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In Sugar Australia Pty Ltd v Southern Ocean Pty Ltd & Anor [2013] VSC 535 (Vickery J), Justice Vickery, the Supreme Court of Victoria Judge in Charge of the Technology, Engineering and Construction List was invalid. His Honour discussed, in detail, earlier decisions of the courts in relation to jurisdictional error, concluding that it was open to a court in considering an application for judicial review to consider the findings of fact made by the adjudicator as to the validity of the Payment Claims in the circumstances of this case which include allegations of misleading conduct and fraud which are pressed by the applicant for relief by way of certiorari. His Honour said, at paragraphs 113-115:
113. For the purposes of s 18 of the Victorian Act,[67] it appears to me that the elements of the section which serve to confer jurisdiction on an adjudicator to make a valid determination under s 23, on the proper construction of the Act, do not permit the adjudicator to finally determine the validity of the adjudication application.[68] If there be any challenge to the jurisdiction assumed by the adjudicator it must finally determined on the basis of facts found by the Court on judicial review, in the course of determining whether a jurisdictional error has been exposed which calls for the exercise of the Court’s discretion to grant relief in the nature of certiorari and, if necessary, mandamus. The Court may grant relief on such relevant evidence as may be adduced before it, whether or not such evidence was before the adjudicator at first instance. Further, the Court may grant such relief without regard to any determination which may have been made on the issue of jurisdiction by the adjudicator. The Court is obliged to arrive at its own conclusion as to jurisdiction based on the law and on the facts as found by it.
114. This is not to say that an adjudicator should not make any findings of fact or rulings on law if a question of jurisdiction is raised in the course of determining an adjudication application. Clearly if an adjudicator is presented with material or submissions which bring into question the jurisdiction of the adjudicator, he or she should determine the question and give reasons for the findings of fact or rulings on law. If however the adjudicator’s decision on jurisdiction is challenged in Court on judicial review, the Court may deal with the matter afresh and receive additional evidence on the matter if the additional evidence is relevant to the determination of the question.
115. To the extent that anything inconsistent with this conclusion appears in paragraphs [115]-[116] of Grocon,[69] in the light of the later reasoning of the High Court in Kirk and of the New South Wales Court of Appeal which followed it in Chase Oyster Bar, I do not follow my earlier ruling.
In Jotham Property Holdings Pty Ltd v Cooperative Builders Pty Ltd & ors [2013] VSC 552 (Vickery J), Justice Vickery, the Supreme Court of Victoria Judge in Charge of the Technology, Engineering and Construction List, was considering whether an adjudication determination was invalid on the grounds that the particular payment claims were served multiple times, in breach of Section 14(8). His Honour held that the payment claim, the subject of the adjudication, had been the subject of an earlier payment claim. Pursuant to Section 14(8), a further payment claim may not be made for the same [progress payment] reference date under the construction contract. His Honour rejected the claimant’s argument that, pursuant to Section 14(9), if a previous payment claim had not been made, it could be claimed afresh pursuant to Section 14(9). His Honour concluded:
On a plain reading s 14(9) provides that, if another and earlier payment claim has been made, but the amount of that earlier claim has not been paid, the unpaid amount may be included in a later and different payment claim which covers different construction work or the supply of different goods and services, calculated by reference to a different reference date under the construction contract.
His Honour preferred this interpretation on the basis that this construction was consistent with Section 14(8), whereas the the claimant’s argument would render Section 14(8) otiose, and further that this construction of Section 14(8) and 14(9) was consistent with the purpose of the Act.
His Honour concluded that the payment claim was invalid.
In Laing O’Rourke Australia Construction v H&M Engineering & Construction [2010] NSWSC 818 (28 July 2010), the Supreme Court of New South Wales affirmed the requirement for adjudicators to act in good faith and to provide natural justice by properly considering all of the material before them when making determinations under the Building and Construction Industry Security of Payment Act 1999 (NSW). Emphasis was placed on the importance of parties to provide relevant and material documents such as statutory declarations or expert reports in support of their submissions, as these should be considered by adjudicators when making their determination. The Court also indicated that it is possible, and appropriate, to include additional documentary evidence in an adjudication response which expands on and supports the reasons set out in the payment schedule.
In Chase Oyster Bar Pty Ltd v Hamo Industries Pty LTD [2010] NSWCA 190 (24 September 2010), the NSW Court of Appeal was considering the validity of an adjudicator’s determination of an application which did not comply with section 17(2)(a), (claimant’s duty to notify intention to apply for adjudication within 20 days after due date for payment). This requirement had not been identified by Hodgson J as a “basic and essential requirement” in Brodyn. The Court of Appeal concluded that the failure to comply with Section 17(2)(a) resulted in a jurisdictional error, and was therefore invalid. (This seemingly extends the range of matters that, following Brodyn, would be sufficient for a determination to be invalid.)
In Seabay Properties Pty Ltd v Galvin Properties Pty [2011] VSC 183, the Judge in charge of the Technology and Construction List, Vickery J, was considering, among other things, whether liquidated damages were to taken into account by an adjudicator in determining the amount payable under a payment claim. His Honour concluded in this respect:
…. In my opinion, the Adjudicator was correct in determining that Seabay’s claim for liquidated damages against Galvin should have been treated as an “excluded amount” and excluded from the adjudication determination made in relation to Galvin’s Payment Claim ….. claimed under the Act.
In Director of Housing of State of Victoria v StructX Pty Ltd (trading as Bizibuilders) [2011] VSC 410, Vickery J (the Judge in Charge of the Technology and Construction List) was considering an adjudication determination and the meaning of “in the business of building residences”.
“Structx” was a builder, constructing homes in Hamilton, for the Director of Housing of the State of Victoria. The Director sought to have the determination quashed on the grounds that :
1. the relevant contract was a domestic building contract and the Director was/is not in the business of building residences (Section 7(2)(c) of the Act);
2. the adjudicator erred in finding that there was no Payment Schedule (on the basis, contested by the Director) that the Superintendent’s Representative lacked authority to issue payment schedules;
3. the adjudicator erred in finding that the Payment Schedule had to be in the form prescribed by the contract (Section 15(2)(d) of the Act).
The Contract was an amended AS2124 General Conditions of Contract form of contract.
His Honour concluded:
1. (Referring to his earlier decision in Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) ), where His Honour had said:
They [adjudicators appointed under the Act] are clothed with legal authority to make a binding determination for the purposes of the Act which affect the statutory rights or obligations of persons or individuals who are claimants for progress payments under the Act or who are respondents to such claims.
His Honour concluded, at paragraphs 17-19:
As such they are amendable to certioriari. However, an adjudicator appointed under the Act does not constitute an inferior court within the court hierarchy…..
As observed in Craig, an adjudicator is therefore exposed to fall into jurisdictional error in a broader range of circumstances than a court.
In the present case, I do not consider that the exception provided by s 7(2)(b) of the Act was intended to confer on an adjudicator the power to decide jurisdiction founded on questions of law or mixed questions of law and fact, which includes the power to decide the question wrongly, without attracting prerogative relief.
Accordingly, the adjudicator’s decision in this respect was/is open to certiorari. His Honour then went on to conclude that the Director was not “in the business of building residences” within the meaning of s 7(2)(b) of the Act, and for this reason the proviso did not operate to exempt the Construction Contract from the operation of the Act. In this respect, the adjudicator erred, and certiorari could be issued.
2. As to the adjudicator’s determination that the Superintendent’s Representative lacked authority to issue payment schedules, His Honour concluded that the purpose of the letter containing the Director’s delegation of authority (relied on by builder as not giving that authority, and accepted by the adjudicator) was to nominate a Superintendent’s Representative for the purposes of the Construction Contract, not the Act, it did not purport to limit the Director’s delegation of authority to the matters set out, nor was it evidence that the architect did not have authority to issue a payment schedule under the Act. In this respect, the adjudicator erred, and certiorari could be issued.
3. The Adjudicator also found that the payment schedule was invalid, because it was not in any prescribed form. Section 15(2)(d) of the Act provides that a payment schedule “must be in the relevant prescribed form (if any)”, however, there are no forms for payment schedules prescribed by regulation. The Adjudicator fell into further error on the face of the record, and on this ground certiorari should also issue.
4. In failing to take into account the payment schedule and the Director’s submissions founded upon it, as required by s 23(2)(d), the Adjudicator fell into further error on the face of the record, and certiorari should issue on this ground.
5. Further, in failing to take into account the payment schedule and the Director’s submissions founded upon it, the Adjudicator did not afford procedural fairness to the Director. This amounted a substantial denial of the measure of procedural fairness required under the Act. On this ground too, an order in the nature of certiorari should be made.
His Honour then considered jurisdictional error, discussed by the High Court in Craig v South Australia, and more recently in Kirk v Industrial Court (NSW). His Honour concluded that the authority of the Supreme Court to quash an adjudication determination where jurisdictional error has occurred has been reinforced by Kirk.
His Honour quashed the adjudication determination (and made the declaration sought by the Director to the effect that the Director is not in the business of building residences within the meaning of s 7(2)(b) of the Act).
In Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2011] VSC 477 (23 September 2011), His Honour Mr Justice Macaulay was considering, among other things, whether documents brought into existence for the purpose of an adjudication under the Building and Construction Industry Security of Payments Act 2002 (Vic) could attract litigation privilege. His Honour considered whether the statutory adjudication process was an “Australian proceeding” for the purposes of Section 119 of the Evidence Act 2008 (Vic)., and concluded that he should prefer a wider interpretation of the words. At paragraphs 48-50:
48 I agree …… that, because an adjudicator is not bound to apply the laws of evidence, such a person does not qualify as an ’Australian court‘ on that basis. But, is an adjudicator authorised by the Security of Payment Act to ‘hear, receive and examine evidence’? In considering whether, as a matter of statutory interpretation an adjudicator meets that description I am to prefer a construction that promotes the purpose or object of the Evidence Act……… Assuming, as I do, that the regime of privilege is intended to ensure fairness between participants in the conduct of litigious processes, I would not give that expression a narrow meaning …..
49 The adjudication occurs in a patently adversarial setting. It is determined upon the basis of evidence presented in documentary form, and upon written submissions. …… Despite the fact that the adjudication may not ultimately determine the parties’ rights if, in a subsequent court proceeding, the parties’ entitlements are litigated, the adjudication result is enforceable at law and is binding upon the parties unless and until a subsequent court order changes that outcome. I think that the nature of adjudications is such that preserving the confidentiality of communications, made for the dominant purpose of enabling the provision of legal services to participants in the adjudication, would promote the object of fairness for and between those participants.
50 Bearing those matters in mind, I conclude that the provisions of the Act I have summarised above do authorise the adjudicator to ‘hear, receive and examine evidence’ as I would construe that expression. I therefore construe the definition of ‘Australian court’ to embrace an adjudicator under the Security of Payments Act and an adjudication as an ‘Australian proceeding’ within the meaning of s119 of the Evidence Act.
