New South Wales opens the door for judicial review of adjudicator’s determinations on non-jurisdictional grounds

Jul 6 2016

Publications

In Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2016] NSWSC 770, the New South Wales Supreme Court considered the scope for challenging adjudication determinations made under the Building and Construction Industry Security of Payment Act 1999 (NSW) (BCISPA). The Court found that it had jurisdiction to quash an adjudicator’s determination on the basis of an error of law on the face of the record. This greatly expands the grounds upon which adjudicator’s determinations can be attacked, which were previously limited to jurisdictional errors only.

The question for Queensland practitioners is what impact will Probuild have on adjudication decisions rendered in Queensland under the Building and Construction Industry Payments Act (2004) (Qld) (BCIPA).

Background

Probuild Constructions (Aust) Pty Ltd (Probuild) and Shade Systems Pty Ltd (Shade Systems) entered into an agreement for the supply and installation of external louvers. Shade Systems applied for adjudication of a disputed payment claim. Probuild’s position was that Shade Systems owed liquidated damages in the amount of $1,089,900 with the effect that no amount was payable to Shade Systems.

The adjudicator determined that Probuild had not established an entitlement to liquidated damages and that it was liable to pay Shade Systems $277,755.03 in respect of the payment claim (Determination).

Probuild sought an order in the Supreme Court of New South Wales to quash the Determination on several grounds, including that the Determination involved an error of law on the face of the record with respect to the assessment of Probuild’s claim for liquidated damages.

Error of law

The adjudicator determined that the subject liquidated damages clause required Probuild to demonstrate that Shade Systems was responsible for delay in order for the entitlement to liquidated damages to arise. Probuild successfully argued that the adjudicator’s construction of the liquidated damages clause was incorrect and constituted an error of law on the face of the record.

In assessing its jurisdiction to quash the determination of an adjudicator, the Court considered the jurisdiction granted to it by the Supreme Court Act 1970 (NSW). The Court distinguished the New South Wales Court of Appeal’s decision in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421, which confined judicial review of adjudication determinations to circumstances where the adjudicator failed to consider an essential requirement of the BCISPA. In Brodyn, the Court noted that the objective of the BCISPA appeared strongly against judicial review of adjudication determinations on the basis of non-jurisdictional error.

In Probuild, the Court determined that although the Court of Appeal in Brodyn had addressed the availability of judicial review in relation to adjudication determinations, those comments were obiter dicta and therefore the question remained open for the Court to consider. The Court considered that:

  • section 69 of the Supreme Court Act provides the Court with jurisdiction to quash any determination that has been made on the basis of an error of law on the face of the record;
  • adjudication under the BCISPA involves the exercise of a statutory power conferred by legislation, and therefore a determination by an adjudicator that contains an error of law, whether jurisdictional or non-jurisdictional, is amenable to judicial review pursuant to section 69 of the Supreme Court Act; and
  • the only exception would be if there was a clear legislative intention, by way of express words in the BCISPA, to exclude the availability of judicial review in respect of non-jurisdictional error.

The Court held that the BCISPA does not expressly exclude judicial review of an adjudicator’s determination, and therefore no limitations on the Court’s jurisdiction can be inferred. Further, the Court stated that a provision conferring jurisdiction on or granting powers to a court should not be construed by implying or imposing limitations that are not found in the express words of the provisions.

Accordingly, the Court decided that it had jurisdiction to grant relief by way of judicial review in respect of the adjudicator’s non-jurisdictional error.

Impact on Queensland

In Queensland, the Judicial Review Act 1991 (Qld) (JR Act) is the mechanism that is typically used to appeal administrative and judicial decisions. Unlike the commensurate New South Wales legislation, section 18(2) of the JR Act provides that adjudication decisions rendered under the BCIPA are not reviewable pursuant to the JR Act.

Instead, in Queensland the Court has jurisdiction to exercise alternative means of reviewing jurisdictional errors that arise in adjudication decisions by:

  • making declaratory orders without granting any relief as a result of making the order, pursuant to section 10 of the Civil Proceedings Act 2011 (Qld); or
  • exercising its inherent supervisory jurisdiction. The Constitution of Queensland provides the Supreme Court with all of the jurisdiction necessary for the administration of justice in Queensland. The High Court in Kirk v Industrial Court (NSW) (2010) 239 CLR 531 determined that no legislative instrument can take away the Supreme Court’s power to grant relief on account of jurisdictional error.

The decision in Probuild turned on the basis of the New South Wales statutory regime which affords the Court wide jurisdiction to exercise judicial review, including in respect of non-jurisdictional errors in adjudication determinations. The equivalent statutory regime in Queensland expressly excludes judicial review of adjudication decisions made under the BCIPA. Although the Queensland Courts have separate statutory and inherent powers in respect of judicial review of jurisdictional errors, these powers do not extend to judicial review of non-jurisdictional errors of law.

Implications

Previously, the circumstances under which New South Wales adjudication determinations could be reviewed and quashed by the Court were limited to jurisdictional grounds. Probuild now suggests that the Court in New South Wales has jurisdiction to review adjudication determinations with respect to all errors of law, both jurisdictional and non-jurisdictional.

It is anticipated that by virtue of Probuild, the number of adjudication determinations that are now the subject of challenge and judicial review in New South Wales will increase. Contracting parties should be aware of the heightened possibility of judicial review and of the potential for increased costs in dealing with the judicial review proceedings.

However, the decision in Probuild is unlikely to widen the scope of judicial review of adjudication determinations for Queensland, which remains limited to errors that go to jurisdiction.

Written by:
Andrew Kelly | Partner | +61 7 3338 7550 | akelly@tglaw.com.au
Christopher Collins | Senior Associate | +61 7 3338 7553 | ccollins@tglaw.com.au
Tarin Olsen | Lawyer | +61 7 3338 7583 | tolsen@tglaw.com.au