Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd

• Jurisdiction: Australia Federal only
• Judge: Bell,Kiefel CJ,Keane,Nettle,Gordon JJ.,Gageler J.
• Judgment Date: 14 February 2018
• Neutral Citation: [2018] HCA 4
• Court: High Court
• Docket Number: S145/2017

Probuild Constructions (Aust) Pty Ltd

Appellant

and

Shade Systems Pty Ltd & Anor

Respondents

[2018] HCA 4

Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon AND Edelman JJ

S145/2017

HIGH COURT OF AUSTRALIA

Administrative law — Judicial review — Availability of certiorari — Error of law on face of record — Non-jurisdictional error — Building and Construction Industry Security of Payment Act 1999 (NSW) — Where Act confers entitlement to “progress payment” on persons who undertake to carry out construction work under construction contracts and provides scheme for determining disputed claims — Where first respondent made claim for progress payment — Where claim referred to adjudicator for determination — Where adjudicator made error of law in reasons for determination — Where reasons form part of record — Whether Act ousts jurisdiction of Supreme Court of New South Wales to make order in nature of certiorari to quash determination for non-jurisdictional error of law on face of record.

Words and phrases — “clear legislative intention”, “error of law on the face of the record”, “interim entitlement”, “jurisdictional error”, “non-jurisdictional error”, “order in the nature of certiorari”.

Building and Construction Industry Security of Payment Act 1999 (NSW), Pts 2, 3.

Supreme Court Act 1970 (NSW), ss 22, 69.

Representation

B W Walker SC with S Robertson and M R L Forgacs for the appellant (instructed by Maddocks Lawyers)

M Christie SC with D P Hume for the first respondent (instructed by Moray & Agnew)

Submitting appearance for the second respondent

1 Kiefel CJ, Bell, Keane, Nettle AND Gordon JJ. The Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Security of Payment Act”) establishes a scheme of rights and procedures relating to the receipt and recovery by contractors of progress payments for construction work. Under the scheme, disputed payment claims may be referred for determination by an adjudicator.

2 The only question in this appeal is whether the scheme established by the Security of Payment Act for claims for, and payment of, progress payments ousts the jurisdiction of the Supreme Court of New South Wales to make an order in the nature of certiorari to quash a determination by an adjudicator for error of law on the face of the record that is not a jurisdictional error. The answer is yes: the Security of Payment Act does oust that jurisdiction.

The Security of Payment Act

3 Enacted in 1999, the Security of Payment Act was followed by closely equivalent statutes in Victoria, Queensland, the Australian Capital Territory, South Australia and Tasmania 1.

4 The object of the Security of Payment Act is “to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services” 2.

5 The means by which the Security of Payment Act ensures that a person is entitled to a progress payment is by “granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments” 3.

6 The statutory entitlement to progress payments is provided for in s 8. “[P]rogress payment” is defined in s 4(1) to include the final payment for construction work carried out (or for related goods and services supplied) under a construction contract, a single or one-off payment for such work or supplies, and a “milestone payment” (a payment that is based on an event or date).

7 As explained in s 3(3), the procedure for recovering such a payment requires:

• “(a) the making of a payment claim by the person claiming payment, and

• (b) the provision of a payment schedule by the person by whom the payment is payable, and

• (c) the referral of any disputed claim to an adjudicator for determination, and

• (d) the payment of the progress payment so determined.”

That procedure is set out in Pt 3 (“Procedure for recovering progress payments”). Section 13(1) provides that a person who is or who claims to be entitled to a progress payment (the “claimant”) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make a payment. The payment claim must identify the relevant construction work (or related goods and services) and the amount of the progress payment that the claimant claims to be due (the “claimed amount”) 4.

8 Section 14(1) provides that a person on whom a payment claim is served (the “respondent”) may reply to the claim by providing a payment schedule to the claimant. The payment schedule must indicate the amount of the payment (if any) that the respondent proposes to make (the “scheduled amount”) 5. If the scheduled amount is less than the claimed amount, the payment schedule must indicate why that is so and, if the respondent is withholding payment, the respondent's reasons for withholding payment 6.

9 If a claimant serves a payment claim on a respondent and the respondent does not provide a payment schedule within 10 business days (or earlier, if required by the construction contract), s 14(4) makes the respondent liable to pay the claimed amount on the due date 7 for the progress payment. Any outstanding amount not paid on or before the due date is recoverable as a debt in a court of competent jurisdiction 8. The position is the same if the respondent provides a payment schedule but does not pay the scheduled amount by the due date 9. Alternatively, the claimant may apply in either case for adjudication of the payment claim 10.

10 Division 2 of Pt 3 deals with the adjudication of disputes. Section 17(1) provides:

“A claimant may apply for adjudication of a payment claim (an adjudication application) if:

• (a) the respondent provides a payment schedule under Division 1 but:

  • (i) the scheduled amount indicated in the payment schedule is less than the claimed amount indicated in the payment claim, or

  • (ii) the respondent fails to pay the whole or any part of the scheduled amount to the claimant by the due date for payment of the amount, or

• (b) the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount.”

An adjudication application is to be made to an authorised nominating authority 11, which must refer the application to an adjudicator as soon as practicable 12. Where the respondent has failed to provide a payment schedule, an adjudication application cannot be made unless the claimant notifies the respondent, within 20 business days immediately following the due date for payment, of the claimant's intention to apply for adjudication of the payment claim and the respondent has been given an opportunity to provide a payment schedule to the claimant within five business days after receiving the claimant's notice 13.

11 The respondent may lodge with the adjudicator a response to the claimant's adjudication application only if the respondent provided a payment schedule within the time specified in s 14(4) or s 17(2)(b) 14. That response must be lodged within five business days after receiving a copy of the application or two business days after receiving notice of the adjudicator's acceptance of the application, whichever is the later date 15. The response may contain

submissions 16 but it cannot include reasons for withholding payment that were not included in the payment schedule provided to the claimant 17.

12 Section 21(3) requires the adjudicator to determine an application “as expeditiously as possible” and, in any case, within 10 business days after the date on which the adjudicator notified the claimant and the respondent of acceptance of the application or within such further time as agreed by the parties.

13 Any proceedings to determine an adjudication application are conducted informally. They may be conducted by a conference and the parties are not entitled to legal representation at any such conference 18.

14 The task of the adjudicator is set out in s 22. Sub-sections (1) and (2) provide as follows:

• “(1) An adjudicator is to determine:

  • (a) the amount of the progress payment (if any) to be paid by the respondent to the claimant (the adjudicated amount), and

  • (b) the date on which any such amount became or becomes payable, and

  • (c) the rate of interest payable on any such amount.

• (2) In determining an adjudication application, the adjudicator is to consider the following matters only:

  • (a) the provisions of this Act,

  • (b) the provisions of the construction contract from which the application arose,

  • (c) the payment claim to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the claimant in support of the claim,

  • (d) the payment schedule (if any) to which the application relates, together with all submissions (including relevant documentation) that have been duly made by the respondent in support of the schedule,

  • (e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates.”

15 Under s 23(2), if the adjudicator determines that the respondent is required to pay an adjudicated amount, the respondent must pay that amount to the claimant on or before the “relevant date” as defined in s 23(1). The “relevant date” is the date occurring five business days after the adjudicator's determination is served on the respondent, unless the adjudicator determines a later date 19.

16 If the respondent fails to pay the whole or any part of the adjudicated amount to the claimant, the claimant may, under s 24, request the authorised...