The NSW Supreme Court in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2016] NSWSC 770 considered whether an adjudication determination under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SoPA) could be subject to judicial review, in circumstances where an adjudicator has made a non-jurisdictional error of law on the face of the record.

Relevantly, the adjudicator had determined that Probuild Constructions (Aust) Pty Ltd (Probuild) was not entitled to liquidated damages claimed, the value of which surpassed the amount claimed by Shade Systems Pty Ltd (Shade Systems). Probuild submitted that the adjudicator’s determination involved a non-jurisdictional error of law, when considering the basis on which the adjudicator rejected Probuild’s claim for liquidated damages, and sought that the determination be quashed pursuant to section 69 of the Supreme Court Act 1970 (NSW).

Prior to this decision, Hodgson JA in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport [2004] NSWCA 394 had held that the legislative intention of the SoPA and its mechanisms which provided for the fast determination of payment claims with minimal court involvement, meant adjudication determinations were not open to review for non-jurisdictional errors of law. In comparison, the High Court in Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 held the NSW Supreme Court is able to grant relief in relation to jurisdictional errors, although did not address whether the same principles apply in respect of non-jurisdictional errors.

The court held that the comments of Hodgson JA were strictly obiter, and found that the SoPA does not implicitly or expressly exclude the operation of section 69 of the Supreme Court Act 1970 (NSW). The court stated at [73]:

The process of reconciliation must take account of the objects of the statute, which are undoubtedly to provide a simple and speedy process to ensure progress payments are made in a timely fashion. However, as a general rule, a constraint on jurisdiction expressly conferred on the court will require express language or at least a clear and unambiguous implication.

The court concluded that in determining Probuild was required to prove a default by Shade Systems before being entitled to liquidated damages, the adjudicator had made an error of law. The court ordered the determination be quashed and the matter be remitted to the adjudicator for further determination.

This decision has significant implications for all parties involved in a SoPA adjudication. Not only does this decision provide a further avenue for parties to challenge unfavourable adjudication determinations, but it undermines the finality and speed of determinations as adjudicators may be required to re-determine applications outside of the timeframes required by the SoPA.