Maxcon Constructions Pty Ltd v Vadasz (No 2)

[2017] SASCFC 2

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Civil)

MAXCON CONSTRUCTIONS PTY LTD v VADASZ (NO 2)

[2017] SASCFC 2

Judgment of The Full Court

(The Honourable Justice Blue, The Honourable Justice Lovell and The Honourable Justice Hinton)

8 February 2017

CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS - ADJUDICATION OF PAYMENT CLAIMS

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - ILLEGAL AND VOID CONTRACTS - CONTRACTS ILLEGAL BY STATUTE

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - ILLEGAL AND VOID CONTRACTS - EFFECT OF ILLEGALITY OR INVALIDITY - SEVERANCE

BANKRUPTCY - OFFENCES - PARTICULAR OFFENCES - FAILURE TO DISCLOSE

ADMINISTRATIVE LAW - JUDICIAL REVIEW - PRIVATIVE CLAUSES - CERTIORARI

ADMINISTRATIVE LAW - PREROGATIVE WRITS AND ORDERS - CERTIORARI - GROUNDS FOR CERTIORARI TO QUASH - ERROR OF LAW ON THE FACE OF THE RECORD

Appeal against dismissal of action for judicial review.

The appellant entered into a contract with the first respondent to design and construct piling for an apartment building. It was a term of the contract that the builder retain 5% of the contract sum as a retention sum, to be released at defined times after issue of a certificate of occupancy for the building. The first respondent was at all material times an undischarged bankrupt.

The first respondent served on the appellant a payment claim under section 13 of the Building and Construction Industry Security of Payment Act 2009 for $204,864.55. The appellant served on the first respondent a responding payment schedule under section 14 showing a scheduled amount of $141,163.55. The appellant had deducted $38,999.40 by way of retention sum and $24,750 by way of setoff for administration charges.

The first respondent applied for adjudication of his payment claim and the second respondent appointed the third respondent as adjudicator.

The third respondent issued an adjudication determination determining that the adjudicated amount be $204,864.55. He held that the retention sum provisions in the contract were “pay when paid” provisions rendered void by section 12 of the Act; and rejected the administration charges setoff claim.

The appellant instituted the action seeking a declaration that the adjudication determination was a nullity. The appellant contended that the contract was rendered void as a result of breach by the first respondent of section 269(1)(b) of the Bankruptcy Act 1966 because he had not disclosed his bankruptcy to the appellant. The appellant contended in the alternative that the adjudicator’s decisions concerning the retention sum provisions and administration charges comprised jurisdictional errors or errors of law on the face of the record vitiating the determination.

A Judge of this Court dismissed the action. The Judge found that the first respondent had not disclosed his bankruptcy, but this did not result in the contract being void. The Judge held that there was no jurisdictional error or error of law made by the adjudicator on the face of the record.

Held:

1. (per Blue J at [66] and [70], Lovell and Hinton JJ agreeing) Section 269(1)(b) of the Bankruptcy Act does not render a contract void or unenforceable by the bankrupt if the contract was entered into in the course of carrying on a business under a firm name without disclosure of the bankruptcy in contravention of that provision.

2.  (per Blue J at [89] and [91], Lovell and Hinton JJ agreeing) The contract was not rendered void or unenforceable by the first respondent at common law by reason of the first respondent entering into the contract in the course of carrying on a business under a firm name without disclosure of his bankruptcy.

3. (per Hinton J at [268] upholding the notice of contention, Lovell J agreeing, Blue J not deciding) The Judge erred in finding that the first respondent contravened section 269 of the Bankruptcy Act 1966 by not considering the requisite mental element or the application of Briginshaw v Briginshaw considerations.

4. (per Blue J at [138], Lovell J agreeing, Hinton J at [284] dissenting) The error by the adjudicator in concluding that the contractual provisions in respect of the retention sum were “pay when paid” provisions rendered void by section 12 of the Act did not comprise jurisdictional error.

5. (per Blue J at [209], Lovell and Hinton JJ agreeing) The error by the adjudicator in concluding that the contractual provisions in respect of the retention sum were “pay when paid” provisions rendered void by section 12 of the Act comprised an error of law on the face of the record (at [145]). However, certiorari on the ground of error on law on the face of the record is, on the basis of the authority of Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2), impliedly excluded by the Act (at [181]).

6.  (per Blue J at [238], Lovell J agreeing, Hinton J not deciding) If the appellant had established that the adjudication determination was affected by jurisdictional error or error of law on the face of the record, the appropriate relief would not have been to set aside the entire adjudication determination but only insofar as the adjudicator awarded amounts in excess of $165,913.55.

6.  (per Blue J at [239], Lovell J agreeing, Hinton J at [287] dissenting) Appeal dismissed.

Acquisition of Land Act 1967 (Qld) s 20; Banking Act 1959 (Cth) s 8; Bankruptcy Act 1914 (UK) s 155; Bankruptcy Act 1966 (Cth) s 269; Building and Construction Industry (Security of Payment) Act 2009 (ACT); Building and Construction Industry Security of Payment Act 1999 (NSW); Building and Construction Industry Security of Payment Act 2009 (SA) s 3, s 5, s 7, s 7A, s 8, s 11, s 12, s 13, s 14, s 16, s 17, s 18, s 19, s 20, s 21, s 22, s 23, s 24, s 25, s 30, s 33; Constructions Contracts Act 2004 (WA); Crimes Act 1914 (Cth) s 19B; Development Act 1993 (SA) s 67; Foreign Judgments Act 1971 (Cth) s 7; Home Building Act 1989 (NSW) s 10; Licensing Act 2007 (NSW) s 92; Supreme Court Act 1970 (NSW) s 69; Trade Practices Act 1974 (Cth) s 51AD; Workers’ Compensation Act 1916 (Qld) s 14C; Development Regulations 2008 (SA); Supreme Court Civil Rules 2006 (SA); Building and Construction Industry Payments Act 2004 (Qld); Building and Construction Industry Security of Payment Act 2002 (Vic); Building and Construction Industry Security of Payment Act 2009 (Tas); Civil Law (Wrongs) Act 2002 (ACT); Commercial Arbitration Act 2011 (SA); Construction Contract (Security of Payments) Act (NT); Defamation Act 2005 (NSW); Defamation Act 2005 (Qld); Defamation Act 2005 (SA); Defamation Act 2005 (TAS); Defamation Act 2005 (Vic); Defamation Act 2005 (WA); Defamation Act 2006 (NT); Defence Service Homes Act 1918 (Cth); Land Acquisition (Just Terms Compensation) Act 1967 (NSW) s 56; Occupational Health and Safety Act 1983 (NSW) s 15; Commercial Arbitration (National Uniform Legislation) Act 2011 (NT); Commercial Arbitration Act 2010 (NSW); Commercial Arbitration Act 2011 (SA); Commercial Arbitration Act 2011 (Tas); Commercial Arbitration Act 2011 (Vic); Commercial Arbitration Act 2012 (WA); Commercial Arbitration Act 2013 (Qld); Criminal Code 1995 (Cth) s 3, s 4, s 5, s 6; Law and Justice Legislation Amendment (Application of Criminal Code) Act 2001 (Cth); Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth), referred to.
A v Hayden (1984) 156 CLR 532; Archbolds (Freightage) Ltd v S Spanglett Ltd [1961] 1 QB 374; Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 232 CLR 1; Briginshaw v Briginshaw (1938) 60 CLR 336; Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; Cattanach v Melchior (2003) 215 CLR 1; Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393; Craig v The State of South Australia (1995) 184 CLR 163; De Choisy v Hynes [1937] 4 All ER 54; Director of Public Prosecutions (Cth) v Ede (2014) 289 FLR 82; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; Gedeon v Commissioner of the New South Wales Crime Commission (2008) 236 CLR 120; Gnych v Polish Club Ltd (2015) 255 CLR 414; Hockey v Yelland (1984) 157 CLR 124; Jacobs v Brett (1875) LR 20 Eq 1; Kirk v Industrial Court of New South Wales (2010) 239 CLR 531; Laing O’Rourke Australia Construction Pty Ltd v Samsung C&T Corporation [2016] WASCA 130; Marshall v Director General Department of Transport (2001) 205 CLR 603; Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140; Musico v Davenport [2003] NSWSC 977; Neat Holdings Pty Ltd v Karajan Holdings (1992) 67 ALJR 170; Nelson v Nelson (1995) 184 CLR 538; O’Donnell Griffin Pty Ltd v John Holland Pty Ltd [2009] WASC 19; Perrinepod Pty Ltd v Georgiou Building Pty Ltd (2011) 43 WAR 319; Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476; Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2016] NSWSC 770; Public Service Association of South Australia v Federated Clerks Union of Australia, South Australian Branch (1991) 173 CLR 132; Public Service Board of New South Wales v Etherton (1985) 1 NSWLR 430; Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372; Re Media, Entertainment and Arts Alliance; Ex parte Arnel (1994) 179 CLR 84; Re Narula, Ng & Hammersley; Ex parte Atanasoski [2003] WASCA 156; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; Roads and Traffic Authority of NSW v Higginson [2011] NSWCA 151; Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2016] NSWCA 379; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; Whiteford v Bailey Unreported, Queensland Court of Appeal, 24 October 1994; Wilkinson v Osborne (1915) 21 CLR 89; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; United States v L A Tucker Truck Lines Inc (1952) 344 US 33; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410, discussed.
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; Anderson Street Banksmeadow Pty Ltd v Helcon Contracting Australia Pty Ltd [2013] NSWSC 657; Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; Attorney-General (NSW) v Quin (1990) 170 CLR 1; Australian Broadcasting Corporation v Redmore Pty Ltd (1989) 166 CLR 454; Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432; Built Environs Pty Ltd v Tali Engineering Pty Ltd [2013] SASC 84; Callaghan v O’Sullivan [1925] VLR 664; Clancy v Butchers’ Shop Employees Union (1904) 1 CLR 181; Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd (2005) 21 BCL 364; Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd (2005) 63 NSWLR 385; Darling Casino Ltd v New South Wales Casino Control Authority (1997) 191 CLR 602; Downer Construction (Australia) Pty Ltd v Energy Australia (2007) 69 NSWLR 72; Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269; Foster v Driscoll [1929] 1 KB 470; Hermann v Charlesworth [1905] 2 KB 123; James Trowse Constructions Pty Ltd v ASAP Plasterers Pty Ltd [2011] QSC 145; John Holland Pty Ltd v Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258; Maxcon Constructions Pty Ltd v Vadasz (No 2) [2016] SASC 156; Minister for Education v Oxwell [1966] WAR 39; Musgrove v McDonald (1905) 3 CLR 132; Parist Holdings Pty Ltd v WT Partnership Australia Pty Ltd [2003] NSWSC 365; Pearce v Brooks (1866) LR 1 Ex 213; R v Deputy Governor of Parkhurst Prison; Ex parte Hague [1992] 1 AC 58; Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd [2009] NSWCA 157; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; R v Navarolli (2009) 194 A Crim R 96; Rederiaktiebolaget Amphitrite v The King [1921] 3 KB 500; Robson Civil Projects Pty Ltd v Walter Mining Pty Ltd [2009] NSWSC 1071; Romaldi Constructions Pty Ltd v Adelaide Interior Linings Pty Ltd (No 2) [2013] SASCFC 124; Samsung C&T Corporation v Loots [2016] WASC 330; Slivak v Lurgi (Australia) Pty Ltd (2001) 205 CLR 304; Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397; SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189; Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd [2012] QSC 373; Tolfab Engineering Pty Ltd v Tie Fabrications Pty Ltd [2005] NSWSC 326; Transgrid v Siemens Ltd (2004) 61 NSWLR 521; Clyde Bergemann v Varley Power [2011] NSWSC 1039; City of Yonkers v United States (1944) 320 US 685; Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389; Collector of Customs v Pozzolonic Enterprises Pty Ltd (1993) 43 FCR 280; G v H (1994) 181 CLR 387; Helton v Allen (1940) 63 CLR 691; Hocking v Bell (1945) 71 CLR 430; Ooralea Developments Pty Ltd v Civil Contractors (Australia) Pty Ltd 1 Qd R 311; Parker v The Queen (1963) 111 CLR 610; R v Scott (1996) 131 FLR 137; Reifek v McElroy (1965) 112 CLR 517; Trendtex Trading Corporation v Credit Suisse [1982] AC 679; Vetter v Lake Macquarie City Council (2001) 202 CLR 439; Watpac Construction (Qld) Pty Ltd v KLM Group Ltd [2013] QSC 236, considered.

MAXCON CONSTRUCTIONS PTY LTD v VADASZ (NO 2)
[2017] SASCFC 2

Full Court: Blue, Lovell and Hinton JJ

BLUE J:

1. This is an appeal against the dismissal by a Judge of this Court of an action for judicial review.

2. The appellant Maxcon Constructions Pty Ltd entered into a contract with Australasian Piling Contractors being a registered business name under which the first respondent Michael Christopher Vadasz traded.

3. Mr Vadasz applied for adjudication under the Building and Construction Industry Security of Payment Act 2009 (SA) (the Act) of a payment claim for $204,864.55[1] in respect of which Maxcon had issued a payment schedule showing a scheduled amount of $141,163.55. Maxcon had made two deductions from the payment claim being $38,999.40 by way of retention sum and $24,750 by way of setoff for administration charges. Mr Vadasz contended in his application that the retention sum provisions in the contract were “pay when paid” provisions rendered void by section 12 of the Act and there was no basis for the administration charges setoff.

   [1]    All dollar figures quoted herein are inclusive of GST, unless otherwise specified.

4. The third respondent Callum Campbell issued an adjudication determination in which he determined the adjudicated amount to be $204,864.55; that Mr Vadasz was entitled to interest thereon at the rate prescribed in respect of judgment debts of this Court; and that Maxcon was required to pay the adjudication application fee of $8,349.

5. Maxcon instituted the action for judicial review of the determination. Maxcon contended that the Act did not apply because Mr Vadasz had breached section 269(1)(b) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) by not disclosing that he was an undischarged bankrupt and the contract was therefore void. Maxcon also contended that the adjudicator made a jurisdictional error or alternatively error of law on the face of the record in holding that the retention provisions of the contract were rendered void by section 12 of the Act. Maxcon also challenged the adjudicator’s rejection of the administration charges setoff but that challenge is not pursued on appeal.

6. The trial Judge found that Mr Vadasz contravened section 269(1)(b) by not disclosing his bankruptcy but held that the contract was not void by reason thereof. The Judge held that the adjudicator made an error of law in holding that the retention provisions of the contract were “pay when paid” provisions but the error was neither jurisdictional nor on the face of the record.

7. Maxcon appeals against the dismissal of the action on the grounds that the Judge erred:

   1in not holding that the contract was rendered void or alternatively unenforceable by section 269(1)(b) of the Bankruptcy Act or alternatively at common law; and

   2in not holding that the adjudicator made a jurisdictional error, or alternatively an error of law on the face of the record, which rendered the determination void.

8. Mr Vadasz contends by way of alternative contention that, in finding that he did not disclose his bankruptcy to Maxcon, the Judge failed to have regard to the considerations addressed in Briginshaw v Briginshaw[2] and that the evidence on the issue of disclosure lacked the requisite clarity and cogency to support the finding of non-disclosure.

   [2] (1938) 60 CLR 336.

9. The appeal and notice of contention raise the following issues:

   1Is a contract entered into by a bankrupt in the course of carrying on business under a firm name without disclosing his or her bankrupt status in breach of subsection 269(2) of the Bankruptcy Act rendered void or unenforceable by section 269 or at common law?

   2In finding that Mr Vadasz did not disclose his bankruptcy to Maxcon, did the Judge fail to have regard to the considerations addressed in Briginshaw v Briginshaw and did the evidence on the issue lack sufficient clarity and cogency to support a finding of non-disclosure?

   3Did the error by the adjudicator in concluding that the retention sum provisions in the contract were “pay when paid” provisions rendered void by section 12 of the Act amount to a jurisdictional error vitiating the adjudication determination?

   4Did the error by the adjudicator in concluding that the retention sum provisions in the contract were “pay when paid” provisions rendered void by section 12 of the Act amount to an error of law on the face of the record of the adjudication determination?

   5Is certiorari for error of law on the face of the record of an adjudication determination implicitly excluded by the Act?[3]

   6If the adjudication determination is affected by jurisdictional error or error of law on the face of the record in respect of the $38,999.40 retention sum component, does it vitiate the entire determination or only the component addressing the sum of $38,999.40?

   [3]    Maxcon contends that this issue does not arise on appeal. This contention is addressed below.

   Background

10. Maxcon is a building contractor. Maxcon entered into a contract with the owner of 150 Wright Street Adelaide to construct a multi-storey apartment building to be known as Bohem Apartments. Vlad Gorsovski, Maxcon’s senior project manager, was responsible for the project and conducted the relevant dealings on its behalf.

11. Mr Vadasz is a piling subcontractor who carries on business under the registered business name Australasian Piling Contractors (APC). He is an undischarged bankrupt, having been made bankrupt on 7 December 2010.

12. On 15 December 2015, Maxcon (designated “the Builder”) entered into a contract (the Contract) with APC (designated “the Contractor”) to design and construct piling for the Bohem Apartments for $782,100, subsequently varied to $795,720.75 (the Contract Sum).

13. The Contract provided for security to be given by the Contractor in the form of the retention by the Builder of five per cent of the Contract Sum (exclusive of GST).[4] Half of the retention sum was to be released to the Contractor 90 days after issue of a certificate of occupancy and any other regulatory approvals required for occupancy (CFO) and the remaining half was to be released 365 days after achievement of CFO. For ease of reference, I use the expression “certificate of occupancy” to encompass all regulatory approvals required for occupancy.

    [4]    The retention sum was to be built up progressively by deducting ten per cent of progress claims until a total retention of five per cent of the Contract Sum was reached.

1. Between December 2015 and February 2016, Mr Vadasz undertook the piling works.

2. On 25 February 2016, Mr Vadasz served on Maxcon his second progress claim in the form of a payment claim under section 13 of the Act. He claimed $204,864.55.

3. On 8 March 2016, Maxcon served on Mr Vadasz a payment schedule under section 14 of the Act showing the amount Maxcon proposed to pay (the scheduled amount) as $141,163.55. This represented the amount claimed by Mr Vadasz adjusted to correct a transposition error to $204,912.95 less two deductions:

   1a retention of $38,999.40 being five per cent of the Contract Sum (the retention sum claim);

   2a setoff of $24,750 for administration charges (the administration charges setoff).

4. Pursuant to sections 11 and 16 of the Act, by reason of Maxcon’s acceptance of the claim to the extent of $141,163.55, that amount became due and payable by 31 March 2016.

5. On 10 March 2016, Mr Vadasz sent a response to the payment schedule, taking issue with the retention sum claim and the administration charges setoff.

6. On 15 March 2016, Mr Vadasz applied pursuant to section 17(1)(a)(ii) of the Act to the second respondent Adjudicate Today Pty Ltd for adjudication of his payment claim for $204,864.55 (as against the scheduled amount of $141,163.55). He took issue with the administration charges setoff of $24,750, and in respect of the retention sum claim of $38,999.40 he contended that the contractual retention provisions were “pay when paid” provisions rendered void by section 12 of the Act.

7. On 23 March 2016, Mr Campbell accepted appointment by Adjudicate Today as adjudicator pursuant to section 19 of the Act.

8. On 29 March 2016, Maxcon’s solicitors sent to the adjudicator a submission in response to the adjudication application. The submission took issue with the contentions advanced by Mr Vadasz.

9. On 6 April 2016, Mr Campbell issued an adjudication determination pursuant to section 22 of the Act (the adjudication determination) in which he determined the adjudicated amount to be $204,864.55; that Mr Vadasz was entitled to interest thereon at the rate prescribed in respect of judgment debts of this Court; and that Maxcon was required to pay the adjudication application fee of $8,349. Mr Campbell accepted Mr Vadasz’s submissions concerning the administration charges setoff and retention sum claim.

10. Pursuant to section 23 of the Act, Maxcon was required to pay the adjudicated amount by 13 April 2016.

11. On 19 April 2016, Mr Campbell issued an adjudication certificate pursuant to section 24 of the Act for $214,614.35 (inclusive of adjudication costs and interest) (the adjudication certificate).

12. On 21 April 2016, Mr Vadasz registered judgment in the District Court of New South Wales for $215,030.85 pursuant to section 25 of the New South Wales counterpart of the Act.

    The proceedings

13. On 26 May 2016, Maxcon instituted the action seeking a declaration that the adjudication determination was a nullity and an order setting it aside. On 14 July 2016, Maxcon filed a second statement of grounds. Maxcon contended that the adjudication determination was a nullity because the contract was rendered void as a result of breach by Mr Vadasz of section 269(b) of the Bankruptcy Act; the adjudicator erred in law by concluding that the contractual retention provisions were rendered void by section 12 of the Act, and the adjudicator erred in relation to the administration charges setoff.

14. In August 2016, Maxcon paid $215,030.85 into Court pursuant to an order by a Judge of this Court.

15. The trial was heard on 25 August 2016. Mr Vadasz gave evidence that on 8 October 2015, before entering into the contract, he had a telephone conversation with Mr Gorsovski during which he said:

    I was put into bankruptcy in December 2010. I have a builder’s licence from the government of South Australia, who are aware of my bankruptcy, and my trustee is aware that I continue to run my business.

16. Mr Gorsovski gave evidence denying the conversation and saying that he was not aware that Mr Vadasz was an undischarged bankrupt until May 2016.

17. On 9 September 2016, the Judge made an order pursuant to subsection 25(1) of the Act for registration of judgment for $215,030.85 based on the adjudication certificate.

    The decision of the Judge

18. On 29 September 2016, the Judge delivered reasons for judgment.[5] On 30 September 2016, the Judge made final orders dismissing the application for judicial review.

    [5]    Maxcon Constructions Pty Ltd v Vadasz (No 2) [2016] SASC 156.

19. The Judge preferred the evidence of Mr Gorsovski over that of Mr Vadasz and found that Mr Vadasz did not disclose his bankruptcy to Maxcon before entry into the contract and thereby contravened section 269(1)(b) of the Bankruptcy Act. This finding is the subject of Mr Vadasz’s notice of contention.

20. The Judge held that a failure by a bankrupt to disclose that he or she is an undischarged bankrupt to a person with whom he or she deals in the course of carrying on business under a firm name in breach of section 269(1)(b) of the Bankruptcy Act does not render void a contract entered into by the parties in the course of that business. This conclusion is the subject of the first ground of appeal.

21. The Judge held that the adjudicator erred in law in concluding that the contractual retention provisions were “pay when paid” provisions rendered void by section 12 of the Act. The Judge held that the adjudicator was not entitled to assume, in the absence of evidence, that the requirement for achievement of a certificate of occupancy was grounded in the head contract between Maxcon and the principal. The Judge held that this error did not involve jurisdictional error. The Judge held that this error was not an error on the face of the record because the reasons of the adjudicator, which disclose the error, did not form part of the adjudication determination. There is a debate between the parties whether the Judge held that in any event an error of law on the face of the record would not have vitiated the adjudicator’s determination because this ground of review is excluded by the Act. The Judge’s conclusion that the error by the adjudicator did not vitiate the adjudication determination is the subject of the second ground of appeal.

22. The Judge held that the adjudicator did not err in relation to the administration charges setoff and in any event the alleged errors would not have vitiated the adjudication determination. Maxcon does not appeal in relation to this conclusion.[6]

    The Bankruptcy Act ground

    [6]    Maxcon abandoned its grounds of appeal in respect of this conclusion.

    Is the contract rendered void by statute?

23. Maxcon’s first contention is that a contract entered into by a bankrupt in the course of carrying on a business under a firm name without disclosure of his or her bankruptcy in breach of section 269(1)(b) of the Bankruptcy Act is impliedly rendered void by section 269(1)(b) of the Bankruptcy Act as a matter of statutory construction.

24. This contention proceeds on the premise that, if the Contract is void, there was no “construction contract” within the meaning of the Act, the Act has no application to the building work undertaken by Mr Vadasz and the adjudicator had no jurisdiction to make the adjudication determination. This premise may be accepted.

25. In the nineteenth century, courts tended to approach the question whether a contract was rendered void as a result of a statutory provision by applying fixed rules by reference to the text and effect of the provision. For example, a primary rule was that, if the statutory provision prohibited entry into or performance of a contract, the contract was rendered void.

26. Since at least the second half of the twentieth century, courts have held that the question whether a contract is rendered void is to be determined in accordance with ordinary principles of statutory interpretation rather than by the application of fixed rules. This approach might be seen as broadly analogous to determining whether, as a matter of statutory interpretation, non-compliance with a statutory requirement renders an administrative or governmental act void,[7] or a statutory provision gives rise, as a matter of statutory interpretation, to a right of action for breach of statutory duty.[8]

    [7]    Australian Broadcasting Corporation v Redmore Pty Ltd (1989) 166 CLR 454 at 457-459 per Mason CJ, Deane and Gordon JJ; Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28, (1998) 194 CLR 355 at [91]-[93] per McHugh, Gummow, Kirby and Hayne JJ.

    [8]    Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397 at 405 per Kitto J (with whom Owen J agreed); R v Deputy Governor of Parkhurst Prison; ex parte Hague [1992] 1 AC 58 at 159 per Lord Bridge of Harwich (with whom Lord Ackner, Lord Goff of Chieveley and Lord Lowry agreed) and 168 -171 per Lord Jauncey of Tullichettle (with whom Lord Ackner, Lord Goff of Chieveley and Lord Lowry also agreed); Slivak v Lurgi (Australia) Pty Ltd [2001] HCA 6, (2001) 205 CLR 304 at [28] per Gleeson CJ, Gummow and Hayne JJ.

27. In Archbolds (Freightage) Ltd v S Spanglett Ltd,[9] Devlin LJ said:

    The general considerations which arise on this question were examined at length in St John Shipping Corporation v Joseph Rank Ltd… Fundamentally they are the same as those that arise on the construction of every statute; one must have regard to the language used and to the scope and purpose of the statute. I think that the purpose of this statute is sufficiently served by the penalties prescribed for the offender; the avoidance of the contract would cause grave inconvenience and injury to innocent members of the public without furthering the object of the statute.[10]

    [9] [1961] 1 QB 374.

    [10]   At 390. The last clause of the second and third sentences were quoted with approval by Gibbs ACJ in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 413-414.

28. In Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd,[11] section 8 of the Banking Act 1959 (Cth) created an offence for a body corporate to carry on a banking business in Australia without holding a banking authority issued by the Governor-General. The bank carried on a banking business in Australia without holding an authority. The bank had entered into a contract to lend money to Yango Pastoral Co secured by a mortgage and personal guarantees. The High Court held that the loan contract and the mortgage and guarantees were not rendered void by section 8. One major consideration was that, if contracts entered into by a bank in the course of carrying on its banking business of borrowing and lending monies were rendered void, this would have a direct prejudicial effect on the rights of depositors and other persons dealing with the bank. Another major consideration was that this would have an indirect prejudicial effect on persons (including depositors and employees) owed money by the bank because it would deplete the bank’s assets available to meet its liabilities. Gibbs ACJ said:

    [11] (1978) 139 CLR 410.

    It is often said that a contract expressly or impliedly prohibited by statute is void and unenforceable. That statement is true as a general rule, but for complete accuracy it needs qualification, because it is possible for a statute in terms to prohibit a contract and yet to provide, expressly or impliedly, that the contract will be valid and enforceable. ... Where a statute imposes a penalty upon the making or performance of a contract, it is a question of construction whether the statute intends to prohibit the contract in this sense, that is, to render it void and unenforceable, or whether it intends only that the penalty for which it provides shall be inflicted if the contract is made or performed.

    The question whether a statute, on its proper construction, intends to vitiate a contract made in breach of its provisions, is one which must be determined in accordance with the ordinary principles that govern the construction of statutes. "The determining factor is the true effect and meaning of the statute" (St John Shipping Corporation v Joseph Rank Ltd). "One must have regard to the language used and to the scope and purpose of the statute" (Archbolds (Freightage) Ltd v S Spanglett Ltd). One consideration that has been regarded as important in a great many cases … is whether the object of the statute - or one of its objects - is the protection of the public. An antithesis is commonly suggested between an intention to protect the public and an intention simply to secure the revenue, and it is said that when the former intention appears the contract must be taken to be prohibited, whereas if the intention is only to protect the revenue the statute will not be construed as imposing a prohibition on contracts. The question whether the statute was passed for the protection of the public is one test of whether it was intended to vitiate a contract made in breach of its provisions, but I am with respect in full agreement with the views expressed in St. John Shipping Corporation v. Joseph Rank Ltd and Shaw v Groom that it is not the only test. It would be contrary to reason and principle to allow one circumstance to override all other considerations in the interpretation of a statute. As Devlin J. said in St John Shipping Corporation v Joseph Rank Ltd: "The fundamental question is whether the statute means to prohibit the contract. The statute is to be construed in the ordinary way: one must have regard to all relevant considerations and no single consideration, however important, is conclusive."

    There is no doubt that Pt II of the Banking Act, in which s. 8 appears, was enacted partly at least for the protection of depositors, or that one object of s. 8 is the protection of the public. ... It was said that a contract to lend money on mortgage supported by guarantee is central to the business of banking and that such a contract, when made by a body corporate unlawfully carrying on the business of banking, and in the course of that business, is prohibited by s. 8 on its proper construction. However the receipt of money on deposit is equally central to the business of banking, and if the argument put on behalf of the appellants is correct, s. 8 would invalidate not only those contracts by which a body corporate carrying on an unauthorized banking business agreed to lend money, but also all contracts pursuant to which it agreed to receive money from depositors. The result of accepting this argument might be that persons who had deposited money with such a body corporate would be unable to seek the assistance of the courts to recover it. Moreover, if a body corporate were unable to recover money that it had lent, it would be disabled from performing its own obligations, including those owed to its depositors. In those circumstances "the avoidance of the contract would cause grave inconvenience and injury to innocent members of the public without furthering the object of the statute" (Archbolds (Freightage) Ltd v S Spanglett Ltd). …

    A contract to lend money on mortgage is one example; a contract of employment is another. Although all of the contracts made by a body corporate in the course of carrying on a banking business are ex hypothesi things which it does in carrying on the business, that is, in doing what is unlawful, it is impossible to accept that the legislature intended to invalidate all such contracts with the result that contracts to pay its employees, or those who provided it with services, would be void.[12]

    Mason J (with whom Aickin J agreed) said:

    The principle that a contract the making of which is expressly or impliedly prohibited by statute is illegal and void is one of long standing but it has always been recognized that the principle is necessarily subject to any contrary intention manifested by the statute. It is perhaps more accurate to say that the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction and that the principle to which I have referred does no more than enunciate the ordinary rule which will be applied when the statute itself is silent upon the question. Primarily, then, it is a matter of construing the statute and in construing the statute the court will have regard not only to its language, which may or may not touch upon the question, but also to the scope and purpose of the statute from which inferences may be drawn as to the legislative intention regarding the extent and the effect of the prohibition which the statute contains.

    …

    Where, as here, a statute imposes a penalty for contravention of an express prohibition against carrying on a business without a licence or an authority and the business is carried on by entry into contracts, the question is whether the statute intends merely to penalize the person who contravenes the prohibition or whether it intends to go further and prohibit contracts the making of which constitute the carrying on of the business. In deciding this question the court will take into account the scope and purpose of the statute and the consequences of the suggested implication with a view to ascertaining whether it would conduce to, or frustrate, the object of the statute.

    …

    In this context there is little to be said for the view that the statute intends to prohibit contracts made by unauthorized banks in the course of carrying on banking business. To do so would be to prejudice depositors, not to protect them. The implication of such a prohibition would deny to innocent depositors the right to recover moneys deposited unlawfully with persons carrying on banking business because ex hypothesi the prohibited contract would be illegal and void. To place the defendants' interpretation upon the statute would confer an extraordinary advantage on the wrongdoer in enabling it to resist repayment of moneys deposited with it. In this respect the advantage given to the wrongdoer might conceivably go some distance towards outweighing the punishment imposed upon it by way of penalty under s. 8.[13]

    [12]   At 413-415.

    [13]   At 423, 426, 426-427.

29. In Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd,[14] Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ said:

    In Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd, Mason J said:

    "The principle that a contract the making of which is expressly or impliedly prohibited by statute is illegal and void is one of long standing but it has always been recognized that the principle is necessarily subject to any contrary intention manifested by the statute. It is perhaps more accurate to say that the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction and that the principle to which I have referred does no more than enunciate the ordinary rule which will be applied when the statute itself is silent upon the question."

    That passage was cited by Kerr LJ in Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd, where his Lordship said that when a statute contains a unilateral prohibition on entry into a contract, it does not follow that the contract is void. Whether or not the statute has this effect depends upon the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations. Ultimately, the question is one of statutory construction. [15]

    [14] [2007] HCA 38, (2007) 232 CLR 1.

    [15]   At [45]-[46]. (Citations omitted)

30. In Master Education Services Pty Ltd v Ketchell,[16] section 51AD of the Trade Practices Act 1974 (Cth) created an offence for a corporation in trade or commerce to contravene an applicable industry code. Clause 11(1) of the Franchising Code of Conduct prohibited a franchisor entering into a franchise agreement without first obtaining from the franchisee a written statement acknowledging receipt and understanding of a disclosure document and copy of the Code. Master Education Services provided Ms Ketchell with the disclosure document and a copy of the Code but did not obtain a written acknowledgement from her and thereby breached clause 11(1) of the Code and section 51AD of the Act. The High Court held that section 51AD did not render the contract void. The High Court held that this question was to be determined as a matter of statutory interpretation. Gummow ACJ, Kirby, Hayne, Crennan and Kiefel JJ said:

    The question on the appeal is whether a franchise agreement is vitiated where it has been entered into by a corporate franchisor which has contravened the Code, by entering into an agreement without receiving the required statement from the franchisee, confirming the receipt of information about the franchise and the franchisor and that the franchisee has had sufficient time to understand that information. It is not to be assumed that the common law sanction is to apply in the case of every contravention of a prohibition directed to one of the parties to a contract unless the statute contradicts or displaces such an effect. The correct approach to such a question was explained in the following passage in Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd:

    [The High Court quoted the passage extracted at [42] above.]

    …

    Section 51AD is not expressed to prohibit entry into a franchise agreement where a franchisor has not complied with the Code. It does not make performance of such an agreement unlawful in that circumstance. Like the statutory provisions in Yango Pastoral Co v First Chicago, it contains no reference to contracts or transactions.  Its prohibition is directed to compliance with industry codes, which are central to the operation of Pt IVB.  ...

    As was pointed out in the passage from Yango Pastoral Co v First Chicago, cited in Australian Competition and Consumer Commission v Baxter Healthcare, it does not always follow from a prohibition directed to one party to an agreement that the contract is void. 

    …

    In the absence of an express prohibition in the Act, any such prohibition against the making of an agreement, unless there has been compliance with an industry code, must be found by a process of implication, as Mason J observed in Yango Pastoral Co v First Chicago.[17]

    [16] [2008] HCA 38, (2008) 236 CLR 101.

    [17]   At [11], [15]-[16], [19]. (Citations omitted)

1. A major consideration in the High Court’s conclusion that section 51AD did not render contracts made in breach of the Code void was that Part VI of the Act contained detailed provisions empowering the Court to grant flexible remedies for breaches of the Act and the Code. Nevertheless, the High Court also had regard to the disadvantage to franchisees if such contracts were rendered void. Gummow ACJ, Kirby, Hayne, Crennan and Kiefel JJ said:

   The final matter which supports the non-applicability of the common law sanction for contravention of s 51AD has regard to the position of the franchisee. One of the purposes of the Code is the protection of the position of the franchisee. It is not expressed to prohibit the franchisee from entering into an agreement where a franchisor had not complied with cl 11. As Rares J pointed out in Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd [No 2], it would be an unusual result if, in that circumstance, a franchisee's bargain was struck down in every case, regardless of the position in which it places the franchisee. It is not to be assumed in every case that a franchisee wishes to be relieved of their bargain. To render void every franchise agreement entered into where a franchisor had not complied with the Code would be to give the franchisor, the wrong-doer, an opportunity to avoid its obligations, and at the same time to place the franchisee in breach of obligations to third parties. A preferable result, and one for which the Act provides, is to permit a franchisee to seek such relief as is appropriate to the circumstances of the case. Some cases of non-compliance with cl 11 might involve substantial non-disclosure; others may only involve a failure to obtain the written statement, confirming that the franchisee has read and understood the disclosure document and the Code. This is such a case.[18]

   [18] At [39].

2. In Gnych v Polish Club Ltd,[19] section 92(1)(d) of the Licensing Act 2007 (NSW) created an offence for a licensee to sublease any part of licensed premises except with the approval of the Authority. The Polish Club granted a sublease to the Gnychs without obtaining the Authority’s approval. French CJ, Kiefel, Keane and Nettle JJ held that the question whether the sublease was void by reason of the contravention of section 92(1)(d) of the Act was to be determined as a matter of statutory construction:

   [19] [2015] HCA 23, (2015) 255 CLR 414.

   In Equuscorp Pty Ltd v Haxton, French CJ, Crennan and Kiefel JJ explained that an agreement may be unenforceable for statutory illegality in three categories of case, where:

   "(i)    the making of the agreement or the doing of an act essential to its formation is expressly prohibited absolutely or conditionally by the statute;

   (ii)     the making of the agreement is impliedly prohibited by statute.  A particular case of an implied prohibition arises where the agreement is to do an act the doing of which is prohibited by the statute;

   (iii)    the agreement is not expressly or impliedly prohibited by a statute but is treated by the courts as unenforceable because it is a 'contract associated with or in the furtherance of illegal purposes’.

   In the third category of case, the court acts to uphold the policy of the law, which may make the agreement unenforceable.  That policy does not impose the sanction of unenforceability on every agreement associated with or made in furtherance of illegal purposes.  The court must discern from the scope and purpose of the relevant statute 'whether the legislative purpose will be fulfilled without regarding the contract or the trust as void and unenforceable'."

   There was some vacillation on the part of the appellants as to whether their argument included an invitation to the Court to deal with the present case as a case in the first or third category.  In the end, little turns on this point because the consequence of illegality is a matter of statutory construction whatever category of illegality is involved.

   In this regard, in Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd, Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ cited with approval the observation by Mason J in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd that:

   "the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction".

   Their Honours went on to state that whether a statute which:

   "contains a unilateral prohibition on entry into a contract … is void … depends upon the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations.  Ultimately, the question is one of statutory construction."

   That statement was, in turn, cited with approval by Gummow ACJ, Kirby, Hayne, Crennan and Kiefel JJ in Master Education Services Pty Ltd v Ketchell.

   Accordingly, the scope of the prohibition in s 92(1)(d) of the Liquor Act and the consequences of a contravention of the prohibition are to be determined by the language of s 92(1)(d) of the Liquor Act construed in the context of the Liquor Act as a whole.[20]

   Gageler J said:

   Judicial determination of a statutory consequence left to statutory implication has become more sophisticated as statutory regulation has become more sophisticated and more pervasive.  What was once a strong presumption of statutory interpretation that a purported agreement made in breach of a statutory prohibition "is not only illegal, but void because illegal, unless the statute indicates a contrary intention" has, since Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd, given way to an acceptance that "[t]he question whether a statute, on its proper construction, intends to vitiate a contract made in breach of its provisions, is one which must be determined in accordance with the ordinary principles that govern the construction of statutes".[21]

   [20]   At [35]-[40]. (Citations omitted)

   [21] At [64]. (Citations omitted)

3. The High Court held that the sublease was not rendered void by section 92(1)(d). French CJ, Kiefel, Keane and Nettle JJ said:

   Section 92(1)(d) is concerned with the act of the licensee:  it proscribes the grant by the licensee rather than that which is granted.  It does not, in terms, proscribe the performance by the parties of their obligations under the relationship created by the grant.

   The Club, in pressing for a more expansive view of the scope of the proscription in s 92(1)(d), in which the rights of the parties to the lease are sterilised, did not shrink from the unattractive result that, on this view, contractual arrangements freely entered into by a licensee would be automatically sterilised, at the licensee's instigation, by the licensee's reliance on its own breach of the statute to the detriment of the lessee. 

   As a matter of legislative construction, the likelihood of adverse consequences for the "innocent party" to a bargain has been recognised as a consideration which tends against the attribution of an intention to avoid the bargain to the legislature.  That consideration is consistent with the general disinclination on the part of the courts to allow a party to a contract to take advantage of its own wrongdoing.  There may be cases where the legislation which creates the illegality is sufficiently clear as to overcome that disinclination; but it is hardly surprising that the courts are not astute to ascribe such an intention to the legislature where it is not made manifest by the statutory language…

   It is not the case that the only way in which legal effect can be given to s 92(1)(d) is by the sterilisation of leases granted in contravention of the prohibition.  Section 92(1) imposes a penalty upon breach.  In Yango, Mason J said:

   "There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished".

   This observation was cited with approval by Brennan CJ, Dawson and Toohey JJ in Byrne v Australian Airlines Ltd in the course of their Honours' expression of support for the proposition that a statute which prohibits the doing of an act under a penalty does not necessarily sterilise a legal relationship associated with that act.[22]

   Gageler J agreed with the conclusion reached in the reasons for judgment of French CJ, Kiefel, Keane and Nettle JJ on the statutory construction of section 92(1)(d).[23]

   [22]   At [43]-[45], [47]-[48]. (Citations omitted)

   [23] At [77].

4. Section 269 of the Bankruptcy Act provides:

   269    Bankrupt or debtor who is a party to a debt agreement obtaining credit etc. without disclosing bankruptcy or debt agreement

   (1)     An undischarged bankrupt or a debtor who is a party to a debt agreement shall not:

   (a)     either alone or jointly with another person, obtain credit to the extent of $3,000 or more from a person without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires);

   (aa)   either alone or jointly with another person, obtain goods or services from a person:

   (i)by giving a bill of exchange or cheque drawn, or a promissory note made, by him or her either alone or jointly with another person, being a bill, cheque or note under which the sum payable is $3,000 or more; or

   (ii)by giving 2 or more such instruments under which the sums payable amount in the aggregate to $3,000 or more;

   without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires);

   (ab)   either alone or jointly with another person, enter into a hire‑purchase agreement with a person, or enter into a contract or agreement for the leasing or hiring of any goods from a person, being a hire‑purchase agreement, contract or agreement under which the amounts payable to that person amount in the aggregate to $3,000 or more, without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires);

   (ac)   either alone or jointly with another person, obtain goods or services from a person by promising to pay that person or another person an amount of, or amounts aggregating, $3,000 or more without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires);

   (ad)   either alone or jointly with another person, obtain an amount of, or amounts aggregating, $3,000 or more from a person by promising to supply goods to, or render services for, that person or another person without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires); or

   (b)     carry on business under an assumed name, in the name of another person or, either alone or in partnership, under a firm name without disclosing to every person with whom he or she or, if he or she is carrying on business in partnership under a firm name, the partnership deals, his or her true name and the fact that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires).

   (2)     This section has effect subject to section 304A.

   Penalty:     Imprisonment for 3 years.

5. Section 269 creates a substantial penalty of imprisonment for up to three years for a contravention of the section.

6. A primary purpose of section 269(1)(b) is the protection of persons who have dealings with undischarged bankrupts carrying on business under names other than their own without disclosing their bankrupt status.

7. Section 269(1)(b) does not require an undischarged bankrupt to disclose his or her bankrupt status to any person with whom he or she deals in carrying on business under his or her own name. Presumably this is because any person dealing with an individual can search a public register to ascertain whether that individual is a bankrupt. Section 269(1)(b) only requires such disclosure when the bankrupt is carrying on business, either as a sole trader or a member of a partnership, under a name other than his or her own name. In light of modern requirements for registration of business names on public registers, it is as easy to search for the proprietor of a business name as it is to search the register of bankrupts, diminishing the rationale for section 269(1)(b). Nevertheless, it remains an offence for an undischarged bankrupt carrying on business under a name other than his or her own not to disclose his or her name and bankrupt status before dealing with another person in the course of the business.

8. There is an endless variety of different types of business that might be carried on by a bankrupt and of transactions that might be entered into by a bankrupt in the course of a business. Such transactions include the supply of goods and services to customers, the acquisition of goods and services from suppliers and subcontractors and the employment of individuals. Such transactions may be undertaken on a cash or credit basis. Such transactions may involve a credit risk to the other party, to the bankrupt only, to both parties or to neither party.

9. In many cases, the bankrupt status of a party will be immaterial to the other party (for example, a contract for the sale of goods owned by the bankrupt may involve no significant credit risk to the other party). In many cases, the other party will wish to enforce the contract notwithstanding the bankrupt status of the bankrupt party (for example, a contract for the sale of goods of the bankrupt of particular value or sentimental value to the other party). If all contracts entered into by a bankrupt in the course of business when the bankrupt has not disclosed his or her status in breach of section 269(1)(b) of the Bankruptcy Act are void, in many cases it will work to the detriment of the other party.

10. Adverse consequences for innocent parties was a factor in the High Court construing the legislative provisions in Yango Pastoral Co, Master Education Services and Gnych as not rendering the relevant contracts void. The extent of the detriment to an innocent party to a contract will vary capriciously depending on the nature of the contract, the attitude of that party and the extent of performance of the contract by the respective parties.

11. In addition, if all contracts entered into by a bankrupt in the course of business when the bankrupt has not disclosed his or her status in breach of section 269(1)(b) of the Bankruptcy Act are void, the section would operate capriciously as between the parties to the contract. The financial consequences of the contract being rendered void would depend on the extent of performance of the contract by the respective parties. In relation to the effect on the bankrupt, if the bankrupt has performed all of the work under the contract and not been paid, it will have a major and potentially disastrous effect.[24] If the bankrupt has performed a small amount of work under a contract and not been paid, it will have a relatively small adverse effect on the bankrupt. If the bankrupt has been overpaid by instalments for work performed to date, it will have no adverse effect on the bankrupt.

    [24] Before the trial Judge, Maxcon conceded that, if the Contract were void, the bankrupt would have a remedy in restitution. However, on appeal, Maxcon contends that restitution would not generally be available when the bankrupt has breached section 269(1)(b). The question whether restitution would be available is a complex one and it is impossible to attribute to the legislature an expectation that a restitution remedy would be available to a bankrupt who has breached section 269(1)(b).

12. In addition, if such contracts were rendered void, it would have adverse consequences on third parties being the creditors in the bankruptcy because it would deprive them of a share of the income earned by the bankrupt. A major purpose of the Bankruptcy Act is to ensure maximum returns to creditors in the bankruptcy. Rendering such contracts void would also have adverse consequences on third parties being new creditors of the bankrupt’s business because it would diminish the bankrupt’s income and assets otherwise available for the purpose of paying such creditors.

13. It is a very unlikely intention to attribute to the legislature that a contravention of section 269(1)(b) is to have such variable, capricious and adverse consequences.

14. Section 269(1)(b) does not expressly prohibit entry into a contract by a bankrupt without prior disclosure. It is addressed to carrying on a business. Section 269(1)(b) does not prohibit performance of a contract by a bankrupt. There is no reason to imply an intention on the part of the legislature in enacting section 269(1)(b) of rendering void any contract entered into in the course of carrying on a business without prior disclosure by a bankrupt of his or her bankrupt status in breach of section 269(1)(b) of the Bankruptcy Act. The section creates a very substantial disincentive by way of a maximum penalty of imprisonment for three years.

15. If another party is induced to enter into a contract by non-disclosure by a bankrupt of his or her bankrupt status, that non-disclosure is material to the decision to enter into the contract and the contract remains executory, the other party would be entitled to rescind the contract for misrepresentation. Conversely, if the contract has been fully performed (as in the present case), there is no good reason why the other party should not be held to its contractual obligations.

16. Considered as a matter of statutory interpretation, section 269(1)(b) does not render void a contract entered into by a bankrupt in the course of business carried on under another name in the absence of prior disclosure of the bankrupt’s status in breach of section 269(1)(b) of the Bankruptcy Act.

17. The parties have not located any authority on this question of statutory interpretation of section 269(1)(b).

18. Maxcon cites two authorities on section 269(1)(a) or its English equivalent. In De Choisy v Hynes,[25] the De Choisys entered into a contract with Hynes to sell land and the shares in a company carrying on business as a car dealer on that land for £4,000 payable by instalments of £3 per week. On discovering that Hynes was an undischarged bankrupt, the De Choisys rescinded the contract. They brought an action seeking an order for rescission and Hynes counterclaimed seeking specific performance. Bennett J made an order for rescission on the ground that Hynes had failed to disclose his bankruptcy in contravention of section 155(a) of the Bankruptcy Act 1914 (UK) by obtaining credit to the extent of £10 or more without disclosing his bankruptcy. This decision addresses rescission for misrepresentation and is not authority that non-disclosure renders a contract void.

    [25] [1937] 4 All ER 54.

19. In Whiteford v Bailey,[26] the parties entered into a contract in 1988 when Whiteford was an undischarged bankrupt. In November 1990, Bailey sued Whiteford for just over $100,000. The reasons for judgment do not disclose the nature of the contract or the factual basis of Bailey’s claim. In January 1991, Bailey obtained default judgment. In January 1991, Whiteford’s application to set aside the default judgment was dismissed. In July 1991, Whiteford filed a notice of appeal against the dismissal about six months out of time. Whiteford failed to prosecute the appeal for three years. In the meantime, Bailey died and his rights passed to his estate. In October 1994, the matter came before the Court of Appeal apparently on a motion by Bailey’s estate to dismiss the appeal on the grounds that it was out of time and for want of prosecution. Whiteford offered no explanation for his delay in filing and serving the notice of appeal and failure to prosecute it.

    [26]   Unreported, Queensland Court of Appeal, 24 October 1994.

20. The Queensland Court of Appeal dismissed the appeal because it was filed and served out of time and for want of prosecution, taking into account the serious, if not fatal, prejudice to Bailey’s estate because he could not give evidence at trial if the judgment were set aside. The Court of Appeal observed by way of aside:

    The defendant appears to have obtained credit from the plaintiff without, as far as can be gathered, disclosing that he was an undischarged bankrupt. Doing so constitutes an offence under s. 269(a) of the Bankruptcy Act, and there is authority to the effect that the contract by which such credit is obtained is not enforceable by the bankrupt. See De Choisy v Hynes. There is, however, nothing here to suggest either that the plaintiff knew of the bankruptcy or that, being ignorant of it, the agreement is unenforceable at his instance. The matter is one which, if it is relevant at all, should have been raised by the defendant at the latest on the application to set aside the judgment in 1991.

1. It appears that no evidence was adduced as to whether Whiteford did disclose his bankruptcy to Bailey. It appears that the Court of Appeal proceeded on the basis that the contract may have been capable of rescission by Bailey for non-disclosure but the point did not really arise for decision. In the circumstances, this decision is of no assistance.

2. Section 269(1)(a) creates an offence for a bankrupt to obtain credit to the extent of $3,000 or more from a person without informing that person that he or she is an undischarged bankrupt. This provision does not evince a statutory intention to render void any contract entered into by a bankrupt in the course of a business without disclosure of his or her bankrupt status for reasons similar to those in respect of section 269(1)(b). However, the two provisions have different structures and subject matters and it is unnecessary for the purpose of this appeal to express a final view on this question.

3. Assuming that Mr Vadasz did not disclose his bankruptcy to Maxcon before entry into the contract in breach of section 269(1)(b) of the Bankruptcy Act, section 269(1)(b) did not render the contract void.

   Is the contract rendered unenforceable by the bankrupt by statute?

4. Maxcon’s next alternative contention is that a contract entered into by a bankrupt in the course of carrying on a business under a firm name without disclosure of his or her bankruptcy in breach of section 269(1)(b) of the Bankruptcy Act is impliedly rendered unenforceable by the bankrupt, but not by the other party, by section 269(1)(b) of the Bankruptcy Act as a matter of statutory construction.

5. One construction theoretically open of any statutory provision creating an offence of engaging in particular conduct is that the statute renders a relevant contract unenforceable by the person engaging in the conduct and the contract remains enforceable against that person by the other party (as opposed to a simple dichotomy between the statute rendering the contract void or not). This possibility was referred to by Gageler J in Gnych v Polish Club Ltd,[27] but was not referred to by the plurality and generally has not been referred to by the High Court when addressing the question whether a statutory provision renders a contract void. Maxcon does not cite any case in which this theoretical statutory construction has been adopted. This absence of authority is not because it is not theoretically available, but because ordinary principles of statutory construction will generally militate strongly against its adoption.

   [27] (2015) 255 CLR 414 at [65].

6. In the present case, there is no basis to attribute to the legislature an intention to render a contract unenforceable by the bankrupt for want of disclosure in breach of section 269(1)(b) but for the contract to remain enforceable against the bankrupt. Bilateral contracts can range from simple to complex. At one extreme is a simple contract in which each party makes a single promise to the other and the promises are interdependent (such as an agreement to exchange a book for $100 at settlement in one week’s time). If such a contract is rendered unenforceable by the bankrupt but enforceable by the other party, principles would need to be implied into the section to determine in what circumstances and on what terms the other party could sue the bankrupt for specific performance or damages for breach of contract. Perhaps it might be implied that the right of the other party to sue would be contingent on its providing the promised consideration. Regardless of the answer to this question, typically a contract will involve non-interdependent promises by the first party to the second party; non-interdependent promises by the second party to the first party; mutual covenants; terms which cannot be characterised as promises by either party; conditions to which the contract or part of the contract or performance or part of the performance is subject; terms governing secondary rights; terms governing incidental matters, and other contractual provisions. If such a contract is rendered unenforceable by the bankrupt but enforceable by the other party, a complex set of principles would need to be implied into the section to determine in what circumstances and on what terms the other party could sue the bankrupt for specific performance or damages for breach of contract. These matters are incapable of being addressed as a matter of implication from the statute. It would give rise to uncertainty, unworkability and/or manifest unfairness in very many instances.

7. Assuming that Mr Vadasz did not disclose his bankruptcy to Maxcon before entry into the contract in breach of section 269(1)(b) of the Bankruptcy Act, section 269(1)(b) did not render the contract unenforceable by Mr Vadasz against Maxcon but enforceable by Maxcon against Mr Vadasz.

8. For the sake of completeness, it is to be observed that Maxcon’s contention proceeds on the premise that, if the Contract is rendered unenforceable by Mr Vadasz and enforceable by Maxcon, the adjudicator had no jurisdiction to make the adjudication determination. This premise is not necessarily valid. In Brodyn Pty Ltd v Davenport,[28] section 10 of the Home Building Act 1989 (NSW) provided that a contract was unenforceable by an unlicensed contractor. The New South Wales Court of Appeal held that this did not result in the adjudication under the New South Wales counterpart of the Act on the application of the unlicensed contractor being void.[29] It is unnecessary to consider this question given the conclusion that section 269(1)(b) of the Bankruptcy Act does not render the Contract unenforceable by Mr Vadasz.

   [28] [2004] NSWCA 394, (2004) 61 NSWLR 421.

   [29]   At [82]-[83] per Hodgson JA (with whom Mason P and Giles JA agreed). Brodyn was not followed in other respects by the Court of Appeal in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190, (2010) 78 NSWLR 393 but not specifically in respect of this aspect of the decision. Nevertheless this aspect may potentially be affected by the different approach taken in Chase Oyster Bar. It is unnecessary to consider this further.

   Is the Contract void at common law?

9. Maxcon’s next alternative contention is that, having been entered into by Mr Vadasz in the course of carrying on a business under a firm name without disclosure of his bankruptcy in breach of section 269(1)(b), the Contract is void at common law as being contrary to public policy.

10. A contract, or a covenant within a contract, is void and unenforceable if the performance of the contract or covenant necessarily entails (or sometimes if the purpose of the contract or covenant is) the commission of:

    1a crime or tort;

    2immoral conduct of a recognised type; or

    3conduct prejudicial to a recognised category of public policy.

11. If a covenant, as opposed to the whole contract, is impugned, the covenant itself will be void but the balance of the contract will survive if that is the contractual intention of the parties under the doctrine of severance.[30]

    [30]   A v Hayden (1984) 156 CLR 532 at 557 per Mason J.

12. Although the categories are not fixed and new categories can be recognised, considerable caution must be exercised before doing so.[31]

    [31]   A v Hayden (1984) 156 CLR 532 at 559 per Mason J; Cattanach v Melchior [2003] HCA 38, (2003) 215 CLR 1 at [60]-[64] per McHugh and Gummow JJ and [233] per Hayne J.

13. Recognised categories of immoral conduct falling within the second broad group historically involved sexual immorality.[32] This category originated in a different era of attitudes to the social contract and before the advent of extensive statutory and regulatory control. It has waned in modern times and new categories within this group of immoral conduct are unlikely to be recognised in future. This group is not relevant in the present case.

    [32]   Pearce v Brooks (1866) LJ (Exch) 134 at 135 per Pollock CB, 135-136 per Pigott B and 136 per Bramwell B.

14. Recognised categories of public policies falling within the third broad group include fettering administrative action or statutory powers or duties,[33] impairing impartiality of public officials,[34] impairing national security or foreign relations,[35] impairing the administration of justice,[36] ousting the jurisdiction of the courts,[37] unreasonably restraining trade,[38] imposing a penalty for breach of contract[39] or injuring the status of marriage.[40] This group is not relevant in the present case.

    [33]   Rederiaktiebolaget Amphitrite v The King [1921] 3 KB 500 at 503-504 per Rowlatt J; Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 17 per Mason CJ.

    [34]   Wilkinson v Osborne (1915) 21 CLR 89 at 94 per Griffiths CJ and 105 per Issaacs J (with whom Gavan Duffy J agreed).

    [35]   Foster v Driscoll [1929] 1 KB 470 at 510-511 per Lawrence LJ and 521-522 per Sankey LJ.

    [36]   Callaghan v O’Sullivan [1925] VLR 664 at 666 per Irvine CJ, Trendtex Trading Corporation v Credit Suisse [1982] AC 679 at 694 per Lord Wilberforce and 702-703 per Lord Roskill (with whom Lords Edmund-Davies, Fraser of Tullybelton and Keith of Kinkel agreed).

    [37]   Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432 at 437-438 per Kitto J, 441-442 per Taylor J and 479 per Owen J.

    [38]   Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269 at 294-295 per Lord Reid, 304-306 per Lord Morris of Borth-Y-Guest, 317-319 per Lord Hodson, 324-325 per Lord Pearce and 331-333 per Lord Wilberforce; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 293-294 per Menzies J, 305-307 per Walsh J (with whom McTiernan ACJ agreed) and 315-317 per Gibbs J.

    [39]   Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30, (2012) 247 CLR 205 at [9]-[14] and [78] per Frend CJ, Gummow, Crennan, Kiefel and Bell JJ.

    [40]   Hermann v Charlesworth [1905] 2 KB 123 at 131 per Collins MR (with whom Mathew LJ agreed) and 137 per Cozens-Hardy LJ; Minister for Education v Oxwell [1966] WAR 39 at 42-43 per Virtue J.

15. The only relevant group is the first group, namely the performance of the contract or covenant necessarily entails (or sometimes the purpose of the contract or covenant is) the commission of a crime (or tort).

16. In Wilkinson v Osborne,[41] Isaacs J (with whom Gavan Duffy J agreed) said:

    What is the test of "public policy" which a Judge is entitled and bound to apply to an agreement, the validity of which is impeached on that ground?

    It is not easy to collect or to reconcile all the observations on the subject of "public policy." But the judgment of Lord Halsbury LC in Janson v Driefontein Consolidated Mines Ltd makes it clear that a Court has not a roving commission to declare contracts bad as being against public policy according to its own conception of what is expedient for or would be beneficial or conducive to the welfare of the State. A Court, says the Lord Chancellor, cannot invent a new head of public policy, and he enumerates some instances of undoubtedly unlawful things. …

    …

    In my opinion the "public policy" which a Court is entitled to apply as a test of validity to a contract is in relation to some definite and governing principle which the community as a whole has already adopted either formally by law or tacitly by its general course of corporate life, and which the Courts of the country can therefore recognize and enforce. The Court is not a legislator: it cannot initiate the principle; it can only state or formulate it if it already exists.

    The rule of law as to contracts against public policy is constant—namely, that every bargain contrary to such a social governing principle is regarded as prejudicial to the State, or, in other words, contrary to "public policy" or, as it is sometimes called, "policy of the law," and the State by its tribunals refuses to enforce it.

    But, as was said by the Judicial Committee in Evanturel v. Evanturel, "the determination of what is contrary to the so-called "policy of the law" necessarily varies from time to time. Many transactions are upheld now by our own Courts which a former generation would have avoided as contrary to the supposed policy of the law. The rule remains, but its application varies with the principles which for the time being guide public opinion."

    … But the point to bear in mind is that the principle which is to be the standard of legality must at the time be one which is of general recognition in the community as one essential to its corporate welfare. Some are not the subject of actual law—such as sexual morality and the promotion of marriage. Others are recognized as fundamental principles of the common law—as the protection of the public revenue, the administration of justice, the freedom and inherent duty of the Legislature and Executive.[42]

    [41] (1915) 21 CLR 89.

    [42]   At 96-98.

17. In A v Hayden,[43] Mason J,[44] Wilson and Dawson JJ[45] and Brennan J[46] referred to or cited part of this passage from the judgment of Isaacs J. Mason J said:

    The refusal of the courts to enforce contracts on grounds of public policy is a striking illustration of the subordination of private right to public interest. The problem is one of formulating with any degree of precision the criteria or the circumstances which will justify a court in refusing to enforce a contract on the ground that there is a countervailing public interest amounting to public policy. The difficulties in ascertaining the existence and strength of an identifiable public interest to which the courts should give effect by refusing to enforce a contract are so formidable as to require that they “should use extreme reserve in holding such a contract to be void as against public policy, and only do so when the contract is incontestably and on any view the inimical to the public interest”.[47]

    [43] (1984) 156 CLR 532.

    [44]   At 558.

    [45]   At 571.

    [46]   At 591.

    [47]   At 559.

18. In Cattanach v Melchior,[48] McHugh and Gummow JJ said:

    In Smith v Jenkins, Windeyer J observed that "public policy" in relation to the common law of torts is not to be thought of as like that public policy which invalidates contracts and, one might add, certain trusts and conditions attached to voluntary dispositions by will or settlement. In those areas, the starting point has been the favour with which the law has looked upon the right of private contract and the performance of contracts, and upon the freedom of disposition of property, by dispositions inter vivos and testamentary. Countervailing policies matured by the long course of judicial decision into detailed doctrines.

    Some (such as the restraint of trade doctrine, the rules against perpetuities, and the rules against contractual restraints upon alienation considered in Hall v Busst) are based upon economic notions.

    Other policies protect and maintain the proper relationship between the citizen and the branches of government. The authorities here include … the importuning of the advisers of the Crown to secure the bestowal of honours by the Crown and the decisions of this Court respecting the "lobbying" of legislators, Ministers and public officers ... Other cases are protective of the authority of the courts. They include the treatment … of covenants to oust the jurisdiction of the courts…[49]

    Hayne J said:

    Public policy considerations have most often been considered in connection with contract and succession to property. In those areas public policy plays a wholly negative role, denoting (as was said in a different context) "a justification or excuse for not applying, or recognising the application of, an otherwise applicable rule of law". A contract will not be enforced if it is unlawful (as, for example, a contract to commit a crime), if it is injurious to foreign relations or to the prejudice of public safety, if it is injurious to the proper working of justice, if it is an unreasonable restraint of trade, if it is injurious to good government, if it is an attempt to oust the jurisdiction of the courts or if it is injurious to the status of marriage or promotes sexual immorality. …

    In both contract and succession the operation of public policy considerations is now well developed. In particular, there is a clear articulation of the need to resolve the tension between competing policies of the law. In the case of contract, it is well accepted that the law will seek to give effect to bargains that are struck between those of full age and capacity. To refuse to enforce a particular bargain on the grounds of public policy trenches upon the general policy favouring the enforceability of bargains. … But in both contract and succession there is a discernible policy of the law which resort to public policy considerations would confine or modify.[50]

    [48] (2003) 215 CLR 1.

    [49]   At [60]-[62].

    [50]   At [234]-[235].

19. In Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd,[51] Gibbs J did not refer explicitly to the common law doctrine and certainly did not consider that it rendered the contract void. Mason J (with whom Aickin J agreed) and Jacobs J each first addressed the issue of statutory construction and then reached a similar conclusion under the common law doctrine giving primary weight to the intention of the statute. After concluding that the statute did not render the contract void, Mason J said:

    [51] (1978) 139 CLR 410.

    …The question therefore remains whether the court will allow the plaintiff to enforce the contract. The suggestion is that the court will not do so and that its refusal so to do is dictated by the principle ex turpi causa non oritur actio or by the more specific rule that the court will not enforce the contract at the suit of a party who has entered into a contract with the object of committing an illegal act.

    …

    … There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished …

    However, in the present case Parliament has provided a penalty which is a measure of the deterrent which it intends to operate in respect of non-compliance with s. 8. In this case it is not for the court to hold that further consequences should flow, consequences which in financial terms could well far exceed the prescribed penalty and could even conceivably lead the plaintiff to insolvency with resultant loss to innocent lenders or investors. …

    Nevertheless, the principle that the court will not enforce a contract at the suit of a party who has entered into it with the object of committing an illegal act does not avail the appellant in this case. The considerations to which I have already referred serve to show that the legislative intention expressed by the Act is that a contract made by a corporation carrying on banking business in breach of s. 8 is not illegal and void, but rather that it is a valid contract and that the only penalty which the corporation suffers in consequence of its breach of the section is a liability to conviction and fine under the provisions of the section.[52] 

    After concluding that the statute did not render the contract void, Jacobs J said:

    In other cases the prohibition against carrying on a business may not be able to be construed as either an express or implied prohibition against the making of a particular contract. Nevertheless in such a case the courts may not enforce such a contract but, if they do not, it is not because the contract itself is directly contrary to the provisions of the statute by reason of an express or implied prohibition in the statute itself but because it is a contract associated with or in the furtherance of illegal purposes… The refusal of the courts to regard such contracts as enforceable stems not from a legislative prohibition but from the policy of the law, commonly called public policy. It is of these contracts that Lord Wright said in Vita Food Products Inc v Unus Shipping Co Ltd:

    "Nor must it be forgotten that the rule by which contracts not expressly forbidden by statute or declared to be void are in proper cases nullified for disobedience to a statute is a rule of public policy only, and public policy understood in a wider sense may at times be better served by refusing to nullify a bargain save on serious and sufficient grounds."

    I would take the reference to "expressly forbidden" to comprehend the case of a prohibition implied as a matter of construction of the statute itself.

    …

    … the contract is only unenforceable if the courts should decline to enforce it because it is associated with the illegal purpose or activity of carrying on the banking business. This is where it is necessary to consider public policy. What public policy of the law would be served? In this connexion it is proper, as was done in Archbolds (Freightage) Ltd v S Spanglett Ltd, to have regard primarily to the scope and purpose of the statutory provision, to consider whether the legislative purpose will be fulfilled without the courts regarding the contract as void and unenforceable. I cannot see that any legislative purpose of s 8 of the Banking Act would be served by preventing a corporation in breach of its provisions from recovering moneys lent on mortgage. A primary purpose of the Banking Act is to protect against loss depositors of money with a corporation which by accepting that money and safeguarding it and lending it out again thereby carries on the business of banking. That purpose is defeated if the depositors' money, lent out by the corporation, is thereby irrevocably lost to the corporation and consequently to the depositors. The avoidance of the contract would cause grave injury to depositors, particularly those who had deposited their money without the knowledge that the corporation had no authority to carry on the banking business. Their right to recovery of their money would be of no avail to such depositors if the corporation could not recover the money which it had in turn lent. I find this a sufficient reason of public policy, based as it is on the scope and purpose of s 8 itself, to decline to apply any rule of public policy that a contract made in association with an illegal purpose cannot be sued on.[53]

    [52]   At 427, 429-430.

    [53]   At 432, 434. (Citations omitted)

1. In this case it is likewise unnecessary to reach a final conclusion as to the fault and physical elements of the offence created by s 269(1)(b). It is enough to note that the fault element is either intention or recklessness and that, as such, the defence of mistake or ignorance of fact is available to a person accused of committing that offence.

2. Significantly, with the application of the Code the offence ceased to be one of strict liability.[207]

   [207] As to the nature of the offence prior to the application of the Code, see R v Scott (1996) 131 FLR 137.

3. Returning to the trial judge’s reasons as quoted above.[208] Clearly the judge concluded that Mr Gorsovski was credible and reliable. In fact, he found the evidence of Mr Gorsovski as to whether Mr Vadasz had made the relevant disclosure to him compelling. I do not think it can be said that the trial judge did not reach a state of actual persuasion that the disclosure was not made. He concluded, “[a]ccordingly, I reject the first defendant’s evidence that the disclosure required by s 269(1)(b) was made.” But there is absent any indication of an actual persuasion that such disclosure was made intentionally or recklessly. The finding made is not a finding of the commission of the offence created by s 269(1)(b) on the balance of probabilities. Nowhere does the trial judge refer to the presumption of innocence nor the exactness of proof.[209] This, in my view, is symptomatic of the effect of failing to truly take into account the Briginshaw considerations.

   [208] At [257].

   [209] Briginshaw v Briginshaw (1938) 60 CLR 338 at 363 (Dixon J).

4. The finding that Mr Vadasz did not make the necessary disclosure cannot be construed as necessarily carrying with it a finding that he did so intentionally or recklessly. The objective theory of intent was long ago dismissed as forming part of the criminal law of this country.[210]

   [210] Parker v The Queen (1963) 111 CLR 610.

5. Concluding that Mr Gorsovski was credible and reliable did not resolve the issue. The issue was not, did Mr Vadasz disclose the fact of his being an undischarged bankrupt to Maxcon. The issue was, has it been proven on the balance of probabilities that Mr Vadasz committed the offence created by s 269(1)(b). The Briginshaw considerations, adapted to the circumstances of this case, if considered, would have brought home the true nature of the task required of the trial judge. The importance and gravity of the allegation lay in the fact that it was an allegation of the commission of a crime, not a mere allegation of an omission. Had the trial judge reminded himself “that members of our society do not ordinarily engage in fraudulent or criminal conduct” and to adopt “a judicial approach that a court should not lightly make a finding that, on the balance of probabilities” a litigant has been guilty of such conduct, he would have appreciated that the criminal law was engaged albeit that civil standard of proof applied. His attention then would have been drawn to the necessity that all elements be proven to the civil standard bearing in mind that weight was to be given to the “presumption of innocence and exactness of proof … expected”.[211]

   [211] Briginshaw v Briginshaw (1938) 60 CLR 336 at 363 (Dixon J).

6. To be fair to the trial judge, counsel did not draw his attention to the application of the Code to the Bankruptcy Act nor make any submission as to the application of the Briginshaw considerations. These matters were raised for the first time on the hearing of the appeal.

7. I would uphold the Notice of Contention.

8. This is not a matter where, in view of the error made, this Court can conduct an independent assessment of the evidence and determine the appropriate outcome. Here any finding of a breach of s 269(1) of the Bankruptcy Act and, in particular, whether it was committed intentionally or recklessly, will turn in no small part upon credibility. That, in turn, necessitates seeing and hearing the witnesses. Thus, if this Court and the trial judge are wrong and a breach of s 269(1)(b) of the Bankruptcy Act does render the contract unlawful and of no effect, and the notice of contention is upheld, the appropriate orders are to set aside the orders of the trial judge and to remit the matter for a new trial.

   The retention sum

   a.   The adjudicator erred in his determination of the retention sum

9. I agree with Blue J for the reasons he gives that the adjudicator was entitled to rely upon Maxcon’s response considerations in his consideration of the terms of the head contract. I also agree with Blue J for the reasons he gives that the adjudicator nonetheless erred in concluding that clause 11(e) of the Contract constituted a “pay-when-paid” provision within the meaning of s 12(2) of the BCISP Act.

   b.   Is the error a jurisdictional error?

10. Before the trial judge Maxcon sought an order in the nature of certiorari quashing the adjudicator’s determination. Maxcon contended that the adjudicator’s error in concluding that clause 11(e) of the contract constituted a “pay-when-paid” provision within the meaning of s 12(2) of the BCISP Act, amounted to a jurisdictional error. When an error of law is described as a jurisdictional error, the descriptor signifies that the relevant repository of power has purported to exercise the power reposed in it in breach of the legal rules that mark out the limits of that power and which condition its valid exercise. The boundary between a jurisdictional error and a non-jurisdictional error is often difficult to determine. In this regard the conclusory terms, ‘jurisdictional’ and ‘non-jurisdictional’, are largely unhelpful. In United States v L A Tucker Truck Lines Inc Frankfurter J declined to use the term ‘jurisdictional’ “because it is a verbal coat of too many colors”.[212] Elsewhere his Honour had described ‘jurisdiction’ as competing with “‘right’ as one of the most deceptive of legal pitfalls”.[213]

    [212] 344 US 33 at 39 (1952).

    [213] City of Yonkers v United States 320 US 685 at 695 (1944).

11. The concept of a jurisdictional error when applied to an administrative decision maker is very broad. In Craig v South Australia Brennan, Deane, Toohey, Gaudron and McHugh JJ said:[214]

    At least in the absence of a contrary intent in the statute or other instrument which established it, an administrative tribunal lacks authority either to authoritatively determine questions of law or to make an order or decision otherwise than in accordance with the law. That point was made by Lord Diplock in In re Racal Communications Ltd:

    "Parliament can, of course, if it so desires, confer upon administrative tribunals or authorities power to decide questions of law as well as questions of fact or of administrative policy; but this requires clear words, for the presumption is that where a decision-making power is conferred on a tribunal or authority that is not a court of law, Parliament did not intend to do so."

    The position is, of course, a fortiori in this country where constitutional limitations arising from the doctrine of the separation of judicial and executive powers may preclude legislative competence to confer judicial power upon an administrative tribunal. If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it.

    (footnotes omitted).

    [214] (1995) 184 CLR 163 at 179.

12. In Minister for Immigration and Multicultural Affairs v Yusuf McHugh, Gummow and Hayne JJ, with whom Gleeson CJ and Gaudron J agreed, quoted the latter part of the passage from Craig reproduced immediately above and added:[215]

    "Jurisdictional error" can thus be seen to embrace a number of different kinds of error, the list of which, in the passage cited from Craig, is not exhaustive. Those different kinds of error may well overlap. The circumstances of a particular case may permit more than one characterisation of the error identified, for example, as the decision-maker both asking the wrong question and ignoring relevant material. What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it. Nothing in the Act suggests that the Tribunal is given authority to authoritatively determine questions of law or to make a decision otherwise than in accordance with the law.

    (footnotes omitted).

    [215] (2001) 206 CLR 323 at [82].

13. In the joint reasons in Kirk v Industrial Court of New South Wales French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ referred to Craig with approval and observed that the distinction between a jurisdictional error committed by an inferior court and that committed by an administrative decision maker lay “in the lack of authority of an administrative tribunal (at least in the absence of contrary intent in the statute or other instrument establishing it) “either to authoritatively determine questions of law or to make an order or decision otherwise than in accordance with the law””.[216] It follows that where an administrative decision maker is invested with power by statute, as in this case, the limits of the decision maker’s powers are to be found in the statute. Further, whether any breach of such limit results in the purported exercise of power being one without jurisdiction is also to be discerned from the statute. The task reflects the purpose of the constitutionally entrenched supervisory jurisdiction of this Court, namely, the “determination and the enforcement of the limits on the exercise of State executive and judicial power by persons and bodies other than the Supreme Court.”[217]

    [216] (2010) 239 CLR 531 at [68].

    [217] Kirk v Industrial Court of New South Wales (2013) 239 CLR 531 at [98] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

14. The payment claim issued by Mr Vadasz in accordance with s 13 BCISP Act made no mention of the retention amount. It was the payment schedule served under s 14 BCISP Act that asserted that Mr Vadasz was not entitled to the retention sum. The payment schedule being for an amount less than the payment claim, the right contained in s 17 BCISP Act to apply for an adjudication of the claim was enlivened. Mr Vadasz exercised that right. In his submission, provided in accordance with s 17(3)(h) BCISP Act, Mr Vadasz asserted that the contractual provision pursuant to which Maxcon purported to retain the retention sum was a pay-when-paid provision within the meaning of s 12 BCISP Act with the consequence that Maxcon had no right to retain it.

15. Pursuant to s 22 BCISP Act the adjudicator was required to determine the amount of any progress payment, the rate of interest payable on that amount, and the date upon which it was to be paid. The exercise of that power necessitated amongst other things a consideration of the terms of the contract. There is a body of authority in other States dealing with coordinate legislation that may be said to stand for the proposition that an error committed by an adjudicator as to the calculation of an amount due under a construction contract committed as a consequence of a misinterpretation of the contractual provisions is not a jurisdictional error.[218] However, those authorities do not stand for the proposition that every and any error of law committed by an adjudicator is immune from review for jurisdictional error.

    [218] See, for example, Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd (2005) 63 NSWLR 385; O’Donnell Griffin Pty Ltd v John Holland PtyLtd (2009) 25 BCL 313; Clyde Bergemann v Varley Power [2011] NSWSC 1039; Watpac Construction (Qld) Pty Ltd v KLM Group Ltd [2013] QSC 236; Ooralea Developments Pty Ltd v Civil Contractors (Australia) Pty Ltd (2015) 1 Qd R 311.

16. In this case the adjudicator had to determine whether or not clause 11 was a pay-when-paid provision. The answer to that question required the adjudicator to construe s 12(1) and (2) BCISP Act, construe clause 11 of the contract, and then determine whether clause 11, as construed, fell within the terms of s 12(1) BCISP Act, as construed. That last step involved a question of law, arguably a question of mixed law and fact.[219]

    [219] Collector of Customs v Pozzolonic Enterprises Pty Ltd (1993) 43 FCR 280 at 287-8 (The Court); Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 394-6 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ); Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at [24] (Gleeson CJ, Gummow and Callinan JJ).

17. Section 12(1) of the BCISP Act provided:

    A pay when paid provision of a construction contract has no effect in relation to any payment for construction work carried out or undertaken to be carried out (or for related goods and services supplied or undertaken to be supplied) under the contract.

18. That section has the effect of overriding the bargain struck between builder and contractor but only to the extent provided. It follows that s 12(1) defines a limit of the right vested under s 8 and a limit to the correlative obligation borne by a person liable to make a progress payment. So doing s 12(1) also necessarily sets a limit on the power of the adjudicator. If the relevant provision pursuant to which a sum is retained is not a pay-when-paid provision, but is retained for some other purpose pursuant to the bargain struck and does not offend s 33 (an additional limit), the adjudicator is not empowered to act contrary to it.

19. As such the determination of whether a provision of a contract that permits a builder to withhold a portion of money otherwise payable for construction work or the supply of related goods and services is a pay-when-paid provision, determines the ambit of the right to a progress payment granted by s 8 BCISP Act. That is, whilst the right contained in s 8 cannot be cut down by a pay-when-paid provision (or a provision contracting out of the BCISP Act), it may be cut down by some other provision that permits retention of a sum otherwise owed for construction work or the supply of related goods and services under a construction contract. Thus, an adjudicator may adjudicate the right to, and determine the amount of, a progress payment despite the existence of a pay-when-paid provision, but has no power to adjudicate the right to, and determine the amount of, a progress payment incorporating a sum excluded by reason of a provision of a contract that does not answer the statutory definition of a pay-when-paid provision yet permits retention of an amount earned and does not offend s 33 BCISP Act.

20. If this analysis is correct, the ambit of the right conferred and the correlative obligation and related limit of the power vested in the adjudicator as demarked in part by whether a provision is a pay-when-paid provision are jurisdictional. In particular, whether a provision in a contract is a pay-when-paid provision determines the limits of the power vested in the adjudicator.[220] Here in consequence of determining that clause 11 answered the statutory description of a pay-when-paid provision the adjudicator awarded an amount as part of the determination made that he or she had no power to award. For an adjudicator to include in a determination an amount that may be retained pursuant to a clause of a contract that is not a pay-when-paid provision in the belief that it is a pay-when-paid provision amounts to the misapprehension of a limit on the right vested by s 8 of the BCISP Act, a misapprehension of the limit on the correlative obligation, and a misapprehension of the limits of the power permitting the adjudicator to determine an adjudication application.

    [220] Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 at 574-5 (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

21. An alternate way of looking at the issue is to say that the erroneous application of s 12(1) to clause 11 has expanded the jurisdiction of the adjudicator in that it has resulted in the adjudicator awarding a progress payment including a sum excluded by the BCISP Act from his or her consideration. In the language of the High Court in Craig, the adjudicator has reached a mistaken conclusion, and the exercise or purported exercise of power is thereby affected with the consequence that he or she has exceeded their authority or power. In the language of the majority in Kirk, the adjudicator has mistakenly asserted jurisdiction in that he or she has misapprehended the limits of the power to be exercised.

22. Nothing in the BCISP Act suggests that the adjudicator had power to authoritatively determine whether a clause in a contract was a pay-when-paid provision within the meaning of s 12(1) and thus a clause which could not cut down the right conferred by s 8 BCISP Act nor the limits of the power conferred by s 22 BCISP Act. I can find nothing in the BCISP Act that would suggest that Parliament intended that any error made by an adjudicator in the construction and application of s 12(1) BCISP Act shall not result in invalidity. I do not think the “pay now – litigate later” nature of the scheme nor any implication to be drawn from s 25 BCISP Act or the absence of a right of appeal alters this conclusion.

23. Accordingly, respectfully, I disagree with Blue J. In my view the adjudicator has made a jurisdictional error.

    c.   Is the adjudicator’s error an error of law on the face of the record?

24. If I am wrong and the adjudicator’s error is not a jurisdictional error, I agree with Blue J for the reason he gives that that same error is an error of law on the face of the record.

    d.   Does certiorari lie for the error of law on the face of the record committed by the adjudicator?

25. I agree with Blue J for the reasons he gives that as a matter of statutory construction the BCISP Act does not exclude the exercise of this Court’s supervisory jurisdiction in the review of an adjudication determination to grant certiorari where there occurs an error of law on the face of the record. Nonetheless, I also agree with Blue J that it cannot be said that the New South Wales Court of Appeal is plainly wrong in arriving at the contrary conclusion in Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2)[221] in relation to what may be regarded as uniform national legislation and that, having regard to what fell from the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd,[222] we should consider ourselves bound by that decision. Accordingly, I agree that the error of law on the face of the record committed by the adjudicator is not amenable to review by this Court.

    [221] [2016] NSWCA 379.

    [222] (2007) 230 CLR 89 at [135] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).

    Conclusion

26. In view of my conclusion that a jurisdictional error has been committed, I would allow the appeal. I would set aside the orders of the trial judge. I would quash the determination of the adjudicator. That leaves extant an adjudication application which should be dealt with in the normal way by the nominating authority. No need arises for any order of this Court remitting the matter to the adjudicator and no such order should be made. An adjudicator does not hold an office or position that continues in existence once a determination is made. I would hear the parties as to costs and any incidental orders.

1. In view of this conclusion, no need arises, and I do not consider, what relief would follow in the event that it is held elsewhere that review for error on the face of the record was not abrogated by the BCISP Act.