Security of Payment Act – The Supreme Court of NSW has
quashed an adjudication determination on the basis that the
adjudicator's contractual interpretaton leading to its
determination amounted to an error of law. This significantly
broadens the previously considered narrow scope for challenging an
The Supreme Court of NSW may see a significant increase in
dissatisfied parties challenging adjudication determinations under
the Building and Construction Industry Security of Payment Act
1999 (NSW) (the Act) after it was found that
the court has jurisdiction to grant relief in respect of an error
of law on the face of the record.
Prior to last week's decision in Probuild Constructions
(Aust) Pty Ltd v Shade Systems Pty Ltd  NSWSC 770, the
scope for judicial review of an adjudication determination was
assumed to be much narrower.
Probuild challenged an adjudication determination in which the
adjudicator had found that Probuild was required to prove that
Shade System's failure to reach practical completion by the
date for practical completion was caused by Shade System's
default before Probuild could be entitled to liquidated damages.
Its right to deduct liquidated damages from the amount otherwise
due to Shade Systems was subsequently dismissed. Probuild asserted
that this determination amounted to an error of law on the face of
the record which was open to judicial review.
Shade Systems relied on the commentary of Hodgson JA in
Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 in which
his Honour considered that the scheme of the Act appeared strongly
against the availability of judicial review on the basis of
non-jurisdictional error of law.
The reasoning for the decision
Emmett AJA determined that Hodgson JA's observations in
Brodyn were obiter dicta and therefore the
question as to whether relief by way of judicial review is
available under section 69 of the Supreme Court Act 1970
(NSW) remained open.
Section 69 of the Supreme Court Act provides the court with
jurisdiction to grant any relief or remedy by way of writ,
including prohibition, mandamus and certiorati (which includes
jurisdiction to quash the ultimate determination of a tribunal in
any proceedings if that determination has been made on the basis of
an error of law that appears on the face of the record of the
proceedings). The face of the record includes the reasons expressed
by the tribunal for its determination.
It was held that the adjudication process under Part 3 of the
Act is a statutory power conferred by legislation and therefore
subject to the Court's powers under section 69 of the
Supreme Court Act in the absence of any clear legislative
intention to the contrary. His Honour did not consider that there
is a clear intention or implication to be found in the Act that the
jurisdiction conferred by section 69 of the Supreme Court Act is
intended to be excluded.
The determination was quashed and the matter was remitted to the
Adjudicator for further consideration and determination according
Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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