The High Court has granted special leave to hear appeals in respect of:

  1. the New South Wales Court of Appeal decision in Probuild Constructions (Aust)Pty Ltd v Shade Systems Pty Ltd [2016] NSWCA 234; and
  2. the Full Court of the Supreme Court of South Australia decision in Maxcon Constructions Pty Ltd v Vadasz & Ors [2017] SASCFC 2.

In Probuild, a five-judge bench of the NSW Court of Appeal found that adjudication determinations are not open to judicial review for non-jurisdictional errors of law on the face of the record. 

The decision in Probuild is consistent with numerous Supreme Court of NSW decisions over the past 10 years and the purpose of the security of payment legislation, which is to provide contractors with a quick and relatively inexpensive mechanism to recover progress payments.

However, there remains some doubt as to whether or not security of payment legislation has been drafted with sufficient clarity to exclude review for non-jurisdictional errors of law (as contemplated by section 69 of the Supreme Court Act 1970 (NSW)).

In Maxcon, the Full Court expressed some doubts about the Court of Appeal’s decision in Probuild but did not consider the decision to be “plainly wrong”.

Accordingly, the Full Court considered itself bound by the decision in Probuild (having regard to High Court authority (Farah Constructions Pty Ltd v Say-Dee Pty Ltd 2007 [HCA] 22), which provides that departures from decisions of intermediate appellate courts in interstate jurisdictions in respect of uniform national legislation should only occur where the intermediate appellate court is “plainly wrong”).

Watch this space

The High Court will now determine if judicial review for non-jurisdictional errors of law on the face of the record can vitiate an adjudication determination.  For example, whether or not an adjudicator misinterpreting a construction contract is sufficient grounds to review or quash an adjudication determination.

If the High Court now finds that review of adjudication determinations is available for non-jurisdictional errors of law, there may be a flood of security of payment legislation litigation, resulting in the legislation being somewhat ineffective (at least in respect of its purpose - to quickly recover progress payments).  For these reasons, if the High Court overturns the Probuild decision, an amendment to the security of payment legislation may be required to enable the legislation to achieve its purpose.

The High Court’s decision will affect the security of payment legislation in the ACT, New South Wales, Queensland, South Australia, Tasmania and Victoria.  The effect of the High Court’s decision on the security of payment legislation in each state may also lend further support to the introduction of nationally harmonised security of payment legislation.  A review of security of payment legislation is currently being undertaken by the federal government, with a final report and recommendations due by 31 December 2017.