In the July 2013 edition of Acumen, we reported on the District Court judgment in Romaldi Constructions Pty Ltd v Adelaide Interior Linings Pty Ltd  SADC 39, which concerned the Building and Construction Industry Security of Payment Act 2009 (SA) (the Act). The District Court granted an injunction preventing a subcontractor from recovering a payment an adjudicator had determined was owed to it by the contractor, thus overriding the intended operation of the Act.
The decision has subsequently been appealed twice.
The subcontractor successfully appealed that decision to the Supreme Court, where Justice Anderson discharged the injunction. The subcontractor subsequently obtained an adjudication certificate and filed it as a judgment debt in the Magistrates Court. The contractor sought a stay of execution until the contractor's claim for damages had been determined in the District Court. The Magistrate refused the stay application on the basis that it was an attempt to circumvent the decision of the Judge on appeal and the outcome of the adjudication.
The contractor unsuccessfully appealed Justice Anderson's decision and the Magistrates Court decision in the Full Court of the Supreme Court.
The decisions suggest that in certain circumstances:
Industry participants should be aware in certain circumstances even if a judgment debt is obtained in respect of an adjudication determination, payment of an adjudication amount may not be guaranteed if there is scope (either by other legislation or by a Court's jurisdiction) to prevent the judgment debt from being effected.
The subcontractor appealed the decision of the District Court to grant the contractor an interlocutory injunction. Justice Anderson allowed the appeal and discharged the injunction, finding that:
Justice Anderson noted that:
Importantly, Justice Anderson noted that the contractor, having elected not to challenge the validity of the adjudication, cannot be permitted to circumvent the objects of the Act by taking its own action to prevent the adjudication certificate from being issued.
If a judicial review of the determination was sought, Justice Anderson suggested that a stay may be the more appropriate way of achieving justice between the parties.
The Full Court considered three issues on appeal:
The Full Court noted that an interlocutory injunction can be granted:
In these proceedings, the juridical basis for the grant of an interlocutory injunction (if any) was to avoid the result of the action being nugatory.
In dismissing the appeal against Justice Anderson's decision, the Full Court decided that, in the absence of a challenge against the validity of an adjudication determination, an interlocutory injunction restraining the filing of an adjudication certificate is unlikely to be granted.
In the Full Court's view, there was no suggestion that the contractor would suffer any prejudice if the adjudication certificate was issued. If the injunction was not granted, the contractor could have applied for a stay of execution of the judgment once the adjudication certificate was filed in court.
The Full Court thought it appropriate to consider the application of the principles applying to the exercise of discretion by the Judge at first instance and the Judge on appeal on an application for a stay.
The Full Court determined that a stay of execution of a judgment founded on an adjudication certificate may be granted where:
The Full Court dismissed the contractor's appeal as the contractor had failed to establish:
The Full Court considered the following criteria as relevant to the Court's exercise of discretion in granting a stay in circumstances where a ground for grant of a stay has been established:
Both the strength of the plaintiff's claim and the effect of the Act were held to be significant factors for consideration. In addition, the contractor's failure to challenge the contractual debt was a 'powerful factor against grant of a stay'.
The Full Court's reasoning suggests that a plaintiff is more likely succeeded in obtaining a stay if it challenges the validity of the adjudication or the entitlement of the builder to the progress payment.
The Full Court held that the Magistrate:
By seeking a stay after the adjudication certificate had been filed as a judgment debt, the subcontractor had been allowed to follow the procedure provided for in the Act. The contractor's application for a stay was not an attempt to circumvent the adjudication or the objects of the Act.
Although a lack of evidence meant the contractor's application for a stay would have ultimately been unsuccessful, the Full Court's decision suggests that a stay of execution of the adjudication certificate may be granted if a plaintiff can establish that it has an arguable case against a defendant and that there is a real risk or a not insubstantial risk that the defendant will be unable to repay the adjudication amount.
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