Lewence Construction Pty Ltd v Southern Han Breakfast Point Pty Ltd [2015] NSWCA 288 

The NSW Court of Appeal determined, unanimously, that a finding by an adjudicator of an available reference date is not a jurisdictional fact and therefore is not a precondition to the making of a valid payment claim. On this basis the adjudicator’s decision was not amenable to judicial review.

The facts

Lewence Construction Pty Ltd (Builder) entered into a contract with Southern Han Breakfast Point Pty Ltd (Principal) for the construction of an apartment block in NSW. A dispute arose and the contract was terminated. The Builder then issued a payment claim under the Building and Construction Industry Security of Payment Act 1998 (NSW) (NSW SoP Act). The claim went to adjudication and the adjudicator found for the Builder in the amount of $1.2M. The Principal then obtained a declaration in the NSW Supreme Court that the adjudication decision was void on the grounds that there was no valid reference date to make a payment claim under the Act. The Builder appealed.

The Court of Appeal

The main issue on appeal (Ward and Emmett JA, Sackville AJA) was whether a finding of a valid reference date by the adjudicator was a finding of jurisdictional fact giving rise to a right to curial review. If not, the Court would have no jurisdiction to review the adjudicator’s decision (because, in essence, no challenge to an adjudicator’s decision is permitted except on the grounds of jurisdictional error).

The issues raised involved the interpretation of sections 8 and 13 of the NSW SoP Act. (The Building and Construction Industry Security of Payment Act 2002 (Vic) (Vic SoP Act) contains similar provisions in sections 9 and 14, and the Court’s decision is therefore relevant in Victoria.)

Section 8(1) of the NSW SoP Act provides among other things that on and from each “reference date” (usually the date specified in the contract) a person who has undertaken to carry out construction work under the contract is entitled to a progress payment.

Section 13 then provides that a person referred to in section 8(1) “who is or claims to be entitled to a progress payment” may serve a payment claim, by reference to the “reference date”, within the period determined by or in accordance with the contract (or within 12 months – 3 months under the Vic SoP Act – after the work ceased to be carried out).

The adjudicator determined that a reference date arose under the contract and assessed the payment claim using that date. The Principal alleged (and the Court at first instance agreed) that there was no reference date, and a finding that there was such a date was a jurisdictional error, and hence the decision of the adjudicator was amenable to curial review.

The Court of Appeal overturned the trial judge’s finding that the adjudicator’s determination of a reference date was a finding of jurisdictional fact. The Court drew a distinction between section 8 of the Act (in a Part 2 entitled “Rights to Progress Payments”), which provides a right to obtain a progress payment; and section 13 which merely provides a procedure for recovering progress payments. Ward JA stated at [52] and [93]:

[52] “The consequence of making a valid payment claim [under section 8(1)] is that it then falls to the adjudicator to determine the claim, and absent jurisdictional error, entitlement to such a payment on the particular facts of a particular case is not for the court to determine.

[93] ”The appellant was a person who claimed entitlement under the construction contract to progress payments in the general sense contemplated by the Act. It satisfied the description in s 8(1)(a) and (b). Whether that claim was valid (including whether it was valid because it was supported by a reference date) is not a jurisdictional fact.

Emmett JA specifically agreed with Ward JA on this point (at [119]) and Sackville AJA also generally agreed.

Conclusion

This case makes it clear that a finding of a reference date is not a jurisdictional fact that may be challenged in the Courts. The distinction drawn by the Court of Appeal between Part 2 (Rights) and Part 3 (Procedures) in the NSW SoP Act is noteworthy and it will be interesting to see whether this decision has further implications for other sections of the Acts contained in Parts 2 and 3 of both the NSW and Victorian Security of Payment Acts.