The Supreme Court of NSW recently expanded the ability of a
respondent to challenge an adjudication determination, in the
decision of Probuild Constructions (Aust) Pty Ltd v Shade Systems
Probuild started proceedings in the Supreme Court seeking to set
aside an adjudication determination which favoured Shade Systems on
the grounds that the adjudicator made an error of law on the face
of the record.
The adjudicator determined that Probuild couldn't rely on a
liquidated damages clause in a contract to avoid paying Shade
Systems - by serving a payment schedule with a nil payment - as
Probuild needed to prove Shade Systems was in default. Probuild was
liable to pay the amount of $277,755 without any reduction for
The Court found that the adjudicator's interpretation of the
liquidated damages clause was incorrect. Under the old regime, it
wouldn't have been a jurisdictional error as has been
ordinarily required. Justice Emmett Aja found that the Supreme
Court had the power to judicially review an adjudication
determination, contrary to the existing position, as the Act
contained no language excluding the Court from doing so.
The Supreme Court set aside the determination, referring it back
to the adjudicator to determine the matter in accordance with the
What does this mean?
It may not be a 'one size fits all' cure for the
construction industry as not all determinations will be subject to
a review however, it does pave the way for a new order to prevail
in the Security of Payments regime.
Applications to quash a determination can now be made on the
basis of an error of law on the face of the record, which will lead
to an increase in applications. The Court also extended the reach
of the Act by allowing the decision to be referred back to the
Only time will tell whether such a decision, if it survives,
will regenerate confidence in the Security of Payments regime which
has for the most part been found to favour applicants of
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