Brodyn Pty Limited t/as Time Cost and Quality (ACN 001 998 830) v Philip Davenport & Ors

Brodyn Pty Limited t/as Time Cost and Quality (ACN 001 998 830) v Philip Davenport & Ors - [2003] NSWSC 1019 - NSWSC 2003 case summary — Zoe

[50]

"(a) the amount calculated in accordance with the terms of the contract; or (b) if the contract makes no express provision with respect to the matter , the amount calculated on the basis of the value of construction work carried out or undertaken to be carried out by the person (or of related goods and services supplied or undertaken to be supplied by the person) under the contract." 12 Section 10 which then provides in subsection (1) for the manner in which construction work carried out or undertaken to be carried out under a construction contract is to be valued, provides for that valuation to be in accordance with the terms of the contract or, if the contract makes no express provision with respect to the matter, for the valuation to have regard to a range of matters including the contract price for the work, and in the case of defective work, the estimated cost of rectifying the defects. A similar approach is taken in subsection (2) to the method by which related goods and services supplied or undertaken to be supplied under a construction contract are to be valued. 13 In short, even where no express contractual provision is made with respect to the amount of a progress payment to which a person is entitled in respect of a construction contract or where no express provision is made with respect to the valuation of construction work carried out under a construction contract, the adjudicator has a judgmental role in determining those matters. And the adjudicator exercises that role by reference to the integers stipulated for by the Act. 14 What the legislature has effectively achieved is a fast track interim progress payment adjudication vehicle. That vehicle must necessarily give rise to many adjudication determinations which will simply be incorrect. That is because the adjudicator in some instances cannot possibly, in the time available and in which the determination is to be brought down, give the type of care and attention to the dispute capable of being provided upon a full curial hearing. It is also because of the constraints imposed upon the adjudicator by section 21, and in particular by section 21(4A) denying the parties any legal representation at any conference which may be called. But primarily it is because the nature and range of issues legitimate to be raised, particularly in the case of large construction contracts, are such that it often could simply never be expected that the adjudicator would produce the correct decision. What the legislature has provided for is no more or no less than an interim quick solution to progress payment disputes which solution critically does not determine the parties rights inter se. Those rights may be determined by curial proceedings, the Court then having available to it the usual range of relief, most importantly including the right to a proprietor to claw back progress payments which it had been forced to make through the adjudication determination procedures. That clawback route expressly includes the making of restitution orders. 15 During the taking of submissions from the parties, Mr Davie, counsel for the plaintiff, addressed at length on the proposition that the adjudicator is a tribunal obliged to act judicially, making the following points: · that the adjudicator once appointed exercises power conferred on him or her by statute; · that the adjudicator has the statutory power to provide a determination which expressly confers rights upon the claimant, including the right to payment, carrying with it the right to suspend work in circumstances which might otherwise constitute a breach of contract; and · that the adjudicator in carrying out the determination is required to decide questions which confer and proclaim a legal right, namely the determination that a progress payment is payable. 16 In many circumstances a statutory provision providing a tribunal with such powers would inexorably result in the decisions of the tribunal being open to judicial review and in particular review in the nature of a writ of certiorari provided for in section 69 (3) of the Supreme Court Act. That subsection reads:

[51]

"It is declared that the jurisdiction of the Court to grant any relief or remedy in the nature of a writ of certiorari includes jurisdiction to quash the ultimate determination of a court or tribunal in any proceedings if that determination has been made on the basis of an error of law that appears on the face of the record of the proceedings." 17 The critical parameter of present significance in terms of the consideration of the extent to which an adjudication determination is amenable to judicial review is the fact that the determination does not finally determine the parties rights even where following the issue of an adjudication certificate, the determination in due course becomes enforceable as a judgment for a debt. All that such a judgment achieves and amounts to is an obligation for the judgment debtor to make a particular payment to the judgment creditor. That payment is regarded as a progress payment mandated by the Act when it has been regularly engaged and when each of the steps provided for have been carried out to the letter. 18 So read, none of the propositions put forward by Mr Davie is conclusive as to the extent to which, if at all, judicial review of the adjudicator's determination is available. And in determining the limited extent to which the procedures under the Act are open to judicial review, it is necessary to take into account the central mischief sought to be remedied as exposed by the second reading speech. Justice McDougall has relevantly set out that reading speech in Musico (see [2003] NSWSC 977 at [20]). It makes it very plain that the legislation was aimed at permitting contractors and subcontractors to obtain a prompt interim progress payment on account, pending final determination of all disputes. Were the Court to now hold that disappointed respondents may, following an adjudication determination, invoke general review by the courts of those determinations by way of orders in the nature of prerogative writs, the way would be open for a wholesale undermining of the mischief sought to be dealt with by the Act. 19 This then provides the essential reason as to why upon the proper construction of the Act the following conclusions may be drawn: · that apart from any privative effect the Act might have, relief under section 69 of the Supreme Court Act would in principle lie against an adjudicator appointed under section 19 of the Act; · that the determination of an adjudicator made pursuant to section 22 of the Act is in principle susceptible to judicial review; · that judicial review of adjudication determinations made under the Act may be undertaken on jurisdictional grounds (at least in the sense that involves refusing to exercise, or acting in excess of, jurisdiction); · that judicial review of adjudication determinations made under the Act may be undertaken for denial of natural justice or for fraud; and · that relief in the nature of certiorari will not lie to quash the determination of an adjudicator on the basis of non-jurisdictional error of law on the face of the record [because the legislative scheme set out in section 25 (4) is inconsistent with the availability of this ground of review]. 20 This conclusion generally follows the reasons for judgment given by McDougall J in Musico (see [2003] NSWSC 977 at [42]-[60]). Were any grounds of review made out? 21 The particular alleged shortcomings in the determination upon which the plaintiff has sought to rely were put as follows:

[71]

In the face of such a clear and express contractual provision, the adjudicator's determination that a progress payment should be made which included sums referrable to variations which were clearly not agreed in writing is (it is submitted) an error of law." Dealing with the matter 22 The short answer to each of these submissions is that: · for the reasons given by McDougall J the rights of the plaintiff under section 32 are not affected in terms of civil proceedings later taken to establish the rights of parties under the construction contract. In particular restitution may be ordered under section 32 (3) (b). It is at that stage and in those proceedings that no doubt submissions will be taken from both parties and every parameter of the subject rights will be extremely carefully traversed. The Court will not be tramelled by the stringent time constraints to which adjudicators are subjected by the Act. In truth all that will have occurred will be that the interim regime for payment of progress claims pending final resolution of disputes under construction contracts will have operated according to the terms provided for in the Act; · insofar as the alleged failure to give reasons is concerned there is simply no substance in the complaint. Reasons were given. The essence of the complaint is in truth concerned with the soundness of the reasons which were given. But that complaint falls outside of the identified candidates for an order in the nature of certiorari; and · relief in the nature of certiorari does not lie to quash the determination upon the basis of the alleged non-jurisdictional errors of law on the face of the record which upon proper examination are seen to be no more and no less than an attempt to impugn the adjudication determination. It cannot be suggested that any of the alleged errors of law caused the adjudicator to exceed his authority or powers. The proper occasion for an attempt to have the Court hold that the proper construction of the construction contract properly applied should not have led to that adjudication determination, will be when proceedings to establish those rights are commenced outside of the regime now stipulated for in terms of the interim payment of progress claims. 23 The matters of which complaint was made do not constitute jurisdictional error. They were not put otherwise than as founded upon error of law on the face of the record [Transcript at 18.32-18.53]. They do not show a mistake in an assertion or denial of the existence of jurisdiction, nor do they misapprehend or disregard the nature or limits of the functions or powers of the adjudicator. Nor do they constitute a denial of natural justice or fraud. 24 The proceedings require to be dismissed.

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