Australia: New Grounds to Review Decisions Made by Adjudicators under the Building and Construction Industry Security of Payment Act 1999 (SOP Act)

Last Updated: 29 September 2010
Article by David Jury and Lindsay Stirton

There are now new grounds to review decisions made by adjudicators under the NSW Building and Construction Industry Security of Payment Act 1999 (SOP Act). The Court of Appeal has found that if all of the steps laid down by the SOP Act are not precisely followed, the Supreme Court can determine that there is a breach of the SOP Act processes and possibly overturn an adjudicator's determination. The Court has said that the right to be able to go to a Court and complain about a breach of a key part of an Act of Parliament (lawyers call this Certiorari) cannot be excluded by judges. This decision will open Adjudicators to more challenges.

In Chase Oyster Bar (Chase) v Hamo Industries (Hamo) [2010] NSWCA 190, Chase engaged Hamo to fit out an oyster bar in the Chatswood Chase shopping centre. Hamo made claims for payment under the SOP Act. Hamo served a payment claim on 31 December 2009. The due date for payment was 13 January 2010. Chase did not serve a payment schedule. Hamo could apply for adjudication in relation to Chase's failure to serve a payment schedule, provided that it gave notice of its intention within 20 business days after 13 January 2010. Hamo gave notice on 11 February 2010, after the 20 business day time limit had expired. Hamo still applied for adjudication.

An adjudicator was appointed who rejected an adjudication response from Chase and decided that Hamo was entitled to the amount claimed as well as interest. As Justice McDougall said at paragraph 121 of his judgment, 'On any view, the adjudicator's finding was plainly wrong'. The adjudicator had incorrectly found that Hamo had given the notice required under section 17 of the SOP Act in time.

Chase applied to the NSW Supreme Court to have the Adjudicator's determination declared void. In doing so, Hamo asked the Court to consider, in light of a recent High Court decision (Kirk), whether the NSW Court of Appeal was wrong in the way that it decided Brodyn v Davenport (Brodyn). Hamo said that the Kirk decision meant that the very narrow ground for reviewing adjudicator's determinations set out in Brodyn was wrong. At an initial hearing, Justice McDougall thought that the arguments about Kirk should be referred directly to the Court of Appeal and he did so.

After hearing very detailed arguments the Court of Appeal, in a majority judgment, held:

  1. The Supreme Court has the power to determine that:
    1. an adjudication application has not been made in compliance with the SOP Act;
    2. an adjudicator's determination is invalid if not made in compliance with the SOP Act; and
    3. in the present case, there was non-compliance with the SOP Act.

Further, in the context of the above factors the Supreme Court had the power in the present case to set aside the determination of the Adjudicator.

  1. To the extent that Brodyn held, in relation to an adjudication application which did not comply with s 17(2)(a) of the SOP Act, that:
    1. the Supreme Court was not required to consider and determine the existence of jurisdictional error by the adjudicator;
    2. an order was not available to quash or set aside a decision of an adjudicator under the SOP Act;
    3. the SOP Act limited the power of the Supreme Court to consider and quash a determination for jurisdictional error by an adjudicator, it was in error.
  1. The SOP Act does not limit the power of the Supreme Court to review an adjudicator's determination for jurisdictional error.

The decision of the Court of Appeal has significant implications for adjudicators and Authorised Nominating Authorities (ANAs), because the Supreme Court can review their decisions if they do not strictly comply with the SOP Act. If an ANA refers an adjudication application to an adjudicator that does not meet the time requirements of the SOP Act, then action could be taken in the Supreme Court.

For claimants the decision confirms the need for strict compliance with the processes set out in the SOP Act. If time limits are missed, then it will be necessary to go back and start afresh with a new claim.

For those receiving claims, the decision provides new hope that the quality of the decision making process may be improved. Adjudicators and ANAs will need to check every step they take to ensure compliance with the SOP Act. While acknowledging, at paragraph 55, that the decision in Chase v Hamo may lead to increased interference by the Supreme Court in adjudications, Chief Justice Spigelman said,

"I do not believe that there will be frequent occasion for such interference - perhaps after a transitional period - once it is realised in the building industry that punctilious compliance with each specific time limit is required if a builder is to have the benefit of the scheme established by the Act."

Those receiving claims will now be checking every determination very carefully to see if it is subject to review. Every determination will now be reviewed in detail to see if it complies with the SOP Act. It may also be possible to revisit old determinations that have already been paid out to see if the adjudicator's decisions were made in accordance with the SOP Act.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

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