Abacus v Davenport [2003] NSWSC 1027

What the court decided

Abacus's payment schedule, with the architect's certificate, proposed to pay $372,038.32 [2]. The adjudicator, Mr Davenport, determined that Renascent was entitled to a progress payment of $819,796.32 [5]. Abacus sought certiorari to quash the determination, relying on asserted errors of law on the face of the record [9]. Its summons also alleged three instances of jurisdictional error, and sought injunctions and restitution [12], [26]. The variations ground and the restitution claim were compromised while judgment was reserved and not decided [9], [12], [41].

Renascent maintained that prerogative relief was not available in principle against an adjudicator's determination [10], [15]. McDougall J adhered to his views in Musico & Ors v Davenport & Ors, noting that Einstein J had followed them in Brodyn Pty Ltd v Davenport & Ors [18]. In Musico he had concluded that prerogative relief would in principle lie for jurisdictional error, including jurisdictional error of law on the face of the record, and for denial of natural justice, but not for non jurisdictional error of law on the face of the record [16]. He said that further grounds might exist, but their consideration should wait until raised on the facts of a particular case [17]. The question was whether Abacus had shown jurisdictional error, no denial of natural justice being claimed [18].

Abacus argued that where the architect had certified a progress claim, the builder was entitled only to the amount certified [30]. For the reasons given in Musico, his Honour held that an adjudicator may make mistakes of law unless they cause the adjudicator to exceed or decline jurisdiction, and so rejected, at least in the unqualified form in which it was put, a submission that legal conclusions must rest on correct propositions of law [31], [32]. He accepted Abacus's submission that, so far as possible, an adjudicator should determine entitlement in accordance with any applicable terms of the contract [33]. But he held that an adjudicator is not bound by the architect's certificate, since otherwise the adjudicator could not depart from one that was manifestly wrong or the result of fraudulent collusion [35]. Abacus's construction would let an unscrupulous proprietor "set at nought" the statutory entitlement to progress payments [37]. The reference in sections 9(a) and 10(1)(a) to the terms of the contract is to the contractual mechanism, not to the person who makes the calculation or valuation [38]. Mr Davenport therefore had to undertake that task for himself, and was not required simply to "apply his rubber stamp" to the architect's work [39].

His Honour held that Mr Davenport had to consider the entitlement to delay costs for himself, and that any error of fact or law in doing so was within jurisdiction [46], [47]. He rejected the submission that Mr Davenport had determined a delay claim never made, because in an appropriate case, subject to compliance with the conditions precedent in cl 10.12, cl 10.13 adds cl 10.09 damages to the contract sum as an adjustment under cl 10.02.02 [48]. He found that both parties had understood the claim in that way [49]. No jurisdictional error of law was shown in paragraphs 1(b) to (e) of the summons [51]. His Honour accepted in principle that Mr Davenport had no jurisdiction to determine variations otherwise than in accordance with the contract, to allow a delay claim specifically excluded by the contract or to determine a progress claim other than by reference to the contractual mechanism [53]. But he found that Mr Davenport had not erred in a jurisdictional sense [55].

His Honour discharged order 1 made by Gzell J, dismissed the summons, ordered Abacus to pay Renascent's costs and reserved liberty to apply [57].

Why it matters

Under the NSW Act as applied here, a contractual certification regime does not confine an adjudicator to the certifier's figure, because the adjudicator must apply the contract's mechanism for himself or herself [38], [39]. On McDougall J's approach, a determination is not reviewable merely because it departs from the certifier's assessment, although an adjudicator who goes outside the contractual mechanism may lack jurisdiction [47], [53]. As this is a first-instance decision, readers should check the current text of the Act and later appellate authority on review.

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.