Australia: Probuild Constructions (AUST) Pty Ltd V Shade Systems Pty Ltd [2016] NSWSC 770

Construction Law Update - July
Last Updated: 24 July 2016

KEYWORDS: SECURITY OF PAYMENT; JUDICIAL REVIEW KEY TAKEAWAY

In a decision which goes against the long-standing authority in Brodyn Pty Ltd v Davenport, 1 a single Judge of the New South Wales Supreme Court held that judicial review is available to quash an adjudicator's determination for a non-jurisdictional error of law on the face of the record.

This is an interesting result, as it has long been held that judicial intervention into adjudication determinations could only occur in instances of a breach of "the basic and essential requirements" which were "laid down for the existence of an adjudicator's determination". Whether or not future cases will follow this decision remains to be seen.

Note: This decision is also the subject of an "In Brief" on the Corrs website: " The Probuild decision: Finding the balance in construction industry payment".

Facts

Probuild engaged Shade to supply and install external louvres to the façade of an apartment complex in Chatswood. During the course of the work, Shade served a payment claim for $324,334.26. Probuild served a payment schedule which asserted that it would pay Shade nil, as Probuild was entitled to liquidated damages of $1,089,900.

Shade subsequently applied for adjudication of its payment claim. Shade revised its claim down to $214,680.88 in its adjudication application. Probuild continued to rely on its entitlement to liquidated damages in its adjudication response. An adjudicator determined that Probuild owed Shade $277,755.03. Probuild then sought to have the adjudicator's determination quashed for reasons including that there was an error of law on the face of the determination, albeit a non-jurisdictional error, relating to the incorrect interpretation by the adjudicator of the liquidated damages clause under the contract, which formed part of the reasons in the determination.

Decision

Emmett AJA, sitting as an additional Judge in the Technology and Construction List, agreed with Probuild, and held:

"Had the adjudicator not made the error of law in incorrectly interpreting the liquidated damages clause, he may have well allowed the claim by Probuild for liquidated damages such that the Adjudicated Amount should have been nil."2

Emmett AJA subsequently quashed the adjudication determination, and ordered the matter of the adjudication be remitted to the adjudicator for further consideration and determination according to law.

In coming to this decision, Emmett AJA considered three broad issues.

A court has jurisdiction to judicially review adjudication determinations

First, Emmett AJA examined whether a court had jurisdiction to judicially review an adjudicator's decision. After considering the powers of the Court under the Supreme Court Act 1970 (NSW) and the process of adjudication under Part 3 of the Building and Construction Industry Security of Payment Act 1999 (NSW), Emmett AJA found that a determination by an adjudicator is amendable to judicial review:

"Accordingly, in principle, a determination by an adjudicator is amendable to judicial review under s 69 of the Supreme Court Act and there is no reason why the Court would not have power to quash a determination by an adjudicator that involves an error of law." 3

Brodyn is only obiter for issues relating to judicial review for errors of law

Emmett AJA went on to analyse the decision of Hodgson JA in Brodyn Pty Ltd v Davenport. 4 Shade attempted to rely on the case as authority that "the scheme of the Security of Payment Act appeared strongly against the availability of judicial review on the basis of non-jurisdictional error of law"5 . However, his Honour did not agree, noting that the case had been thrown into doubt as a result of Kirk v Industrial Court of New South Wales6 and that Brodyn was not strictly binding on his Honour:

"Mason P and Giles JA agreed with Hodgson JA without comment. However, the correctness of certain propositions advanced by Hodgson JA [in Brodyn] have now been put substantially in doubt by the High Court. That is to say, legislation that would take away from the Supreme Court a power to grant relief on account of jurisdictional error is beyond the legislative power of the New South Wales Parliament. Further, while I would be very slow to depart from observations made by such a distinguished jurist as Hodgson JA, his Honour's observations are not strictly binding, quite apart from the doubt cast on his Honour's analysis by the High Court.
... the case is only authority for the proposition that a person who contracts to do work without a licence in contravention of s 4 of the Home Building Act 1989 (NSW) is not precluded from receiving progress payments under the Security of Payment Act. Hodgson JA held that there was in fact no error of law and, accordingly, the observations made by his Honour as to whether relief by way of judicial relief is available under s 69 of the Supreme Court Act were strictly obiter dicta and the question therefore remains open." 7

The Security of Payment Act does not exclude the courts' ability to judicially review an adjudicator's determination

Finally, Emmett AJA considered the language of sections 25 and 27 of the Security of Payment Act, and stated that there was nothing in the language or intention of the Act that operated to exclude the jurisdiction of the courts to undertake judicial review of an adjudicator's determination:8

"I do not consider that there is a clear indication or implication to be found in the Security of Payment Act that the jurisdiction conferred by s 69 of the Supreme Court Act is intended to be excluded ..."

Having identified an error of law made by the adjudicator (namely that Probuild was required to prove fault by Shade before being entitled to deduct liquidated damages), and that it was material, Emmett AJA quashed the determination.9

https://www.caselaw.nsw.gov.au/decisio n/575f4f9ce4b058596cb9c344

Footnotes

1 [2004] NSWCA 394; 61 NSWLR 421
2 At [79]
3 At [56]
4 [2004] NSWCA 394; 61 NSWLR 421
5 At [58]
6 [2010] HCA 1; 239 CLR 531
7 At [64], [65]
8 At [74]
9 At [78]–[80]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.