Haskell Construction Ltd v Ashcroft
| Jurisdiction | New Zealand |
| Judge | Grice J |
| Judgment Date | 21 April 2020 |
| Neutral Citation | [2020] NZHC 772 |
| Court | High Court |
| Docket Number | CIV-2019-485-593 |
| Date | 21 April 2020 |
And
[2020] NZHC 772
Grice J
CIV-2019-485-593
IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE WHANGANUI-A-TARA ROHE
Construction, Judicial Review — application for judicial review of a decision by the first defendant adjudicator that he had jurisdiction to embark on a third adjudication between plaintiff and second defendant — doctrine of issue estoppel — “rights and obligation of the parties” under the construction contract — whether the adjudicator had jurisdiction to determine damages pursuant to a statutory remedy — Building Act 2004 — Construction Contracts Act 2002
M Freeman for Plaintiff
F B Collins for Second Defendant (for limited purpose of abiding decision) and Third Defendant
| Para No. | |
| Introduction | [1] |
| Grounds for judicial review | [11] |
| Issues | [17] |
| Judicial review | [18] |
| Construction Contracts Act 2002 | [21] |
| What do “rights and obligation of the parties” under the construction contract mean? | [31] |
| The words used | [37] |
| Implied Warranties and Statutory Remedies Under the Building Act 2004 | [41] |
| Issue estoppel | [72] |
| Conclusion | [87] |
| Costs | [89] |
In September 2018 Haskell Construction Limited (Haskell) commenced construction of an architecturally designed home for Alpine Prime Properties Limited (Alpine). They were parties to a signed construction contract for the building that was entered into in August 2018. Not long into the construction complications arose requiring further work involving structural steel framing. This work was the subject of a variation issued which added to the cost of construction. The parties disagreed on payment for the steel members. This led to Alpine purporting to cancel the contract.
In February 2019 Haskell submitted a payment claim for stage two of the construction and in March gave five days' notice that it would suspend works for non-payment. In April Alpine asserted that the contract was cancelled for breach of contract. Haskell accepted the cancellation on a without prejudice basis.
The substantive dispute between the parties will be dealt with at arbitration in August 2020. The appointed arbitrator is a barrister. In the meantime the dispute has been dealt with at adjudication. Two adjudication determinations have been issued and these proceedings relate to a third adjudication claim brought by Alpine.
The Construction Contracts Act 2002 (CCA) established a summary adjudication process for the determination of disputes. This was designed to provide a fast track determination process which would allow the timely determination of disputes arising in construction contracts so the construction was not delayed pending a lengthy legal process. A determination does not affect the ultimate substantive decision which will be made here at arbitration. Nevertheless, the determinations are enforceable in their terms when made.
In this case two adjudication determinations have been issued. The adjudicator, Mr Hazelton, issued a determination in each the first and second adjudications on 29 May 2019. The net outcome of the adjudications was that Alpine was to pay Haskell the sum of $133,619.16 as an interim award under the contract. This amount was determined in the first adjudication.
In the second adjudication the adjudicator found that Haskell was in breach of the contract. However, the adjudicator declined to change the earlier monetary result.
Following the determinations Haskell issued a statutory demand under the Companies Act 1993 as a precursor to a winding up petition against Alpine for the amount determined in the first adjudication. Alpine applied to set that aside on the basis it intended to issue a third adjudication notice. It did so on 26 September 2019. Haskell responded with an objection as to jurisdiction.
Mr Ashcroft, the first defendant, was appointed adjudicator for the third adjudication. He decided that he had jurisdiction to hear the third adjudication and delivered reasons for that conclusion in October 2019.
Following that decision these judicial review proceedings were issued. The statutory demand proceeding has not been dealt with pending the outcome of this application. Mr Ashcroft has also indicated that in order to preserve position, he will not take any further steps to issue the third adjudication determination. Therefore, the adjudication is effectively stayed.
Mr Ashcroft, the adjudicator, was present in court during the hearing. Mr Collins, for the first and second defendants, indicated on Mr Ashcroft's behalf that he would abide the decision of this Court.
The first cause of action is that the adjudicator has no jurisdiction to embark on a third adjudication because the dispute has already been adjudicated. The plaintiff relies on the doctrine of issue estoppel. It says that Mr Ashcroft erred in law and/or took into account irrelevant factors, and/or did not take into account relevant factors in his decision to proceed with the third adjudication.
The plaintiff says that the adjudication determination is a judicial decision which is binding pro tem and can be enforced. The parties are bound by the determinations of the adjudicator until the arbitrator makes his substantive decision in this case. 1 Therefore, the plaintiff asserts that as the adjudicator has already addressed and determined the rights and obligations of the parties on termination of the contract, the third adjudication will be a re-adjudication of the same matters in the first and second adjudications. It says Alpine is merely seeking a more favourable outcome by introducing further evidence in support of its damages claims.
The second cause of action pleads that the assessment of damages sought in the third adjudication is outside the scope and jurisdiction of an adjudication.
The plaintiff says the remedies claimed by Alpine in the third adjudication are common law or statutory damages which are not rights, obligations or remedies under the contract. Accordingly, the claim for damages falls outside the adjudicator's jurisdiction.
The third cause of action relating to breach of natural justice was not pursued.
Declarations are sought that Mr Ashcroft has no jurisdiction to hear and determine the adjudication and that the matters Alpine seeks to refer to a third adjudication are the same or substantially the same as the dispute which has already been determined in the first and second adjudication. In addition, that the damages claimed in the third adjudication are outside the scope and jurisdiction of an adjudication under s 38 and 48(1)(a) and (b) of the CCA. 2
The issues are whether:
-
(a) The matters raised in the third adjudication have already been dealt with or should have been raised in the first and second adjudication and therefore the adjudicator cannot embark on the third adjudication. This is referred to as the issue estoppel argument.
-
(b) The adjudicator's jurisdiction is limited to first whether the liability of the parties to the adjudication should make a payment under the contract and secondly to determine any questions and disputes about the rights and obligations of the parties under that contract. But the adjudicator does not have the jurisdiction to determine damages pursuant to a statutory remedy.
As Mr Freeman for Haskell noted, the courts are vigilant to ensure that judicial reviews of adjudicators' determinations do not cut across the scheme of the CCA and undermine its objectives. The Court of Appeal has warned against the courts allowing judicial review proceedings to be used to interfere with the “pay now argue later” philosophy that underlines the CCA. It said: 3
[27] The courts must be vigilant to ensure that judicial review of adjudicators' determinations does not cut across the scheme of the CCA and undermine its objectives. But this does not mean that judicial review should be limited to instances of “jurisdictional error”. In principle, any ground of judicial review may be raised, but a plaintiff must demonstrate that the court should intervene in the particular circumstances, and that will not be easy given the purpose and scheme of the CCA. Indeed, we consider that it will be very difficult to satisfy a court that intervention is necessary. As an example, given that an important purpose of the CCA is to provide a mechanism to enable money flows to be maintained on the basis of preliminary and non-binding assessments of the merits, it is unlikely that errors of fact by adjudicators will give rise to successful applications for judicial review. In the great majority of cases where an adjudicator's determination is to be challenged, the appropriate course will be for the parties to submit the merits of the dispute to binding resolution through arbitration or litigation (or, of course, to go to mediation).
The Court in that case also noted comments made by the Court of Appeal of England and Wales in relation to a similar regime, that it was too easy in a complex case for a party dissatisfied with the decision of an adjudicator to comb through the adjudicator's reasons and identify points to challenge under labels of “excessive jurisdiction” among others. 4 The New Zealand Court of Appeal noted with reference
I will deal with the jurisdictional argument first. The plaintiff argues that the jurisdiction of the arbitrator does not extend to determining common law or statutory damages for breach of the statutory...
To continue reading
Request your trial
-
Haskell Construction Limited v Robert Francis Ashcroft
...HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE CIV-2019-485-593 [2020] NZHC 772 BETWEEN HASKELL CONSTRUCTION LIMITED Plaintiff AND ROBERT FRANCIS ASHCROFT First Defendant AND ALPINE PRIME PROPERTIES LTD Second Defendant Hearing: 27 February......