Nepean Conveyors Pty Ltd and Linkforce Industrial Services Pty Ltd [2024] WASC 71

Tom French | Shevaun Stringer | Sasha Thomas

Key takeouts

In deciding an application for an interlocutory injunction to prevent an adjudication under the Construction Contracts Act 2004 (WA) (the Act), the balance of convenience will likely favour the defendant.  

Courts have granted injunctions to avoid an abuse of the adjudication process, but outside of those specific circumstances, an applicant is likely to face difficulty in establishing why an injunction should be granted to prevent a party from issuing an adjudication application under the Act.

The Supreme Court of Western Australia refused an interlocutory injunction that would have prohibited Linkforce from issuing an adjudication application. Nepean argued there was no jurisdiction for Linkforce to bring an adjudication because, amongst other things, the relevant payment claim fell within the ‘mining exclusion’. The court rejected Nepean’s application for an injunction and noted that Nepean would be free to commence judicial review proceedings following the adjudication if it considered the mining exclusion applied. However, to injunct the adjudication process itself would be inconsistent with the purpose of the adjudication process in the Act.

Therefore, despite there being a question on whether the contract was a ‘construction contract’ in light of the mining exclusion, the purpose of the Act, the interim basis of adjudication determinations and the mechanisms to dispute the outcome, weighed against granting an injunction.

Facts

Nepean Conveyors Pty Ltd (Nepean) engaged Linkforce Industrial Services Pty Ltd (Linkforce) to construct two overland conveyor systems as part of Roy Hill Iron Ore Pty Ltd’s expansion project.  The date of practical completion was 3 December 2022 and works were largely completed in April 2023.

On 14 November 2023, Linkforce commenced an adjudication application disputing Nepean’s assessment of its progress claim submitted July 2023.  In December 2023, the appointed adjudicator determined that Nepean was required to pay $1,311,887 to Linkforce (first determination).

Around 26 February 2024, Linkforce advised Nepean that it intended to make a second adjudication application seeking approximately $18 million.  On 1 March 2024, Nepean applied for an interlocutory injunction to prevent Linkforce from commencing the adjudication application pending the determination of its application for judicial review of the first determination.  The application for judicial review requested the court determine whether the adjudicator had made a jurisdictional error by making the first determination.

Nepean contended that the adjudicator had made a jurisdictional error because:

•  the contract was not a ‘construction contract’ as it was subject to the ‘mining exemption’ under section 4(3)(c) of the Act; and

•  the claim was not a ‘payment dispute’ for the purposes of the Act which applied only to claims brought within a ‘reasonable period’ of time after the performance of the relevant contractual obligation.

In determining whether to grant an interlocutory injunction the court was required to consider whether there was a serious question to be tried in relation to Nepean’s application for judicial review and whether the balance of convenience favoured granting the injunction.

Decision  

Whilst the court found there was a serious question to be tried regarding the application of the mining exemption under the Act, it refused Nepean’s injunction application as it was not satisfied that the balance of convenience favoured granting the injunction.

In considering the balance of convenience, the court found that Nepean’s reputational concerns arising from the second adjudication, expected quantum of the application and the alleged delay by Linkforce in making its payment claim, were not sufficient to weight the balance in favour of Nepean. 

The balance of convenience favoured Linkforce and the court refused to grant the interlocutory injunction for the following key reasons:

•  Nepean could still make its legal arguments in response to Linkforce’s second adjudication application and could seek judicial review of that determination (if not accepted by the adjudicator).

•  An injunction would defeat the object and purpose of the Act which gave Linkforce the right to engage in the adjudication process and provided for payment disputes to be resolved on an interim basis in a timely fashion.

•  The object and purpose of the Act, to keep cash flow moving while a construction project is on foot, was not undermined by the timing of Linkforce’s claim.

•  Nepean’s claim that it would suffer prejudice by participating in the ‘no cost’ jurisdiction of the adjudication process was rejected and, if Nepean was seeking an injunction to avoid that aspect of the process, granting the injunction would also undermine the Act.

•  There was general prejudice to Linkforce in not being able to exercise its right to engage in the adjudication process under the Act.