When can a Court quash an adjudication determination?

Nick Kallipolitis

Recent judicial development

On what grounds can a Court quash an adjudication determination? A recent NSW Court of Appeal decision in Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd held that the Building and Construction Industry Security of Payment Act (the Security of Payment Act) didn’t permit review of the determination of an adjudicator otherwise than for jurisdictional error.

The facts

Probuild Construction, head contractor, entered into an agreement with Shade Systems, a subcontractor, for the supply and installation of external louvers to the facade of an apartment complex in Chatswood.

In December 2015, Shade Systems served a payment claim on Probuild claiming $324,334.26 progress payment under the subcontract. In January 2016, Probuild served a payment schedule on Shade Systems indicating that it wouldn’t make any payments. The dispute was referred to an adjudicator under the Security of Payment Act and the adjudicator delivered his determination in February 2016, allowing the claim for a progress payment of $277,755.

Court proceedings

Probuild sought to review the determination in the Supreme Court, on the grounds of a denial of procedural fairness in the adjudication process, as well as errors of law in the adjudicator’s written reasons. The Court rejected Probuild’s claim of a denial of procedural fairness but found that there had been an error of law on the face of the record. The determination was quashed on the grounds that the Court had the power to review non-jurisdictional errors of law on the face of the record.

Shade Systems appealed in the Court of Appeal, asserting that the Court had no power to intervene where the only errors identified were non-jurisdictional errors of law. The Court unanimously held that the Security of Payment Act didn’t allow review of the determination of an adjudicator other than for jurisdictional error.

The decision is presently under appeal to the High Court of Australia where the High Court has recently granted special leave to appeal the Court of Appeal decision. If the High Court finds that the Supreme Court does have the power to review adjudications on non-jurisdictional grounds it may open the flood gates as to the number of determinations that are reviewed.

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