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

What the court decided

Remo Constructions Pty Ltd engaged Dualcorp Pty Ltd as subcontractor for excavation and piling work at a building site in Five Dock [19]. Dualcorp left the site in or about November 2007 [9], [20]. On or about 29 January 2008 it served a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW), attaching six invoices totalling $743,612.50 [21]. On 11 February 2008 Remo served a payment schedule that disputed most of the amounts in the first four invoices but, apart from an immaterial amount, conceded the other two [22]. Dualcorp applied for adjudication of its claim on those four invoices [23].

On or about 3 March 2008 Dualcorp made a further claim under the Act (the March claim), based on the same six invoices and for the same total apart from a one cent difference [26]. On 11 March 2008 the adjudicator determined that Dualcorp was entitled to $75,509.43, against a total of $659,619.65 in the four invoices [24]. Judgment for that amount was entered in the District Court on 3 April 2008 on the adjudicator's certificate [25]. Macfarlan JA described Dualcorp as having made the March claim because it was dissatisfied with the adjudicated amount, although on the dates he gave the claim preceded the determination [24], [26].

Remo served no payment schedule in response to the March claim, and Dualcorp sued for its amount under section 15 [27]. Quirk DCJ refused summary judgment for the amounts in the four adjudicated invoices, accepting that reagitating them was barred by principles akin to res judicata or was an abuse of process [31]. Her Honour did enter summary judgment on the other two invoices, which totalled $83,992.95, plus interest [31].

The Court of Appeal granted Dualcorp leave to appeal and dismissed the appeal with costs [75]. Macfarlan JA proposed the grant of leave because the case raised an issue of general importance about the Act [74]. Handley AJA said only that he agreed with Macfarlan JA [76]. Allsop P agreed with the orders and gave separate reasons [1].

Macfarlan JA held that the Act's limits on the defences a respondent could raise when a claimant sought judgment did not prevent a defence based on issue estoppel, if otherwise available, because such a defence did not arise under the construction contract [41]. He framed the question as whether the Act, properly construed, gave adjudicators' determinations enough finality to attract res judicata and issue estoppel [42], [50]. In his view adjudication, despite its abbreviated form, was sufficiently judicial in character [49].

He relied on several features of the Act [52], [53], [54], [57], [58]. They included its objects, the rule allowing one payment claim for each reference date and the rule that a later adjudicator generally adopts an earlier valuation of the same work [52], [53], [54]. They also included the bar on a respondent challenging the determination when seeking to set aside a judgment on an adjudication certificate and the narrow grounds on which a new adjudication application could be made [57], [58]. In particular, he did not read the qualification allowing a payment claim to include an amount from a previous claim as authorising the inclusion of an amount that had been the subject of an earlier adjudication [53].

The case for finality was stronger, he said, because under section 32 determinations did not affect contractual rights, so any inability to reagitate issues was confined to rights to progress payments [59]. He concluded that a determination was "final and binding between the parties as to the issues determined", except so far as the Act allowed it to be revisited [60]. Remo had also argued that the two claims related to the same reference date, but Macfarlan JA did not decide that argument [37].

Macfarlan JA agreed with McDougall J's approach to section 22(4), observing that many issues relevant to a progress claim did not involve determining the value of construction work [66]. He did not, however, regard section 22(4) as an exhaustive statement of what an earlier adjudication decides for a later adjudicator, and so disagreed with the view McDougall J ultimately reached in John Goss Projects v Leighton Contractors [67], [70]. In remarks that went beyond the claim for judgment before the Court, he said that findings on questions of entitlement could not be reopened in a later adjudication [67]. Where a claimant instead sought judgment after no payment schedule was served, it should be denied judgment so far as what it sought was inconsistent with the adjudicator's findings [67].

Macfarlan JA held that the primary judge was right to treat principles akin to res judicata or abuse of process as applicable, and concluded that the principles of issue estoppel applied [68]. The analogy with res judicata was incomplete, mainly because timing was significant for progress claims [68]. The broader principle of abuse of process was, he thought, probably also applicable, but it was unnecessary to reach a final view [68].

Issue estoppel required that the same issue had been decided earlier [69]. By way of example, he said a claim rejected as premature would not preclude a later claim made on time, but a rejection for failure to comply with express requirements of the contract would bind a later adjudicator facing the same issue [69]. He added that it would be an abuse of process for a claimant to use a later claim, left unanswered by a payment schedule, to get judgment inconsistent with issues the earlier determination resolved [69].

Dualcorp argued that it would be unfair to bind a claimant whose claim had been rejected for want of evidence [71]. Macfarlan JA disagreed, observing that a single opportunity to put forward evidence and submissions was the usual position for those seeking remedies [72]. A related argument, not put at first instance, that the judgment should be increased by items Dualcorp said the adjudicator had rejected for insufficient evidence, was not entertained, and in his view would have failed in any event [35]. His conclusion was that the adjudicator had determined the issues relevant to Dualcorp's rights to progress payments for the four invoices, so its application for summary judgment on those amounts was inconsistent with that determination [73].

Allsop P agreed with Macfarlan JA that the Act was not intended to permit repetitious use of adjudication for the same claim [2]. He said that Dualcorp, as a party in its position, should not be able to "re-ignite the adjudication process at will" because it was dissatisfied with the first result [2].

His Honour said that the Act permitted cumulative claims by reference to later reference dates that included an amount from a previous claim, and that where there had been an adjudication the valuation rule then required the same value to be given to the work, subject to its qualification [8]. In his view the six invoices could relate to only one reference date, and lodging the same claim for the same completed work again did not create a fresh one [12], [13]. Allsop P held that the March claim was in respect of the same reference date, so it was not a payment claim under the Act and Dualcorp could not proceed to judgment on it [14], [15].

His Honour also agreed with Macfarlan JA's approval of McDougall J's approach to section 22(4), and agreed that the Act as a whole generally showed an intention to prevent the same issues being reagitated [16]. He considered section 13(5) sufficient to decide the case [16]. He left to another occasion whether principles of estoppel could prevent an abusive use of the Act not covered by sections 13(5) and 22(4) [16].

The two sets of reasons differed on whether a later claim could include an amount already adjudicated. Allsop P treated such cumulative claims as permitted, with the valuation rule governing the value, while Macfarlan JA, with Handley AJA's agreement, did not read the Act as authorising that inclusion.

Why it matters

Under the Act as it then stood, the Court of Appeal upheld the refusal of judgment under section 15 on a later payment claim for amounts that an adjudicator determined on the earlier claim, although no payment schedule had been served in response to the later claim. On the reasoning of Macfarlan JA and Handley AJA, a determination bound the parties by issue estoppel on the issues it decided, except so far as the Act allowed it to be revisited, and the limits on defences in section 15 did not exclude that defence. Allsop P reached the same result under section 13(5) and did not decide the estoppel question.

The decision concerned the New South Wales Act as it stood when the 2008 claims were made. Readers should check the current text of that Act, and readers in Victoria should check the provisions of the Victorian Act, before relying on it.

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.