In the Western Australian Supreme Court case of Nepean Conveyors Pty Ltd v Linkforce Industrial Services Pty Ltd [2024] WASC 71, Nepean Conveyors Pty Ltd (Nepean) commenced an application for an interlocutory injunction to prevent an adjudication application by Linkforce Industrial Services Pty Ltd (Linkforce) under the Construction Contracts (Former Provisions) Act 2004 (WA) (CCA).
Justice Seaward dismissed the application, and considered it was not an appropriate exercise of her discretion to grant the interlocutory injunction sought by Nepean.
This serves as a reminder to principals and contractors that the balance of convenience favours the party opposing the injunction application, and it would be very difficult to obtain an injunction to prevent an adjudication application.
On 8 December 2021, Nepean entered into a contract with Roy Hill Iron Ore Pty Ltd to construct two overland conveyor systems (Head Contract).
By subcontract dated 14 March 2022, Nepean subcontracted some of the Head Contract works to Linkforce (Subcontract).
On or about 20 July 2023, Linkforce submitted progress claim 20 in the amount of $83,393,111.84 (excluding GST), claiming a net amount payable of $23,048,745.55 (excluding GST).
On or about 26 July 2023, Nepean issued its assessment of progress claim 20, assessing a negative amount of $3,706,705.98 (excluding GST) i.e. Nepean assessed Linkforce was to pay Nepean money, giving rise to a payment dispute.
On 13 November 2023, Linkforce commenced an adjudication application in respect of the payment dispute under the CCA (First Adjudication Application).
Nepean lodged and served its response on 28 November 2023.
The Adjudicator issued his determination and determined that Nepean was required to pay Linkforce the sum of $1,311,887 (including GST).
On 26 February 2024, the parties held a without prejudice meeting to attempt to resolve issues in connection with the Subcontract. Evidence was given that Linkforce told Nepean on an open basis that Linkforce intended to lodge a second adjudication application the next week, seeking an amount of approximately $18 million.
On 1 March 2024, Nepean filed in the Supreme Court:
Nothing in the CCA prevents a party from commencing legal proceedings to seek an alternative outcome when they are dissatisfied with an adjudication determination. If a party is dissatisfied with the outcome of the adjudication, they are (if the relevant circumstances exist) entitled to seek judicial review of the Adjudicator’s determination.
The general principles applicable to the exercise of the power to grant an interlocutory injunction, as summarised by Newnes JA (with whom McLure P and Corboy J agreed) in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87] include the two main enquiries:
It was accepted that Nepean had established that there was a serious question to be tried, however it was not possible, at the interlocutory stage, for Justice Seaward to form a view as to the strength of that case.[2]
However, Justice Seaward was not satisfied that the balance of convenience favoured granting the interlocutory injunction. In summary, Justice Seaward’s reasons included:
In Justice Seaward’s concluding remarks, she agreed with Justice Le Miere’s observations in Enerflex Process Pty Ltd v Kempe Engineering Services (Australia) Pty Ltd [2013] WASC 406, in that given the existence of the CCA and the underlying procedures, it is premature to grant an injunction. It may be that the Adjudicator agrees with the case advanced by the plaintiff, in which case there is no need for an injunction. If the Adjudicator is against Nepean, Nepean is entitled to apply for judicial review of the determination or commence other appropriate legal action.
The CCA applies to construction contracts entered into after 1 January 2005 and before 1 August 2022. The Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOPA) applies to construction contracts entered into after 1 August 2022.
The decision of Nepean v Linkforce will likely have relevance to an attempt to injunct an adjudication application under the CCA or SOPA.
The key object of the CCA and SOPA is to provide a statutory system of adjudication of payment disputes arising under a construction contract in a fair, quick, informal and cost-effective manner.
Importantly, this expeditious process does not finally determine the rights, duties or liabilities of any party to a construction contract, and the parties retain the ability to commence other proceedings in relation to the payment dispute.
The current position in Western Australia appears to be that it would be very unlikely that a party would be successful in obtaining an injunction to prevent the claiming party from bringing an adjudication application. Accordingly, principals and contractors should expect that attempting to do so is, unless exceptional circumstances exist which have not previously been considered by the WA courts, risky.
To date, it appears that no application for an injunction to prevent an adjudication application has been successful in Western Australia.
Parties seeking to bring adjudication applications to ‘keep the money’ flowing should continue to do so in the usual course, noting that an attempt to ‘block’ the application is unlikely to be successful.
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[1] The declarations sought by Nepean included a declaration that a payment claim for the purposes of the CCA does not include a claim made under a construction contract for an amount in relation to the performance of obligations under the construction contract where such obligations were not performed within: (i) a reasonable period of the relevant claim under the contract; or (ii) alternatively, six months of the relevant claim under the contract.
[2] The Court’s preliminary view as to the strength of Nepean’s case in relation to the temporal element of Nepean’s case was that it was weak.