SoPA Update: Probuild and Maxicon

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 (14 February 2018) and Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5 (14 February 2018)

 

Executive summary

 

In Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 and Maxcon Constructions Pty Ltd v Vadsz [2018] HCA 5, the High Court unanimously determined that, in the absence of:

(a)  a privative clause or

(b)  words expressly addressing the availability of judicial review,

SOPA was nevertheless intended by Parliament to oust the jurisdiction of the state Supreme Courts to grant orders in the nature of certiorari quashing adjudicator’s decisions in which an error of law was apparent on the face of the record.

 

Judicial review of adjudication decisions is therefore limited to jurisdictional error, as recognized by the NSW Court of Appeal in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421.

 

Probuild

Probuild appealed to the High Court from the decision of the NSW Court of Appeal in Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No.2) (2016) 344 ALR 355 at 375 (per Basten JA, Bathurst CJ, Beazley P, Macfarlan and Leeming LLA agreeing) that the Supreme Court did not have jurisdiction to quash an adjudicator’s determination for error of law on the fact of the record.

In three separate judgments, the majority (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ), Gageler J and Edelman J upheld the decision of Basten J in the NSW Court of Appeal, finding that SOPA did oust the jurisdiction of the Supreme Court. The joint judges said:

 

First, that in the absence of express words ousting the supervisory  jurisdiction of the Supreme Court, the Parliament may still, as a matter of “text, context and purpose” intend to oust that jurisdiction (at 12[34]).

 

Secondly, that the SOPA “creates an entitlement that is ‘determined informally, summarily and quickly, and then summarily enforced without prejudice to the common law rights of both parties which can be determined in the normal manner” (at 16[44]).

 

Thirdly, that the absence of judicial review for non-jurisdictional error “does not entrench for all time the consequences of a non-jurisdictional error of law” (at 17[46] and 18 [51]).

 

Fourthly, “the operation of the scheme…supports the conclusion that review for non-jurisdictional error of law…is excluded” (at 17[47]). Parliament clearly intended to minimize delay in the determination of the statutory entitlement to payment.

 

Fifthly, it could be inconsistent with the “terms, structure [and] purposes of the statutory scheme” to read the Act as not ousting the Supreme Court’s jurisdiction to review for non-jurisdictional error. To permit review on this basis would “frustrate” the scheme (at 17[47] and [48]).

The Court approved the decision of the NSW Supreme Court in Brodyn  Pty Ltd v Davenport  (2004) 61 NSWLR 421 (at 19[52]).

 

Gageler J, in his separate judgement approached the question of ouster from an entirely different perspective. His Honour focused not on the construction of the statute as a whole but upon the nature and terms of the power conferred (by s.22), stating:

“It is one thing to accept, where there is an affirmative statutory indication that the decision-making authority conferred on a particular repository of statutory power encompasses authority to decide a question of law, or to make a decision otherwise than on a correct understanding of the applicable law, that the resultant decision is nevertheless susceptible of being quashed by certiorari for error of law on the face of the record unless there is some further affirmative statutory indication that certiorari is not available to be issued on that basis. In the case of a statutory conferral of decision-making authority on a person or body other than a court, no further affirmative indication of an intention to exclude certiorari is required.” (at 31[78]).

His Honour found that s.22(1) of SOPA “confer[ed] authority on an adjudicator to make a determination notwithstanding that the determination is based on a legally erroneous interpretation of a construction contract” and that alone provided the basis for inferring Parliament’s intention to exclude judicial review for this kind of error (at 33[83]).

Edelman J in his judgment expounded upon the “narrow” construction principle in relation to privative clauses excluding jurisdiction to issue orders in the nature of certiorari. His Honour found that a “background legislative assumption” that certiorari not be available, in combination with a consequences and purposive analysis of SOPA, led to the conclusion that the appeal must be dismissed (at 44[104] – 107)). He expressly disagreed with Gageler J’s analysis of s.22(1).

 

 

 

Maxcon

Maxcon appealed to the High Court from the Full Court of the Supreme Court of South Australia in Maxcon Constructions Pty Ltd v Vadasz (No. 2) (2017) 127 SASR 193. Maxcon alleged that the adjudicator had made both jurisdictional error and non-jurisdictional errors of law. In that decision, the Full Court said that they were of the view that review was available for non-jurisdictional error but deferred to the NSW Court of Appeal decision in Probuild (delivered two weeks earlier).

 

In the High Court, Vadasz contended that the adjudicator had made no error of law at all.

 

In their joint judgment, Kiefel CJ, Bell, Keane, Nettle and Gordon JJ agreed with Vadasz’s contention and dismissed the appeal.

 

Justice Gageler in a separate decision agreed that the appeal should be dismissed but worked back from the questions of “public importance” (whether judicial review was available and whether or not the alleged error was jurisdictional).

 

In answering the first question at [34] his Honour applied his reasoning in Probuild.

 

In answering the third question his Honour helpfully quoted from the decision of the Court in R v Toohey; Ex parte Northern Land Council  (1981) 151 CLR 170 at 268 that there are “mistakes and mistakes” [at 35] but that the key question was

 

“whether the particular mistake of law that …the adjudicator [was found] to have committed had the effect of causing the adjudicator, for some reason other than it simply having been a mistake of law, to exceed the authority conferred by s.22(1) with the consequence that what purported to be a determination within the scope of that authority was no more than an “ostensible determination”

(references omitted).

 

In this case the question was whether the misconstruction of a term defined in the construction contract was a jurisdictional error. That question is answered by asking

“whether the authority conferred by s.22(1) is conditioned by a requirement that the adjudicator not incorrectly apply s. 12 of the Security of Payment Act.” (at [37]).

His Honour found that it was not, expressly disagreeing with the dissenting view of Hinton J in the Full Court at 271 (at [38]). His Honour agreed with Blue J and Lovell in the Full Court that “s. 12 is a provision which modified the substantive aw applicable to the construction contract”. Section 12 is merely a matter to be considered in the course of exercising the adjudicator’s power under s.22 (at [39]).

Download the article here

 

Natasha Case

Greenway Chambers

14 February 2018

 

 

Natasha Case