TransGrid v Walter Construction Group [2004] NSWSC 21
In the Administrative Law List of the Common Law Division of the Supreme Court of New South Wales, McDougall J held that TransGrid's summons for judicial review of an adjudicator's determination under the Building and Construction Industry Security of Payment Act should be dismissed, because the adjudicator was not bound by the Superintendent's certificate, any error in finding variations directed in writing was within jurisdiction because he had sought to apply the contract and TransGrid, having offered no evidence of its own, was not denied natural justice [32], [33], [54], [65], [66], [71].
What the court decided
TransGrid sought judicial review of a determination by the adjudicator, Mr Sullivan, under section 22 of the Building and Construction Industry Security of Payment Act 1999 (the Act) on Walter's adjudication application [1]. Walter claimed $12,991,145.00 excluding GST, and Mr Sullivan determined that it was entitled to $5,010,433 including GST [2].
McDougall J adhered to the view he had expressed in Musico v Davenport and repeated in Abacus Funds Management Ltd v Davenport, that judicial review was in principle available [13], [16]. As he had said in Musico, review was available for jurisdictional grounds and denial of natural justice, but not for non jurisdictional error of law [17]. Subject to Walter's primary position, neither party suggested that any different approach should be taken [17].
His Honour noted that TransGrid's complaints about the variation claims logically arose only if its primary position on the Superintendent's determination was correct [23]. He thought the better view was that clause 42.1(a) did not bar payment where a variation was either directed or approved in writing by the Superintendent [27]. Any error by Mr Sullivan about whether a direction was in writing was an error in applying the contract, and so within jurisdiction [30], [32]. Unlike the adjudicator in Musico, Mr Sullivan understood that he was to proceed under section 9(a) and sought to do so [33]. TransGrid had not shown how the alleged errors of principle affected Mr Sullivan's particular findings, which his Honour called completely unhelpful [40], [41]. Where TransGrid criticised Walter's valuations without offering its own, Mr Sullivan did not err in allowing the amount claimed once the challenges failed [44], [45].
TransGrid accepted that its argument required an adjudicator to "rubber stamp" the Superintendent's certificate [46]. Having reconsidered his decision in Abacus, his Honour adhered to it [48], [54]. He did not think the legislature intended adjudication to be set at nought by an honest but manifestly wrong certification [52]. Under clause 42.3 the amount due was the value of the work, so the position was stronger than in Abacus [55]. TransGrid relied on clause 23 to distinguish Abacus [56]. His Honour held that this afforded no point of distinction [57]. TransGrid argued alternatively that Mr Sullivan was bound to apply section 10(1)(b) [58]. His Honour rejected the premise, because the contractual amount is obtained by applying the contract's terms [59].
On natural justice, TransGrid, having chosen to put forward no evidence of its own, was not entitled to "a second bite of the cherry" once its criticisms were rejected [65]. Mr Sullivan could have called for further material under section 21(4) but was not bound to do so [65], [68].
The remaining severance issues did not arise for consideration [70]. None of TransGrid's challenges was made out, so the summons should be dismissed with costs [71]. He stood the matter over to no later than 20 February 2004 for short minutes and costs submissions [71].
Why it matters
The decision holds that an adjudicator determines the amount of the progress payment under section 9(a) by applying the contract's terms, not by adopting the Superintendent's certificate. It also warns respondents that attacking a claimant's material without offering their own evidence is a weak foundation for a natural justice complaint.
Brodyn Pty Ltd v Davenport (2004) NSWCA 394 at paragraph 44 listed this decision among those following Musico, and at paragraph 59 disagreed with them so far as they held certiorari available to quash a determination which is not void. In Transgrid v Siemens Ltd (2004) NSWCA 395 at paragraph 34, on another determination, Hodgson JA held that even if the section 9(a) amount were the amount certified, a contrary decision would be "a mere error of law, and not such as to render the determination invalid". At paragraph 35 Hodgson JA preferred, obiter, the view in Abacus to which this decision adhered. In Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) NSWCA 190 at paragraphs 261 and 262 McDougall J said determinations are amenable to certiorari for jurisdictional error, and in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) HCA 4 at paragraph 2 the High Court held that the Act ousts certiorari for non-jurisdictional error of law on the face of the record; readers should check the current text of the Act.
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.