Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2)
[2021] ACTSC 296
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 2) |
Citation: | [2021] ACTSC 296 |
Hearing Date: | 30 August 2021 |
DecisionDate: | 19 November 2021 |
Before: | Mossop J |
Decision: | See [117] |
Catchwords: | BUILDING AND CONSTRUCTION – SECURITY OF PAYMENT – Building and Construction Industry (Security of Payment) Act 2009 (ACT) – challenge to adjudicator’s decision – application for prerogative relief – application of the doctrine of issue estoppel – where the adjudicator erred in the scope and effect of s 24(4) of the Act ESTOPPEL – ISSUE ESTOPPEL – Application of issue estoppel to adjudication decisions is limited – issue estoppel is not generally applicable between adjudications ADMINISTRATIVE LAW – JURISDICTIONAL ERROR – Where application of issue estoppel gives rise to a jurisdictional error – error of law on the face of the record established – jurisdictional error a material one |
Legislation Cited: | Australian Capital Territory (Self-Government) Act 1988 (Cth), ss 28, 48A Building and Construction Industry (Security of Payment) Act 2009 (ACT), ss 8(1)(b)(iii), 10, 15, 24, 25, 27, 28, 38, 43(1) Supreme Court Act 1970 (NSW), s 69 |
Cases Cited: | AE & E Australia Pty Ltd v Stowe Australia Pty Ltd [2010] QSC 135 Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd [2021] ACTSC 166 Watpac Constructions v Austin Corp [2010] NSWSC 168 |
Parties: | Beno Excavations Pty Ltd t/as Benex Pipelines ( Plaintiff) Harlech Enterprises Pty Ltd atf Harlech Family Trust (First Defendant) Jonathan H Sive (Second Defendant) |
Representation: | Counsel J Moffett ( Plaintiff) A Greinke (First Defendant) |
| Solicitors BAL Lawyers ( Plaintiff) Mills Oakley (First Defendant) | |
File Number: | SC 206 of 2021 |
MOSSOP J:
Introduction
This is an application for prerogative relief directed to a decision of an adjudicator under the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (SOP Act) made on 17 March 2021. The plaintiff was granted an extension of time in which to bring the proceedings and a condition of that grant was that the grounds of challenge to the adjudicator’s decision were limited to the adjudicator’s interpretation of the operation of s 24(4) of the SOP Act and issue estoppel: see Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd [2021] ACTSC 166 (Beno Excavations (No 1)).
The plaintiff, Beno Excavations Pty Ltd (Beno), is a civil contracting company. The first defendant, Harlech Enterprises Pty Ltd (Harlech), was the vehicle through which its director, Benjamin Moseley, was engaged to be the general manager of Beno. Although the contractual basis for this arrangement was contested, in a general sense the arrangement continued from 2017 until 2020.
Following the end of the arrangement, Harlech made a payment claim under the SOP Act upon Beno, claiming some $60,153.23 said to have arisen under a “construction contract” between the parties. Beno provided a payment schedule which identified that the amount it would pay in response to the payment claim was nil. This was subject to an adjudication by the second defendant, Jonathan Sive (the adjudicator), who determined that the full amount claimed by Harlech was payable.
Following that adjudication (and as a result of what was said by the adjudicator in his decision) Harlech served two further payment claims for substantially larger amounts ($151,419.84 and $452,185.80) in relation to work which was undertaken in 2017 and 2018. Beno served a payment schedule indicating that the amount it would pay was nil. The two payment claims were then subject to a second adjudication which happened to be before the same adjudicator. The second adjudication decision determined that almost the total amount claimed by Harlech was payable by Beno. An adjudication certificate was filed pursuant to s 27(1) of the SOP Act and became a judgment of the court. This was partially satisfied as a result of the operation of a garnishee order.
As confined by the conditions upon the grant of an extension of time to bring proceedings for an order in the nature of certiorari in relation to the second adjudication decision, the grounds of challenge are that the second defendant:
(a)incorrectly and impermissibly applied the doctrine of issue estoppel precluding the plaintiff from advancing arguments in the second adjudication; and
(b)incorrectly and impermissibly applied and expanded the scope of s 24(4) of the SOP Act so that it extended to and included the methodology applied in the first adjudication decision.
The adjudicator filed a submitting appearance. Curiously, it was in the form of document entitled “Memorandum of Consent [to] Jurisdiction of the Court” (a document not contemplated by the Court Procedures Rules 2006 (ACT)) of some 13 pages. I was asked by the plaintiff not to consider the terms of that document and have not.
Overview of the dispute and adjudications
The first payment claim
Harlech sent a tax invoice dated 14 October 2020 to Beno claiming $60,153.23. This claim was based upon an entitlement to 15 per cent of the profit of a project identified as “EVO CDC Hume”. The claim was said to relate to “Consulting & Management Services”. The invoice identified that what was being sought was the balance outstanding after $90,000 of the $144,684.75 owing had been paid.
The first payment schedule
The plaintiff provided a payment schedule dated 26 November 2020. That identified that the amount owing was nil. It provided the following reasons for non-payment:
Reason for non-payment of amount shown in payment claim
1. There was no construction contract in place with the claimant
2. There was no agreement implied or otherwise to pay instalments
3. The Act has no application to the agreement in place between the claimant and Beno Excavations P/L
4. The Claimant was [paid] for management and consulting services provided by Mr Benjamin Moseley who was personally designated and responsible for being the General Manager for Beno Excavations P/L
5. If the Act does apply (which is denied) the figures used by the claimant are not correct, and there was no agreement at the relevant time to profit share.
The first adjudication application
The defendant made an application for adjudication dated 11 December 2020. Leaving aside formal parts, the application said:
From March 2017 through to February 2020, my Company Harlech, was engaged as a Project Manager, Construction Manager, General Manager and Consultant for the Respondent Beno Excavations Pty Ltd.
The arrangement was simply $80/hour + a minimum of 15% of the Gross Profit in the projects that I worked on.
I resigned from the role and arrangement at the end of February 2020.
There is a total of 3 invoices that are outstanding;
Tax Invoice # 20200930 - $60,153.23
Tax Invoice # 20200929 - $151,419.84
Tax Invoice # 20200928 - $452,185.80As the Tax Invoices ending in 28 & 29 relate to works completed longer than 12 months ago, I have been advised to pursue these through the ACT Court System.
Invoice # 20200930 relates to works completed and invoiced within the last 12 months, therefore am able to apply for through the SOPA.
Please find attached -
Payment Claim
Section 19(2)a Notice
Payment Schedule
Adjudication Application
Examples of previous claim and payments made relating to this and other projects
The Contract pertaining to the Project subject of the Claim
Background and supporting information
Amongst the supporting information was a document purporting to outline the profit and loss from the project the subject of the claim. It indicated that the gross profit was $964,565, 15 per cent of which was $144,684.75. It also recorded that $90,000 had been claimed on 20 December 2019 and paid on that day. It therefore said that the balance owing was $54,684.75. The tax invoice added to that an amount of GST of $5468.48 giving the total claimed as part of the adjudication of $60,153.23.
The adjudication response dated 21 December 2020 was provided by the plaintiff and signed by its director. The substance of the response was as follows:
Beno Excavations Pty Ltd trading as Benex Pipelines engaged Benjamin Moseley (Claimant) in March 2017. The Claimant was not engaged in “Construction work” or providing “related goods and services.” At the time of his leaving, Mr Moseley was the Respondent’s General Manager. He requested that his services be paid to his company Harlech Enterprises Pty Ltd. He was paid holiday pay. The Applicant stands in the shoes of Mr Moseley. There was not a project by project engagement of Mr Moseley. He was retained by the Respondent on a full-time basis to act in the interests of the Respondent, as its General Manager. His functions for the Respondent did not include consultancy or advisory roles, outside of those expected of a general [manager]. He was paid an hourly rate for work full time for the respondent.
Mr Moseley without notice terminated his services as General Manager on 3 March 2020. His sudden and unannounced departure was an embarrassment for the Respondent causing the Respondent to suffer financially. While being paid full time by the Respondent, Mr Moseley was unknown to us, a director of a company and which company invoiced twice, a client of the Respondent’s for work done by the Respondent. If Mr Moseley was to be paid a % of gross profit (which is not admitted), it was only to occur if Mr Moseley acted in the interests of the Respondent. Any arrangement to pay a % of gross profit was terminated when Mr Moseley breached those obligations to the Respondent, which he did for example, when he became that director and issued the mentioned invoices.
We refer particularly to sections 6,7,8,9,10,11,13 and 15 of the Act, and submit that the Claimant does not come within the jurisdiction of the Act. In the abundance of clarity, we nevertheless attached documents relevant to this claim.
The Claimant has wrongfully retained possession of the Respondent’s items and equipment namely- Benex Laptop, Benex office keys with gate remote, Benex iPhone, Paslo gas nail gun and Drop saw. We would like these items returned as we have stated many times.
As we believe the Claimant has no case, we ask the Adjudicator to invoice the Claimant and for the Claimant to pay all adjudication fees.
Attached to the response was a document outlining the income and expenses on the job and comparing the expenses with those identified by Mr Moseley. The document showed expenses considerably higher than those identified by the claimant and hence a lower gross profit.
The adjudicator’s first decision
The adjudicator gave his decision on 7 January 2021. Two features of the decision should be noted.
First, the parties manifestly failed to provide the adjudicator with proper assistance. The substance of the claim and response is set out above. The variety of contractual and factual issues which necessarily arose from the claim and the response were not the subject of submissions. The parties, apparently acting without legal assistance, left the identification and resolution of relevant issues to the adjudicator. This necessarily meant that the adjudicator’s task was more difficult than it might otherwise have been.
Second, the reasons of the adjudicator are unnecessarily long, repetitious and do not involve a clear structure. They extend over 46 pages. Their drafting is idiosyncratic.
The reasoning of the adjudicator may be summarised as follows:
(a)Project management services were within the scope of the definition of construction work because that fell within the scope of “building … advisory services in relation to construction work” within the meaning of s 8(1)(b)(iii) of the SOP Act: [27].
(b)The contract was a construction contract and not a contract of employment: [31].
(c)Because neither party provided any meaningful discussion of the facts and circumstances surrounding Mr Moseley’s resignation, the record showed that the contract between the parties “is in a state of suspension” and “still on foot”: [31](b)(IV) and [45].
(d)The assertions by Beno that Mr Moseley had double claimed amounts could have been proved by records but were not and for that reason not accepted: [45](d). The claims of double claiming, unannounced termination and injury to Beno were not included in the payment schedule: [46].
(e)Beno had made payments of bonuses in the past which were documented and had not directly challenged the payment of the bonus for this project other than by raising the circumstances of termination: [49]. It had in fact part-paid the 15 per cent owing on 20 December 2019: [49](d).
(f)Under the relevant construction contract, two milestones were identified. It could be presumed that they had been reached: [49](f)-(g).
(g)Additional costs included in Beno’s materials were not permitted to be included in the bonus calculation: [49](k). The adjudicator was not prepared to treat Beno’s figures as reliable in the circumstances: [49](I)-(o).
(h)The nature of the arrangement between the parties was a long-term standing agreement: [54], [69], [76], which covered any project which Beno elected to instruct Harlech to perform construction management services for the respondent: [70].
(i)Because the contract was a long-standing one, Harlech was mistaken in relation to the two unclaimed invoices that were identified by Harlech as being outside the 12-month period: [72], [77].
(j)The contract was not terminated but instead “ran its contemplated course”: [80] with Mr Moseley departing from the job voluntarily after performance of work: [81]. The work was “practically complete” on 3 March 2020 when Mr Moseley resigned: [84].
The conclusion reached by the adjudicator was that the value of the payment claim was that identified by Harlech, namely $60,153.23. He identified that Beno was to pay 100 per cent of the adjudicator’s fees.
It is clear that the adjudicator undertook a detailed examination of the material with which he was provided. He did so in the absence of almost any assistance from the parties. The conclusions reached went beyond the contentions of the parties. Many of the conclusions reached by the adjudicator arose because the respondent, who had the capacity to provide evidence to support its assertions, had failed to do so.
Spurred on by its success and the reasoning of the adjudicator, on 5 February 2021 Harlech resubmitted the two invoices which had previously been withdrawn. Those invoices were:
(a)a claim (tax invoice # 20200929) for a total of $151,419.84 being 15 per cent profit on a project identified as “Icon Water CX-13” between March 2017 and June 2017; and
(b)a claim (tax invoice # 20200928) for a total of $452,185.80 being 15 per cent of the profit on an Icon Water project identified as “Icon Water CX-14” from November 2017 through to June 2018.
The second payment schedule
Notwithstanding the outcome of the earlier adjudication, Beno, apparently acting without the benefit of legal advice, adopted much the same approach that it had in relation to the earlier payment claim. It provided a payment schedule dated 19 February 2021 which identified the amount payable as nil in relation to both claims. The substance of the reasons were:
Reason for non-payment of amounts shown in payment claim:
1. There was no construction contract in place with the claimant.
2. There was no agreement implied or otherwise to pay instalments.
3. The Act has no applications to the agreement in place between the claimant and Beno Excavations P/L
4. The claimant was paid for management and consulting services provided by Mr Benjamin Moseley who was personally designated and responsible for being the General Manager for Beno Excavations P/L
5. If the Act does apply (which is denied) the figures used by the claimant are not correct, and there was no agreement at the relevant time to profit share.
6. These claims have come after Mr Moseley had left Benex Pipelines employment, he left in March 2020 with no notice. Works were done in 2017- 2018.
7. Mr Moseley employment commenced with Benex Pipelines on 15th March 2017 as our Construction Manager, as he had no experience in the Trenchless Industry, Mr Mosley had to learn on the job, and familiarise himself with services Benex provided to ICON Water. Mr Moseley had walked into the ongoing project of Icon Water CX-13. There was no agreement implied or otherwise for Mr Moseley to receive any type of profit for either Icon Water CX-13 or Icon Water CX-14.
For these reasons, the Respondent proposes to pay $NIL to the Claimant in respect of the payment claims, being Invoice 20200928 and Invoice 20200929.
Reasons 1 to 5 are the same as were provided with the earlier payment schedule. Reasons 6 and 7 are new.
The second adjudication application
By an application dated 24 February 2021 Harlech made an application for adjudication. The terms of the application made it clear that the application was made only because of the encouragement given by the earlier adjudication decision. It provided:
I was initially advised that as the claims ending in 28 & 29 relate to works completed longer than 12 months ago, I was not able to claim these amounts under the SOPA Act, Mr Johnathan H Sive advised in his adjudication determination that the claims could be claimed under the Act.
Provided with the adjudication application was the earlier adjudication decision. This time, submissions were provided along with documents to support the calculations in the claim. The submissions addressed each of the seven points made in the payment schedule.
The second adjudication response
Submissions were provided by a solicitor acting for Beno. Provided with those submissions was an email dated 10 September 2019 in which Mr Moseley was said to have resigned with effect from 27 September 2019. The submissions asserted that Beno subsequently engaged the applicant for further work on an ad hoc basis pursuant to a separate arrangement.
Beno submitted that the “Consulting & Management Services” were not “related goods and services” under the Act but that in any event the claim was outside the 12-month period after those services were last supplied because the relevant invoices identify the end dates as being June 2017 and June 2018 respectively. Alternatively, if time began to run at the end of the overall arrangement, then it expired on 27 September 2020, 12 months from the end of the termination on 27 September 2019.
The submissions identified that Beno relied upon reasons 2, 5, 6 and 7 from its payment schedule. Beno submitted that the applicant provided no evidence in support of its claim concerning the nature of the arrangement between it and the respondent, its claim that it worked on the Icon Water projects or the basis on which any profit was calculated. Beno submitted that it did not accept that any payments made to the applicant in 2019 were representative of any arrangement in respect of the Icon Water projects. It submitted that there was no evidence that there were agreed terms that Beno would pay the claimant a share of the profit on any Icon Water projects.
It submitted that notwithstanding the reasons given in the previous adjudication there was no evidence in this application that any arrangement between the parties extended up until 3 March 2020.
It submitted that the applicant had not provided evidence of his resignation at the end of February 2020. The only material provided was the email dated 10 September 2019.
The submissions also addressed what it said was the lack of coherent documentation or evidence on critical points.
The adjudicator’s second decision
The adjudicator gave his decision on 5 March 2021.
The reasons of the adjudicator suffer from the same defects as the earlier reasons insofar as they are prolix and the structure of the reasoning is not straightforward. Additionally, they contain unnecessary and unhelpful commentary that was pointed out in my earlier reasons: see Beno Excavations (No 1) at [5].
The reasons must be understood in a context in which the parties have provided to the adjudicator very little assistance, most particularly in relation to the factual history of the dealings between the parties. Although, on this occasion, the respondent provided written submissions prepared by a lawyer in response to the adjudication application, those submissions were significantly constrained by the scope of the matters raised in the payment schedule. A theme in the adjudicator’s reasons is the capacity that the respondent had to put forward evidence that would provide a factual basis for contradicting the claimant’s claim or supporting the respondent’s contentions and the failure of the respondent to do so.
Because of the convoluted nature of the reasons and the competing contentions of the parties as to the significance of errors within those reasons, it is, unfortunately, necessary to describe them in some detail.
The decision first identifies the outcome of the case.
There is then a lengthy section under the heading “Background”. After some introductory commentary, the adjudicator says that of the seven reasons provided by Beno in the payment schedule, all but one are the same reasons presented in the previous proceeding. This appears to be on the basis that reasons 1 to 5 are identical and the substance of item 6 was raised as part of the adjudication response in the previous adjudication. The adjudicator makes reference to Beno’s reliance on the decision in LaingO’Rourke Australia Construction Pty Ltd v Monford Group Pty Ltd [2018] NSWSC 491 (Laing O’Rourke) despite there being no evidence to support reasons in the payment schedule. The adjudicator then continued:
Reasons 1 to 6 of the payment schedule are the same issues decided in the Previous Decision. I am unable to agree with the respondent’s suggestions made in the adjudication response. The principle of “issue estoppel” applies.
The adjudicator then continued:
7.Although a decision made under the Act represents an interim decision about a progress payment, the case authorities consider the issues decided in the adjudication of a payment claim to be finally decided on an interim basis. J Hutchison Pty Ltd v Galform Pty Ltd and Ors [2008] QSC 205 and Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69 are authorities from different jurisdictions that discuss the impacts and consequences of res judicata and issue estoppel when a previous decision has resolved the same issue being presented to a new adjudicator. I am satisfied that no submission could have been made that would produce a different result with respect to matters previously decided. The procedural risk of an adjudicator electing not to request further submissions exists essentially in this issue to be decided, especially here since the respondent elected to resubmit verbatim the same reasons that were previously decided against the respondent.
(Emphasis added.)
The emphasised portion of this passage is difficult to understand.
While the adjudicator then went on to refer to the standing agreement that he had described in the previous decision, he also referred to the admission by Beno that at the relevant time in 2017 and 2018 the claimant was engaged by Beno as a general manager and the agreement was largely oral but otherwise established by conduct.
He then addressed the contention that the contract was a contract of employment, referring to the previous decision and his conclusion that the contract was a construction contract for the purposes of the Act and that it was in “a state of suspension”. He rejected the submissions made in the adjudication response (which related to termination of the agreement in September 2019, the submission that there was no construction contract and that goods were last supplied at the end date of the relevant invoice).
The adjudicator referred to the lack of evidence provided by Beno, concluding: “The respondent provides no evidence at all to displace or reconsider the conclusion reached in the Previous Decision.”
He referred to Beno’s submission as to whether project management services were captured by the definition of related goods and services in s 8 of the SOP Act, including “The respondent’s attempt to reagitate these issues in this proceeding is contrary to the intent of the Act and is precluded by the principles of issue estoppel.” A footnote referred to the decision in DualcorpPty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69; 74 NSWLR 190 (Dualcorp).
He then recapitulated his theory about the nature of the contractual arrangement between the parties being an ongoing one which “contemplated numerous referrals of projects and construction contracts between the respondent and a contracting party to be managed by the claimant under the services agreement”.
He then referred to the terms of s 24 of the SOP Act and said:
The underlying policy of section 24 of the Act prevents repetitious re-agitation of the same issues in a previous matter where the previous adjudicator decided the value of performance under the same construction contract involving one party undertaking to carry out construction work, or to supply related goods and services, for another party.
The adjudicator then engaged in a long discussion of the provisions of the SOP Act, making reference to the decision of Chesterman J in J Hutchinson Pty Ltd v Galform Pty Ltd & Ors [2008] QSC 205 (Galform) which included a passage in which his Honour said “There can, I think, be no doubt that an adjudication giving rise to a judgment does give rise to a res judicata and, indeed, issue estoppel”. He identified that in Galform, the claimant sought to re-agitate a claim finally decided and said:
Unlike the claim in Galform, the claim in this proceeding is not based on the same transaction that was at issue in [the previous adjudication]. The respondent agrees but otherwise suggests a changed circumstances that requires a review under section 24 (4) (b) of the Act.
At [38] the adjudicator said: “The claimant is not attempting to reagitate the same cause of action. However, the same cannot be said for the respondent.”
The adjudicator then set out the items in the respective payment schedules. He indicated that he rejected item 7, which related to the situation that existed at the commencement of the claimant’s employment because he was not persuaded that the claimant would have agreed to work without determining the terms upon which he was working.
He then said that reasons 1 to 6 were no different from the matters raised in the previous proceeding, with reason number 6 being raised in the previous adjudication response. He continued: “The issues raised arise under the same agreement but relate to different transactions. The issues raised by the respondent attempt to reagitate issues of fact that have been decided in [the previous determination].”
He then referred to the distinction between an agreement for project management services confined to one construction contract and one for ongoing services performed in relation to several construction contracts. He referred to the claimant having presented evidence that there was an arrangement in June 2018 that permitted the respondent to retain all profit in order to restructure its balance sheet and the absence of dispute or evidence from the respondent to contradict that. He therefore concluded that the time bar under s 15(4)(b) of the SOP Act did not apply to the payment claim.
The adjudicator then went on to further discuss his view of the nature of the agreement. At [46] he continued:
46. The issue is not, as submitted by the respondent, whether “material … provided to the Adjudicator in a separate adjudication application does not fall within the ambit of section 24(2) of the Act and, as such, should not be considered by the Adjudicator”. The issue to be resolved is found in s 24 (4) of the Act and requires a review to decide whether the findings made in the Previous Decision are subject to determining whether a claimant or respondent satisfies the adjudicator that the methodology used to calculate the value of the work or the related goods and services has changed since the Previous Decision thereby displacing the presumptions permitted to flow from the Previous Decision. It is only on a showing of changed circumstances that section 24 (4) (b) of the Act permits the subsequent adjudicator to decide a different value to the value decided by the adjudicator in the Previous Decision.
47. I do not disagree with the respondent’s submission that “Whatever material was provided to the Adjudicator in a separate adjudication application does not fall within the ambit of section 24(2) of the Act”. However, the first of several determinative factors overlooked by the respondent in making this submission is that I rendered findings of fact to support the ultimate decision made in the Previous Decision.
48. In arriving at the Adjudicated Amount under section 24 (1) of the Act, I had to determine whether substantial evidence supported a position advanced by a party and whether the findings made in this regard supported the conclusion that all applicable contractual and legislative requirements to arrive at the decision had been satisfied. In arriving at the Adjudicated Amount under section 24 (1) of the Act, I was satisfied that there was sufficient evidence to support the administrative findings made under section 24 (2) of the Act to arrive at the Decision made under section 24 (1) of the Act.
49. The Previous Decision, which is 46 pages in length, engaged in an exhaustive review of the facts and evidence. In the Previous Decision, I was satisfied that sufficient evidence had been adduced and that the evidence presented by the parties satisfied the requisites under section 24 (1), namely, to decide the amount of the progress payment to be paid by the respondent to the claimant (the Adjudicated Amount), the day on which the amount became payable, and the rate of interest on the amount.
50. In arriving at the Adjudicated Amount in the Previous Decision, the impacts of the facts and evidence did not remain uncertain as suggested by the respondent in the adjudication response. The fact overlooked by the respondent is that the Previous Decision discusses the evidence and made findings, and these findings supported the decision made under section 24 (1) of the Act. Put another way, the Previous Decision provides an exhaustive review that shows a subsequent adjudicator how the decision is supported by the findings and the findings are supported by the evidence. By focusing on the relationship between the evidence and findings and findings and ultimate decision under section 24 (1) of the Act, I sought to direct the subsequent adjudicator’s attention to the analytic route I travelled from evidence to Adjudicated Amount. Therefore, I revealed the analytic route of my deliberations in this regard and left no room for a subsequent adjudicator to speculate as to my basis for the decision.
51. By exposing the mode of my analysis, the findings made in the Previous Decision constrict and define the scope of the administrative function under section 24 of the Act. A subsequent adjudicator knows what the decision means before the duty to assess whether a changed circumstance is permitted to be considered under section 24 (4) (b) of the Act. Given the express findings made in the Previous Decision and the valuations made under section 12 of the Act, a subsequent adjudicator in a later adjudication involving the valuation methodology used in the Previous Decision or the Supreme Court of New South Wales in a proceeding challenging the validity of the Previous Decision, the subsequent adjudicator or the court can determine whether the findings are supported by the substantial evidence and, in the case of the subsequent adjudicator, whether the findings warrant a review under section 24 (4) (b) of the Act, and, in the case of the court, whether the decision consists of an error that gives rise to the issue of subject matter jurisdiction. The concern of the court here is whether an error of fact or law occurred within the adjudicator’s subject matter jurisdiction or whether an error of fact or law relate to subject matter jurisdiction. Although the respondent has not paid the Adjudicated Amount in the Previous, there is nothing presented by the respondent to show that the respondent has applied to the Supreme Court of New South Wales seeking declaratory relief from the decision made. This is the first factor overlooked by the respondent in its submissions.
The adjudicator then went on to address at length evidentiary burdens which he described as “the burden of persuasion” and “the burden of production” and give an analysis of what he described as the “weight” and “substance” of evidence in an adjudication. He criticised the approach taken to the provision of evidence by the respondent, saying at [58]:
Jumping like a grasshopper from one statement to the next without building an evidentiary foundation that permits an independent assessment of the suggestion being made is problematic for the respondent. This conduct raises the concern of whether information has been intentionally concealed and brings into focus the question of whether the evidence omitted did not exist at all or that the evidence would have been unfavourable to that party.
This concern is illustrated by the lack of evidence provided by the respondent to explain or contradict the statement by the claimant that he had held back from making the present claims because of continual promises of a directorship and partnership and that the funds were left in the business so it could reduce its level of debt for various items.
The adjudicator then addressed the submission that the lack of coherent documentation or evidence meant that the failure by a respondent to rebut it should not be a matter weighing against the respondent. The adjudicator went to some length to distinguish the circumstances from those in Laing O’Rourke. In the context of dealing with that decision the adjudicator said, “The question in this case is whether the respondent acted in a way that shows a groundless attempt to defeat a legitimate progress claim based on a non‑existent dispute.”
The adjudicator then turned back to the operation of s 24 of the SOP Act:
68. Section 24 (4) of the Act is reasonably interpreted to say that new claims or new approaches taken in a subsequent adjudication that closely resemble claims or approaches taken in a previous decision become unreasonable. The claim or approach taken in the subsequent proceeding, whether the same or new, must yield to, or otherwise be excluded by, the prejudicial statutory requirement that same values as previously decided must be followed unless new or additional facts are alleged that satisfies the adjudicator concerned that the value of the work or the methodology used in valuing the performance has changed or should not be followed as in the previous decision.
69. Therefore, once a value has been decided in accordance with section 12 of the Act, section 24 of the Act bars the respondent from raising issues that were part of the considerations used in valuing the claim in a subsequent matter. The respondent is unable to re-agitate issues 1 to 6 simply because these are the same issues considered in [the previous determination].
There is then a heading “Appointment / Service of Application” which addresses those issues. There is then a heading “Material” identifying the material that was provided to the adjudicator. There is then a heading “Subject Matter Jurisdiction” which refers back to the discussion under the heading “Background” and identifies that Beno was the person who is or may be liable to make the payment, that the construction contract was entered into after the commencement of the SOP Act, that the work fell within the scope of “related goods and services” and that the work was performed in the Australian Capital Territory.
Under the heading “Payment Claim” the reasons address the relevant reference date, service of the payment claim, the identification of the construction work or related goods and services, the amount of the progress payment and the endorsement of the payment claim that was made under the SOP Act.
The payment schedule was described under the heading “Payment Schedule” and the adjudication application and response were described under the headings “Adjudication Application” and “Adjudication Response”. There was then a discussion of s 24(2) of the SOP Act under the heading “Statutory Consideration (s.24 (2) of the Act)”.
Under the heading “Contract” the adjudicator recorded that for the reasons given under the heading “Background” and in the Previous Decision, he was satisfied that a project management advisory services agreement was formed between the parties and a construction contract as defined by the Act.
Under the heading “Issues in Dispute” the adjudicator said:
113. The payment schedule sets out the reasons for withholding payment of the payment claim. The payment schedule identifies seven reasons. The first six reasons have been resolved in the Previous Decision and are subject to issue estoppel.
The adjudicator then embarked on the baseball analogy, part of which was set out in the earlier decision: Beno Excavations (No 1) at [5].
From [117] the adjudicator addresses the position between 10 September 2019 and March 2020. This is the period during which Beno said that Harlech must have been operating under a separate contractual agreement because Mr Moseley had, by email dated 10 September 2019, resigned from his position. While continuing the baseball analogy, the adjudicator identified that the outcome might turn on who bore the onus of proof on a particular issue. He then said (at [122]): “However, to discuss reason seven and for the sake of being complete, I must revisit the concern raised by the respondent in reason number six.” He identified that Beno admitted that Harlech subsequently undertook work for Beno in October to December 2019 but that Beno said that this was pursuant to a separate arrangement. The adjudicator said that having regard to the terms of the previous decision a reasonable respondent could identify what was necessary to dispute Harlech’s claim. He said that “[t]he claim that there is an end to one agreement and the beginning of another are statements that ought not to be made lightly unless the evidence speaks for itself”. He referred, with a tone of scepticism, to the proposition that the respondent “somehow forgot about the termination that occurred on 27 September 2019 but remembered when the respondent reviewed the evidence tendered by the claimant in the adjudication application”. He continued at [133]:
An arrangement within an arrangement that sits within an arrangement is a confusing situation. With each twist and turn, a new condition or situation presents itself in a way in which a party runs the risk of being unexpectedly placed to his injury because he was mistaken as to some fact material to an arising duty to respond, without any default or negligence on his own, which ordinary prudence could not have guarded against. Thus, on this submission made by the respondent in the response, the respondent is attempting to show that the requirements under section 24 (4) (b) of the Act have been satisfied and that a changed circumstances occurred to warrant a hard-look review.
The adjudicator then referred to the absence of sworn statements or other evidence to support Beno’s contention. However, notwithstanding this, the adjudicator referred to the submission that the works from October to December 2019 were pursuant to a separate arrangement as having merit and requiring “a hard look at the facts and evidence”. The reasons then reflect a review of the material provided by the claimant which included the resignation email and reach the conclusion that “there was never a meeting of minds in respect of the claimant’s resignation”. The adjudicator did so on the apparent assumption that in order for the resignation to be effective, the conditions identified in the email of 10 September 2019 needed to be satisfied. The adjudicator also referred to the failure by Beno, in light of the finding of fact in the Previous Decision that the agreement was in “a state of suspension”, to provide evidence to show how the respondent responded to the purported termination intended to take effect on 27 September 2019. Finally, the adjudicator referred to material in the claimant’s documents which were suggestive of some further negotiations after the resignation email in a meeting on 18 September 2019. The adjudicator identified that neither party provided any evidence to assist with what occurred after the meeting on 18 September 2019 but that there was “nothing presented to suggest that the standing agreement terminated after 27 September 2019”.
The adjudicator also made reference to communications between Mr Moseley and a business coach which extended up until 12 September 2019 and made reference to the intended meeting about the future of the business. The adjudicator also referred to email communication with Mr Moseley relating to construction projects in the period after 27 September 2019 which were said to “show convincingly” that the arrangement established on 15 March 2017 was continuing.
The adjudicator made reference to the issue identified in the earlier decision relating to retention of the company’s equipment. The conclusion reached was that there were no valid reasons for withholding payment of the payment claim.
There was then a heading “Valuation of Services Performed in Relation to Construction Work”. Under this heading the adjudicator referred to the agreement that part of the claimant’s remuneration consisted of a bonus and continued:
This fact and the minimum bonus of 15 per cent were decided in the Previous Decision. Section 24 (4) (b) of the Act says that I must apply the same valuation methodology involving the valuation of the goods and services under the same services agreement unless the claimant or respondent satisfy me that the valuation methodology has changed since the Previous Decision.
As the respondent had introduced no evidence to support a finding of the non-existence of the minimum percentage, the adjudicator continued:
Therefore, I must find that the existence of the minimum 15 per cent bonus in respect of the respondent’s profit under the construction contracts managed by the claimant under the project management services agreement formed between the parties on 15 March 2017.
The adjudicator then addressed issues of calculation of net profit and arrived at a figure identical to that claimed in the smaller of the two claims and slightly below that in the payment claim for the larger claim. The total amount determined was $598,813.17.
He then dealt with “Time for Payment”, “Payment of Interest”, “Adjudicator and ANA Fees and Expenses”.
The position of the parties
As pointed out above, Beno contended that the adjudicator:
(a)incorrectly and impermissibly applied the doctrine of issue estoppel precluding the plaintiff from advancing arguments in the second adjudication; and
(b)incorrectly and impermissibly gave s 24(4) of the SOP Act an expanded scope which extended to and included the methodology applied in a previous adjudication determination.
Beno contended that both of these errors had a material effect upon the decision of the adjudicator because he proceeded on the basis that Beno was acting illegitimately by repeating arguments that had been made in the earlier adjudication.
Harlech accepted that the adjudicator’s reasons form part of the record for the purposes of certiorari: see Pines Living Pty Ltd v John O’Brien & Walton Construction Pty Ltd [2013] ACTSC 156 (Pines Living) at [31]. Harlech accepted that the adjudicator’s understanding of the effect of s 24(4) of the SOP Act was wrong because that subsection does not have the more expansive operation suggested in his reasons but instead is restricted to valuations of the same goods or services in a later adjudication. However, Harlech contended that this was not a material error of law because the same findings were compelled by the application of the doctrine of issue estoppel.
The defendant then contended that any error was a non-jurisdictional error and that non‑jurisdictional errors are not sufficiently material as to warrant the court’s intervention: see Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; 264 CLR 1 (Probuild).
Even if the error was material, the defendant contended that prerogative relief should be refused as a matter of discretion as was suggested in Empire Global Pty Ltd v SA Expert Designs Pty Ltd [2019] ACTSC 244 (Empire Global) at [67]-[68].
The s 24(4) error
The adjudicator clearly erred in relation to the scope and effect of s 24(4) of the SOP Act. The subsection contains a relatively straightforward command. If an earlier adjudication involved the same work or goods and services, then the same value has to be attributed to that work as was attributed to it by the earlier adjudicator, unless the respondent satisfies the adjudicator that the value of the work has changed since the valuation. It covers a relatively common situation in which the cumulative value of work completed up to the date of a payment claim needs to be assessed for the purposes of the contract and ensures that, except in defined circumstances, the valuation exercise of that earlier work by a prior adjudicator does not need to be repeated.
The interpretation of the operation of s 24(4) of the SOP Act by the adjudicator was not crisply articulated. It is apparent, however, that the adjudicator considered that what was encompassed in the concept of the valuation of the work extended substantially beyond the attribution of the same value to the same work as had been determined by a previous adjudicator.
Some passages which refer to the “methodology used to calculate the value of the work or related goods and services” suggest that s 24(4) of the SOP Act applies in relation to that methodology: at [46], to findings of fact made which were relevant to the valuation methodology: at [47] and to satisfaction of contractual and legislative requirements: at [48]. It is by this means that the adjudicator suggested that the findings made in the Previous Decision “constrict and define” the scope of the exercise under s 24 of the SOP Act: at [51] and that any change by a subsequent adjudicator would require a change of circumstances under s 24(4)(b): at [51].
Consistent with this approach, later in the decision s 24 is relied upon to suggest that as a result of s 24(4) “new claims or new approaches taken in a subsequent adjudication that closely resemble claims or approaches taken in a previous decision become unreasonable”: at [68]. The balance of [68] and [69] indicate that the effect of this unreasonableness is that the respondent is barred from raising issues “that were part of the considerations used in valuing” the earlier claim.
Examples of the consequence of this approach are provided at [133] and [174]. At [133] the adjudicator made it clear that the issue of resignation was to be assessed within the context of s 24(4)(b) of the SOP Act. At [174] the adjudicator considered himself bound by s 24(4) to apply the same 15 per cent figure to the present claim as that which had been applied to the earlier claim.
Harlech conceded that the adjudicator adopted an incorrect approach to the subsection. However, it contended that in order to justify an order akin to certiorari the plaintiff needed to demonstrate that the error was a material error.
The defendant contended that the error was not material because:
(a)it would make no difference to the outcome of the adjudication because of the operation of issue estoppel; and
(b)what is a material error is to be determined having regard to the statute under which the decision is made and in Probuild, the High Court found that the equivalent NSW Act excluded the jurisdiction of the NSW Supreme Court to make an order in the nature of certiorari to quash an adjudicator’s determination for non-jurisdictional error on the face of the record.
This second argument mixes the holdings of the High Court in Probuild and Hossain v Minister for Immigration and Border Protection [2018] HCA 34; 264 CLR 123 (Hossain).
In Hossain, the High Court held that an error which was not a material one would not be sufficient to establish jurisdictional error. Therefore, an error which could have made no difference to the decision in the circumstances is not taken to be a jurisdictional error. That is because the relevant statute will ordinarily be interpreted as incorporating a threshold of materiality before denying legal effect to a decision made inconsistently with its terms: see [29]-[30]. The requirement that the error might have made a difference to the outcome is not the only criterion, as Nettle and Edelman JJ pointed out: see [40]‑[43], [72]. The issue as to whether materiality also applied to the other ground for certiorari, error of law on the face of the record, was identified but not resolved by Edelman J at [65].
In Probuild the Court held that the terms of the NSW Act were, in light of its intended purpose, sufficient to impliedly exclude the grant of certiorari on the ground of error of law on the face of the record as distinct from jurisdictional error.
Harlech’s submissions combine these decisions to argue that there is a requirement for materiality of error for the purposes of a grant of certiorari and that what is material should be determined by reference to the terms and purpose of the SOP Act.
Harlech did “half-heartedly” make the submission that prerogative relief for error of law on the face of the record was excluded in the same way as the High Court held in Probuild. That necessarily involved a submission that s 48A of the Australian Capital Territory (Self-Government) Act 1988 (Cth) (Self-Government Act) did not preclude the legislature from withdrawing from the jurisdiction of the Supreme Court the power to review decisions for non-jurisdictional errors. That raises two aspects of Territory law of some complexity which would need to be addressed if such a submission was to be finally determined.
Unlike the position in NSW where the sources of jurisdiction are the non-entrenched provisions of the Supreme Court Act 1970 (NSW), in the ACT aspects of the jurisdiction are entrenched by s 48A of the Self-Government Act. As a consequence, whatever the content of s 48A is, that content is protected from derogation by a Territory enactment: see Self-Government Act, s 28. In NSW, as a result of the terms of s 69 of the Supreme Court Act, “[t]he scope and incidents of that historical, inherited, supervisory jurisdiction were defined by the common law”: Probuild at [56] (Gageler J). That means that subject to the constitutional requirement identified in Kirk v Industrial Court (NSW) [2010] HCA 1; 239 CLR 531 (Kirk), the jurisdiction must yield to legislation “which common law principles of interpretation indicate to manifest an intention that a decision…is not to be quashed or otherwise reviewed”: Probuild at [57]. In the Territory it has not yet been resolved whether s 48A of the Self-Government Act should be interpreted by reference to its very general language or should be read as a term of art, picking up powers and limitations on powers of the courts of NSW or England to which its jurisdiction is historically linked. As a consequence of this lack of certainty, the extent to which s 43(1) of the SOP Act, which purports to exclude the jurisdiction of the Supreme Court, can be effective is not clear: see also Pines Living at [31].
Second, unlike in NSW where the High Court found that the interim nature of an adjudicator’s determination and the absence of any statutory powers of appeal or review led to the conclusion that prerogative relief for error of law on the face of the record was impliedly excluded, in the ACT the SOP Act contains provisions for review which indicate that the legislature did not intend for adjudicators to have the same degree of freedom to go wrong. The inclusion of s 43, based on an earlier provision in the Commercial Arbitration Act 1986 (ACT) (repealed) was a territory “innovation”: see Pines Living at [19]; Fulton Hogan Construction Pty Ltd v Brady Marine & Civil Pty Ltd [2015] ACTSC 384; 11 ACTLR 111 at [71]. It makes it impossible to directly apply the reasoning in Probuild or Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5; 264 CLR 46 to the SOP Act. If, however, the capacity of the Supreme Court to grant an order in the nature of certiorari for non‑jurisdictional error on the face of the record may, notwithstanding s 48A of the Self‑Government Act, be able to be excluded, then s 43(1) of the SOP Act would be effective to do so. Further, the existence of a qualified right of appeal under s 43 of the SOP Act which permits review of an adjudicator’s decision for non‑jurisdictional error of law on the face of the record would be relevant to the discretion to withhold or grant relief.
The submissions of Harlech attempted to avoid the need to resolve these issues by assuming that review for error of law on the face of the record was not excluded but that it was subject to a requirement of materiality which, in the context of the SOP Act, was not met. That submission was dependent upon its submissions about the applicability of issue estoppel to which I now turn.
Issue estoppel
Issue estoppel was raised at a number of points in the adjudicator’s decision to justify a rejection of arguments previously put by Beno in the first payment schedule or the first adjudication response. Issue estoppel was identified as the basis for rejecting arguments put in the second adjudication response: second adjudication decision at [6] and [17]. Issues 1 to 6 were said to involve re-agitating issues of fact that were decided in the first adjudication decision: second adjudication decision at [42]. That position is repeated at [113] of the second adjudication decision.
While issue estoppel was quite prominent in the adjudicator’s decision, the relationship between issue estoppel and the expanded scope the adjudicator gave to s 24(4) of the SOP Act was not articulated. Both concepts were referred to at different points. No attempt was made to reconcile the absolute nature of issue estoppel with the statutory entitlement to revisit issues about valuation methodology that would arise under the adjudicator’s interpretation of s 24(4).
As summarised above, the stance adopted by Harlech was to contend that issue estoppel applied generally to the facts found and conclusions reached in an earlier adjudication decision so that a subsequent adjudicator addressing a claim for different work or related goods and services was bound by those findings and conclusions. This was done in order to provide a foundation for saying that the adjudicator’s admitted error in relation to the scope of s 24(4) of the SOP Act was not a material error and hence not worthy of a grant of prerogative relief.
Harlech advanced the proposition that an issue estoppel could apply to any issue determined by the adjudicator. In other words, it was not limited to the acceptance or rejection of a particular claim for payment or component of a claim for payment but instead would arise in relation to an issue of fact or law that was determined along the way to reaching a conclusion as to whether or not a claim or component of a claim should be accepted or rejected. If the latter approach was accepted, then it would treat an issue estoppel arising as a result of an adjudication decision as having the same subject matter scope (its “breadth”) as one arising from a decision of a court even though the universe in which it would operate would be limited to the payment claim process arising under the SOP Act (its “depth”). This involved an expansion of the breadth of issue estoppel beyond the breadth that has been accepted in previous cases, commencing with the decision of the NSW Court of Appeal in Dualcorp.
The scope of issue estoppel in the context of the SOP Act according to those authorities can be summarised as follows. A claimant is precluded from making a further claim for an amount which an adjudicator has determined is not payable. That is the case whether or not the amount is not payable because:
(a)the adjudicator determined that it was not an entitlement of the claimant under the construction contract;
(b)the evidence put forward by the claimant was not sufficient to establish that any amount is payable; or
(c)an amount was payable and has been valued at a particular amount but the claimant wishes to claim a greater amount in circumstances where s 24(4)(b) of the SOP Act does not apply.
See Dualcorp at [66]-[67], [70]-[72]; and the summary of the authorities in AE & E Australia Pty Ltd v Stowe Australia Pty Ltd [2010] QSC 135 at [32].
The authorities have reached these conclusions based upon implications from the provisions of the relevant Act and the concepts of abuse of process and issue estoppel.
The decision of Macfarlan JA (with whom Handley AJA agreed) in Dualcorp was expressed in language which suggested the general application of the concept of issue estoppel even though the context in which it arose was a limited one. The relevant passage said:
60. These various provisions in my view indicate a legislative intent to render adjudication determinations relevantly conclusive. Such determinations do not conclude contractual rights. Section 32 expressly so provides. The Act however creates special statutory rights to progress payments. When a claim is made, a dispute arises and an adjudication determination resolves that dispute. I consider that determination to be final and binding between the parties as to the issues determined, except to the extent that the Act allows the determination to be revisited. It would in my view be quite contrary to the scheme of the Act to permit claimants simply to resubmit the already adjudicated claims if they were dissatisfied with the adjudication.
(Emphasis added.)
The generality of the emphasised portion in this quote is consistent with the concept of issue estoppel applying generally in relation to questions of fact or law determined by the adjudicator. However, as the final sentence of the quote makes clear, the context in which the statement was made was one which was focused upon a situation where a claimant was resubmitting an already adjudicated claim relating to particular work.
The application of issue estoppel has been held to extend to Anshun estoppel so that the rejection of a claim for a particular amount made on one basis (unjust enrichment) meant that a claim for the same amounts put on another basis (contract) was precluded: see Watpac Constructions v Austin Corp [2010] NSWSC 168 at [104].
The unconstrained application of general principles of issue estoppel was questioned in Caltex Refineries (Qld) Pty Ltd v Allstate Access (Australia) Pty Ltd [2014] QSC 223 at [54]-[55] where Philip McMurdo J said:
54. Although Macfarlan JA described the outcome as a result of an issue estoppel, it is clear that his Honour had in mind something less than the operation of the common law doctrine of issue estoppel as it is usually understood. The doctrine of issue estoppel has been said to reflect “a central and pervading tenet of the judicial system [which] is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances”. Where the doctrine does apply, then subject to any qualification by legislation or agreement, it precludes the reagitation in any forum of the same issue. Yet, the estoppel for which Allstate contends, in attempted reliance upon Dualcorp, at its highest is one in which the issue could be reagitated in some forums but not others. It is a remarkable species of issue estoppel where, having regard to s 32 of the New South Wales Act, the “entitlements inter se under the contract” are unaffected by it. The source of this more limited estoppel must be found, if at all, within the legislation. In my view, the legislation does not provide it. A contrary indication is that such an estoppel would be problematical in many ways. Take, for example, a case where a court declares the effect of the parties’ contract, inconsistent with an adjudicator’s decision. Is a future adjudicator, dealing with another claim under that contract, bound by the decision of the earlier adjudication (if not set aside) or that of the court?
55. The limited finality described by Macfarlan JA was founded, as his Honour explained, upon the combined effect of several provisions within this statute. Contrary to the submission for Allstate, the judgment of Macfarlan JA did not hold that the doctrine of issue estoppel applies in this context in all respects. The judgment identifies a finality of an adjudicator’s decision in the sense of precluding a claimant from pursuing a progress payment inconsistently with determination of an issue by an adjudicator which was fundamental to that decision.
(Footnotes omitted.)
Up until 2017, no authority to which I was referred extended the operation of issue estoppel beyond the statutorily required determination, namely whether or not a particular amount was properly claimable. In 2017 Blow CJ in Modscape Pty Ltd v Francis [2017] TASSC 55; 29 Tas R 288 (Modscape) relied upon the decision of the High Court in Kuligowski v Metrobus [2004] HCA 34; 220 CLR 363 (Kuligowski) to conclude that an issue estoppel may apply to a finding of fact in an adjudication. That was subject to the requirements derived from Blair v Curran (1939) 62 CLR 464 that it be “fundamental to the decision arrived at” or “legally indispensable to the conclusion” so that it would not cover findings of fact that were “subsidiary or collateral”.
This decision in Modscape was followed by Archer J in Salini-Impregilo S.P.A. v Francis [2020] WASC 72 (Salini-Impregilo) at [374]-[389].
In my view, the decision in Dualcorp should not be understood as applying the principles of issue estoppel at large in relation to decisions of adjudicators. The starting point must be the statute. The statute makes it very clear that decisions of adjudicators are not final in the sense required for an issue estoppel to arise. To the extent that there is finality that arises from the prevention of abuses of the process of the SOP Act, that is derived by implication from the terms of the Act. The terms of the Act do not compel the conclusion that the range of issues that might be the subject of an issue estoppel arising from the final judgment of a court may also give rise to an equivalent estoppel by reason of an adjudication decision in relation to a subsequent adjudication decision. That conclusion does not detract from those decisions which characterise attempts to re‑agitate, in a subsequent adjudication, a claim for payment which has been unsuccessfully pursued in an earlier adjudication as an abuse of process. Rather, it would prevent the expansion by means of the concept of issue estoppel of the preclusion of re-agitation to questions of fact or law determined in one adjudication in a subsequent adjudication relating to different claimed amounts.
The foundation of the SOP Act is that it does not affect any right that a party to the construction contract has under the contract or arising from anything done or omitted to be done under the contract: s 38. Thus, it is a statutory scheme which sits apart from the final determination of rights. It is, therefore, distinct from circumstances which give rise to traditional issue estoppel, including circumstances such as those in Kuligowski where the issue estoppel arises from a statutory scheme designed to finally determine rights. The fact that the statutory scheme permits decisions of adjudicators to be filed and give rise to judgments of a court cannot, in the context of s 38 of the SOP Act, be characterised as rendering them final. Rather, the regime is one which picks up the processes associated with judgments of a court for the purposes of making them readily enforceable within a known enforcement regime.
The regime in the SOP Act does demonstrate an intention to limit the capacity of parties to a construction contract to re-contest the determination of claims relating to particular amounts that have been the subject of a determination by an adjudicator. That arises from the terms of s 10 and the definition of “reference date”, the limitation to one payment claim for each reference date in s 15(5), the process for adjudication, the terms of s 24(4), 25, 27, 28 and 38, and the underlying purpose of the Act: cf Dualcorp at [52]‑[60]. The terms of the Act do not, either expressly or by necessary implication, provide that any issue necessary to reach a conclusion in relation to a payment claim must be determined the same way by a subsequent adjudicator addressing a different payment claim in relation to different work and hence different amounts claimed.
Nothing in the SOP Act suggests this sort of continuity between adjudication decisions. Rather, the terms of s 24 and in particular s 24(2) are more consistent with each adjudication being an independent exercise. Section 24(2) does not require consideration of any earlier adjudication decision. While it is possible that an earlier adjudication decision would be provided as part of the adjudication application or adjudication response, that is not sufficient to indicate a legislative intention to make conclusions reached by another adjudicator binding on a subsequent adjudicator. That conclusion is reinforced by s 24(4). Section 24(4) expressly addresses the circumstances in which the decision of a previous adjudicator will be binding upon a subsequent adjudicator and the scope of that provision is limited to the valuation of (as opposed to entitlement to payment for) construction work or related goods and services the subject of a previous adjudication. It is true that in Dualcorp, the equivalent of s 24(4) of the SOP Act was not treated as an exhaustive statement of the matters determined by an earlier adjudication which are binding on a subsequent adjudicator: Dualcorp at [16], [67]. However, that was because the Act read as a whole manifested an intention that questions of entitlement resolved by an adjudication determination were not to be reopened. The terms of the Act do not compel any conclusion that antecedent issues of fact or law remain binding from one adjudication to the next. In my view, it would be inconsistent with that statutory scheme to expand, by some modified concept of issue estoppel, the effect of an earlier adjudication to a broader range of issues of fact or law.
To the extent that it is relevant, it is not obvious that adding this further layer of legal complexity to the process undertaken by adjudicators would facilitate the rough and ready interim determination of the entitlements of the parties under the construction contract. On the contrary, it would appear to open up a further area of contestation within an already time pressured and potentially complex process.
For these reasons, I do not follow the decision in Modscape or Salini-Impregilo and I treat the reasons of the majority in Dualcorp as being limited to those aspects of repetitive claims which were under consideration in that case.
What kind of error is established?
The position is, therefore, that an error of law on the face of the record is admitted. The contention that this error is not a material one because the substance of the error is cured by the doctrine of issue estoppel has not been established.
If the error of law on the face of the record was a non-jurisdictional one, it would then be necessary to determine whether the effect of s 48A of the Self-Government Act permits the Legislative Assembly to exclude review for non-jurisdictional error of law on the face of the record as it purports to have done in s 43(1) of the SOP Act. That is a matter in relation to which the parties did not make more than cursory submissions, and which is of some Territory constitutional importance. For that reason, it would be undesirable to determine the issue in the absence of further submissions.
Harlech’s submission was that an error in the application of issue estoppel is not a jurisdictional error. It relies upon the decision of Blow CJ in Modscape. In that case, the application of issue estoppel as between adjudications was assumed. The adjudicator was found to have erred in his interpretation of the decision of the High Court in Kuligowski by relying upon it as authority relating to indispensability rather than finality. The final paragraph of that decision in Modscape provides:
27. In my view the adjudicator did not deny the parties natural justice. He made an error which does not go to the validity of his determination, and which may be corrected upon a final hearing of the issues in dispute between the parties. For these reasons I have decided to discharge the general order to show cause.
On the assumption that issue estoppel applies generally as between adjudications, that decision is plainly correct. The error of the adjudicator would be one within jurisdiction. However, the decision does not address the situation in which issue estoppel is not generally applicable as between adjudications and hence the application of issue estoppel may give rise to a jurisdictional error. Further, it has nothing to say about errors relating to the operation of s 24 of the SOP Act or the equivalent provision.
In my view, the error on the part of the adjudicator is properly characterised as a jurisdictional error. In Hossain, a majority of the High Court explained (at [24]-[29]) the distinction between jurisdictional and non-jurisdictional error. Jurisdictional error involves “a failure to comply with one or more statutory preconditions or conditions to an extent which results in a decision which has been made in fact lacking characteristics necessary for it to be given force and effect by the statute pursuant to which the decision maker purported to make it”. The judgment referred to the language of Selway J in describing the distinction between jurisdictional and non-jurisdictional errors as ultimately “a distinction between errors that are authorised and errors that are not”. Plainly, such a formulation turns on the construction of the statute because it is the statute which will provide an indication of what errors are intended to be permissible within power and those which ought to be treated as beyond power. The decision in Probuild was referred to as an example of a situation involving a departure from the general principle that a decision-maker must proceed by reference to correct legal principles correctly applied. In Hossain, the critical question concerned whether an error was required to be material in order to be jurisdictional. The court said that a statute is ordinarily to be interpreted as incorporating a threshold of materiality in the event of non-compliance.
It must be accepted that the SOP Act permits errors to be made by an adjudicator within the adjudicator’s jurisdiction. It would be inconsistent with the scheme for speedy interim determinations to deny the capacity to make errors within jurisdiction. However, s 24 of the SOP Act is central to the decision-making exercise. Section 24(1) identifies the ultimate determinations that must be made by an adjudicator. It is s 24(2) that identifies the only matters to which regard must be had by the adjudicator. Section 24(4) is a provision requiring, in a limited respect, maintenance of consistency between adjudication decisions. The error in the present case has been to misconstrue the scope of s 24(4) in a way which substantially alters the relationship between that provision and s 24(2) and hence departs from the exercise required by s 24 in a substantial way. It resulted in the adjudicator misconceiving the nature of his function and addressing himself to the wrong issues. Having regard to the terms of the SOP Act, in my view, the error is of such a nature as to warrant it being characterised as a jurisdictional error: Kirk at [72].
The error as to the operation of s 24(4) of the SOP Act was a material one because it cannot be concluded that the error made no difference to the decision that was made in the circumstances in which it was made. While, having regard to the idiosyncratic approach of the adjudicator to the adjudication exercise generally and the very favourable conclusions that he reached in relation to Harlech’s contractual position, it is open or even likely that he would have reached a similarly favourable decision, the question of materiality should be determined on the basis of an objective assessment of the material. When that is done it is not possible to reach the conclusion that compliance with the provisions of the SOP Act “could have made no difference to the decision that was made in the circumstances in which that decision was made”: Hossain at [30].
Discretion
Harlech relied upon the decision in Empire Global in support of the contention that relief should be refused in any event. In that case, the Chief Justice rejected the claim of jurisdictional error. However, in the context of considering the discretion as to whether to grant or refuse relief, her Honour said:
Proceedings such as the present are therefore inimical to the objective of providing a “rough and ready” determination while preserving the parties’ rights to fully ventilate issues in civil proceedings: Probuild at [39]–[40].
That is plainly correct as far as it goes. However, in a case involving jurisdictional error which is, by definition, material, it is not appropriate to refuse relief simply because, by definition, the scheme is an interim one. The interim nature of the scheme and the need for speedy determinations does not detract from the imperative that decisions be lawful in the sense of being free of jurisdictional error.
Orders
The final relief sought by Beno included both prerogative relief and a declaration. The making of a declaration in judicial review proceedings is specifically contemplated by r 3558 of the Court Procedures Rules. Both forms of relief are not necessary.
I will direct the parties to formulate orders to give effect to my decision including any orders relating to the judgment entered as a result of the filing of the adjudication certificate and the question of costs.
The orders of the Court are:
1. Direct that the plaintiff and first defendant are to provide by 23 November 2021 by email to my associate agreed or competing orders to give effect to these reasons including orders in relation to costs.
2. List the matter on 26 November 2021 at 9:30am for the making final orders.
3. In the event that orders provided pursuant to order 1 are not agreed, direct that the plaintiff and first defendant provide written submissions limited to not more than three pages to my associate no later than 4pm on 24 November 2021.
| I certify that the preceding one hundred and seventeen [117] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop. Associate: Date: 19 November 2021 |
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