Castle Constructions Pty Ltd v N & R Younis Plumbing Pty Ltd

1. [1]

   In these proceedings, Castle Constructions Pty Ltd (“the Builder”) challenges an adjudication determination in favour of N & R Younis Plumbing Pty Ltd (“the Contractor”) under the Building and Construction Industry Security of Payment Act 1999 (NSW). Unless otherwise stated, statutory references in the balance of this judgment are to that Act. All figures quoted are inclusive of GST.

2. [2]

   The contract between the parties was one of three contracts to which the Builder and the Contractor were party for works under a building project being constructed by the Builder at Northbridge. The contract in question covered the provision of hydraulic services. It was dated July 2017 and was a Standard Trade Contract published by the Master Builders’ Association of NSW, August 2014 Edition. The contract price was $517,000.

3. [3]

   The present dispute concerns a payment claim issued by the Contractor on 20 November 2018. The amount claimed was $142,140.51, which covered both the completion of the works and variations. The claim was rejected by the Builder; in response to the claim, it issued a payment schedule refusing to make any payment. The Contractor brought an adjudication application which was referred to Callum Campbell, (“the Adjudicator”), the second defendant. In its application the Contractor reduced its claim to $120,654.50. The Adjudicator awarded the whole of this amount in the Contractor’s favour.

4. [4]

   Pursuant to an agreement between the parties which is referred to in more detail below, the Builder paid the sum of $150,000 into a bank account controlled by the solicitors for the parties to abide the outcome of the dispute. The present proceedings were commenced on 22 January 2019 and have been conducted on an urgent basis.

Issues for determination

1. [5]

   Section 8 of the Act provides:

2. [6]

   The Act (s 4) contains the following definition of the term “progress payment”:

3. [7]

   Section 13 of the Act relevantly provides:

4. [8]

   Under the Act there is no entitlement to a progress payment, and there can be no valid progress claim, unless there is an available reference date. This is established by the High Court decision in Southern Han Breakfast Point Pty Ltd v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 which is referred to in more detail below.

5. [9]

   The Builder contends that, at the time the Contractor issued its November progress claim, it had no entitlement to a progress payment under the Act. The Builder advances two separate contentions to support this conclusion.

6. [10]

   First, the Builder contends that it terminated the relevant contract before the progress claim was issued by the Contractor. According to the Builder, once the contract was terminated there was no remaining reference date upon which the progress claim could be based.

7. [11]

   The Builder’s alternative contention is that, if the contract was not terminated, then as a matter of construction of the contract and the Act, the relevant reference date was 28 November. According to the Builder, the Contractor’s progress claim dated 20 November was invalid because it was issued before the relevant reference date.

8. [12]

   The Contractor disputes that the Builder’s purported termination of the contract was valid, and disputes the Builder’s contention concerning the available reference date. But in addition the Contractor contends that the resolution of these contentions was a matter for the Adjudicator, and there was no jurisdictional error by the Adjudicator which would permit this Court to intervene.

Facts and evidence

1. [13]

   The Builder is a company controlled by Victor Lahoud. The Contractor is a company controlled by Richard Younis. All relevant commercial negotiations and dealings took place between Mr Lahoud on behalf of the Builder and Mr Younis on behalf of the Contractor.

2. [14]

   The printed MBA conditions of contract dealt with the making of payment claims and payment terms in clause 4 which relevantly provided:

3. [15]

   Schedule 2 Item (ii) dealt with progress payments. It provided in its printed form:

4. [16]

   The printed form of Item (ii) was amended and completed in handwriting. Sub-clause A(a) was struck out. In sub-clause A(b) the word “on” was struck out and replaced by the word “by”. The word “28th” was written in to the blank space. The result was that the contractual version of the clause read as follows:

5. [17]

   The contract provided for the work to begin in July 2017 and for it to be completed by May 2018. The parties fell into dispute and the work was not completed by that date.

6. [18]

   By letter dated 3 October 2018, McLachlan Thorpe, solicitors acting for the Builder, wrote to Mr Younis. The letter asserted among other things that the Contractor had failed to comply with the hydraulic services contract and its staff had left the site. The letter stated that this conduct amounted to repudiation of the contract and purported to accept the repudiation by terminating the contract.

7. [19]

   Mr Younis responded on 17 October asserting that the purported termination was invalid and reserving the Contractor’s rights. The letter asserted that the contract remained on foot. It stated that the Contractor remained ready, willing and able to carry out its obligations under the contract.

8. [20]

   Negotiations then took place between McLachlan Thorpe and solicitors acting for the Contractor, Salim Rutherford. Those negotiations resulted in the preparation of a document styled “Term Sheet”. The Term Sheet was drafted as a communication between the solicitors for the Builder on the one hand and the solicitors for the Contractor on the other, describing the parties as “our client” and “your client” respectively. It was then signed by Mr Lahoud and Mr Younis on behalf of the Builder and the Contractor. It stated:

9. [21]

   The Term Sheet was dated 29 October but was referred to in subsequent communications as an agreement of 30 October.

10. [22]

    The sum of $150,000 referred to in clause 3 of the Term Sheet agreement was paid and the Contractor’s workers returned to the site. But the parties fell into dispute again. On 12 November McLachlan Thorpe wrote to Salim Rutherford complaining that the work was incomplete. The letter referred to ninety-eight separate allegedly incomplete aspects of the work. The letter purportedly terminated the “30 October agreement” and directed that the Contractor’s workers should not return to the site without prior written authority.

11. [23]

    Salim Rutherford responded later that day:

12. [24]

    The Contractor’s payment claim followed on 20 November. The claim took the form of an invoice. It contained an invoice number and a reference which read “final claim”. Under the description of the work it stated that the job was “now complete” and that the invoice represented the final claim for plumbing work. The sum claimed included the 5% retention provided for in the contract.

13. [25]

    The invoice also stated that it represented a payment claim for the purposes of the Act. It did not state what the relevant reference date was. In the payment schedule the Builder took the point, among others, that there was no available reference date. In its submissions in support of the adjudication application the Contractor responded:

14. [26]

    The Adjudicator stated:

15. [27]

    In dealing with the Builder’s argument that the contract had been terminated the Adjudicator said:

16. [28]

    For the purpose of the hearing, affidavits were filed and read from both Mr Lahoud and Mr Younis. These affidavits canvassed the merits of the termination dispute. In particular, Mr Lahoud set out in detail his complaints about the Contractor’s alleged failure to complete the work. Both affidavits were read without objection. Even though they contradicted each other, neither Mr Lahoud nor Mr Younis was required for cross-examination. I will return to the significance of this in resolving the issues between the parties below.

17. [29]

    Following the hearing counsel for the parties lodged supplementary written submissions. Those submissions, helpfully, restated each party’s argument.

Available reference date

1. [30]

   The question for me is whether, having regard to the terms of the contract (including the effect of the Term Sheet), the application of the Act, and the alleged termination, the Contractor’s payment claim was supported by a valid reference date. Strictly speaking, I must first decide to what extent, if at all, the Court is entitled to go into these questions, having regard to the Contractor’s submission that any error the Adjudicator may have made was a non-jurisdictional one.

2. [31]

   Counsel for the parties referred me to a number of decided cases, and review of those cases led me to consider a number of other decisions. I set out below the authorities I consider to be relevant.

3. [32]

   In Holdmark Developers Pty Ltd v GJ Formwork Pty Ltd [2004] NSWSC 905 it was common ground that the building contract (a sub-contract between Holdmark as builder and GJ as contractor) came to an end on 12 March 2004. Holdmark’s contention was that it had terminated the contract for cause. GJ’s contention was that Holdmark had not been entitled to terminate the contract but GJ had accepted its repudiation. Thereafter GJ issued four successive payment claims. The fourth, which ultimately became the subject of the adjudication, was issued on 27 July.

4. [33]

   Counsel for Holdmark submitted that periodic payment claims could only be made during the currency of the contract, while work was being performed, and that after the completion of work a final payment claim could be made but there could not be more than one. Counsel for GJ submitted that periodic claims could be made at each reference date occurring after the end of the contract. McDougall J said (at [25]-[27]):

5. [34]

   The contract relevantly provided (cl 3(a)) for invoices to be sent “monthly”. His Honour considered that the effect of this clause was to provide for a reference date on the last day of the month. Alternatively, if the clause did not have this effect, then that would be the relevant date pursuant to s 8(2)(b). His Honour said (at [37]-[38]):

6. [35]

   It is not clear to me why his Honour nominated 30 April as being the reference date rather than 31 March, which was the last day of the month in which work ceased. But nothing turns on this. Having held that there could be only one reference date after the end of the contract, his Honour concluded that the fourth payment claim was invalid because it contravened the prohibition in s 13(5) against a claimant serving more than one payment claim for the same reference date.

7. [36]

   In Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394 the owner (Brodyn) purported to terminate the building contract based on an alleged repudiation by the builder (Dasein). The purported termination took place on 13 June 2003. On 27 June Dasein served a “final claim” stating that it was a claim under the Act. Dasein served a further claim on 28 August and another further claim on 28 September. The third of the claims was the subject of the adjudication.

8. [37]

   Hodgson JA, who gave the leading judgment in the Court of Appeal, said (at 443-444 [62]-[65]):

9. [38]

   His Honour added (at 444 [66]):

10. [39]

    In Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2006] NSWCA 259 the Court of Appeal returned to what was said in Brodyn at [62]-[65] about whether reference dates fixed by s 8(2)(b) cease after the termination of the contract. Hodgson JA, on this occasion with the concurrence of Handley JA and Hunt AJA, reaffirmed his views (at [36]). These views are binding at first instance in this State: Broadview Windows Pty Ltd v Architectural Project Specialists Pty Ltd [2015] NSWSC 955 at [42]-[44], [48] (McDougall J); Veer Build Pty Limited v TCA Electrical and Communication Pty Ltd [2015] NSWSC 864 at [43]-[44] (Darke J); Pinnacle Construction Group Pty Ltd v Dimension Joinery & Interiors Pty Ltd [2018] NSWSC 894 at [20] (Stevenson J).

11. [40]

    In Patrick Stevedores Operations No. 2 Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2014] NSWSC 1413 the building contract gave the owner (Patrick) the right to terminate the contract for convenience. Patrick exercised this right on 24 April 2014. The payment claim by the builder (McConnell Dowell) was served on 30 June. Ball J said (at [36]):

12. [41]

    His Honour concluded that as a matter of construction of the contract, the right to make progress claims did not survive termination. This meant that no reference date was available under s 8(2)(a). He continued (at [38]):

13. [42]

    The reasoning in Patrick Stevedores is not directly inconsistent with that in Brodyn. But it introduces an important practical qualification. Where the contract specifies a reference date for the purposes of s 8(2)(a) but is terminated before that date is reached no further reference dates are available either under s 8(2)(a) or s 8(2)(b).

14. [43]

    In Southern Han v Lewence Constructions the building contract entitled the principal (Southern Han), in the event of substantial breach by the contractor (Lewence), and following a show cause procedure, to take the work out of the contractor’s hands and suspend payment. On 27 October 2014, having purportedly invoked the show cause procedure, Southern Han issued a notice purporting to take the remaining work out of Lewence’s hands and suspending payment under the contract. On 28 October, Lewence purported to terminate the contract on the basis that Southern Han, in taking this step, had repudiated. Lewence then, on 4 December, issued the payment claim which was the subject of the proceedings. The claim did not expressly specify its reference date, but included work done up to 27 October.

15. [44]

    The adjudicator considered that the payment claim was validly supported by a reference date, and the Court of Appeal held that this finding was binding because the actual existence of a reference date was not a jurisdictional fact. But the High Court disagreed. The Court said (at [61], [72]):

16. [45]

    The Court made some general observations about the way in which a reference date is determined under the Act. The Court said (at [65], footnotes omitted):

17. [46]

    The Court made it clear that sub-paragraphs 8(2)(a) and 8(2)(b) are alternatives. The Court said (at [70]-[71]):

18. [47]

    Clause 37 of the contract provided for the making of progress claims on the eighth day of each calendar month for work done to the seventh day of that month. The Court said (at [73]):

19. [48]

    The Court then considered whether cl 37 still continued to operate beyond 28 October. The Court held it did not. If the notice taking the works out of Lewence’s hands was valid, any entitlement under cl 37 was suspended. And (at [79]):

20. [49]

    In Abergeldie Contractors Pty Ltd v Fairfield City Council [2017] NSWCA 113 the building contract relevantly provided for a payment claim to be made on the twenty-eighth day of the month “immediately after” practical completion. The question was whether this was 28 September 2016 (the date on which the owner contended practical completion had in fact been achieved) or 28 November (the month in which practical completion was certified by the superintendent). Basten JA, with whom the other members of the Court of Appeal agreed, stated (at [4], footnote omitted):

21. [50]

    In All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 the relevant payment claim was issued on 12 July 2016. The building contract in question provided (cl 37.1) for claims to be made progressively on the 20th day of the month, but that an early progress claim should be deemed to have been made on the date for making that claim. Leeming and Payne JJA gave the leading judgment. Their Honours considered that, although the clause was effective as a matter of contract between the parties, it was not effective to alter the reference date of 20 July for the purposes of the Act. The payment claim therefore predated the reference date and was therefore invalid.

22. [51]

    The third member of the Court, White JA, agreed, but added some further comments. The first of those comments was (at [49]):

23. [52]

    In Primelime (NSW) Pty Ltd v BAEC Contracting Pty Ltd [2018] NSWSC 372 the building contract was an informal one, constituted by correspondence. The parties fell into dispute and work ceased on 20 January 2017. The owner (Primelime) purported to terminate the contract on that date. The defendant (BAEC Contracting) responded by letter on 23 January; it was common ground that the effect of the letter was to bring the contract, if not already terminated, to an end. At some point after 23 January, BAEC Contracting submitted a payment claim and thereafter obtained an adjudication in its favour.

24. [53]

    One of Primelime’s contentions was that there was no reference date to support the payment claim. McDougall J said (at [22]-[24], [30], footnotes omitted):

25. [54]

    In Greenwood Futures v DSD Builders [2018] NSWSC 1407 the building contract (cl 17.3) required the builder (DSD) to give the owner (Greenwood) a written claim for a progress payment “for” the completion of each identified stage of the works. McDougall J said (at [63]):

26. [55]

    The relevant payment claim was served on 30 April 2018. McDougall J concluded that under the Act that was an available reference date under s 8(1)(b) (this was on the basis that work had been undertaken in April 2018: see at [65]) and the adjudicator’s determination was sustained. Although the payment schedule had asserted that the contract had been terminated on 27 April, before the reference date arose, no argument appears to have been put to the Court that this prevented the reference date from being available.

27. [56]

    I was not referred to any NSW case which directly considers whether the validity of a termination is a jurisdictional fact. Counsel relied on dicta in two decisions in this Court by way of analogy. Counsel also relied on two interstate decisions.

28. [57]

    In Brodyn v Davenport, Hodgson JA stated (at [52]) that for a document purporting to be an adjudication determination to have the effect provided for by the Act, it had to satisfy whatever the conditions laid down in the Act were as essential for there to be a determination. His Honour stated (at [53]) that the “basic and essential requirements” appeared to include:

29. [58]

    In Primelime v BAEC Contracting one of the questions was whether the defendant was a proper party to the building contract in question. Primelime contended that the contractor had not been BAEC Contracting but a related company called BAEC Electrical. This contention was rejected by the adjudicator but McDougall J said (at [16]):

30. [59]

    His Honour went on to consider, on the material before him, whether BAEC Electrical was the contracting party. His Honour thought that it was, but did not need to reach a concluded view because the payment claim was not supported by a valid reference date in any event.

31. [60]

    The question whether the validity of a purported termination of a building contract is a jurisdictional fact for the purposes of the Act was raised directly in McNab NQ Pty Ltd v Walkrete Pty Ltd [2013] QSC 128, a decision of de Jersey CJ (as his Honour then was). The payment claim by the contractor (Walkrete) was made on 1 November 2012. The builder (McNab) contended that the contract had been terminated on 10 September and that as a result there was no available reference date to support the claim.

32. [61]

    His Honour said (at [11]-[12]):

33. [62]

    His Honour went on to consider the relevant facts for himself and concluded that the builder had been entitled to terminate the contract as it purported to do.

34. [63]

    McNab v Walkrete was referred to by Brown J in Watkins Contracting Pty Ltd v Hyatt Ground Engineering Pty Ltd [2018] QSC 65. His Honour apparently accepted what de Jersey CJ had said as being correct: see at [60]-[62], [97] fn 72. In any event, his Honour found that a reference date had accrued prior to the alleged determination of the contract and the challenge to the decision on other natural justice grounds failed, so it was not necessary to decide whether the finding was otherwise immune from judicial review.

35. [64]

    In The Trustee for Allway Unit Trust trading as Westside Mechanical Contracting Pty Ltd v R&D Air Conditioning Pty Ltd [2018] SASC 46 the building contract between the builder (Westside) and the sub-contractor (R&D) provided in clauses 9.1 and 9.2:

36. [65]

    The contract particulars provided the time for submission of payment claims was “the 23rd day of the month for work done to and including the last day of the month”. The relevant payment claim was made by R&D on 8 December 2017. Westside contended that the contract had come to an end in late October 2017 when R&D left the site following disputes between the parties. According to Westside, it had terminated the contract for cause or alternatively there had been a repudiation which had been accepted or the contract had been mutually cancelled. The adjudicator found that the contract had not been terminated.

37. [66]

    Doyle J said (at [80]-[81]):

38. [67]

    His Honour went on to consider Westside’s contentions for himself. He concluded that the contract had not been terminated, but had been brought to an end on or shortly after 27 October by mutual agreement. This meant that 23 October would have been an available reference date, and would have continued to have been available even after the contract came to an end (at [105]). But R&D had relied on 23 December as the reference date for the purpose of the adjudication, and the adjudicator had determined the application on this basis. Because the contract had come to an end in the meantime, 23 December could on no view be an available contractual date.

39. [68]

    His Honour said (at [119]-[121]):

40. [69]

    His Honour went on to point out (at [122]-[127]) that a reference date was not merely a precondition to the entitlement to serve a payment claim. It was critical to the operation of the prohibition against multiple statutory payment claims (s 13(5)). It was also linked to the date on which the progress payment was to be paid. His Honour concluded (at [129]-[130]):

41. [70]

    Doyle J also considered the question on the alternative hypothesis that he was wrong in thinking the contract had come to an end on 26 October. On that view, 23 November would, in theory, have been available but had not been relied upon. Because the claim was issued on 8 December, the claim was premature and invalid on the reasoning in All Seasons Air (at [135]-[141]).

42. [71]

    I have not found it easy to pick my way through this thicket of authority. But I think one thing is clear. Despite the suggestion to the contrary by Hodgson JA in Brodyn, the existence or otherwise of the reference date is a jurisdictional fact which is determined by the Court. This proposition was accepted by the Court of Appeal in Abergeldie as following from Southern Han. The Court must consider for itself whether the payment claim is supported by a reference date.

43. [72]

    It is convenient to defer the question of termination and consider what reference date would be available for the 20 November payment claim, even assuming the contract had not been terminated at that point. I will consider this question for both reference dates adopted by the Adjudicator, namely 28 November and 31 October.

44. [73]

    No doubt if Item (ii) cl A(b) in the printed MBA form is selected and a date of the month is specified, that date will be the reference date for each month in which work is carried out under the contract. The form contemplates that a claim may be submitted after that date (cl 4(f)) for work done up to the nominated date, in which case payment may be postponed but the claim remains contractually valid. But there is a difficulty in the present case which arises from the fact that cl A(b) was amended so as to substitute the word “by” for the word “on”.

45. [74]

    The Adjudicator’s view was that, despite this change, the reference date remained the nominated day of the month, namely the 28th. I am not sure that, if it were necessary to decide this, I would agree. The expressed intent was arguably to allow the Contractor to bring the date of the claim forward from the 28th day of the month. If that is correct, then the reference date would presumably be the date on which the claim was made (or perhaps, the date of the last work for which payment was claimed). In effect, the Contractor would have a discretion. Difficult questions would arise as to how such an arrangement would work under the Act, and in particular whether such a discretionary arrangement would satisfy s 13(1)(a).

46. [75]

    It is not necessary to go into these questions (which were not argued before me) for the purpose of resolving this case. In my view, the suggested reference date of 28 November cannot be supported. That is for two reasons.

47. [76]

    First, even if Item (ii) cl A were construed so that the payment claim took effect from 28 November, the claim itself was lodged on 20 November, before that date arrived. The claim was therefore invalid on the authority of the Court of Appeal decision in All Seasons Air.

48. [77]

    The second reason why I consider 28 November was not a contractual reference date is based on the provisions of the Term Sheet. At one point in the argument, counsel for the Contractor sought to characterise the Term Sheet as a contract separate from the original MBA building contract. Counsel submitted that the purported termination of 12 November was a termination of the provisions of the Term Sheet only. I consider the question of termination below, but in my view, the Term Sheet should not be characterised in that way. It was a variation of the MBA building contract not some new or separate contract.

49. [78]

    At the outset, I should note that the Term Sheet incorporated the making of an adjudication application into the mechanism it set out. The Term Sheet also provided that the Adjudicator’s decision would be “binding for the purposes of dealing with the deposit”. It might have been argued that the effect of these provisions was to render the Adjudicator’s decision unchallengeable as a matter of contract, quite apart from any preclusive effect it might have had under the Act. But no such argument was presented by counsel for the Contractor.

50. [79]

    The Term Sheet expressly provided that a further claim would be made once the work had been completed. On the face of it, the effect would appear to have been to amend the contract and to substitute for the provisions of item (ii) a provision that the final claim will be made upon completion of the work. Thus the entitlement to make a progress claim by reference to the 28th day of the month had ceased by 20 November.

51. [80]

    In the end, counsel for the Contractor did not seek to support the Adjudicator’s reliance on 28 November as a reference date. Counsel instead sought to support the Adjudicator’s alternative date of 31 October.

52. [81]

    But in my view, that alternative date cannot be supported either. On the view I take of the contractual relationship between the parties, the building contract did provide, once the Term Sheet was executed on 29 October, for a reference date. That reference date was the date of completion of the works. On the reasoning in both Patrick Stevedores and Primelime v BAEC Contracting, this excluded the operation of s 8(1)(b).

53. [82]

    There is another potential difficulty with the 31 October date. Had that been the relevant reference date, then the entitlement for the purposes of the application was to a progress payment for work done up to that date. It seems clear enough that, as at that date, on no view had the work been completed. Yet the claim sought to recover the whole of the amount due under the contract for the work. In other words, had 31 October been available it would have been open to the Adjudicator to make a determination in favour of the Contractor based on work undertaken up to that point, but that is not the way in which the Adjudicator proceeded. In view of the conclusion I have reached that s 8(1)(b) did not apply, it is not necessary to pursue this further.

54. [83]

    On the view I have taken, neither 28 November nor 31 October was available as a reference date to support the payment claim. It would have been open to the Contractor to contend that the work had been completed and, if that was so, then on the view I take of the contract the date of completion would have been a reference date. It appears from Salim Rutherford’s letter of 12 November that the Contractor’s position was that the work had been completed by the time the Contractor left the site.

55. [84]

    Had the case been put forward on this basis by the Contractor, a question might have arisen about whether the date of completion, not being a fixed calendar date, satisfied the requirements of s 8(1)(a). Arguably it would have. The Act expressly recognises an entitlement to “milestone” progress payments. The making of a progress claim on completion of works in such circumstances which was recognised as a possibility by White JA in All Seasons Air and by Doyle J in Westside. The High Court in Southern Han spoke of a date under s 8(1)(a) being fixed by operation of one or more express provisions of the contract. It is not necessary to go further into these questions for the purposes of this case. They were touched on in oral argument but counsel for the Contractor did not, in his supplementary submissions, advance an argument that the date of completion of the works was the reference date. It would have been difficult for counsel to maintain any such submission because it had not been put to the Adjudicator on this basis.

56. [85]

    For these reasons, I consider that even if the contract was still subsisting on 20 November, the Adjudicator made a jurisdictional error in concluding that there was an available reference date to support the claim.

57. [86]

    If I am wrong in thinking that the Adjudicator’s determination cannot be supported by a reference date of 31 October, then the question of termination becomes irrelevant since the purported termination did not take effect until after that date. The question would only be relevant if the Adjudicator’s determination could be supported on a reference date of 20 or 28 November. In that event, it would be necessary to consider whether there had been a valid termination of the contract before 20 November which would prevent that date from being used.

58. [87]

    For reasons touched on by Hodgson JA in Brodyn the conclusion that the Court must determine for itself whether the contract has been validly terminated would be a very inconvenient one. Where, as in this case, it was contended that the Builder is entitled to terminate because of defects in the way the work has been carried out, the Court would inevitably be drawn into factual debates and questions about the interpretation of the contract which are usually the province of the Adjudicator. Such a result was described in a similar context by Basten JA as driving “a horse and cart (or perhaps a B-Double) through the legislative scheme” (Abergeldie at [47]). But the view that the Court must decide the validity of termination for itself has been expressly accepted by de Jersey CJ in Queensland and also (albeit indirectly) by Doyle J in South Australia. Counsel for the Contractor did not present any submissions as to why those decisions were wrong or should not be followed. Had it been necessary to do so, I would have followed them despite the inconvenience involved.

59. [88]

    But this does not mean that it would have been possible to decide the case immediately. If the Court is to make a factual finding on such an issue, then there must be a proper basis for a factual resolution. The Court should simply be presented, as it was in this case, with conflicting affidavit evidence and be told to resolve the disputed question of fact without the benefit of cross-examination or, indeed, any detailed submissions on the proper outcome. Furthermore, the Court should, consistently with the Supreme Court Act, s 63, deal with all matters in dispute between the parties, and do so in a way so as to quell the controversy finally. The Builder’s case on this point in effect invited the Court to conclude, finally and substantively, that the contract between the parties was terminated on 12 November 2018. In order to quell the controversy finally, in my view, the Builder should have sought a declaration to this effect. If the Builder wished to make any claim for damages for loss of bargain, they should also be claimed in the same proceedings.

60. [89]

    Had it been necessary to go into the question of determination, I would have adjourned the proceedings and required the parties to proceed to determine the question of termination in the usual way in which such a claim would be done; namely, by way of pleadings, full evidence, and, in the event of disputed issues of fact, cross-examination. In view of the conclusions I have reached, however, the Builder is entitled to succeed and it is not necessary for these steps to be taken.

Conclusion and orders

1. [90]

   I have concluded that:

2. [91]

   The Builder has therefore succeeded in these proceedings. There is no reason why costs should not follow the event. I assume that the monies paid into the joint bank account can be paid out in accordance with my decision without the need for any further order from the Court.

3. [92]

   The Orders of the Court are: