Birdon Pty Ltd v Houben Marine Pty Ltd (No 2)
[2011] FCA 1313
The avenues available for a party who wishes to stop or quash a adjudication continue to expand.
In this case, the Federal Court granted an injunction under s 234 of the Australian Consumer Law restraining an adjudication before Philip Davenport on the ground that the contract was induced by deceptive or misleadiung conduct. The injunction was made against Houben Marine, and Philip Davenport as adjudicator, and Adjudicate Today as the ANA.
The decision is as follows:
FEDERAL COURT OF AUSTRALIA
Birdon Pty Ltd v Houben Marine Pty Ltd (No 2)
[2011] FCA 1313
Citation: Birdon Pty Ltd v Houben Marine Pty Ltd (No 2) [2011] FCA 1313
Parties: BIRDON PTY LTD (ABN 59 002 810 255) v HOUBEN MARINE PTY LTD (ACN 14 002 623 396), PHILLIP DAVENPORT and ADJUDICATE TODAY PTY LTD (ABN 39 109 605 021)
File number: NSD 667 of 2011
Judge: RARES J
Date of judgment: 27 October 2011
Catchwords: CONSUMER LAW – INTERLOCUTORY INJUNCTIONS – application for interim injunctions under s 234 of the Australian Consumer Law restraining further progress of adjudication process under Building and Construction Industry Security of Payment Act 1999 (NSW) – plaintiff alleged first defendant conveyed representations that were misleading or deceptive contrary to s 18 of the Australian Consumer Law – whether prima facie case – strength of prima facie case – balance of convenience – relevance of plaintiff’s application for special leave to appeal to High Court of Australia – whether damages are an adequate remedy – sufficient likelihood of success to justify preservation of status quo
Held: application for interim injunctions granted
Legislation: Australian Consumer Law ss 18, 234
Building and Construction Industry Security of Payment Act 1999 (NSW) ss 23(2), 25, 32
Competition and Consumer Act 2010 (Cth) Sch 2
Cases cited: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 applied
Birdon Pty Ltd v Houben Marine Pty Ltd [2011] FCA 1217 cited
Bitannia Pty Limited v Parkline Constructions Pty Limited (2006) 67 NSWLR 9 applied
Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 considered
Jennings Construction Limited v Burgundy Royale Investments Pty Ltd [No. 1] (1986) 161 CLR 681 applied
Paringa Mining & Exploration Co plc v North Flinders Mines Limited (1988) 165 CLR 452 cited
RJ Neller Building Pty Limited v Ainsworth [2009] 1 Qd R 390 cited
Date of hearing: 27 October 2011
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 46
Counsel for the Plaintiff: Mr AW Street SC with Mr AK Fleknoe-Brown
Solicitor for the Plaintiff: Hicksons Lawyers
Counsel for the First Defendant: Mr EGH Cox
Solicitor for the First Defendant: Piper Alderman
Counsel for the Second and Third Defendants: The second and third defendants did not appear
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 667 of 2011
BETWEEN: BIRDON PTY LTD (ABN 59 002 810 255)
Plaintiff
AND: HOUBEN MARINE PTY LTD (ACN 14 002 623 396)
First Defendant
PHILLIP DAVENPORT
Second Defendant
ADJUDICATE TODAY PTY LTD (ABN 39 109 605 021)
Third Defendant
JUDGE: RARES J
DATE OF ORDER: 27 OCTOBER 2011
WHERE MADE: SYDNEY
Upon the plaintiff by its senior counsel giving to the Court:
(a) the usual undertaking as to damages;
(b) an undertaking that the plaintiff will prosecute its application for special leave to appeal to the High Court of Australia and, if leave be granted, any appeal, with all reasonable expedition; and
(c) an undertaking that on or before 1 November 2011, the plaintiff will pay the sum of $200,000 into Court or into a bank account agreed in writing by the solicitors for the plaintiff and the first defendant or alternatively by providing a bank guarantee in that sum in a form reasonably acceptable to the first defendant and failing agreement, in a form settled by the Registrar:
THE COURT ORDERS THAT:
1. Pursuant to the answer to question 5 given by the Full Court on 13 October 2011, the interlocutory injunctions as made on 20 May 2011, and extended and varied on 14 June 2011 and on 17 June 2011, be vacated.
2. The first defendant, by itself, its servants and agents, be restrained from proceeding with any application or process concerning the backhoe dredge Ain Dschalut under the Building and Construction Industry Security of Payment Act 1999 (NSW).
3. The first defendant, by itself, its servants and agents, be restrained from seeking any adjudication certificate under the Building and Construction Industry Security of Payment Act 1999 (NSW) concerning the backhoe dredge Ain Dschalut and/or the vessel Hopper 139.
4. The first defendant, by itself, its servants and agents, be restrained from serving or filing or otherwise pursuing any adjudication certificate issued under the Building and Construction Industry Security of Payment Act 1999 (NSW) for or relating to invoices concerning the backhoe dredge Ain Dschalut and/or the Hopper Barge 139.
5. The first defendant, by itself, its servants and agents, be restrained from making any fresh application under the Building and Construction Industry Security of Payment Act 1999 (NSW) for or relating to invoices concerning the backhoe dredge Ain Dschalut and/or the Hopper Barge 139.
6. The second defendant be restrained from proceeding with any adjudication process in relation to the adjudication application made by the first defendant relating to the payment claims by the first defendant relating to the backhoe dredge Ain Dschalut and/or the Hopper Barge 139.
7. The third defendant be restrained from referring to any adjudicator the adjudication made by the first defendant relating to the payment claims by the first defendant relating to the backhoe dredge Ain Dschalut and/or the Hopper Barge 139.
8. The proceedings be fixed for hearing commencing on 12 March 2012.
9. The proceedings be listed for directions on 28 October 2011 at 2 p.m.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 667 of 2011
BETWEEN: BIRDON PTY LTD (ABN 59 002 810 255)
Plaintiff
AND: HOUBEN MARINE PTY LTD (ACN 14 002 623 396)
First Defendant
PHILLIP DAVENPORT
Second Defendant
ADJUDICATE TODAY PTY LTD (ABN 39 109 605 021)
Third Defendant
JUDGE: RARES J
DATE: 27 OCTOBER 2011
PLACE: SYDNEY
REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)
1 Birdon Pty Ltd has applied for the continuation or remaking of the interlocutory injunctions currently in place restraining the further progress of an adjudication procedure under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Security of Payment Act) in the circumstances I described in Birdon Pty Ltd v Houben Marine Pty Ltd [2011] FCA 1217. It has also applied for interim injunctions under s 234 of the Australian Consumer Law in Sch 2 to the Competition and Consumer Act 2010 (Cth) based on its substantive case.
BACKGROUND
2 The facts can be briefly stated because there is no substantial dispute between the parties that in the circumstances before me Birdon has a sufficient prima facie case for the purposes of establishing the first limb of its entitlement to seek an interlocutory injunction, having regard to the organising principles identified by Gummow and Hayne JJ in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 81-84 [65]-[72] with which Gleeson CJ and Crennan J agreed at 68 [19]. The facts that I will recount in these reasons are based on the evidence which is before me only on an interlocutory basis. For the most part, Houben Marine has not filed any evidence, for the purpose of the interlocutory application, as to what it contended the conversations between the principals of the parties were.
3 The parties appeared to agree that on 30 March 2010 they made an oral agreement for the charter of the dredge, Ain Dschalut. The dredge was originally to be transported from Homebush Bay to Western Australia. The parties disagree as to what the terms of that oral agreement are. Birdon alleged that the terms were partly oral and partly in writing but that the written part, which had been prepared by Houben Marine Pty Ltd, did not accurately record the terms. Birdon also claimed that Houben Marine had inserted additional terms that were not agreed or discussed. Houben Marine contended that although the agreement was made orally, its terms were, with one gloss, recorded in writing using a BIMCO standard bareboat charter in the Barecon 2001 form with additional clauses which was emailed by Houben Marine to Birdon on 1 April 2010. The gloss was pleaded by Houben Marine in its defence. It asserted that at the time of their agreement on the terms of the charter, the parties made a further mutual agreement as contemplated, but not recorded, in box 21 in Part 1 of the Barecon 2001 form, that the charter period would be extended for the whole of the period of other dredging work to be performed by Birdon at Garden Island in Sydney. Box 21 had been completed stating that the charter period was:
“3 mths-ext’d by mutual agrmt 2 wks notice
+ 2 mths max standdown”
4 It appears that the circumstances in which the parties negotiated were as follows. Birdon required a dredge and hopper barges for dredging work on two projects. A dredge was required immediately for the purposes of one project in Western Australia. Ain Dschalut was a dredge that could be transported by road, disassembled into six different parts and then reassembled. At the time of the negotiations, Birdon anticipated that the dredging work in Western Australia would take in the order of two weeks. However, Houben Marine was not willing to commit its dredge for any period less than three months. The parties then turned their minds to how the dredge could be employed for the whole of the three months in the event that the West Australian work did not take that length of time. Hence, they turned their attention to Birdon’s other contract, which was to perform dredging work at Garden Island in Sydney Harbour. Birdon needed to charter two hopper barges for the Garden Island work. It agreed to charter those from Houben Marine at the same time as the discussions concerning Ain Dschalut were finalised. The two hopper barges were chartered to Birdon by Houben Marine under other charterparties in the Barecon 2001 form.
5 The parties appeared to have contemplated that if the dredge was returned from Western Australia, she could be employed at Garden Island. But, there is a significant dispute as to whether the term of the charterparty would come to an end at the expiry of the three months, if the Western Australian work was by then complete, unless an extension was agreed, as Birdon contends, or only at the conclusion of the Garden Island dredging work, as Houben Marine asserts. Houben Marine relied on an additional clause, cl 33.2, it had added to the version of the charterparty emailed on 1 April 2010 which provided:
“33. The backhoe pontoon Ain Dschalut is chartered with the provision that:
33.2 After the Ain Dschalut returns from WA to Homebush Sydney it is to work on the offshore disposal dredging component of the Garden Island project from when that starts to its completion. If the dredge has to wait – and there is no other suitable interim work available – the charter rate can be reduced to 15% for up to 60 days before starting offshore disposal dredging.”
6 Under box 22 of the charterparty form, charterhire was payable two weeks in advance at the rate of $67,200 per week, charged every two weeks. Box 20 provided for the trading limits and was completed in the following terms:
“Transport from Sydney to AMC dredging project at Henderson WA and back to Sydney Garden Island dredging Sydney.”
7 The heading of box 20 referred to cl 6 in Pt II of the Barecon 2001 form which dealt with the trading restrictions governing the places of a vessel’s employment. The preamble in the Barecon 2001 form provided that the provisions in the boxes in Pt 1 prevailed over the clauses in Pt 2, including any additional clauses, to the extent of any conflict between the two. The additional clauses in the 1 April 2010 version of the charterparty also provided that following redelivery of all dredge components, a lump sum charge of $10,000 would be payable by Birdon for reassembling the dredge.
8 The content of the boxes in Pt 1 of the charterparty remained the same in the version emailed on 1 April 2010 as it had been in an earlier version sent on about 26 March 2010. However, the contents of additional cl 33 in Pt 2 set out above had changed significantly between those versions, the earlier one being more consistent with the version of the contract for charter that Birdon asserts.
9 Birdon’s group general manager, Ian Ramsay, said that after he had participated in the 30 March 2010 negotiation, he understood that the charterparty was to provide for the dredge to be available for Birdon’s use for three months and no more. That was based on what he said was Houben Marine’s representatives’ insistence in the negotiations that it would not agree to hire the dredge for any lesser period. Mr Ramsay said that he understood that if the dredge was not able to be used in Western Australia for the entire three months, Birdon would then be able to use her on its works at Garden Island, which were expected to commence sometime later. Hence, Mr Ramsay said that because the work at Garden Island may not have been ready to commence immediately, the parties agreed on a stand down period at a lesser rate of hire for a maximum of two months, after which Birdon would be required, as he understood, to work the dredge at the full rate of hire for the balance of the three months’ charter.
10 In the event, the dredge was employed in Western Australia for considerably longer than two weeks as initially had been anticipated. On about 8 June 2010, the manager of Birdon’s dredging division, Steven Bruce, telephoned Casper Houben, informing him that the dredging in Western Australia had been completed and that Birdon was awaiting a confirmation of a survey from its client before demobilising the dredge. Then, on 21 June 2010, Mr Bruce had a conversation with a member of Houben Marine’s staff who had been sent to Western Australia under the terms of the agreement for the dredge’s hire there. Mr Bruce told the staff member that the dredging was now complete and that the demobilisation of the dredge could be commenced. That demobilisation occurred between 22 June and 7 July 2010. The barge was loaded onto trucks and sent to Houben Marine’s Homebush Bay yard, being the place nominated in box 16 of the Barecon 2001 form as the place of redelivery. The redelivery occurred during the week commencing 12 July 2010.
11 No issues arose between the parties relevant for present purposes in relation to the dredging work in Western Australia and the return of the dredge in July 2010. Hire payments were made either in accordance with the charterparty or without any relevant complaint. Birdon paid an apparently final invoice, ADs 009, for $31,680 dated 11 July 2010, for the hire of Ain Dschalut. That invoice recorded the dredge being on hire for three days until 7 July and no charge being made for 10 days during her transport back to Sydney, pursuant to cl 43 of the additional clauses in the 1 April 2010 version of the charterparty. The period covered by the invoice finished on 17 July 2010.
Houben Marine sends fresh invoices for subsequent charter hire seven months later
12 On 20 February 2011, Houben Marine sent five further invoices, ADs 10-14, to Birdon. These asserted that Ain Dschalut had been on hire from 18 July 2011 to 26 December 2011. Subsequently, on 8 March 2011, Houben Marine sent three more invoices, ADs 15-17, claiming further hire until 20 March 2011. The total claimed in those eight invoices amounts to about $2,060,000.
13 The eight invoices bore dates well before the dates of their despatch. The first, ADs 10, was dated 31 August 2011. It claimed $95,040 for hire between 18 July 2010 and 15 September 2010. That was apparently based on the last part of cl 33.2 of the additional terms, claiming hire at the rate of 15% of the charterparty rate for 60 days. Invoice ADs 11 was dated 9 September 2010 and claimed $190,080 hire at the full rate of $67,200 for two weeks and four days from 16 September to 3 October 2010. Invoice ADs 12 was dated 27 September 2010 and claimed $295,680 for four weeks’ hire to 31 October 2010. Invoices ADs 13 and 14 were dated 25 October and 22 November 2010. Each claimed a further four weeks’ hire to 28 November and 26 December 2010 respectively. The second batch of invoices, ADs 15, 16 and 17, sent to Birdon on 8 March 2011, were dated 20 December 2010, 17 January 2011 and 14 February 2011 respectively. Each claimed four weeks’ hire for periods ending 23 January, 20 February and 20 March 2011 respectively. Each of the eight invoices commenced with the anomalous assertion, given their content, dating and times of despatch:
“2 weeks hire payable in advance as per Charter agreement.”
14 Subsequently, on 21 April 2011, Houben Marine made a payment claim for $2,132,907.86 against Birdon under the Security of Payment Act asserting that the eight invoices, together with one other which is not presently relevant, were unpaid. The payment claim asserted reference dates for payment of the last day of each month between March 2010 and March 2011. It claimed that the date for payment was 10 May 2011.
15 The interlocutory injunctions I granted in May and June this year restrained Houben Marine from proceeding with the adjudication process, from seeking any adjudication certificate or making any further application relating to those invoices under the Security of Payment Act. The interlocutory injunctions also restrained the adjudicator and his appointer from proceeding with the adjudication or referring to adjudication any further payment claims made by Houben Marine based on the impugned invoices. At that time, Birdon put forward that its financial position was as recorded in its accounts as at 31 October 2010. The balance sheet in those accounts showed that the company had share capital and reserves of about $2.26 million, including trade debtors of over $5 million, a loan to its holding company, Birdon Holdings Pty Limited, of about $1.2 million, and total assets of nearly $8 million. The accounts showed total liabilities of about $5.6 million.
16 When the matter was returned before me following the delivery of judgment by the Full Court, Houben Marine put into evidence Birdon’s draft accounts for the year ending 30 June 2011. These showed a significant change in Birdon’s balance sheet. The total capital and reserves were now about $1.34 million. The intercompany loan account due by the holding company had increased to about $2 million. Birdon’s total current assets were about $2.45 million and total current liabilities were about $3.1 million, leaving it with net assets of about $1.34 million.
THE ISSUES BETWEEN THE PARTIES
17 The cases of each of the parties on what the oral contract provided and whether or not it was at an end following the dredge’s return to Homebush Bay are clearly divergent, on the facts, and on what might be the proper construction, and reconciliation, of the apparently conflicting terms of the 1 April 2010 version of the charterparty, if that is found ultimately to record the agreement made by the parties. A major issue for the trial will be the contractual period of the hire. That will involve determining whether or not the charterparty required mutual agreement to extend the hire period beyond three months, whether additional cl 33.2 effected such an extension or whether, as Houben Marine appears to contend as an alternative in its defence, the parties made some further agreement on 30 March 2010 for an extension of time. Birdon argued that the contract orally agreed between the parties on 30 March 2010 provided for the hire of the dredge for a period of three months for use in Western Australia, and if that were completed before the three month period had ended, for return to Sydney for use at Garden Island. In addition, Birdon alleged that each of the invoices was “backdated”.
18 Birdon relied on the return of the dredge to Houben Marine’s Homebush Bay premises after more than three months of hire as a redelivery and, therefore, the completion of the charterparty. There is no evidence that Houben Marine ever informed Birdon that the dredge was ready for use after it had been returned to Homebush Bay in mid July 2010. Houben Marine argued that there was no evidence of a notice of redelivery in accordance with the written terms of the charterparty and, so, it was entitled to treat the charter as continuing. Houben Marine made a submission in the adjudication proceedings explaining the seven month delay between the return of the barge to its Homebush Bay premises and service of the first five invoices in respect of hire claimed after that return. That explanation was follows:
“There was no need to communicate that hire was on going when this was clearly evident from the contract. … The reason for the delay in the issuing of invoices was because the relevant director of Houben Marine was distracted as he was going through a divorce at the time.”
19 Birdon also alleged that Houben Marine made representations, in trade or commerce, that in substance were:
• the hire period was effectively for three months or as extended by mutual agreement on two weeks’ notice, and upon redelivery at Homebush Bay the charter would terminate (the first representations);
• Houben Marine’s intention was only to seek to hire out the dredge for three months and there would be no hire or further obligation due by Birdon once she was redelivered to Homebush Bay (the second representations);
• the eight invoices served on Birdon in February and March 2011 were genuine, correctly represented the dates of their issue and were not backdated (the third representations).
20 Birdon alleged that the first representations were made before the oral contract was made. It pleaded that each representation was relied upon by it and amounted to a contravention of s 18 of the Australian Consumer Law. It alleged that by reason of the first representations it was misled into entering into, or performing, the charterparty without reviewing or revising the terms of the unsigned Barecon 2001 form proffered in the email of 1 April 2010. Secondly, Birdon asserted that at no time prior to late February 2011, when it received the first set of invoices, had Houben Marine suggested that the charterparty was still on foot following redelivery of the dredge in July 2010. Accordingly, Birdon claimed that the second representations had caused it to be misled into believing that the charter was at an end from the time of the dredge’s redelivery. Thirdly, Birdon alleged that the third representations were calculated to bring about a situation in which Birdon was exposed to an adjudication process based on the eight invoices and their use in supporting the payment claims. It asserted that in making the payment claims, Houben Marine represented that they were based on genuine reference dates, the invoices had not been backdated, and had become due and payable and remained unpaid from their dates of issue.
21 In effect, Birdon claimed that it is not liable for any further amounts of hire at all and that the true contract between the parties effectively came to an end when the dredge was returned to Homebush Bay in July 2010. Alternatively, Birdon sought relief on the basis that it was misled by Houben Marine’s conduct in contravention of s 18 to believe that the contract either provided, as the first representations suggested, for the three month period of hire, or alternatively, that the contract had, in fact, been accepted to be at an end as asserted in the second representations.
CONSIDERATION
(a) Should an interim injunction be granted under s 234 of the Law?
22 It is convenient to deal first with the claim for an interim injunction under s 234 of the Australian Consumer Law. That section provides that if an application for an injunction is made under s 232, the Court may, if it considers desirable, grant an interim injunction pending the determination of that application. There is no dispute that Birdon is entitled to bring its application for relief under s 234. The test applicable for the grant of an interlocutory injunction has been subject to some debate between the parties. As noted above, the test is set out in the organising principles identified in the reasons of Gummow and Hayne JJ in O’Neill 227 CLR at 81-82 [65], namely:
‘The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd ((1968) 118 CLR 618). This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued ((1968) 118 CLR 618 at 622-623):
“The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.”
By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument ((1968) 118 CLR 618 at 620). With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal ((1968) 118 CLR 618 at 622):
“How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.”’
23 The real debate between the parties centred on whether the second of the two criteria for the grant of the injunction has been established in this case. The substance of the parties’ arguments centred on the questions of the degree to which the inconvenience or injury to each has to be established in this application and how that may be affected by the strength of any prima facie case, which it appears that Houben Marine concedes currently exists.
24 I am satisfied that Birdon has shown a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial, subject to the question of the balance of convenience. The strength of the probability of Birdon’s success is signalled by the fact that for over seven months Houben Marine made no claim at all for what ultimately amounted to over $2 million in the aggregate. That sum was comprised of very large sums accruing, if its case were correct, every two weeks at the rate of $134,400. It is notable, in weighing the likelihood of success of a claim for charter hire due two weeks in advance for eight months, that nothing was claimed by the owner (Houben Marine) against a charterer, particularly in circumstances where Houben Marine did not give any notice of the dredge’s reassembly and availability for use at any time. And, Houben Marine was aware of Birdon’s ongoing work at Garden Island because it had two of its hopper barges working on that project, earning it charter revenue. A further factor that adds to the apparent strength of Birdon’s prima facie case is the present absence of any evidence of a mutual agreement for an extension of the hire period, after the return of the dredge to Homebush Bay, apart from what happened prior to the making of the oral contract on 30 March 2010.
25 In addition, the reference dates relied on by Houben Marine in its payment schedule are somewhat incongruous. There is no apparent reason why they were claimed to be at the end of each month of the asserted period of the hire, rather than for every second week in advance, as Box 22 of the Barecon 2001 form provided. Of course, this issue may be resolved by an adjudicator in the course of an adjudication.
26 If the current interlocutory injunctions substantively remain in place until final determination of the proceedings, the adjudication process will continue to be forestalled. Of course, those injunctions must be justified on a different basis following the decision of the Full Court that the current injunctions should be dissolved after Birdon failed on its Constitutional challenge.
27 These facts suggest that there is a strong prima facie case that if the evidence remains unchanged, Birdon would be likely to succeed at trial. However, it is likely that at the trial, there will be, first, considerably more evidence adduced and, secondly, detailed argument on the construction of any contract, whether it is fully recorded in the 1 April 2010 Barecon 2001 form or elsewhere. A trial of those issues will be necessary before a confident conclusion could be reached as to what the real underlying rights of the parties are. It is not appropriate to express any views on that question on this application. I merely make the observation that at the moment, on the limited evidence, and bearing in mind that Houben Marine has not yet exercised its opportunity to put on evidence as to the circumstances, it is impossible to know the basis on which the ultimate trial will be decided.
28 The grant or continuation of interlocutory injunctions will not substantively dispose of the rights of either of the principal parties in the proceedings. However, Birdon’s position must be balanced against the interruption in the statutory right of Houben Marine to seek remedies under the Security of Payment Act. That Act was designed to ensure, as its analogues throughout Australia were, that the process of adjudication would provide a speedy and effective means of ensuring cash flow to builders from parties with whom they contract, where those parties operated in a commercial, as opposed to a domestic, context. That intention reflects the legislature’s appreciation that an assured cash flow is essential to the commercial survival of builders and if a payment the subject of an adjudication is withheld pending the final resolution of the builder’s actual entitlement to payment, the builder may be ruined, as Keane JA observed in RJ Neller Building Pty Limited v Ainsworth [2009] 1 Qd R 390 at 400-401 [39]. Fraser JA and Fryberg J agreed with his Honour.
29 Houben Marine argued that this speedy adjudication procedure ought not be interfered with by the grant of an interlocutory injunction and that the balance of convenience weighed heavily in its favour. It also argued that no present damage had been sustained or proved by Birdon and that in effect, its application for injunctive relief was premature. Houben Marine said that this was because until the result of the adjudication process was known, there would be uncertainty as to the best means of balancing the respective prejudices that each party will, or might, suffer by the grant or withholding of interlocutory relief. Houben Marine argued that if the adjudication were allowed to proceed, the parties would be able to address arguments from a new position, influenced by whether the adjudicator had accepted Birdon’s argument that Houben Marine’s claims were not maintainable under the contact, or alternatively, the adjudicator having provided for a reduced payment or set of payments.
30 Houben Marine also pointed to the fact that Birdon had not paid any money into Court, as would ordinarily be expected, so it claimed, and indeed, as would be required under s 25 of the Security of Payment Act if an attempt were made to set aside a judgment based on an adjudication certificate. During the course of argument, Birdon offered to provide, on or before 1 November 2011, $200,000 in cash to be paid into Court or provided by way of a bank guarantee as securing its undertaking as to damages, if an interlocutory injunction were granted or continued.
31 Houben Marine also argued that Mason A-CJ in Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 at 153 had appositely observed that a party applying for an interlocutory injunction had to demonstrate that he or she would suffer irreparable injury for which damages would not be an adequate compensation.
32 The concept of irreparable injury to which his Honour referred must, of course, be read having regard to the organising principles accepted as stating the law by the majority of the High Court in O’Neill 227 CLR 57. I am of opinion that Mason A-CJ was referring to the well known principle affecting the discretion to grant an interlocutory injunction, namely, that damages would not be adequate compensation for the injury that the plaintiff would suffer if an injunction were not granted. This is relevant in considering the degree of injury that the plaintiff would suffer by permitting the threatened conduct to continue unabated. I am not satisfied that there is any substantive difference between what Mason A-CJ had in mind and the organising principle of considering whether the inconvenience or injury which the plaintiff is likely to suffer if an interlocutory injunction were refused, outweighs or is outweighed by the injury the defendant would suffer if an injunction were granted. Both what Mason A-CJ said and the organising principles involve consideration of the same concepts and matters in exercising the discretion to grant an interlocutory injunction.
33 The injury to which Birdon will be exposed is a process in which a debt due by it will be created under the Security of Payment Act if an adjudication is made against it by force of s 23(2) of that Act. Whether or not an injunction is later granted, the creation of such a debt is likely to create significant disadvantage for Birdon. That is because, on its current balance sheet, any significant sum found to be due by it in the adjudication would cause it substantive detriment and may render it insolvent. In addition, if an adjudication were made against Birdon, Houben Marine would be entitled to add statutory interest of 8.5% or perhaps more at the charterparty rate, thereby leading to a not insubstantial increase in the amount of Birdon’s liability.
34 Next, Houben Marine argued that Birdon had not identified any causative effect between the alleged misleading conduct and any apprehended loss that Birdon asserted. Houben Marine argued that this ellipsis was demonstrated by the reasons of Hodgson and Basten JJA in Bitannia Pty Limited v Parkline Constructions Pty Limited (2006) 67 NSWLR 9 at 39 [106] per Basten JA (also at 27 [58]-[60]) and at 15 [8] per Hodgson JA.
35 In one sense, there is an opposition here between two sets of statutory rights that are in play, namely, Houben Marine’s right to pursue the adjudication process under the Security of Payment Act and Birdon’s right to seek relief from Houben Marine’s alleged departure from the norm of conduct in s 18 of the Law. Birdon claimed that it will suffer loss by the use of the adjudication procedure in the circumstances where an adjudication award may be made against it despite, first, the contract being at an end or, secondly, the misleading or deceptive conduct that gave rise to its entry into the contract, or, thirdly, the rendering of the invoices that may be acted on by the adjudicator, in treating the contract or the payment claims as valid.
36 In my opinion, the proper principle to be applied in a case like this was identified by Hodgson JA in Bitannia 67 NSWLR at 15 [8], namely, that the Australian Consumer Law:
“… discloses a legislative intention that persons should have a remedy to protect them from damage from the misleading conduct of a corporation, or to recover from the corporation compensation for such damage, and it would not be in accordance with that intention that a corporation should be permitted to obtain a judgment against a defendant on a cause of action one essential element of which has been created by that corporation’s misleading conduct against that defendant. Subject to discretionary questions, it would in my opinion be appropriate for a court to give effect to that legislative intention by granting an injunction under [the powers now reflected in ss 232 and 234 of the Law].” (emphasis added)
37 The provision by Birdon of $200,000 in cash or by way of a bank guarantee in support of the undertaking as to damages will also be of assistance in providing Houben Marine with some redress if it succeeds at trial.
38 In weighing the injury likely to be suffered by the parties, I am mindful of the fact that, without any real explanation, Houben Marine delayed for over seven months in making claims that a valuable dredge was actually on hire after it had been returned to the contractually nominated place of redelivery, Homebush Bay. Its assertion that its delay was due to one of its directors having difficulties arising out of his own personal circumstances suggests that the injury from a further delay of a few months until the matter comes on for a trial that will commence on 12 March 2012 will not be of great significance to it. This is hardly a situation in which Houben Marine has timeously or expeditiously sought to pursue its rights. It sat on its hands for over seven months before it created a series of invoices for that preceding period without ever raising with the other party to the contract a serious contention that the dredge was still on hire. On the material now before me, Houben Marine has failed to give any real explanation for its delay or of any injury that it may be caused if the status quo is maintained until Birdon’s case is determined on its merits.
39 Birdon’s claim is further strengthened by the circumstance that Houben Marine, without any explanation, relied on invoices that bore issue dates well before the dates in February and March 2011 when they were served, with the exception of the last. There has been no explanation as to how that discrepancy in dating and service happened, even accepting that one of the directors was experiencing matrimonial problems.
40 I am satisfied that damages would not be an adequate remedy if I allowed an adjudication process to proceed that could potentially result in a substantial determination being made against Birdon. The size of the payment claims is significant. At the moment, it would appear that these claims were put forward by Houben Marine in order to obtain an adjudication under the Security of Payment Act for a sum in the order of $2 million plus interest. I am satisfied that Birdon is not, and will not be, in a position where it could meet an adjudication debt of that order or of a significant size. On the other hand, there is no evidence before me of a substantive injury to Houben Marine if it is kept out of its entitlement to pursue an adjudication procedure.
41 The scheme reflected in s 32 of the Security of Payment Act is that at a final hearing of the parties’ underlying dispute, the accelerated payment of an adjudication debt can be taken into account in adjusting the parties’ rights if they are not as the adjudicator found. It is not appropriate to wait until the adjudication process takes place to assess the consequences of what the adjudicator might determine. Whatever the adjudicator determines will then become a debt created, and given effect, by statute. Whether or not an injunction were granted restraining Houben Marine from presently enforcing it, the existence of that debt and interest is likely to impact adversely on the appearance of Birdon’s solvency to its creditors.
(b) The relevance of the application for special leave to appeal
42 The second, and until now primary, basis upon which Birdon sought the continuation of injunctive relief was that it has applied to the High Court of Australia for special leave to appeal from the decision of the Full Court. The special case stated for the consideration of the Full Court included the question whether the existing interlocutory injunctions should continue. The majority held they should not. Nonetheless, the subject matter of the application for special leave includes, in part, the consideration of that very question.
43 It is less than desirable that, as the dissenting judge in the Full Court, I should be asked effectively to make an evaluation of the strength of Birdon’s attack on the decision of the majority: see Paringa Mining & Exploration Co plc v North Flinders Mines Limited (1988) 165 CLR 452 at 459-460 per Mason CJ, Brennan and Gaudron JJ. Whether or not an injunction ought be granted pending the hearing of an application for special leave to appeal involves the exercise of an extraordinary jurisdiction. In that situation, the Court must consider the four issues raised by Brennan J in Jennings Construction Limited v Burgundy Royale Investments Pty Ltd [No. 1] (1986) 161 CLR 681 at 685, namely: (1) whether there is a substantial prospect that special leave to appeal will be granted; (2) whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; (3) whether the grant of a stay will cause loss to the respondent; and (4) where the balance of convenience lies. The second issue is not relevant here, since I am considering that very question. Brennan J addressed an argument by the respondent that special leave there was unlikely to be granted saying (at 685):
“It is undesirable to canvass the arguments in advance. I do not, however, think that the prospect of a grant of special leave is insubstantial.”
His Honour imposed, as conditions on the grant of a stay in that case, that the applicant seek special leave and prosecute any appeal with all reasonable expedition and give an undertaking as to damages.
44 In this matter, the argument based on Constitutional invalidity is not insubstantial. Birdon is prepared to give undertakings, by its senior counsel, in the terms that it gave earlier as well as a further one, to provide a measure of security for the undertaking as to damages, albeit that it falls far short of Houben Marine’s total claim. If the High Court were to grant special leave to appeal there may be a question as to the maintenance of the trial date that I have fixed. When I offered the trial date neither party had put on or prepared its evidence for a final hearing. Birdon has sought about three weeks in which to provide any further evidence that it will seek to lead. After that, Houben Marine has said that it will not be able to complete its evidence preparation until late January 2012.
CONCLUSION
45 There being no evidence of any substantial injury to Houben Marine other than the one that can be inferred by it being kept out of a claim for a very large sum of money, to which it may only be temporarily entitled in any event, I am not persuaded that the injury it will suffer from the relatively short delay until a trial in this matter is held and a final judgment delivered will outweigh the potential prejudice and detriment to Birdon. I am satisfied that Birdon is entitled to interim protection under s 234 of the Law based on its claims under s 18: Bitannia 67 NSWLR at 15 [8].
46 For these reasons, I am of opinion that I should make an order giving effect to the answers the Full Court gave but then remake the interlocutory injunctions in the same terms until the final hearing has concluded or until further order, on conditions that Birdon undertakes:
(1) to pursue its application for special leave to appeal, and any appeal, and all steps in these proceedings up to and including the completion of the trial with all due expedition; and
(2) on or before 1 November 2011 to pay the sum of $200,000 into Court or into any bank account which may be agreed between it and Houben Marine or alternatively provide a bank guarantee in that sum in a form acceptable to Houben Marine or failing agreement, in a form settled by the Registrar in that sum.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.
Associate:
Dated: 21 November 2011
