Question 2: Is Pt 3 of the Security of Payment Act incompatible with Ch III of the Constitution?
91 Birdon's proceedings raised a controversy in federal jurisdiction. First, that controversy involved a general maritime claim within s 4(3)(f) of the Admiralty Act that arose out of the agreements that related to the use or hire of each ship. That claim included a dispute as to whether each agreement already had come to an end before any payment claim was made and whether the Security of Payment Act could apply in respect of either agreement because, if Birdon were correct, neither was on foot at the time the 2011 invoices were raised. Secondly, the controversy involved claims arising under the Australian Consumer Law.
92 The Admiralty Act does not create a cause of action. Rather, that Act confers (federal) jurisdiction to hear and determine certain classes of matters that exist independently of, and owe their existence to, sources of law, including foreign law, different to itself: Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 at 420 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. However, s 232 of the Australian Consumer Law creates a cause of action for an injunction for a contravention of the norm of conduct prescribed by s 18 and s 236 creates a cause of action for damages for such a contravention.
93 Here, it was common ground between the parties that an adjudicator does not exercise judicial power in making an adjudication. But, the act of filing the adjudication certificate creates a "judgment for a debt in any court of competent jurisdiction and is enforceable accordingly" (s 25(1)). If a certificate is filed in the Supreme Court, the "judgment" so created by s 25(1), is a judgment, decree or order of that Court that attracts the appellate jurisdiction of the High Court under s 73 of the Constitution. The first issue that arises is what would be the subject of an appeal to the High Court against such a "judgment"? If the adjudication process was non-judicial, then what error in respect of such a judgment, or an order based on it, could the High Court correct in an appeal?
94 Secondly, by filing the certificate, depending on the controversy between the parties, the party enforcing it may create a matter in federal jurisdiction, such as, in this case, a general maritime claim and a claim under the Australian Consumer Law. This is because s 32 of the Security of Payment Act inextricably links that certified amount to the adjustment of accounts between the parties that must occur in the course of a court deciding finally the underlying dispute on the "construction contract".
95 By force of s 25(4) of the Security of Payment Act a debtor who brings proceedings to set aside a judgment of a court made on the basis of the unpaid amount of an adjudication certificate under s 25(1) and (2) is not entitled to bring any cross claim (s 25(4)(a)(i)), raise any defence in relation to matters arising under the construction contract (s 25(4)(a)(ii)) or challenge the adjudicator's determination (s 25(4)(a)(iii)). Generally speaking, the Security of Payment Act does not permit the debtor to make any challenge to the merits of an adjudicator's determination by way of defence to its liability to pay the sum outstanding under an adjudication certificate: Bittania 67 NSWLR at 27 [60] per Basten JA with whom Hodgson and Tobias JJA agreed. Section 15(4) has a similar effect where the debtor does not provide a responsive payment schedule. Thus, s 25(4)(a)(ii) effectively excludes from consideration, in proceedings to set aside a judgment enforceable by reason of s 25(1), any issue that may arise under a general maritime claim in s 4(3)(f) of the Admiralty Act, and hence any issue in federal Admiralty jurisdiction. So, in proceedings under s 25(4) to set aside a judgment enforceable under s 25(1), a debtor could not argue that the contract had been fully performed and that no sum was capable of being found due by it then or in the future.
96 A judgment under s 25(1) must be recognised and given full faith and credit under s 118 of the Constitution as a judicial proceeding of a State. Although s 25(4) refers to a debtor commencing proceedings to set aside such a judgment, that section, if it is a valid law, and s 118 of the Constitution, exclude any basis on which the judgment could be challenged directly in the exercise of jurisdiction under s 4(3)(f) of the Admiralty Act or by a cross claim seeking an injunction under s 232 of the Australian Consumer Law to prevent the adjudication certificate becoming binding and enforceable as a judgment of the court in which the certificate was filed.
97 Houben Marine argued that the purpose of ss 17-25 of the Security of Payment Act was to ensure that a claimant could receive a payment determined by the process those sections created "notwithstanding that there is a controversy as to the underlying rights and obligations of the parties". It argued that the effect of the Security of Payment Act was to create a separate, stand alone right to payment that was subject to later adjustment under s 32. It and New South Wales contended that somehow the State legislation could create an hermetically sealed right to payment that did not, and necessarily could not, form part of a constitutional "matter" involving the underlying controversy between the parties that would be resolved separately and with the aid of s 32.
98 I cannot accept that argument. The Security of Payment Act recognises in s 32(3) that the rights created by Pt 3 are part of one controversy. This is because s 32(3)(a) seeks to require a court or tribunal dealing with the underlying construction contract to take account of any payment made in respect of the right created earlier under the process in Pt 3 and s 32(3)(b) creates a discretion to make orders for restitution. Thus, s 32(3) creates an integral connection between the parties, their rights under the adjudication and other processes in the earlier provisions of Pt 3 and the underlying controversy.
99 If a judgment debt created by proceedings brought under s 15 or a judgment created by s 25(1) must be taken into account in resolving the underlying controversy by force of s 32(3), the circumstances in which such a judgment can come into being, namely, the existence, operation and effect of a construction contract are part of one cognate controversy that may arise in federal jurisdiction. Houben Marine argued that ss 25(4) and 32 operated to limit the scope of proceedings to ensure that no matters relevant to the underlying dispute involving the construction contract could be raised in proceedings to set aside a judgment under s 25(1). But a State law cannot limit or withdraw a part of a controversy from the scope of the application of a valid federal law or the exercise of federal jurisdiction.
100 Houben Marine and New South Wales argued that this Court could grant an injunction to restrain Houben Marine from enforcing the judgment and, thus, the exercise of federal jurisdiction would not be ousted by s 25. But this argument is in the teeth of each of ss 15(4)(b) and 25(4)(a). This is because each expressly excludes, as a ground to set aside a judgment under s 25(1) that must be given full faith and credit, any defence or cross claim, including as to enforceability or the proper construction (i.e. interpretation) of the construction contract in relation to a general maritime claim that arises from the subject matter (s 4(3)(f) of the Admiralty Act) or in relation to contraventions of the Australian Consumer Law by the claimant in the process of it obtaining the adjudication certificate or a judgment based on it.
101 In other words, each of ss 15(4)(b)(i) and 25(4)(a)(i), by expressly prohibiting a debtor bringing any cross claim in proceedings brought under s 15 or a judgment created by s 25(1), purports to exclude a court in such proceedings from exercising federal jurisdiction under any law of the Parliament. If the making of a payment claim consisted of a claimant engaging in conduct that was misleading or deceptive in contravention of s 18 of the Australian Consumer Law, a State parliament cannot legislate to prevent any court invested with federal jurisdiction under Ch III and seized of the controversy so enlivened from exercising that jurisdiction if it is invoked by a debtor exercising its right to seek an injunction under s 232 of that Law to prevent the claimant obtaining or retaining a judgment debt based on that misleading or deceptive conduct. That is because the moment that a debtor seeks to rely on its rights under a law made by the Parliament in proceedings, the court seized of them exercises exclusively the judicial power of the Commonwealth.
102 In Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 588 [59] Gleeson CJ, Gaudron and Gummow JJ said (with the agreement of Hayne and Callinan JJ at 637 [213]; and see too McHugh J at 613 [141]):
"It should be emphasised that the law of a State cannot withdraw from this Court federal jurisdiction conferred by s 75 of the Constitution, nor the federal jurisdiction which a court (State or federal) otherwise may exercise under a conferral or investment of jurisdiction by a law made under s 76 or s 77 of the Constitution; nor may a State law otherwise limit the exercise of federal jurisdiction."
[Emphasis added].
103 A State law cannot exclude the effect of s 39(2) of the Judiciary Act or the use by the Parliament of the Commonwealth of the autochthonous expedient in s 77(iii) of the Constitution: cf The Queen v Kirby: Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 at 268 per Dixon CJ, McTiernan, Fullagar and Kitto JJ. As their Honours said there, in a passage cited with approval many times (see e.g. Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 574-575 [111] per Gummow and Hayne JJ with whom Gleeson CJ and Gaudron J agreed):
"The demarcation of the powers of the judicature, the constitution of the courts of which it consists and the maintenance of its distinct functions become therefore a consideration of equal importance to the States and the Commonwealth. While the constitutional sphere of the judicature of the States must be secured from encroachment, it cannot be left to the judicial power of the States to determine either the ambit of federal power or the extent of the residuary power of the States. The powers of the federal judicature must therefore be at once paramount and limited. The organs to which federal judicial power may be entrusted must be defined, the manner in which they may be constituted must be prescribed and the content of their jurisdiction ascertained."
[Emphasis added].
104 Just as a State Parliament cannot confer State jurisdiction on a court created by the Parliament of the Commonwealth, so too it cannot prevent any court, State or federal, invested with the judicial power of the Commonwealth, from exercising that judicial power in a matter arising under Ch III of the Constitution. In Re Wakim 198 CLR at 585-586 [140]-[141] Gummow and Hayne JJ explained (with the agreement of Gleeson CJ and Gaudron J) that the determination of whether there is a single controversy:
"… "depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships" (Fencott (1983) 152 CLR 570 at 608, per Mason, Murphy, Brennan and Deanne JJ). There is but a single matter if different claims arise out of "common transactions and facts" or "a common substratum of facts" (Philip Morris (1981) 148 CLR 457 at 512, per Mason J), notwithstanding that the facts upon which the claims depend "do not wholly coincide" (Fencott (1983) 152 CLR 570 at 607, per Mason J, Murphy, Brennan and Deane JJ). So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other (Philip Morris (1981) 148 CLR 457 at 512, per Mason J), as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are "completely disparate" (Felton v Mulligan (1971) 124 CLR 367 at 373, per Barwick CJ), "completely separate and distinct" (Philip Morris (1981) 148 CLR 457 at 521, per Murphy J) or "distinct and unrelated" (Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 481, per Stephen, Mason, Aickin and Wilson JJ) are not part of the same matter.
Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter."
105 I reject Houben Marine's and New South Wales' argument that s 25 of the Security of Payment Act is valid because it does not prevent other proceedings being commenced in a federal or State Court to seek an injunction under, say, s 232 of the Australian Consumer Law or ss 22 and 23 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) in aid of a claim that challenges the creation or validity of a debt based on a judgment under s 25 of the Security of Payment Act. The only reason that such other proceedings, asserting a right under a law made by the Parliament, would be necessary, is if the prohibition against a cross claim, made in the State Act, is effective to exclude the operation of a law made by the Parliament that applies in the circumstances of the parties to create a matter. The very statement of the issue demonstrates that there can only be one matter where, as here, Birdon contends that:
the contract on which it makes its general maritime claim under the Admiralty Act was at an end well before Houben Marine made a payment claim premised on that contract being on foot; and
by making its payment claim, Houben Marine contravened s 18 of the Australian Consumer Law.
106 This is not a situation in which the nature of the right created by a State law is incapable of being litigated in federal jurisdiction. So, in Smith v Smith (1986) 161 CLR 217, a State Act conferred jurisdiction on its Supreme Court to approve a deed giving effect to rights created by that statute. The High Court held that the Family Court did not have jurisdiction to make an order of approval of a deed of release by a person of his rights under the State law and there was no inconsistency between the power of the Family Court under s 87 of the Family Law Act 1975 (Cth) to approve a maintenance agreement and the power of the Supreme Court under the State Act to approve the deed of release. One reason for this was that s 87 of the Family Law Act did not confer jurisdiction on the Family Court to create a matter involving the granting of an approval under the State Act: Smith 161 CLR at 238 per Gibbs CJ, Wilson and Dawson JJ, 249 per Mason, Brennan and Deane JJ.
107 In Edensor 204 CLR at 571 [7] Gleeson CJ, Gaudron and Gummow JJ said:
"A "matter" in respect of which that jurisdiction is conferred may, in a given case, include claims arising under common law or under the statute law of a State. But the jurisdiction invoked remains, in respect of all of the claims made in the matter, "wholly" federal; even in a State court "there is no room for the exercise of a State jurisdiction which apart from any operation of the Judiciary Act the State court would have had" and "there is no State jurisdiction capable of concurrent exercise with the federal jurisdiction invested in the State court". These terms were used by Barwick CJ in Felton v Mulligan ((1971) 124 CLR 367 at 373-374)." [Emphasis added].
108 In Bitannia 67 NSWLR 9 Hodgson, Tobias and Basten JJA each held that a debtor could litigate a defence in proceedings under s 15(4)(b) of the Security of Payment Act based on a contention that the claimant had engaged in misleading or deceptive conduct in obtaining an enforceable debt under s 15(1) in contravention of the analogue of s 18 of the Australian Consumer Law in its previous form in s 52 of the Trade Practices Act 1974 (Cth). They held that such a claim was not a defence in relation to matters arising under the construction contract. They explained that a debtor could do this by impeaching the basis on which the payment claim was served as being affected by misleading or deceptive conduct and seeking damages as a set off in its defence (Bitannia 67 NSWLR at 32 [79] and 36 [96] per Basten JA, 16 [11] per Hodgson JA and 17 [17] per Tobias JA) or as Hodgson JA suggested, by bringing a notice of motion for an injunction under what is now s 232 of the Law: Bitannia 67 NSWLR at 15-16 [7]-[12].
109 However, as Basten JA correctly held, if a claim under the Trade Practices Act could not have been raised as a defence because of the preclusion in s 15(4)(b)(ii) of the Security of Payment Act, then the prohibition on the claimant bringing a cross claim in s 15(4)(b)(i) would create an operational inconsistency between the federal and State laws so that the State law would be inoperative to the extent of the inconsistency: Bittania 67 NSWLR at 42 [118]-[119] (Hodgson JA at 16 [13] and Tobias JA at 17 [19] did not express a view on this issue).
110 The significance of this discussion is that s 25(4) of the Security of Payment Act operates differently to s 15(4). First, s 25(1) will have created a court order that the debtor pay a sum certain. Secondly, the chapeau to s 25(4) envisages in terms that the debtor will "commence[…] proceedings to have the judgment set aside". This must be understood as a reference to taking steps within the notional proceeding or action which the court created when the adjudication certificate was filed, since the prohibitions on the debtor bringing a cross claim or raising a defence in relation to matters arising under the construction contract are only apt to reflect that the debtor is taking steps as a respondent in the extant "proceeding" to set aside the judgment under s 25(1). Thirdly, as a condition of exercising any right to apply to the court to set that judgment aside, s 25(4)(b) requires the debtor to pay into court the unpaid sum due under the judgment, as security. There is no apparent discretion given to the court to relieve the debtor of that potentially onerous obligation.
111 It is difficult to see how a State law can require a person to pay money into court as a mandatory, and not judicially imposed, condition of that person being allowed to litigate his, her or its rights under a federal law. No doubt a court can order a person to pay a disputed sum into court as security as an incident of the exercise of judicial power. However, the amount of a judgment under s 25(1) can be very substantial. In these proceedings, the Full Court was informed that the payment claim seeks over $2 million. Suppose that an extravagant payment claim were made and, because of the claimant's misleading or deceptive conduct in contravention of the Australian Consumer Law, the debtor was not served, as was alleged in Bittania 67 NSWLR 9, and then a judgment under s 25(1) were created. The effect of s 25(4)(b) would be to create a potentially impossible financial barrier to the debtor commencing proceedings to set aside that judgment. Likewise, a barrier would be created if s 25(4)(a)(iii) operates to preclude a challenge to the adjudicator's determination based, for example, on the debtor being denied natural justice because it was never served with, and was at all relevant times unaware of, the payment claim or any process relating to the adjudication.
112 The laws made by the Parliament of the Commonwealth that have been relied on in these proceedings do not impose a mandatory precondition, of payment into court of the sum in dispute, on the right of a person to invoke the exercise of the federal jurisdiction they create. Such an inflexible precondition imposed by State law is operationally inconsistent with the rights of all persons to apply to a court exercising the judicial power of the Commonwealth for relief under laws made by the Parliament.
113 Houben Marine also argued that a matter for the purposes of ss 75 and 76 of the Constitution did not exist in the abstract and necessarily required that a remedy could be granted by a court to enforce the right, duty or liability that gave rise to it, as explained by Gleeson CJ and McHugh J in Abebe v The Commonwealth (1999) 197 CLR 510 at 527-530 [31]-[36]. So much may be accepted. However, Houben Marine's argument seeks to turn what their Honours said on its head. They were discussing the power of the Parliament to identify a "matter" in a law that it had enacted by reference to the remedy it created and the court it authorised to hear and determine the controversy. Nothing said in Abebe 197 CLR 510 supports a contention that the Parliament of a State can so define a controversy as to limit the exercise by a Ch III court of federal jurisdiction when it otherwise exists. The authority that a court exercising federal jurisdiction possesses is to determine the whole of the controversy between the parties arising under federal and, where applicable, State law.
114 It may be, as was the case in Smith 161 CLR 217, that the jurisdiction conferred by the Parliament on a court exercising federal jurisdiction will be limited so that the court concerned (there the Family Court) will not have been given jurisdiction to resolve issues under State law that, had the grant of federal jurisdiction been greater, it could have resolved. But here, this Court can resolve all issues between the parties, including whether the construction contract is on foot and so entitles Houben Marine to proceed with the adjudication process. However, a State law cannot limit the exercise of federal jurisdiction to resolve all matters in the controversy between the parties in respect of the construction contract, including by use of a restriction of justiciable issues, such as is found in s 25(4) of the Security of Payment Act: Boilermakers 94 CLR at 268; Re Wakim 198 CLR at 574-575 [111], 585-586 [140]-[141]; Edensor 204 CLR at 588 [59].
115 A State law cannot preclude a court from exercising the judicial power of the Commonwealth by precluding a party from exercising rights that arise in a "matter" within the meaning of ss 75 and 76 of the Constitution. Here, Birdon has raised a real controversy as to whether the Security of Payment Act can apply to it at all in the circumstances that it alleges, namely, that the construction contract was at an end well before Houben Marine made its payment claims.
116 Houben Marine and New South Wales argued that the adjudicator's determination was a "factum" selected by the legislature as the "trigger" of the statutory consequence in s 25(1): cf Baker v The Queen (2004) 223 CLR 513 at 532 [43] per McHugh, Gummow, Hayne and Heydon JJ. However, the issue in Baker 223 CLR 513 concerned a restrictive criterion, selected by the Parliament of a State in legislation, that had to be satisfied before its Supreme Court was authorised to exercise a judicial function: see the terms of s 13A(3A) of the Sentencing Act 1989 (NSW) set out by Gleeson CJ at 519 [3], 523 [12]-[13]; see also McHugh, Gummow, Hayne and Heydon JJ at 532 [41]-[43], 534 [49].
117 The proposition concerning the legislative authority to select a factum as a "trigger" for a legislative consequence identified by McHugh, Gummow, Hayne and Heydon JJ in Baker 223 CLR at 532 [43] was sourced to Re Macks; Ex parte Saint (2000) 204 CLR 158 at 178 [25] per Gleeson CJ, 187-188 [59]-[60] per Gaudron J, 200 [107] per McHugh J, 232-233 [208] per Gummow J and 280 [347] per Hayne and Callinan JJ. In that case, the Court considered the effect of State legislation that conferred, imposed and affected rights and liabilities of persons by reference to ineffective judgments, as defined, of the Federal Court. The State legislation used the criterion that the Federal Court judgments had been made without jurisdiction because the State Act purporting to confer that jurisdiction had subsequently been held invalid in Re Wakim 198 CLR 511. However, the State legislation did not purport to affect the Federal Court judgments or to deem them to be judgments of the State's Supreme Court. The legislation simply declared that the rights and liabilities of the parties to the litigation in the Federal Court were the same as if its judgment had been a valid judgment of a State court: see Gleeson CJ at 178 [25]. As the Chief Justice said at 179 [31], the legal operation of the remedial State Act:
"… does not purport to validate ineffective judgments. It creates rights and liabilities of persons. It does so by reference to such judgments; but it does not affect the judgments."
118 And, as Gummow J said in Re Macks 204 CLR at 232-233 [208]:
"Thirdly, the provisions of the SA Act do not by legislative fiat convert the orders of the Federal Court to orders made by the Supreme Court. Rather, certain consequences are attached to them "as acts in the law" (R v Humby; Ex parte Rooney (1973) 129 CLR 231 at 243); rights and liabilities are created as if orders had been made by a judge of the Supreme Court. There is ample legislative precedent at the State and federal level for providing, if stipulated conditions be satisfied, for the registration of foreign judgments in State Supreme Courts and in the Federal Court with the effect they would have if given in those courts and entered on the day of registration (see Foreign Judgments Act 1971 (SA) and now Foreign Judgments Act 1991 (Cth), and, within Australia, Pt 6 (ss 104-109) of the Service and Execution of Process Act 1992 (Cth)). The functions performed by courts of federal jurisdiction under such laws of the Commonwealth or the States are not incompatible with the exercise of the judicial power of the Commonwealth by those courts (Kable (1996) 189 CLR 51 at 98, 106, 117, 132). The reasoning in Kable might be applicable where, for example, legislation of a State obliged its Supreme Court to enforce as if it were its own judgment an executive or legislative determination of a nature which was at odds with the fundamentals of the judicial process. That situation is far from that which is presented here." [Emphasis added].
119 An adjudication certificate is very different from an ex parte or interlocutory injunction, a default or summary judgment, a judgment of a foreign court or an arbitration award. In the first category of case (an ex parte or interlocutory injunction and a default or summary judgment), the domestic court exercises its ordinary judicial power. An ex parte or interlocutory injunction, even one given in circumstances of urgency without time for the court fully to assess the evidence or law, is no less an exercise of judicial power, despite not finally determining rights. It is a provisional order; it can be reconsidered; adjustments can be made by the court at a final hearing, including by enforcing the undertaking as to damages. The provisional nature of an interlocutory order does not derogate from the fact that it is an exercise of judicial power. Similarly, an ordinary incident of the judicial process creating a judgment debt is that it resolves a controversy as to the debtor's liability: Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 270 per Deane, Dawson, Gaudron and McHugh JJ. That is so even in the case of a judgment entered by default or summarily.
120 In the second category of case (a foreign judgment), a foreign judicial process recognised by the law of the forum, as such, is enforced. In the third category of case (an arbitration award), the parties' arbitration agreement involved an agreed method of dispute resolution that, when agreed, had as an incident, the consequence that the award would be enforceable in this way. That is also well recognised as an ordinary incident of judicial power. In effect, by agreeing to having an arbitration clause in a contract, the parties to that contract consent to judgments being entered that are based on the award, subject to the applicability of any legislative exception.
121 In contrast, the adjudication process under the Security of Payment Act is not judicial. It creates, in a summary fashion, a new right, namely, the right to be paid the sum certified. The procedure in s 25 provides one means by which that right is enforced. An adjudicator must make a determination under Pt 3 of the Security of Payment Act that is enforceable under the Act, independently of any underlying provisions and rights contained in the construction contract. If the construction contract already provides for progress payments and the times at which they are payable, s 8(1) gives those provisions statutory force as an entitlement of the claimant under the Act. A claimant whose construction contract has such provisions can serve any payment claim under s 13(1) and thus initiate the adjudication procedure provided by Pt 3 of the Security of Payment Act.
122 Accordingly, the adjudication procedure under Pt 3 can involve the adjudicator making a determination under the Act that either gives effect to the claimant's existing contractual rights to a progress payment or creates a new right to such a payment. The adjudicator's determination is made enforceable by the operation of s 25. That makes the adjudication certificate recording the determination binding and conclusive once filed because it has effect, and is enforceable, as a judgment of a court.
123 Legislation can vest in a court the power to make orders creating new rights and imposing new liabilities as an incident of judicial power: Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 191 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. But, under the Security of Payment Act, the court in which the certificate is filed does nothing itself to make the adjudicator's determination have the effect of an order. Moreover, s 25 enlists the ordinary enforcement powers of the court in which the certificate is filed in respect of orders that that court might make in the exercise of its judicial functions. Importantly, under s 25, the adjudicator's determination does not become a determination by the court in which the adjudication certificate is filed. While s 25(4) contemplates that proceedings may be taken to set aside a "judgment" created by s 25(1) and some process of judicial review of the adjudicator's determination may also be available, the adjudication certificate becomes a judgment of the court in which it is filed by force of the Security of Payment Act and not as a result of any judicial proceeding. This scheme is similar to that considered in Brandy 183 CLR at 269-270 per Deane, Dawson, Gaudron and McHugh JJ.
124 The fact that s 25(1) provides that an adjudication certificate becomes a judgment of the court in which it is filed and "is enforceable accordingly", transforms the previous non-judicial character of the adjudication process into the exercise of judicial power. Deane, Dawson, Gaudron and McHugh JJ said in Brandy 183 CLR at 268-269 that the enforceability of a decision was an aspect of judicial power that may serve to characterise a function as judicial when it was otherwise equivocal. They applied the principle that "the concept of judicial power includes enforcement: the capacity to give a decision enforceable by execution". In that case, their Honours held that the determination of the Human Rights and Equal Opportunity Commission was made enforceable by the legislation operating upon the registration of that decision in the Federal Court. The result was that the decision could be enforced by execution under s 53 of the Federal Court Act: Brandy 183 CLR at 270. The enforceability of the Commission's determination upon its registration, by use of the Court's powers, was the critical factor that made the determination an exercise of judicial power. But the enforceable determination was in no sense a determination of the Federal Court whose process of execution was conscripted by the legislation providing for registration and enforceability of the determination: Brandy 183 CLR at 270-271.
125 Here, the last portion of what Gummow J said, in the passage quoted above from Re Macks 204 CLR at 232-233 [208], has particular relevance, for the court in which the adjudication certificate is filed, must enforce the amount due as if it were that court's own judgment made in the exercise of its judicial power. The adjudication process does not at any point involve the exercise of judicial power. It is one thing, as Gummow J explained, for legislation to enable registration of the judgment of a foreign court so that it may be enforced as a judgment of a local State or federal court, because that is not incompatible with the exercise of the judicial power of the Commonwealth by the court in which registration occurs. Indeed, that exercise is compatible with the fundamentals of the judicial process because it accords recognition to a determination of a foreign court's orders arrived at in a manner that involves the exercise of judicial power.
126 But, it is quite another process to register in a court, exercising the judicial power under Ch III of the Constitution, an act of a person, such as either an adjudicator or the Human Rights and Equal Opportunity Commission, so that that person's determination is deemed to be a judgment of the Court and enforceable using its processes: Brandy 183 CLR at 270-271. Such a process involves the exercise of a court's powers in a manner unauthorised by, and fundamentally at odds with, the judicial process envisaged in Ch III of the Constitution.
127 Section s 25 of the Security of Payment Act precludes a court, in proceedings commenced to set aside the judgment, from dealing with the very existence of any reason under the construction contract as to why liability for the judgment entered under s 25(1) exists, or from considering any contest to the filing of the adjudication certificate and from challenging the entry of a judgment as a consequence. That results in the courts conscripted by s 25(1) being precluded from giving any consideration at all to the exercise of the judicial power that creates and gives effect to an enforceable judgment. This is contrary to the ordinary functions of a court exercising, or capable of exercising, the judicial power of the Commonwealth under Ch III of the Constitution.
128 Houben Marine and New South Wales also argued that the judgment created by s 25(1) of the Security of Payment Act could be set aside for jurisdictional error by reason of the decision in Kirk v Industrial Court of New South Wales (2010) 239 CLR 531. This is a curious argument. In this case, if Houben Marine obtained an adjudication certificate for about $2 million, it would have to be filed in, and become a judgment of, the Supreme Court of New South Wales. That court is a superior court of record: ss 22-23 of the Supreme Court Act 1970 (NSW). It would not exercise supervisory jurisdiction over its own judgment and its jurisdiction to set aside a judgment obtained under s 25(1) would be confined by s 25(4) which expressly precludes the respondent from challenging the adjudicator's determination (s 25(4)(a)(iii)) or raising any defence in relation to matters arising under the construction contract (s 25(4)(a)(ii)). But, presumably that determination could be challenged for jurisdictional error in proceedings to set aside a judgment entered on the adjudication certificate being filed: cf Kirk 239 CLR at 581 [99]-[100] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. If the second preclusion in s 25(4)(a)(ii), from raising a defence in relation to matters arising under the construction contract is effective, how can a debtor argue, as Birdon would wish to here, that the construction contract was at an end and therefore the adjudicator committed a jurisdictional error in proceedings to have the Supreme Court set aside its own judgment? And, if the argument that Birdon wishes to raise is available under s 25(4), then it is part of the very controversy in this Court.
129 I am of opinion that the entry of an adjudication certificate as an enforceable judgment of a court arrived at by a process that was not at all judicial, with no judicial scrutiny, or even any opportunity for such scrutiny, is fundamentally inconsistent with the judicial process. It uses the status and powers of a court to clothe the adjudication certificate in a judicial guise. But, this is a chimera. It is an usurpation of the judicial authority of the court whose process is conscripted to give the appearance of a judicial determination - an enforceable judgment - to an unjudicial exercise. The "judgment" created by force of s 25(1) is not an exercise of judicial power, yet, if it were valid, ss 73 and 118 of the Constitution would clothe it in judicial raiments. No judicial process is engaged at any point prior to the entry of judgment enforceable, if s 25(1) is a valid law, throughout the Commonwealth by force of s 118 and covering cl 5 of the Constitution. For these reasons, question 2 should be answered: "Sections 25 and 32(3) are invalid because they impermissibly interfere with the institutional integrity of the courts upon which the judicial power of the Commonwealth can be conferred".