Application for stay of proceedings pending payment of judgment debt pursuant to an adjudication determination – security for costs - reasonableness of estimates of costs
Proceedings based upon underlying contractual issues will not be stayed pending payment of a judgment debt based upon an adjudication determination. To do so would be contrary to the rights expressly preserved by section 32(2) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act).
On 16 June 2015, SX Projects Pty Ltd (SX) obtained a judgment against Samadi Developments Pty Ltd (Samadi) based upon an adjudication determination in respect of unpaid progress claims. On 29 May 2015 Samadi commenced proceedings against SX for liquidated damages for delays in completion, damages for defects and damages for the cost of completing the work. SX has been unsuccessful in enforcing the judgment obtained against Samadi and seeks a stay of the proceedings pursuant to s 67 of the Civil Procedure Act 2005 (NSW) until the judgment amount has been paid. SX also seeks security for its costs of defending the proceedings.
Ball J did not grant a stay of proceedings but did order Samadi to provide security for costs.
SX argued that it was unable to enforce the judgment against Samadi because, in any winding up proceedings, Samadi will maintain that it has an offsetting claim based upon the current proceedings. His Honour did not accept that there is anything preventing Samadi from enforcing the judgment it has obtained. Whilst it may be prevented from bringing an application to wind up Samadi, if Samadi was wound up before the proceeding was determined because the proceedings had been stayed, the result may be to deprive Samadi of its ability to pursue its contractual rights. Those rights are expressly preserved by section 32(2) of the Act.
There was no dispute that SX was entitled to security. The only issue was quantum. His Honour considered estimates from both parties. He made his own assessment as to some of the elements included in the estimates and ordered security for SX's party/party costs.