Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd; Maxcon Constructions Pty Ltd v Vadasz & Ors

[2017] HCATrans 112

[2017] HCATrans 112

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S8 of 2017

B e t w e e n -

PROBUILD CONSTRUCTIONS (AUST) PTY LTD ACN 095 250 945

Applicant

and

SHADE SYSTEMS PTY LTD ACN 134 134 400

First Respondent

DORON RIVLIN

Second Respondent

Office of the Registry
  Adelaide  No A10 of 2017

B e t w e e n -

MAXCON CONSTRUCTIONS PTY LTD

Applicant

and

MICHAEL CHRISTOPHER VADASZ (TRADING AS AUSTRALASIAN PILING COMPANY)

First Respondent

ADJUDICATE TODAY PTY LTD

Second Respondent

CALLUM CAMPBELL

Third Respondent

Applications for special leave to appeal

GAGELER J
NETTLE J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA ON FRIDAY, 12 MAY 2017, AT 10.35 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, SC:   May it please the Court, in Probuild, I appear with my learned friend, MR S. ROBERTSON, for the applicant.  (instructed by Maddocks)

MR M.CHRISTIE, SC:   May it please the Court, I appear with my learned friend, MR D.P. HUME, for the first respondent in both matters.  (instructed by Moray & Agnew and O’Loughlins Lawyers)

MR B.J. DOYLE:   If it pleases the Court, I appear for the applicant in Maxcon.  (instructed by Diakou Faigen)

GAGELER J:   Yes, thank you, and you are in both of them I see, Mr Christie.

MR CHRISTIE:   Yes, that is so, your Honour. 

GAGELER J:   Very well, we will hear from the applicants, I think, first.

MR CHRISTIE:   Just before your Honours commence, there is evidence in the first matter by both the applicant and my client.  Can that evidence be taken as read and the exhibits as having been tendered?  They are the subject of the application book and the supplementary application book.

GAGELER J:   Yes, they can.  Mr Walker, you have a pretty good point here by the presence of the other case.

MR WALKER:   I am sorry, I am ‑ ‑ ‑

GAGELER J:   Your point about the importance ‑ ‑ ‑

MR WALKER:   Yes, yes.

GAGELER J:   ‑ ‑ ‑ of the matter is demonstrated by the existence of the other special leave application.

MR WALKER:   Yes, I tender my friend, Mr Doyle, as an exhibit as it were.  Yes, I did not tell him I would but ‑ ‑ ‑

GAGELER J:   Is there anything more to say on your part?

MR WALKER:   No, can I just add this – it might just be icing – but your Honours will know section 69 was not creating a jurisdiction. The language of section 69 and the critical subsections; this is, of course, in the application book, you will find it at page 91.  In subsections (3), (4) and (5) but particularly in subsection (3) is of the declaration of part of the justice jurisdiction which is at the very heart of the character of the Court and this was all post‑Craig in order to keep as ample as it had been understood pre‑Craig to have been, a jurisdiction.  That is a matter that perhaps we have not emphasised in our written submission which adds very powerfully, in our submission, to the extreme unlikelihood of the later statute having had the effect that the Court thought.

GAGELER J:   Thank you.  Yes, Mr Doyle, so you have a similar ground, ground 1, but you have a couple of extra bits you want to bring before us.

MR DOYLE:   Yes, if I might ….. the Act makes ….. related of questions   ….. legislation ….. New South Wales ….. Victoria, Queensland ….. Territory.   First up is a matter that my learned friend, Mr Walker, has just been addressing ….. your Honours, it is obviously a matter of importance ‑ ‑ ‑

GAGELER J:   Well, you do not have to persuade us of that, it is grounds 2 and 3 you need to address.

MR DOYLE:   Our second proposed ground of appeal raises whether the error of law which the Full Court unanimously found to have had ….. by misconstruing sections 12 ….. of the legislation involving jurisdiction.  Your Honours, the second involves a critical test of the architecture of the legislation  ….. rights ….. contract over and above that which is achieved by the creation of ….. type of project complaint.

Your Honours, what it does and your Honours will find ….. it is set out at page …..The Full Court ….. The nature of the error ….. provision make payments turn on the issuing of a certificate of occupancy ….. The adjudicated reason that that must have …. must also ….. all members of the Full Court felt that the …..that the statute.  Where the members of the Full Court differed was that Justice Blue, with whom Justice Lovell agreed, considered that that was an error within jurisdiction because he considered that section 22 of the Act which is set out at application book page 207, required the adjudicator to consider, this is subsection (2):

(a)       the provisions of this Act;

Justice Blue reasoned that that both required and authorised the adjudicator to construe the relevant legislation and that, having regard to the statutory scheme, it ought not to be concluded that an error as to the construction of the statute was jurisdictional.  His Honour held critically, at paragraph 146 of his reasons at application book 146, that it was simply in the nature of an error of substantive law, and his Honour said in paragraph 146:

The fact that section 12 appears in the Act, rather than in some other legislation is happenstance. 

In other words, it was an irrelevant consideration.

EDELMAN J:   Is the question of construction of section 12, as potentially involving either jurisdictional or non‑jurisdictional error, one that is capable, therefore, of bearing upon the larger question of implied exclusion by the Act of error of law?

MR DOYLE:   Quite so, your Honour. That is where I was coming to in that ultimately, one of the considerations which Justice Basten regarded as important and which Justice Blue regarded as less important, was the incremental effects on this scheme of allowing certiorari to lie, not only for jurisdictional error but for error of law on the face of the record.

GAGELER J:   On this particular error, it is agreed by all judges in the Full Court to be an error of law.  There is a difference between Justice Blue on the one hand, Justice Hinton on the other ‑ ‑ ‑

MR DOYLE:   Yes.

GAGELER J:   ‑ ‑ ‑ as to whether it is jurisdictional and you say it is the presence of that issue that really highlights the importance of the first ground.

MR DOYLE:   Quite so, your Honours, and just very briefly ‑ ‑ ‑

GAGELER J:   ‑ ‑ ‑ illustrates its application.

MR DOYLE:   Yes, very briefly, if I may.  Justice Hinton noted that there had been many decisions in other jurisdictions holding that where an adjudicator misconstrues the contract, that is thought to be a non‑jurisdictional error of law.  However, Justice Hinton considered that where the expert misconstrued the very statute which empowered him or her and the very statute which created and delimited the matter about which the expert was to give a determination – namely, the quantum of the progress payment – that was in the nature of a jurisdictional error.  It is an error as to the compensating instrument from which the adjudicator derives power.

GAGELER J:   Well, he really seems to me to put it in terms of, it is an error that results in an expansion of jurisdiction.

MR DOYLE:   Yes, precisely so because ‑ ‑ ‑

GAGELER J:   The matter becomes bigger because of this error than it would have been if the error had not been made.

MR DOYLE:   Yes, your Honour.  It permitted the adjudicator to make an award which he was only to make by misdirecting himself as to the meaning of section 12.  That misdirection was accepted by all members of the court.  So, your Honours, we say it is a matter which turns duly on the papers that are presently before the Court.  There is no need to analyse any underlying evidence.  It is a matter which might cast light on the broader question of whether review through error on the face of the record should be taken to be impliedly excluded and it is a matter which bears on the third ground to which I will come presently.

Your Honours, the third ground is, what is the appropriate relief if, as the applicant contended below, the court had power to grant certiorari, either on the basis of jurisdictional error or on the basis of error of law on the face of the record, where that error affected part ….. but not all of the determination.  Your Honours, the submission that my client made below in the Full Court was that turned critically on the nature of the adjudicator’s power because certiorari is tied up with quashing an exercise of power.

The proposition we made was that the power in section 22 of the Act is a singular power to fix a singular and indivisible adjudicated amount and critically, that adjudicated amount can then become the subject of a judgment which can be registered in a court of competent jurisdiction, in a singular and indivisible thing and a statutory creation.

It is not simply the product of an addition of other separately existing
legal concepts.  It is an assessment of a progress payment which is a singular and statutory created concept.  Prior to the Full Court’s judgment, there had been decisions at first instance in New South Wales, Queensland and Western Australia which are set out at paragraphs 232 and 233 of the application – at Justice Blue’s judgment at page 170 to 171 of the application book.  His Honour set out that those decisions had all held that it simply was not possible to partially quash an adjudicated amount because it was a singular exercise of power.  However, his Honour noted in paragraph 233, each of those cases had involved:

jurisdictional error and none involved mere error of law on the face of the record.

However then, with respect incongruously, in paragraph 234, Justice Blue, nevertheless held that:

there would be power to severe the determination ‑

if it were –

vitiated by jurisdictional error.

which is in direct conflict with the authorities he had just cited.

GAGELER J:   Is this part of the reasoning that leads to the judgment from which you seek ‑ ‑ ‑

MR DOYLE:   No.

GAGELER J:   ‑ ‑ ‑ special leave to appeal?  So, I mean, it is interesting ‑ ‑ ‑

MR DOYLE:   It is, your Honour.

GAGELER J:   ‑ ‑ ‑ to have an argument about it but how does it become a ground of appeal.

MR DOYLE:   Well, your Honour, I really raise that by way of background to the aspect that did impinge on or would impinge on the orders that this Court would make were the Court to grant special leave; allow the appeal on the basis there was jurisdiction to review the error on the face of the record, because his Honour Justice Blue held, in paragraph 236 in application book, page 172, that had he been free to give effect to his view, which was that review for error on the face of the record was not excluded and I interpolate, he could not give effect to that view because he felt compelled to follow the decision in Probuild unless it were plainly wrong.

GAGELER J:   Yes.

MR DOYLE:   He considered it was wrong but not plainly wrong, but had he not been so constrained, his ruling in paragraph 237 was that he would have only quashed the aspect of the adjudicated amount which related to the section 12 issue.  He did so because in paragraph 236, he considered that there was a different:

rationale for certiorari for of law on the face of the record –

as distinct from jurisdictional error.  In our respectful submission, that is the wrong dichotomy. The most relevant inquiry is what is the nature of the power, which is impugned by the error and if the power which was exercised was a singular exercise of power, which was inseverable for jurisdictional purposes ‑ ‑ ‑

GAGELER J:   I follow all this, but it is an order that was not made.  I am just wondering how we deal with it technically as a ground of appeal.

MR DOYLE:   Well, because, your Honours, if the appeal is allowed, orders will have to be made as to the orders that the Full Court should have made and that necessarily requires analysis of whether the adjudication amount should be quashed in its entirety or, as Justice Blue contemplated, remitted.

Now, the short point, in our respectful submission, is that Justice Hinton was correct to say one cannot remit these things.  The adjudicator is functus; an adjudication must be given within 10 days of a date long since passed and adjudicators do not hold any continuous office.  So to partially quash and partially remit would be erroneous.  That is a matter of principle where Justice Blue, with whom Justice Lovell has agreed, have indicated an approach which differs from that hitherto taken in other jurisdictions.  Your Honours, each of these three matters raise the same statute and the same principles and, in our respectful submission, to avoid partial and unsatisfactory resolution of the case we should be given special leave on all three grounds.

GAGELER J:   Thank you, Mr Doyle.  Well, Mr Christie.

MR CHRISTIE:   Yes, may it please the Court.  Your Honours, we submit that both these cases are entirely unsuitable as vehicles for special leave.  Can I start with Mr Doyle’s case?  What he has not told your Honours is that the amount in question is $30,000, or perhaps on his case $60,000 and that is including GST.  Against the background of a very sorry history of this litigation which involved an appeal from four judgments, two judges of the Supreme Court of South Australia, to the Full Court. 

Can I take your Honours to the application book?  Your Honours will see at application book page 88.  Your Honours will find the notice of appeal before the Full Court of the Supreme Court of South Australia and your Honours will note on pages 89 and 90 there were appeals from four judgments of Justices Stanley and Doyle.  Your Honours will then note at application book 90, should I say 92, there were approximately 18 grounds of appeal.  So, up until now there has been an adjudication, four judgments of single judges, a decision of the Full Court involving a hearing which went over a period of one plus days. 

Then, one goes to the amount in dispute.  The claim was for 204,000 including GST.  Can I take your Honours to application book page 5?  This is the adjudicator’s determination on page 5 of the application book.  Your Honours will see at line 21 of page 5 the amount claimed was 204,000 including GST.  Then it says in the line underneath that on page 5, “Payment Schedule . . . $141,163.55”.  That is the amount which my learned friend’s client proposed to pay, which leaves a balance of approximately $60,000.  If your Honours go to Justice Blue’s judgment at application book page 169 at line 40, his Honour said:

Maxcon in its payment schedule and in its submissions to the adjudicator accepted liability to pay $141,163.55.

That leaves a balance of $60,000 but the real amount in dispute is the $30,000 the subject of the occupancy certificate issue.  Now, on that issue, I should point out that we respectfully submit that there was no error of law by the adjudicators, so if special leave were allowed your Honours could assume there would be a notice of contention which would involve going through the South Australian law and occupation certificates.  So that is another reason why we respectfully submit this case is not an appropriate vehicle for special leave.  Your Honours can also infer from the very sorry history of the litigation that the legal costs vastly outweigh the amount in dispute.  So, in our respectful submission, that is another reason why special leave should not be granted in the case involving Mr Doyle’s client.

NETTLE J:   Mr Christie, if the Court were to take the view that the matter raises an important question of principle, would your objections be overcome if the grant of leave were conditioned on undertaking to pay costs, or your costs come what may?

MR CHRISTIE:   All costs come what may – I need to take instructions on that but that would certainly go a long way, your Honour, including an order that all costs to date be paid, yes.

NETTLE J:   Do you accept that it does raise a question of principle of importance?

MR CHRISTIE:   It raises a question of principle but your Honours ought not think that there is some division amongst different courts.  At the end of the day, the Full Court of the Supreme Court of South Australia, being the only court which has adopted this view, held that review was available for error of law on the face of the record but it held that the five‑judge decision in New South Wales was not plainly wrong.  It followed that for that reason, so as the law currently stands there is no conflict amongst the States on this issue. 

So, in our respectful submission, after a very carefully considered decision by the Court of Appeal of New South Wales comprising five judges, including the Chief Justice and the President of the Court of Appeal, your Honours ought have no sufficient doubt about the correctness of that decision.  We would also say that the Probuild matter is also entirely unsuited for special leave.  It, too, involves an amount in dispute just above the local court limit.

NETTLE J:   Say that again, please.

MR CHRISTIE:   Just above the local court jurisdiction.  It is closer to the local court limit than it is to the district court limit, it is some $300,000.  Can I ask your Honours just to glance at the supplementary application book?

GAGELER J:   So this point is the same as your other point, it goes to the quantum in dispute, does it?

MR CHRISTIE:   It does but there is a further reason why Probuild is particularly unsuited for special leave over and above the Maxcon Case and that is because if special leave were granted and the appeal were allowed, that would not be the end of the dispute about the interim payment because the original orders by Justice Emmett involved remitting the matter to the adjudicator.  His Honour did not conclude that the error was material.  That would be a matter for the adjudicator to determine.  He went no further than to say that it might or it might not be material.  In those circumstances, that makes it a very unsuitable vehicle for special leave.  We would submit that the appropriate vehicle for special leave would be a case in which the error of law was clearly and beyond doubt materially.

GAGELER J:   Well, that might have been a reason why one might have said it was an inappropriate case for five judges of the Court of Appeal of New South Wales ‑ ‑ ‑

MR CHRISTIE:   I missed that, sorry, your Honour.

GAGELER J:   What you are now submitting might be a reason why it was an inappropriate case for five judges of the New South Wales Court of Appeal to sit and declare the law in New South Wales but that is what has happened.  We now have an authoritative statement of the law in New South Wales.

MR CHRISTIE:   We do and can I say that the five judges sat at the request of the appellant because there were authorities prior to the decision of the five judges which was entirely consistent with the decision of the five judges as is apparent from the judgment itself.  So, in our respectful submission, both cases are entirely unsuitable and in the Probuild Case as well one can infer that the legal costs either approach or outweigh the amount in dispute.  So, for those reasons, your Honours, before one even gets to the special leave questions, we would respectfully submit that these are not appropriate vehicles for special leave.  Would your Honours like to hear me on the substantive issue?

GAGELER J:   Which substantive issue?

MR CHRISTIE:   As to whether there is any reason to doubt the correctness of the decision of the five judges in New South Wales.

GAGELER J:   I do not think we would be assisted by argument as if on appeal on that question.

MR CHRISTIE:   May it please the Court.

GAGELER J:   Mr Doyle, you heard the exchange between the Bench and Mr Christie about the possibility of imposing a condition of the grant of special leave in your case, which might be the price to be paid for that grant that the condition would be to the effect that your client would undertake to pay the respondent’s costs of the appeal and not to seek to disturb the orders for costs in the court below.

MR DOYLE:   Your Honours, it is obviously a matter for the Court whether such condition is appropriate and if such condition is made I will respectfully seek instructions and that will affect matters but, your Honour, I did have instructions to indicate that we would not seek an order for our costs if successful in the High Court.

GAGELER J:   That may not go far enough.

MR DOYLE:   I understand, your Honours, and I am not seeking to cavil with what your Honours have raised with me, but there is one matter that I would wish to be heard on in reply on that issue.

GAGELER J:   Yes.

MR DOYLE:    ‑ ‑ ‑ and that is that your Honours may have divined from the papers that the respondent was an undischarged bankrupt at the time of entering into this arrangement.  That was a separate issue in the case.  As a result of that, the Full Court has required that while my client has paid across the amount which Mr Christie indicated was not in dispute and that has happened, that money has been received, there should be a stay as to the balance on the footing that there is a reasonable apprehension that if the amount is paid over and my client succeeds in the High Court, it may not be able to recover the amount in dispute.  In my respectful submission, that is a matter which might touch on the justice of imposing the condition in quite the breadth of terms that your Honours are proposing.

EDELMAN J:   The overall requirement of proportionality remains the same, does it not, in relation to costs?

MR DOYLE:   I understand, Justice Edelman.  The only point I could make about that is that while the costs of the appeal might, on one view, seem out of proportion to the amount presently in dispute, the issues that we would seek to raise have, in effect, been fully argued.  For a court which held that had the law remained as it stood but heard argument, we were

entitled to succeed.  It was only the delivery of the Probuild judgment after substantive argument that has necessitated my client needing to seek special leave to enjoy the protection of the clause, the very point of which is to provide security in a case where there might be some difficulty with the building at the point of completion.  That is all I can say on the matter, your Honours.  If the condition is imposed in the terms that your Honours foreshadow I will obviously take that up with my instructor.

GAGELER J:   Very well.  In the Probuild Constructions matter there will be a grant of special leave to appeal on the ground indicated.  In the Maxcon Constructions matter there will be a grant of special leave on all three grounds.  In the unusual circumstances of this case, the grant will be subject to the condition which I have already indicated in my discussion with Mr Doyle.

MR CHRISTIE:   Your Honours, might I just be heard?  We would respectfully submit that the same condition be applied in Probuild.  Can I just take your Honours to the supplementary application book, page 13?  Your Honours will note this is part of the affidavit of Mrs Jolly, the principal of the company, and she says at application book 13 – supplementary, I should say, application book 13, at paragraph 27 she has referred to the severe hardship her family has suffered arising out of non‑payment or out of litigation.  Her family’s only significant asset had been mortgaged.  All their savings which had been set aside for retirement had been dissipated, that is paragraph 28. 

Now, when one compares that with Probuild on page 10 at line 25, which has a pipeline of projects worth $5 billion and an annual turnover of $2 billion, your Honours are entitled to infer that Probuild is bringing this litigation, as it is entitled to, potentially for reasons beyond the specific matters at stake, that is the $200,000 and $300,000.  Given that disparity, we would respectfully submit that the same orders be made.

GAGELER J:   Mr Walker.

MR WALKER:   Your Honours, I cannot say anything against an exercise of discretion ….. your Honours appropriate, as Justice Edelman points out.  Proportionality is always significant in discretions of such matters.  There is, however, in our submission, no particular circumstance that calls for the imposition of such a term in this case.

GAGELER J:   The grant of special leave in the Probuild Constructions Case will be subject to the same condition as has already been indicated or imposed on the – or has been imposed on the grant of special leave in Maxcon Constructions.  The Court will now adjourn until 11.30 am.

AT 11.05 PM THE MATTER WAS CONCLUDED