Last Friday the Victorian Court of Appeal in the case of Saville v Hallmarc Constructions Pty Ltd clarified the scope of jurisdictional facts in adjudication determinations under the Building and Construction Industry Security of Payment Act (2002) Vic. (Act) that may be reviewed by the Courts.

Kliger Partners represented Hallmarc and advised it throughout the course of the Adjudication process and also the judicial review in the Supreme Court and the Court of Appeal.  This is the fourth landmark decision in Victoria under the Act that Kliger Partners has been involved in.

The Adjudication

Saville was engaged by Hallmarc to supply and install joinery. Saville last attended the construction site on 30 September 2013 leaving defective and incomplete work.  On 21 February 2014, more than 4 months after last attending the site, Saville served a payment claim under the Act on Hallmarc.

In the adjudication under the Act, the adjudicator determined the relevant reference date under the Act was 25 November 2013 and the payment claim served on 21 February 2014 was served within time.

The adjudicator’s determination of the reference date was based on findings that:

  1. JMP Carpentry (JMP), a contractor engaged by Hallmarc, rendered an invoice to Hallmarc on 25 November 2013 for rectification of Saville’s defective work; and
  2. the contract between Hallmarc and Saville included “project management” work, which included reviewing invoices for rectification work which would be the subject of a backcharge.

Judicial Review

In Hallmarc Construction Pty Ltd v Saville & Anor, Vickery J quashed the adjudicator’s determination after making declarations that the payment claim did not comply with the mandatory requirements of sections 9 and 14 of the Act as it was served out of time and was therefore invalid and void.  His Honour found that the adjudicator fell into jurisdictional error when he determined the reference date to be after 25 November 2013.

In the Judicial review proceeding, Saville argued that JMP were engaged by Hallmarc as Saville’s agent. His Honour accepted evidence given on behalf of Hallmarc that JMP was engaged directly by Hallmarc and JMP was not engaged as agent for Saville.

The Appeal

Saville appealed the decision of Vickery J on the grounds including that the judge erred in:

  1. finding that the adjudication was mistaken in determining that Saville last carried out work under the contract on 25 November 2013 was a reviewable error of law;
  2. finding that the adjudication was mistaken in determining that due to repairs carried out in November 2013 for part of Saville’s scope of work under the construction contract, Saville last carried out work under the contract on 25 November 2013 was a reviewable error of law; and
  3. failing to consider and apply or to explain the exclusion of the principle enunciated in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd  that a reviewable error relating to the validity of the adjudication is limited to straightforward calculations of time or determinations that are arbitrary, capricious and irrational.

The Court of Appeal unanimously found that the principle in Chase did not limit the jurisdictional facts that may be the subject of judicial review and stated that:

“[t]he assumption of jurisdiction by an adjudicator under the Act may involve, as it does here, matters requiring evaluation just as jurisdictional facts involve evaluation and assessment in other contexts. The jurisdiction of the adjudicator under s 23(1) to determine the amount of the progress payment to be made by Hallmarc to Saville, the date on which the amount became payable and the rate of interest, was dependent upon the validity of the first payment claim.  If it was served out of time, it was invalid; it had no legal force or effect and could not ground a jurisdiction under s 23 of the Act that the adjudicator did not otherwise have. In this sense, it was a matter of jurisdiction that was an essential requirement to the adjudicator’s determination; it was a jurisdictional fact and reviewable ”.

The Court of Appeal’s decision highlights the breadth of scope for judicial review in respect of jurisdictional facts. Contrary to the argument made by Saville of the limiting nature of Chase,  the Court of Appeal has made clear that other facts that an adjudicator may find which give rise to the adjudicator assuming jurisdiction are reviewable.

Different approach adopted by the NSW Court of Appeal

In apparent contrast to the decision in Saville, the New South Wales Court of Appeal in Lewence Construction Pty Ltd v Southern Han Breakfast Point Pty Ltd  held that “The existence of a reference date to support a payment claim is not a jurisdictional fact; it is not an essential pre-condition for the making of a valid payment claim (Ward JA at [60], [93]; Emmett JA at [119]; Sackville AJA at [133])."

This difference in approach between the courts in Victoria and NSW is something that Kliger Partners is required to regularly advise head-contractor clients on in different jurisdictions.

Conclusion

When considering the potential for judicial review of adjudication determinations, particularly on the basis of jurisdictional error, the approach may differ depending whether the adjudication is made under the Victorian or New South Wales legislation.

In Victoria, the facts on which jurisdiction is founded are reviewable jurisdictional facts and the jurisdictional facts that may be reviewed go beyond straightforward calculations of time or determinations that are arbitrary, capricious and irrational. In New South Wales, on the basis of the decision in Lewence, the existence of a reference date is not a jurisdictional fact that may give rise to judicial review and scope for judicial review in New South Wales may be more limited as a result.

These cases serve to highlight the difference not only between the security of payment legislation between States but also the difference in approach to judicial reviews of adjudication determinations in each State.