Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4

What the court decided

The appeal concerned the Building and Construction Industry Security of Payment Act 1999 (NSW) [1]. Shade Systems agreed to supply and install external louvres for an apartment development under a subcontract with Probuild [19]. Probuild's payment schedule proposed to pay nothing, relying on a set-off for liquidated damages of $1,089,900.00 [21]. The adjudicator held that liquidated damages could not be calculated before practical completion or termination, and determined a progress payment of $277,755.03 including GST [22].

The primary judge quashed the determination for error of law on the face of the record [23]. A five-member Court of Appeal held that the Supreme Court had no jurisdiction to do so [24]. As Gageler J recorded, Probuild conceded in the Court of Appeal and the High Court that the adjudicator's error was not a jurisdictional error [79]. The High Court dismissed Probuild's appeal from the Court of Appeal [54].

Kiefel CJ, Bell, Keane, Nettle and Gordon JJ held that the Act ousts the Supreme Court's jurisdiction to quash a determination for non-jurisdictional error of law on the face of the record [2]. An intention to alter the settled role of the superior courts must be clearly expressed, and the Act has no privative clause to that effect [34]. Read as a whole, however, the Act evinces a clear legislative intention to exclude that jurisdiction [34], [35].

The joint reasons drew that intention from several features of the scheme. The scheme is, in the words of Basten JA in the Court of Appeal, "coherent, expeditious and self-contained" [36]. The joint reasons endorsed the description of the time limits at each stage as imposing "brutally fast" deadlines on the claimant, the respondent and the adjudicator [40]. There is no appeal from a determination, and a respondent seeking to set aside a judgment on an adjudication certificate cannot challenge the determination [43].

Where an adjudicator errs in law within jurisdiction, the resulting dispute may be resolved in civil proceedings under the construction contract and, if necessary, a restitutionary order sought [51]. The risk that the party advantaged by the error cannot later meet a restitutionary order is assigned to the other party [51]. Review for jurisdictional error remains, because its exclusion would be beyond the power of the New South Wales Parliament [50]. The joint reasons noted that Brodyn Pty Ltd v Davenport had understood the Act in the same way on this point [52]. Parliament had since twice made substantial amendments to the Act without altering that understanding, which the joint reasons treated as "a powerful reason for rejecting any suggestion" that it was other than "a faithful reflection of the intention of the legislature" [52].

Gageler J agreed in the result, giving his own reasons [55]. In his Honour's view, the question whether certiorari for error of law on the face of the record has been excluded should be answered by ordinary principles of interpretation, without any presumption that it has not [60]. Because section 22(1) authorises an adjudicator to decide on the adjudicator's own reading of the contract, right or wrong, certiorari for such an error is displaced [80], [81], [83].

Edelman J also concurred in the result. His Honour accepted that the traditional narrow approach to construing legislation said to exclude review for non-jurisdictional error, applied with its usual strength, would have required the appeal to be allowed [100]. His Honour considered that the approach applies only weakly here, because a determination is not, in a practical sense, a final adjudication of rights [102]. His Honour also considered that the Act did not authorise adjudicators to make errors of law [108], which differs from Gageler J's reasoning [83]. In his Honour's view the Act instead, by implication, immunises a non-jurisdictional error of law on the face of the record from judicial review [108].

Why it matters

The New South Wales Act was followed by closely equivalent statutes in Victoria, Queensland, the Australian Capital Territory, South Australia and Tasmania [3]. In Maxcon Constructions Pty Ltd v Vadasz, heard with this appeal and decided the same day, the joint reasons stated the same conclusion for the South Australian Act, whose relevant provisions they found not materially different (Maxcon at [1], [5]). That appeal itself failed because the adjudicator had made no error of law (Maxcon at [4]). The joint reasons here relied on the deliberate omission of any appeal from a determination [43], and a footnote to that passage invites comparison with Division 2A of Part 3 of the Victorian Act ([43] fn 61). In my view the decision should not be assumed to settle the Victorian position: the Court did not construe the Victorian Act, whose own terms, including that Division, must be checked.

In New South Wales, a determination cannot be quashed for a non-jurisdictional error of law on the face of the record; review for jurisdictional error remains [2], [50]. Whether the adjudicator's error was jurisdictional was not in issue, given Probuild's concession [79]. Gageler J described that concession as "undoubtedly correct" [80].

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.