By Ziv Ben-Arie, Partner, Scott Higgins, Partner

Claimants can now breathe a sigh of relief, as yesterday the High Court of Australia unanimously upheld a long standing principle that an adjudication determination cannot be challenged for non-jurisdictional errors of law. The decision has now put to rest recent uncertainty arising from the conflicting views expressed in the earlier Court of Appeal decision and by the Full Court of the Supreme Court of South Australia in Maxcon Constructions Pty Ltd v Vadasz (No. 2).[1]

In so holding, the High Court has dismissed the appeal by Probuild Constructions (Aust) Pty Limited, preferring to follow the earlier NSW Court of Appeal decision of Brodyn.[2] In the Court of Appeal decision, Basten JA (Bathurst CJ, Beazley P, Macfarlan and Leeming JJA agreeing) held that the Supreme Court had no power to quash an adjudication determination for non-jurisdictional errors of law, overturning the earlier decision of Emmett AJA in the first instance decision. For a more detailed discussion regarding the material facts and issues of the case, please refer to our previous article on the first instance decision here.

The High Court considered the text, context and purpose of the Building And Construction Industry Security Of Payment Act 1999 (NSW) (Act). While noting that the Act contained no express exclusion of the Supreme Court’s jurisdiction for non-jurisdictional errors of law, the High Court stated that the Act evinced a clear legislative intention to exclude challenges to adjudication determinations for non-jurisdictional errors of law.

Their view was predicated on the basis that the regime itself creates an interim payment entitlement which is intended to be determined informally, summarily, quickly and without prejudice to any of the parties rights under their construction contract or otherwise at law. While the High Court appreciated the serious consequences faced by Respondents in not being able to challenge a determination for non-jurisdictional error, they noted that an aggrieved Respondent’s rights on a final basis are still preserved under the construction contract by virtue of sections 3(4) and 32 of the Act.

The High Court concluded that permitting review of an adjudicator’s determination for non-jurisdictional error would be antithetical to the legislative intent and purpose of the Act.

The Probuild decision will likely be welcomed by successful Claimants who can now take comfort in the narrow scope of challenging adjudication determinations.

This decision ought to fortify the use of the adjudication process as a means of attempting to compel payment for construction works performed (or the provision of related good and services).

From a Respondent’s viewpoint, it underscores the importance of being vigilant in their response to payment claims and adjudications generally. Respondents should also ensure that adequate security (preferably not cash retention) is held so as to assist in preserving final contractual rights.

If you have any questions relating to this article, or any other construction issue, please do not hesitate to contact the authors.

[1] [2016] SASC 156.

[2] Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421.