Venture Spirits Pty Ltd v Adjudicate Today Pty Ltd [2024] TASSC 12

Nikki Miller  |  Isobel Carmody  |  Isabella Nicolaci

Key takeouts

• Payment into court of an adjudicated sum is almost always required where a party seeks judicial review of the adjudication determination, on the basis that the ‘pay now, argue later’ policy of the security of payment legislation is a factor that heavily weighs towards requiring payment of that sum into court.

• Other potential factors in deciding whether to require payment into court of an adjudicated sum, such as the financial hardship of the party seeking judicial review will carry little weight.
  

Facts

On 21 March 2021, Venture Spirits (principal) contracted Jayspec Builders Pty Ltd (contractor) for the construction of works at the principal’s business premises in North Hobart. On 24 February 2023 the contractor served a ‘final payment claim’ seeking the sum of $170,603.  The principal disputed the claim and the contractor referred the claim to adjudication under the Building and Construction Industry Security of Payment Act 2009 (Tas) (SOP Act).

The adjudicator determined that the contractor was entitled to payment of the full amount claimed, and an adjudication certificate was issued and registered as a judgment in the Supreme Court of Tasmania.

 When the principal failed to  pay the judgment debt, the contractor issued and served on the principal a creditor’s statutory demand pursuant to the Corporations Act 2001 (Cth).

Following this, the principal filed (separately):

• an originating application seeking the adjudicator’s determination be quashed on the basis of alleged jurisdictional error; and
• another originating application seeking to set aside the statutory demand.

The contractor then applied for an order that the proceeding seeking the quashing of the determination be stayed until the principal paid the adjudicated amount (including the fees and interest) into court.

Decision

The court decided that the interlocutory application should be granted, and that the proceedings should be stayed unless and until the principal paid into court the amount owing under the adjudication certificate as it stood at the date of commencement of that proceeding.

Section 27 of the SOP Act provides that:

• an adjudication certificate may be filed as a judgment for a debt in a court of competent jurisdiction (such as the Supreme Court of Tasmania), upon which it is enforceable as a judgment for a debt (s 27(1) and (2)); and
• where a party commences proceedings to have that judgment (on the basis of the filing of the adjudication certificate) set aside, that party ‘must pay into the court as security the unpaid part of the adjudicated amount, pending the final determination of those proceedings‘ (s 27(5)).

The court’s reasoning was based on the fact that the proceedings for prerogative relief are only one step away from setting aside the judgment, as contemplated by s 27(5).  If those proceedings for prerogative relief are successful, then the setting aside of the judgment will follow as a matter of course.  That is, proceedings which seek to quash an adjudication determination for invalidity can realistically and ultimately only be going to one place, the setting aside of the resulting judgment.

The principal argued that it would be unable to make payment of the adjudicated amount, and that if the orders sought by the contractor for payment into court of the adjudicated amount were granted this would fetter the principal’s right to challenge the validity of the adjudication determination.  The principal submitted that this was a factor to be considered by the court in exercising its discretion in making the order sought by the contractor that would weigh against the making of that order.   

While the court did not have sufficient evidence before it to determine what financial hardship the principal might be suffering, the court concluded that any weight placed on the principal’s financial circumstances as a discretionary factor is limited due to the mandatory nature of the payment into court where s 27(5) of the SOP Act is triggered.  The ‘pay now, argue later’ policy underpinning the SOP Act is a matter that weighs heavily in favour of the making of an order that a party seeking to have a SOP Act adjudication determination quashed would need to pay the determined amount into court as a condition of being able to prosecute that claim.

The court also considered that:

• the merits of the application for relief would ordinarily carry little weight given that the legislative scheme of the SOP Act focusses on acceptance of the adjudication determination; and
• while the prospects of early determination of the application would be a matter which can affect the exercise of the court’s discretion, it similarly carries little weight in the circumstances of the matter.