggesting an error of mathematics. Her Honour also noted that in circumstances where no evidence had been provided as to the parties’ respective prejudice, the Club had failed to discharge its onus of demonstrating that it was exposed to a real risk of prejudice if the stay was not granted. Her Honour noted at [13] that it was not entirely clear whether the Club had a right of appeal or needed leave to appeal. Her Honour’s doubts on this last issue were, in my respectful opinion, well founded, as I will elaborate upon shortly.

20. [22]

    Finally, after finding that the balance of convenience favoured the Builder, Rees J refused the Club’s application for a stay. Her Honour ordered that the money paid into Court by the Club be paid out in the amount of $859,134.02 to the Builder, with the remaining balance being paid out to the Club.

Disposition

1. [23]

   As the Builder correctly pointed out, this is the third attempt by the Club to obtain a stay.

2. [24]

   I should acknowledge that, at times, I had difficulty grasping the essence of the Club’s argument in favour of a stay. The difficulty was compounded by the obtuse drafting of the single ground of appeal in the notice of appeal. Further confusion is created by the fact that the notice of motion is directed to the orders dated 17 April 2025, but those orders appear to have been overtaken by the orders dated 24 April 2025.

3. [25]

   It appears, however, that the Club’s case is primarily directed to the primary judge’s reasoning at [43] of the judgment dated 16 April 2025.

4. [26]

   First, the Club contends that Rees J erred in stating there that the Club continued to incur obligations to pay money owed under the Contract to the Builder after Judgment was entered, with reference to Progress Claim 14. As noted above, the Judgment was entered on 3 February 2025. The Club pointed out that the amount of $284,318.94 was paid on 31 January 2025, which pre-dated the Judgment. That is correct, but I fail to see any arguable or material error. At [43], Rees J was simply pointing out that the Club continued to incur obligations under the Contract after 3 February 2025, including by reference to the fact that Progress Claim 14 had been lodged, which enlivened the obligations under the SOPA.

5. [27]

   Secondly, the Club contended that the primary judge erred in concluding that, if the amount of $284,318.94 was paid to the Club out of the monies in Court, that would effectively amount to a refund to the Club of the payment of Progress Claim 14.

6. [28]

   Although it is unnecessary and inappropriate for the purposes of this application to reach a firm view on the strength of the Club’s appeal in relation to this matter (beyond whether it discloses a serious question to be tried), I consider that there is considerable force in the Builder’s contention that the Club’s position is relatively weak. In particular, the amount of $284,318.94 which the Club paid directly to the Sub-Contractor had the effect, pursuant to s 12(2) of the CD Act, of discharging part of the amount owing by the Club to the Sub-Contractor under the Debt Certificate dated 13 December 2024. The Builder pointed out that it intended to cross-appeal her Honour’s judgment insofar as the amount of $81,978.47 is concerned.

7. [29]

   The Builder contended, with some force, that there is a flaw in the Club’s calculation of the amount that should be paid to the Builder out of the monies in Court. The Club claims that that amount is $574,812.38, but that fails to bring to account monies that have been paid by the Club to the Sub-Contractor in reduction of the Debt Certificate amounts. The effect of s 8(1) of the CD Act in the circumstances of this case is that service on the Club of the Debt Certificates operated to assign to the Sub-Contractor the Club’s obligation to pay the money owed to the Builder under the Contract. Moreover, s 12(2) of the CD Act provides that, if only part of the debt is discharged, the assignment effected in respect of that part of the debt ceases to operate.

8. [30]

   I respectfully agree with the Builder’s submission at [28] of its written submissions dated 27 April 2025 (noting that the table referred to is the same table set out at [6] above), which casts real doubt on whether the single ground of appeal is arguable and suggests that the Club’s grievance relates to an arithmetical calculation as opposed to any issue of principle:

9. [31]

   The core of the matter is reflected in the following exchange during the course of oral argument with the respondent’s solicitor [T21 l 21-27]:

10. [32]

    Turning now to the issue of the balance of convenience, I find that the balance weighs heavily in favour of the Builder who, contrary to the policy objectives of the SOPA, has still not been paid the money owed to it by the Club.

11. [33]

    For completeness, although senior counsel for the Club denied that it was seeking a “Grosvenor stay” (see Grosvenor Constructions (NSW) Pty Ltd (in administration) v Musico [2004] NSWSC 344), the Builder relied on an affidavit dated 28 April 2025 by Mr Joseph Stephen. Mr Stephen is a director of the Builder. He provided evidence that the Builder had now paid all outstanding amounts to its sub-contractors, except for one payment which was not yet due. Mr Steven also attached a brief statement from the Builder’s chartered accountants, which was headed “Solvency Declaration”. Mr Hutchins, who appeared for the Builder, properly acknowledged that this statement should not be overstated given its form and the haste with which it had been prepared. But, to the extent that it is relevant, I am prepared to give limited weight to the accountant’s evidence that the Builder is solvent, profitable and financially viable.

12. [34]

    Finally, I return to the issue, which was raised by the primary judge, as to whether the Club requires leave to appeal. In my view, it plainly does. That is because the notice of appeal filed on 23 April 2025 does not appeal against the final order made in the SOPA Proceedings on 27 March 2025, dismissing the judicial review summons. Rather, it relates to the orders made by Rees J on 17 April 2025 and, in particular, order 4, relating to the payment out of monies in Court. In my opinion, that order is not in the nature of a final order. Instead, it is more correctly regarded as an interlocutory order in the sense that it is an order which gives effect to the rights of the parties. It is consequential upon the working out of the condition imposed by Stevenson J on the initial stay granted in the proceedings 2025/44205.

13. [35]

    The distinction between a final order, such as that made by Rees J on 27 March 2025 when the Club’s judicial review summons was dismissed, and subsequent orders which, in effect, are consequential upon the earlier final order, may be elusive, but the distinction is well established (see Tjiong v Chang [2025] NSWCA 25 at [267] and the cases referred to therein).

14. [36]

    In circumstances where the Club requires leave to appeal it seems to me that the hurdles to it obtaining a stay are even higher. When I raised the issue of the need to obtain leave to appeal, senior counsel for the Club submitted that there was a proper basis for the grant of leave to appeal and proposed that if leave is required, a stay should be granted pending the filing of an amended summons seeking leave to appeal, which could be done within 24 hours. He added that a novel issue was raised as to the inter-action between the CD Act and the SOPA.

15. [37]

    I do not accept that the single ground in the notice of appeal raises any issue of principle, whether novel or not. No such principle is properly articulated in that ground of appeal. Rather, as noted above, I consider that the Club’s grievance relates to an arithmetical calculation and does not present an issue of general principle which would warrant leave to appeal being granted. In these circumstances, I do not consider that there should be a short stay as sought by senior counsel. The Club has been on notice since at least 24 April 2025 of the possible need to obtain leave to appeal, but has persisted with a view that leave was not required.

16. [38]

    I consider that there is no sufficient basis for granting any stay in respect of the primary judge’s order concerning the payment out of monies paid into Court.

Conclusion

1. [39]

   For all these reasons, the notice of motion will be dismissed, with costs. I do not accept the Builder’s submission that this is an appropriate case to award costs against the Club on an indemnity basis. The formal order will be:

   1. (1)

      The notice of motion filed 23 April 2025 is dismissed, with costs.