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Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd

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HIGH COURT OF AUSTRALIA
KIEFEL CJ,
BELL, GAGELER, KEANE, NETTLE, GORDON AND EDELMAN JJ
PROBUILD CONSTRUCTIONS (AUST) PTY LTD APPELLANT
AND
SHADE SYSTEMS PTY LTD & ANOR RESPONDENTS
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd
[2018] HCA 4
14 February 2018
S145/2017
ORDER
Appeal dismissed.

On appeal from the Supreme Court of New South Wales
Representation
B W Walker SC with S Robertson and M R L Forgacs for the appellant (instructed by Maddocks Lawyers)
M Christie SC with D P Hume for the first respondent (instructed by Moray & Agnew)
Submitting appearance for the second respondent
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

Administrative law – Judicial review – Availability of certiorari – Error of law on face of record – Non-jurisdictional error – Building and Construction Industry Security of Payment Act 1999 (NSW) – Where Act confers entitlement to "progress payment" on persons who undertake to carry out construction work under construction contracts and provides scheme for determining disputed claims – Where first respondent made claim for progress payment – Where claim referred to adjudicator for determination – Where adjudicator made error of law in reasons for determination – Where reasons form part of record – Whether Act ousts jurisdiction of Supreme Court of New South Wales to make order in nature of certiorari to quash determination for non‑jurisdictional error of law on face of record.
Words and phrases – "clear legislative intention", "error of law on the face of the record", "interim entitlement", "jurisdictional error", "non-jurisdictional error", "order in the nature of certiorari".
Building and Construction Industry Security of Payment Act 1999 (NSW), Pts 2, 3.
Supreme Court Act 1970 (NSW), ss 22, 69.

KIEFEL CJ, BELL, KEANE, NETTLE AND GORDON JJ. The Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Security of Payment Act") establishes a scheme of rights and procedures relating to the receipt and recovery by contractors of progress payments for construction work. Under the scheme, disputed payment claims may be referred for determination by an adjudicator.
The only question in this appeal is whether the scheme established by the Security of Payment Act for claims for, and payment of, progress payments ousts the jurisdiction of the Supreme Court of New South Wales to make an order in the nature of certiorari to quash a determination by an adjudicator for error of law on the face of the record that is not a jurisdictional error. The answer is yes: the Security of Payment Act does oust that jurisdiction.
The Security of Payment Act
Enacted in 1999, the Security of Payment Act was followed by closely equivalent statutes in Victoria, Queensland, the Australian Capital Territory, South Australia and Tasmania[1].
[1]Building and Construction Industry Security of Payment Act 2002 (Vic); Building and Construction Industry Payments Act 2004 (Q); Building and Construction Industry (Security of Payment) Act 2009 (ACT); Building and Construction Industry Security…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] HCA 4
Decision Date: 14 February 2018

CaseChat Overview and Summary

The High Court of Australia considered an appeal from the Supreme Court of New South Wales concerning the availability of judicial review for an adjudicator's determination under the *Building and Construction Industry Security of Payment Act 1999* (NSW). The dispute arose between Probuild Constructions (Aust) Pty Ltd and Shade Systems Pty Ltd, where Shade Systems made a claim for a progress payment. Probuild disputed the claim, asserting a right to set off a significant amount for liquidated damages due to alleged delays. An adjudicator determined that Shade Systems was entitled to a progress payment, rejecting Probuild's set-off claim on specific grounds. Probuild subsequently sought an order in the nature of certiorari to quash the adjudicator's determination.

The central legal issue before the High Court was whether the *Security of Payment Act* excluded the jurisdiction of the Supreme Court to grant an order in the nature of certiorari for a non-jurisdictional error of law appearing on the face of the adjudicator's determination. This involved considering the effect of the Act's provisions, particularly its strict timetable for determinations and the absence of a formal right of appeal, on the traditional supervisory jurisdiction of the Supreme Court. The Court had to determine if the Act evinced a clear legislative intention to oust this jurisdiction for errors that did not render the decision entirely beyond power.

The High Court reasoned that the *Security of Payment Act*, while establishing a swift and final determination process, did not contain a privative clause that clearly evinced an intention to exclude the Supreme Court's jurisdiction to grant certiorari for non-jurisdictional errors of law on the face of the record. The Court distinguished between jurisdictional errors, which render a decision a nullity, and non-jurisdictional errors, which occur within the exercise of conferred power. The Act's scheme, including its strict timeframes and lack of appeal rights, was premised on the assumption that decisions would not be subject to challenge for errors of law that did not exceed the adjudicator's authority. The Court affirmed that legislation rarely authorises legal error and that expressions such as "authority to go wrong" typically refer to errors made within jurisdiction that are rendered unreviewable by a privative clause, rather than authorising the error itself.

The appeal was dismissed.

Orders

Orders of the court

Appeal dismissed.

Background

Background to the litigation

Parties may not contract out of the scheme[21]. But the rights, duties and remedies arising under a construction contract are acknowledged and preserved by ss 3(4) and 32. In particular, s 32 clarifies that nothing in Pt 3 affects any right that a party to a construction contract may have under that contract. Moreover, nothing done under Pt 3 affects any civil proceedings arising under a construction contract except as provided in s 32(3), which provides that, in any such proceedings, a court or tribunal:"(a)must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or award it makes in those proceedings, and(b)may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings."[21]s 34 of the Security of Payment Act.Facts Probuild Constructions (Aust) Pty Ltd ("Probuild") and Shade Systems Pty Ltd ("Shade Systems") were parties to a subcontract under which Shade Systems agreed to supply and install external louvres for an apartment development. On 23 December 2015, Shade Systems served on Probuild a payment claim pursuant to s 13 of the Security of Payment Act stating that a progress payment of $294,849.33 (excluding GST) was due. On 11 January 2016, Probuild provided a payment schedule pursuant to s 14 of the Security of Payment Act indicating that it did not propose to pay any of the amount claimed. Probuild relevantly contended that it was entitled to set off, against the amount in the payment claim, a considerably higher amount for liquidated damages ($1,089,900.00) which it asserted was owing because works were not completed before the "Date for Practical Completion" in the subcontract. Pursuant to s 17 of the Security of Payment Act, Shade Systems applied for adjudication of its payment claim. The adjudicator rejected Probuild's liquidated damages claim on the basis that liquidated damages could not be calculated until either "practical completion" (being actual completion of the works) or termination of the subcontract. The adjudicator determined that the amount of the progress payment payable by Probuild to Shade Systems was $277,755.03 (including GST). Proceedings for certiorari Probuild sought, under s 69 of the Supreme Court Act 1970 (NSW), an order in the nature of certiorari quashing the determination of the adjudicator. The primary judge (Emmett AJA) did not consider that the Security of Payment Act excluded the jurisdiction of the Supreme Court to make an order in the nature of certiorari for error of law on the face of the record[22]. Emmett AJA made the order sought by Probuild on two bases: first, the adjudicator erroneously considered that no entitlement to liquidated damages arose until practical completion or termination of the subcontract; and second, the adjudicator erroneously considered that Probuild needed to demonstrate that Shade Systems was at fault for the delay for which it claimed liquidated damages. [22]Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2016] NSWSC 770 at [74].

Evidence

Evidence Before The Court

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Decision

Reasons for decision

KIEFEL CJ, BELL, KEANE, NETTLE AND GORDON JJ GAGELER J EDELMAN J

Secondly, the Security of Payment Act provides a strict timetable within which a decision must be made, without any right of appeal. The existence of a jurisdictional error, where the decision maker had no authority to decide, means that no real decision was made. But where a decision was made, with authority to do so, the strict timetable is premised upon the assumption that a decision will not be challenged for error of law. An adjudicator is to determine an adjudication application "as expeditiously as possible"[189] and, in any case, within 10 business days after the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the adjudication application[190], or within such further time as the claimant and the respondent agree[191]. The adjudicator may, in certain circumstances, have only five business days after receiving the adjudication response from the respondent to determine the adjudication application[192]. If the adjudicator determines that a respondent is required to pay an adjudicated amount then, subject to one exception[193], the respondent must pay that amount within five business days after the date on which the adjudicator's determination is served[194]. [189]Building and Construction Industry Security of Payment Act 1999 (NSW), s 21(3). [190]Building and Construction Industry Security of Payment Act 1999 (NSW), s 21(3)(a).[191]Building and Construction Industry Security of Payment Act 1999 (NSW), s 21(3)(b). [192]Building and Construction Industry Security of Payment Act 1999 (NSW), ss 20(1) and 21(3). [193]Building and Construction Industry Security of Payment Act 1999 (NSW), s 23(1)(b). [194]Building and Construction Industry Security of Payment Act 1999 (NSW), s 23(1)(a). Conclusion The basic question on this appeal concerned whether the Security of Payment Act had excluded judicial review for non-jurisdictional error of law. Where legislation, properly construed, has the effect that the error of law does not make the decision beyond power then the legislation has sometimes been described as creating authority to go wrong or, less elegantly, as conferring jurisdiction to decide a question wrongly[195]. As the appellant correctly submitted, these expressions conflate (i) a conclusion that a particular error is within jurisdiction but, due to a privative clause, possibly unreviewable, with (ii) a conclusion that the particular error is not merely unreviewable but that it is authorised. The second circumstance is almost non-existent. Parliament almost never authorises legal error. The unfortunate expression, "authority to go wrong", commonly refers only to the first circumstance, where a privative clause purports to preclude review of a legal error that does not take the decision beyond power[196]. The expression connotes only an error made by taking unlawful steps, revealed on the record, in the course of reaching lawful decisions in the exercise of public power. It does not mean that the decision maker was authorised to make the error, nor does it mean that the legislation, in Professor Wade's language described above, has purported to "legalize illegalities". [195]Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 at 171 per Lord Reid.[196]Leeming, "The riddle of jurisdictional error", (2014) 38 Australian Bar Review 139 at 149.

Ratio Decidendi

Legal Principle Established

Established by: KIEFEL CJ, BELL, KEANE, NETTLE AND GORDON JJ, GAGELER J, EDELMAN J

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