The New South Wales Court of Appeal in Chase Oyster Bar v.
Hamo Industries1(Chase) has handed
down an important decision about the Building and Construction
Industry Security of Payment Act 1999 (NSW)
(SoPA). The Court confirmed that the Supreme Court
can set aside an adjudicator's decision made under the SoPA
where the necessary elements for the adjudicator to have power to
make a decision do not exist. In legal speak, nothing in the SoPA
removes the Supreme Court's power to quash a decision made by
an adjudicator in circumstances where an adjudicator has made a
jurisdictional error of law.
The decision in Chase expands the options that were previously
available to a disgruntled party to challenge an adjudicator's
Overturning an adjudicator's decision prior to Chase
Prior to Chase, the ability of a Court to quash an
adjudicator's determination was guided by the New South Wales
Court of Appeal decision of Brodyn v
Davenport2(Brodyn). The Court in
Brodyn held that the only available options for reviewing an
adjudicator's decision were limited to circumstances where:
the adjudicator did not make a bona fide attempt to exercise
its power under the SoPA
the claimant fraudulently exercised its rights under the SoPA
with which the adjudicator was involved
the adjudicator substantially denied at least one party natural
the basic and essential requirements of the SoPA were not
complied with. These requirements included:
the existence of a construction contract
the service by the claimant on the respondent of a payment
the making of an adjudication application by the claimant to an
authorised nominating authority
the reference of the application to an eligible adjudicator,
who accepts the application, and
the adjudicator determining the application deciding the amount
of the progress payment, the date on which it becomes or became due
and the rate of interest payable, and the issue of a determination
As a result, an adjudicator's decision could not be quashed
even in circumstances where the adjudicator had made a
jurisdictional error of law as it did not fall within the
categories listed above.
In Chase, the Court generally disagreed with the decision of
Brodyn and followed the recent decision of the High Court in
Kirk v Industrial Relations; Commission of New South Wales Kirk
Group Holdings Pty Ltd v WorkCover Authority of New South
Wales (Inspector Childs)3 to
determine that the State legislature, in any event, cannot remove
the Court's power to quash a decision made by an adjudicator
which is infected by jurisdictional error.
This means that a decision made by an adjudicator under the SoPA
(which is a State based Act) cannot overrule the Court's power
provided under the Constitution despite the intention of the State
The key issue is now what features of the SoPA will amount to
jurisdictional facts which, if wrongly decided, amount to a
jurisdictional error. That is, as the Court in Chase acknowledged,
a difficult question with no hard and fast rule and one which will
likely be answered in the cases following this decision.
It is clear, following the decision in Chase, that disgruntled
parties to an adjudicator's decision have more avenues of
appeal than previously thought. It is likely that there will be
more court proceedings commenced challenging adjudicator's
decisions and the key questions to be determined in those
proceedings will be what aspects of the SoPA amount to
At the moment, parties and the adjudicator should ensure that
the preliminary requirements of the SoPA are closely followed to
prevent the (sometimes) unwelcome result of the Courts overturning
an adjudicator's decision.
1.  NSWCA 190
2.  NSWCA 394
3.  HCA 1
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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