CAPE RANGE ELECTRICAL CONTRACTORS PTY LTD -v- AUSTRAL CONSTRUCTION PTY LTD [2012] WASC 304 (29 August 2012)

Supreme Court of WA|2012-08-29|Before: Pritchard J

1 PRITCHARD J: Austral Construction Pty Ltd (Austral) is an engineering company which has been constructing an accommodation village and related facilities at the Rio Tinto Koodaideri Mine in Western Australia (the Project). It contracted with Cape Range Electrical Pty Ltd (Cape Range) to be the electrical subcontractor for the Project, and to design, supply and install the electrical and communications services for the Project (the electrical works).

2 In about December 2010 Austral and Cape Range entered into a contract for the provision of the electrical works to the Project (the Contract). It was not in dispute in this case that the Contract was subject to the Construction Contracts Act 2004 (WA) (the CC Act). It was also not in dispute that Austral was the principal, and Cape Range was the contractor, under the Contract, for the purposes of the CC Act.

4 Mr Dennis Oon (the Adjudicator) was appointed to adjudicate the dispute the subject of the Adjudication Application. On 10 November 2011 the Adjudicator delivered his determination in relation to the Adjudication Application (the Determination) in which he determined that Austral should pay Cape Range the sum of $327,114.15 plus GST and interest, by 17 November 2011 (the Determination sum).

5 Austral did not pay Cape Range in accordance with the Determination. Cape Range then commenced proceedings in the District Court seeking to enforce the Determination pursuant to s 43 of the CC Act (the enforcement proceedings). Subsequently, Austral commenced proceedings in this Court, seeking, amongst other things, to challenge the validity of the Determination. Orders were then made remitting the enforcement proceedings to this Court so the actions could be managed together.

6 In the enforcement proceedings, Cape Range seeks (amongst other things) the leave of the Court pursuant to s 43 of the CC Act for the Determination to be enforced in the same manner as a judgment or order of the Court, and that judgment be entered against Austral in the amount of the Determination sum.

7 Austral opposes the grant of leave and entry of judgment in the enforcement proceedings. Austral's case is that leave should not be granted because the Determination is invalid and, in addition or alternatively, because the Determination sum can properly be considered to have been paid for the purposes of s 39 of the CC Act by virtue of a contractual right to setoff amounts which Austral claims that Cape Range owes it, against amounts Cape Range claims from it (the setoff claim).

8 Austral also claims to have other rights, at common law or in equity, to withhold or setoff monies which it claims Cape Range owes it, against Cape Range's claims for payment, and that the amount it is entitled to set off exceeds the Determination sum. Austral claims that if Cape Range is able to enforce the Determination, Austral will be deprived of a benefit which would otherwise be available to it, namely of not having to pay Cape Range in respect of the monies the subject of the Determination sum. However, counsel for Austral indicated that this contention would be relied on only in the event that leave to enforce was granted, in which case it would seek a stay or suspension of the enforcement.

9 Austral also commenced proceedings by a writ of summons and statement of claim (the SOC proceedings). Austral seeks a declaration that the Determination is invalid and of no force and effect, and various other declarations in relation to whether it may withhold or setoff amounts for which it says Cape Range is liable under the Contract, a declaration that Cape Range is not entitled to suspend the performance of its obligations under the Contract pursuant to s 42 of the CC Act, and a declaration that Cape Range has repudiated the Contract, so that Austral is entitled to terminate the Contract.

10 Austral's challenge to the validity of the Determination concerns whether there was satisfaction of a condition (under s 31(2)(a) of the CC Act) on which the existence of the Adjudicator's jurisdiction to determine the Adjudication Application depended, and whether the Adjudicator fell into jurisdictional error in exercising his jurisdiction under s 31(2)(b) of the CC Act.

11 Counsel for Cape Range submitted that s 46(3) of the CC Act precluded Austral's challenge to the validity of the Determination by an application for declaratory relief in the SOC proceedings, rather than by an application for a writ of certiorari to quash the Determination.

12 It was apparent that there would be a considerable overlap between that part of the SOC proceedings in which Austral sought to have the Determination declared invalid (the invalidity proceedings), and the enforcement proceedings, in which Austral sought to raise the alleged invalidity of the Determination as a basis for the refusal of leave to enforce the Determination. It was also apparent that no oral evidence would be required in either the invalidity proceedings or the enforcement proceedings and that the proceedings would be determined on affidavit evidence. Accordingly, I made orders pursuant to O 32 r 4 of the Rules of the Supreme Court 1971 (WA) that the invalidity proceedings be heard and determined at the same time as the enforcement proceedings, and orders permitting the evidence in each proceeding to be relied on as evidence in the other proceeding.

13 The Adjudicator was not a party to the SOC proceedings. Had Austral sought to challenge the validity of the Determination through an application for prerogative relief, the Adjudicator would necessarily have been a party to that application. In the circumstances, I concluded that this was an appropriate case for the joinder of the Adjudicator as a defendant in the SOC proceedings, so that if he saw fit to do so, he would have the opportunity to be heard in relation to the invalidity proceedings. Pursuant to orders I made on 27 March 2012, the Adjudicator was served with all relevant documents. The Adjudicator subsequently advised the Court that he did not wish to be heard.

14 Having regard to the issues raised by the parties, this judgment deals with the following matters:

The statutory framework for the Determination and the factual background relevant to the claims for payment which were the subject of the Adjudication.
Whether Austral's challenge to the validity of the Determination is excluded by s 46(3) of the CC Act.
Whether affidavit evidence relied upon by Austral at the hearing is admissible in the enforcement proceedings and in the invalidity proceedings.
The requirement for leave to enforce and factors relevant to the exercise of that discretion.
The role of an adjudicator under s 31 of the CC Act.
Whether the Determination is invalid either on the basis that:

(a) the Adjudicator erred in concluding that a jurisdictional fact (upon which his jurisdiction to make the Determination depended) existed, namely, that the Adjudication Application was prepared and served in accordance with s 26 of the CC Act; or

(b) a fact on which the Adjudicator's jurisdiction to make the Determination depended, namely that the Adjudication Application was prepared and served in accordance with s 26 of the CC Act, was not established as a matter of fact.

Whether the Determination is invalid on the basis that the Adjudicator failed to consider part of the Adjudication Response and thereby failed to make a determination of the kind contemplated by the CC Act, and/or breached a requirement for procedural fairness in s 32(1) of the CC Act.
Whether leave to enforce should be refused on the ground that the Determination sum has been satisfied, in whole or in part, by Austral's setoff claim.
Having regard to my conclusions in respect of issues 6 - 8 above, whether a declaration should be granted that the Determination is invalid.
Having regard to my conclusions in respect of issues 6 - 9 above, whether leave to enforce the Determination should be granted.

1. The statutory framework for the Determination and the factual background relevant to the claims for payment which were the subject of the Adjudication

15 Under the CC Act, if a payment dispute arises under a construction contract, then (subject to qualifications which are not presently relevant) any party to the contract may apply to have the dispute adjudicated pursuant to the CC Act.[1] For the purposes of the CC Act, a 'payment dispute' arises if, relevantly, by the time when the amount claimed in a payment claim is due to be paid under the contract, the amount has not been paid in full, or the claim has been rejected or wholly or partly disputed.[2] A 'payment claim' includes a claim made under a construction contract by the contractor to the principal for payment of an amount in relation to the performance by the contractor of its obligations under the contract.[3]

16 Cape Range made an application for the adjudication of two payment disputes which it claimed arose under the Contract. The two payment disputes arose from Austral's failure to pay 26 invoices, which collectively amounted to a claim for $356,402.85 (excluding GST).

17 The first payment dispute pertained to Invoice 1778 for the amount of $298,719.85 (excluding GST), which was lodged with Austral on 27 July 2011.

18 The second payment dispute pertained to Invoices 1782 - 1806 for a combined amount of $58,119.60 (excluding GST). Those invoices were lodged with Austral on 28 July 2011.

19 Cape Range claimed that Austral failed to pay all or any of these invoiced amounts by the due dates for payment.

20 An adjudicator's functions in relation to an adjudication application are relevantly set out in s 31(2) of the CC Act. It is convenient to set out that provision in full:

An appointed adjudicator must ...

(a) dismiss the application without making a determination of its merits if -

(i) the contract concerned is not a construction contract;

(ii) the application has not been prepared and served in accordance with section 26;

(iii) an arbitrator or other person or a court or other body dealing with a matter arising under a construction contract makes an order, judgment or other finding about the dispute that is the subject of the application; or

(iv) satisfied that it is not possible to fairly make a determination because of the complexity of the matter or the prescribed time or any extension of it is not sufficient for any other reason;

(b) otherwise, determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment, or to return any security and, if so, determine -

(i) the amount to be paid or returned and any interest payable on it under section 33; and

(ii) the date on or before which the amount is to be paid, or the security is to be returned, as the case requires.

21 Much of the argument in this case concerned whether the Adjudication Application complied with s 26 of the CC Act. Section 26(1) provides:

(1) To apply to have a payment dispute adjudicated, a party to the contract, within 28 days after the dispute arises, or, if applicable, within the period provided for by section 37(2)(b), must -

(a) prepare a written application for adjudication;

(b) serve it on each other party to the contract;

(c) serve it -

(i) if the parties to the contract have appointed a registered adjudicator and that adjudicator consents, on the adjudicator;

(ii) if the parties to the contract have appointed a prescribed appointor, on that appointor;

(iii) otherwise, on a prescribed appointor chosen by the party;

(d) provide any deposit or security for the costs of the adjudication that the adjudicator or the prescribed appointor requires under section 44(8) or (9).

Section 26(2) goes on to specify certain requirements for the content of the written application. Compliance with those requirements was not in issue.

22 In respect of Invoices 1797 - 1806 the Adjudicator determined that Cape Range had not submitted its Adjudication Application within the time frame required by s 26(1) of the CC Act. Accordingly the Adjudicator dismissed that part of the Adjudication Application and the Determination did not substantively deal with Cape Range's claims for payment of the amounts the subject of invoices 1797 - 1806. That part of the Determination was not in issue in these proceedings.

23 The Adjudicator found that insofar as it pertained to Invoices 1778 and 1782 - 1796, the Adjudication Application was prepared and served within the time required by s 26(1) of the CC Act.[4] The Adjudicator went on to consider the merits of Cape Range's claims to the payment of these invoices, and found that Austral was required to pay the whole amount of Invoices 1778 and 1782 - 1796. For that reason, the Determination sum amounted to a total of $327,114.15 (excluding GST).

2. Whether Austral's challenge to the validity of the Determination is excluded by s 46(3) of the CC Act

24 Austral's attack on the validity of the Determination was pursued through the SOC proceedings in which it sought relief in the form of a declaration that the Determination was invalid. It did not make, nor did counsel for Austral foreshadow any intention to make, an application for a writ of certiorari to quash the Determination.

25 Counsel for Cape Range submitted that it was not open to Austral, by way of an application for declaratory relief, to challenge the validity of the Determination. He submitted that any challenge to the validity of a determination made by an adjudicator, other than one pursued by an application for a prerogative writ, was excluded by s 46(3) of the CC Act.

26 It is convenient to set out s 46 in its entirety. That section provides:

(1) A person who is aggrieved by a decision made under section 31(2)(a) may apply to the State Administrative Tribunal for a review of the decision.

(2) If, on a review, a decision made under section 31(2)(a) is set aside and, under the State Administrative Tribunal Act 2004 section 29(3)(c)(i) or (ii), is reversed the adjudicator is to make a determination under section 31(2)(b) within 14 days after the date on which the decision under section 31(2)(a) was reversed or any extension of that time consented to by the parties.

(3) Except as provided by subsection (1) a decision or determination of an adjudicator on an adjudication cannot be appealed or reviewed.

27 I am unable to accept Cape Range's submission. In Perrinepod Pty Ltd v Georgiou Building Pty Ltd[5], the Court of Appeal held that s 46(3) of the CC Act was not a privative clause which purported to exclude the supervisory jurisdiction of the Court with respect to jurisdictional error and therefore did not purport to exclude judicial review of adjudication determinations.[6] Had it purported to do so, s 46(3) of the CC Act would have been an invalid attempt to exclude the Court's supervisory jurisdiction.[7]

28 The Court concluded that the use of the word 'review' in s 46(3) of the CC Act refers only to a review by the State Administrative Tribunal (the Tribunal) of the kind referred to in s 46(1) of the CC Act.[8] Insofar as s 46(3) refers to an 'appeal' against a decision or determination of an adjudicator, the Court noted that the CC Act does not contemplate a right of 'appeal' as such against a decision or determination of an adjudicator.[9]

29 The practical impact of s 46(3) of the CC Act in view of this construction appears to be that the only right of review to the Tribunal which is available in respect of a decision or determination of an adjudicator is the right of review referred to in s 46(1) of the CC Act.[10] Any other rights of review by the Tribunal which might otherwise exist are excluded, as is any appeal against a decision or determination of an adjudicator (although no such appeal right in fact exists). In light of this construction of s 46(3) of the CC Act, any other means by which decisions or determinations of an adjudicator might be reviewed (other than by the Tribunal) remain open.

30 Clearly, an application to this court for a declaration as to the invalidity of a determination made by an adjudicator is not a review of the kind contemplated by s 46(1) of the CC Act. Accordingly, s 46(3) does not preclude Austral's application for declaratory relief in respect of the Determination on the ground that the determination is invalid. Counsel for Cape Range ultimately accepted, albeit reluctantly, that this was so.[11]

31 Further, insofar as counsel for Cape Range submitted that Austral's application for judicial review should have been brought by an application for a prerogative writ, rather than by an application for a declaration, that submission must also be rejected. It was clearly open to Austral to pursue its application for judicial review by way of an application for declaratory relief in the SOC proceedings.[12]

32 It is appropriate to briefly mention one further issue, which received some attention at the hearing as a result of a submission made by counsel for Cape Range. The submission by counsel for Cape Range in relation to the effect of s 46(3) of the CC Act raised the question whether the power of the Court to grant a bare declaration in the course of a proceeding commenced by writ (rather than as ancillary relief in the context of an application for a prerogative writ) should properly be seen as part of the Court's supervisory jurisdiction, with the result that it could not be excluded by a statutory privative clause.[13] The sources of the Court's power to grant declaratory relief and prerogative relief are different,[14] and it is not entirely clear from the authorities whether the power to grant a bare declaration should now be regarded as part of the supervisory jurisdiction of the Court.[15] However, having regard to my conclusion on the construction of s 46(3) of the CC Act, it is unnecessary for present purposes to determine this issue.

33 I have therefore proceeded on the basis that s 46(3) of the CC Act does not exclude an application for a declaration that a determination of an adjudicator is invalid for jurisdictional error. It was therefore open to Austral to challenge the Determination by an application for a declaration made in the course of the SOC proceedings, rather than by an application for prerogative relief.

3. Whether affidavit evidence relied upon by Austral at the hearing is admissible in the enforcement proceedings and in the invalidity proceedings

34 It was common ground that the terms of the Contract as originally agreed between the parties were set out in a number of documents including a document entitled the 'Koodaideri Exploration Village Installation Austral Contract 1017 Subcontract Agreement' (the Subcontract Agreement) and a document entitled 'Austral Construction Pty Ltd General Conditions of Contract' (the GCC). A copy of each of these documents was annexed to the Archer Affidavit. However, the copy of the GCC which was annexed to the Archer affidavit was dated 28 July 2010. That version of the GCC thus predated the Contract. In the course of the hearing, counsel for Austral also tendered a bundle of documents containing a further copy of the documents comprising the Contract (exhibit D), and that bundle of documents included a copy of the GCC dated 13 December 2010.[16] Counsel for Austral submitted that this was the version of the GCC in effect immediately prior to the date on which the Contract was executed.

35 Counsel for Cape Range did not dispute that the version of the GCC which formed part of the Contract when it was entered into was that dated December 2010. However, counsel for Cape Range objected to the tender of Exhibit D on the basis that he did not know (and had not had an adequate opportunity to confirm) whether the terms of the December 2010 version of the GCC were the same as the July 2010 version of the GCC.

36 I provisionally admitted Exhibit D into evidence, pending confirmation by Cape Range as to whether its objection was maintained following an inspection of exhibit D. Counsel for Cape Range did not make any further submissions in relation to the tender of Exhibit D. A comparison between the July 2010 version of the GCC and the December 2010 version of the GCC confirms that, at least in respect of the key clauses of relevance in these proceedings, namely clauses 39, 45 and 47, those clauses are in identical terms in each version. Accordingly, the objection by Cape Range falls away.

37 At the hearing, counsel for Austral tendered an affidavit of Mr Brendan James Archer sworn 27 February 2012 (the Archer affidavit)[17] and an affidavit of Mr Aaron Turner sworn 13 April 2012 (the Turner affidavit).[18] These affidavits were provisionally admitted into evidence, pending the resolution of objections made by counsel for Cape Range to the admissibility of parts of the affidavits. A number of these objections were dealt with in the course of the hearing. However, there remained two objections to the admissibility of parts of the Turner affidavit and Archer affidavit, about which it is necessary to make rulings:

(a) Counsel for Cape Range objected to the admission into evidence of paragraph 9 and Annexure BJA 3 to the Archer affidavit. It was submitted that this material was inadmissible by virtue of s 45(3) of the CC Act;

(b) Counsel for Cape Range also objected to the admission into evidence of paragraphs 15, 24, 25, 26, 27, 29, 30, 32, 33, 40 - 49, 53 - 56, 69 - 79 of the Turner affidavit. The basis for this objection was that these paragraphs were directed to Austral's setoff claim. It was submitted that this setoff claim was irrelevant to the enforcement application because the basis for the application to enforce was the existence of a requirement to pay the Determination sum pursuant to s 39(1) of the CC Act.

(a) Whether paragraph 9 and Annexure BJA 3 to the Archer affidavit are inadmissible by virtue of s 45(3) of the CC Act

39 Paragraph 9 of the Archer affidavit referred to the Adjudication Response made by Austral. Annexure BJA 3 to the Archer affidavit was a copy of the Adjudication Response. Counsel for Cape Range submitted that the Court could not refer to this material to determine the issues raised by Austral in relation to the enforcement proceedings or the invalidity proceedings because the Court was precluded by s 45(3) of the CC Act from having regard to anything said or done in an adjudication, with the result that par 9 and annexure BJA 3 to the Archer affidavit were inadmissible. Counsel for Cape Range submitted, however, that this prohibition did not apply when the Court was dealing with an application for prerogative relief.

(1) This Part does not prevent a party to a construction contract from instituting proceedings before an arbitrator or other person or a court or other body in relation to a dispute or other matter arising under the contract.

(2) If other such proceedings are instituted in relation to a payment dispute that is being adjudicated under this Part, the adjudication is to proceed despite those proceedings unless all of the parties, in writing, require the appointed adjudicator to discontinue the adjudication.

(3) Evidence of anything said or done in an adjudication is not admissible before an arbitrator or other person or a court or other body, except for the purposes of an application made under section 29(3) or an appeal made under section 46.

(4) An arbitrator or other person or a court or other body dealing with a matter arising under a construction contract -

(a) must, in making any award, judgment or order, allow for any amount that has been or is to be paid to a party under a determination of a payment dispute arising under the contract; and

(b) may make orders for the restitution of any amount so paid, and any other appropriate orders as to such a determination.

The meaning of s 45(3) is somewhat elliptical, not least because no appeals are able to be brought under s 46 of the CC Act. However, as the present issue concerns the opening words of s 45(3), it is unnecessary to resolve the meaning of the concluding words of that subsection.

41 If the opening words used in s 45(3) are read in isolation, then at first blush, there is some attraction to the meaning advanced by counsel for Cape Range. However, to read those words in isolation would be to ignore a fundamental rule of statutory construction, namely that statutory provisions must be construed having regard to their context.[19] When regard is had to the context in which s 45(3) appears, the words in the subsection cannot be given the meaning advanced by counsel for Cape Range, for two reasons.

42 The first arises from a general contextual consideration. Section 45(1) makes clear that the parties to an adjudication remain entitled to seek the resolution of their substantive contractual dispute in other for a - whether in an arbitration or in litigation. If that right is to be effectively preserved, then what goes on in proceedings before the adjudicator should not be able to be admitted in those other proceedings other than to the extent that the sum awarded in an adjudication should be taken into account in determining any amount of an award, judgment or order which might be made in resolving the parties' contractual dispute. That is the work that is done by s 45(3) and s 45(4). (Section 45(3) also has the additional effect of facilitating the expeditious resolution of the adjudication because the parties to the adjudication can make frank submissions to an adjudicator without being concerned that those submissions would prejudice their position in any substantive proceedings about their contractual dispute before an arbitrator, court or other body.)

43 The second and more specific contextual consideration is that the opening words of s 45(3) mirror the words in s 45(1). That is, s 45(3) refers in a shorthand fashion to the proceedings referred to in s 45(1) of the CC Act. It is only in those proceedings (that is, in proceedings before an arbitrator or a court or other body to resolve the substantive dispute between parties to a construction contract) that anything said or done before an adjudicator will be inadmissible.

44 These two contextual considerations support the conclusion that when s 45(3) prohibits evidence of anything said or done before an adjudicator being placed before an arbitrator or a court or other body, the prohibition is on the use of that material in proceedings before any other body which is dealing with the merits of the contractual dispute between the two parties to the construction contract. A proceeding before this Court which is concerned with the validity of a determination made by an adjudicator - whether that proceeding is brought by an application for a prerogative writ, or for a declaration of invalidity, or whether the question of invalidity arises in the context of an application to enforce an adjudication determination as a judgment of the Court - is not a proceeding of that kind. In short, s 45(3) has no application to the present proceedings, and there is no reason why evidence of what was said or done before the Adjudicator - and specifically, in this case, the Adjudication Response submitted by Austral - cannot be admitted into evidence in the invalidity proceedings or the enforcement proceedings.

(b) Whether paragraphs 15, 24, 25, 26, 27, 29, 30, 32, 33, 40 - 49, 53 - 56, 69 - 79 of the Turner affidavit were inadmissible on the grounds of irrelevance.

45 I am not persuaded that these paragraphs of the Turner affidavit are wholly irrelevant. The paragraphs are admissible because they assist to identify the various bases on which Austral says it is entitled to setoff amounts it claims Cape Range owes it, or for which it says Cape Range is liable, against amounts claimed from it by Cape Range.

46 However, beyond this limited relevance, these parts of the Turner affidavit had little bearing on the resolution of the matters in dispute, for two reasons. First, Austral relied only on the setoff claim (that is, its claim to a contractual entitlement to setoff) for the purposes of this hearing. Secondly, resolution of the question whether the determination is invalid by virtue of a jurisdictional error does not involve any analysis of the merits of the substance of any claim by Austral to an entitlement to setoff particular amounts.

4. The requirement for leave to enforce and factors relevant to the exercise of that discretion

47 Section 43 of the CC Act permits a determination of an adjudicator to be enforced in the same manner as a judgment or order of a court with jurisdiction to deal with a claim for the recovery of a debt of the same amount as the amount payable under the determination. However, the leave of the court is required before the determination may be enforced in this way, and is a prerequisite to the entry of judgment in terms of the determination.[20] (The position under the CC Act may be contrasted with the position under similar legislation in the other States and Territories where the leave of the Court is not required before a contractor can enforce a determination of an adjudicator in the same way as a judgment for a debt.[21])

48 The terms of s 43(2) of the CC Act indicate that the Court has a discretion as to whether to grant leave to permit a determination of an adjudicator to be enforced in the same manner as a judgment or order of the Court. However, s 43(2) does not expressly identify the factors which should be considered in the exercise of that discretion.

49 The principles applicable to the grant of leave to enforce a determination were considered by Corboy J in Thiess Pty Ltd v MCC Mining (Western Australia) Pty Ltd,[22] and I respectfully adopt his Honour's analysis. For the reasons set out by his Honour, I agree that the scheme of the CC Act reinforces the proposition that prima facie, a party who has the benefit of a determination is entitled to enforce it. The existence of an arguable case that a determination is invalid and liable to be declared to be so, or to be set aside in the exercise of prerogative relief, would be a reason for refusing the grant of leave to enforce a determination. However, that is not necessarily the only reason why leave might be refused. What will be a sufficient reason for refusing leave to enforce a determination will depend on a consideration of all of the relevant circumstances, and must be assessed bearing in mind the scheme and policy of the CC Act.[23] In this case, an additional reason (apart from the invalidity of the determination) was advanced by Austral, namely that the determination sum had been 'paid' for the purposes of s 39(a) of the CC Act by virtue of Austral's setoff claim. I deal with this submission in [152] [157] below.

5. The role of an adjudicator in making a determination under s 31(2)(b) of the CC Act, and implications for judicial review of determinations by adjudicators

50 In assessing Austral's submissions as to why the Determination is said to be invalid, it is necessary to bear in mind some important contextual considerations which arise from the terms of the CC Act. These contextual considerations provide important guidance on the nature and role of an adjudicator. In turn, an understanding of the nature and role of adjudicators under the CC Act assists the court in assessing the merit of contentions made by a party to the effect that an adjudicator's determination is invalid.

51 The objects of the adjudication process are 'to determine the dispute fairly and as quickly, informally and inexpensively as possible'.[24] It is not necessary that an adjudicator have legal qualifications, and adjudicators may instead have qualifications in a range of other fields, as well as experience in administering contracts or in dispute resolution in relation to construction contracts.[25]

52 The CC Act also marks out the parameters of what an adjudicator is relevantly required to determine in dealing with the merits of a payment dispute. An adjudicator is required to determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment, and if so, to determine the amount to be paid, any interest payable on that amount, and the date on or before which the amount is to be paid.[26] Further, a determination by an adjudicator of a payment dispute does not prevent a party to a construction contract from instituting proceedings before an arbitrator or a court in relation to a dispute or other matter arising from the contract.[27] An arbitrator or court dealing with such a dispute must in making an award, judgment or order, allow for any amount that has been paid, and may make orders for restitution of any amount so paid.[28]

53 The CC Act also addresses the process by which an adjudication is conducted. An adjudicator is required to act informally,[29] is not bound by the rules of evidence,[30] and is largely entitled to determine his or her own procedure.[31] Although an adjudicator may inform himself or herself in any way he or she thinks fit,[32] if possible an adjudicator must make the determination on the basis of the adjudication application and the adjudication response which the parties provide.[33] In addition, an adjudicator is required to deal with an adjudication application within 14 days after the date of service of a response to an adjudication application.[34] The need for expedition is reinforced by s 32(5) of the CC Act which makes clear that an adjudicator's power to make a determination is not affected by the failure of either or both of the parties to comply with a request by an adjudicator for more information.

54 These provisions, particularly when considered in light of the purpose of the CC Act as a whole,[35] indicate that adjudications under the CC Act are intended to be a rapid process for the resolution of disputes within the context of construction contracts, the aim of which is to 'keep the money flowing in the contracting chain'.[36] The 'rapid adjudication process is a tradeoff between speed and efficiency on the one hand, and contractual and legal precision on the other'.[37]

55 Within that context, the role of an adjudicator in conducting an adjudication is intended to be relatively confined. The area of inquiry is confined to the subject of the payment dispute, and the questions for the adjudicator are similarly confined to whether a party to the dispute is liable to make a payment, and if so the amount and due date of the payment. The fact that the adjudication determination does not preclude the parties from litigating about broader issues of dispute under their construction contract also reinforces the limited scope of the adjudicator's inquiry. That would tend to suggest that questions of how the particular payment claim fits into broader disputes arising under the contract in question should be pursued in other fora.

56 Against this background, it cannot be said that the Parliament intended that an adjudicator would express himself or herself with the same degree of legal precision as would a court in examining the terms of a contract, or in applying the requirements of the CC Act in the context of a particular contract, or that an adjudicator would be expected to deal with arguments other than those expressly raised by the parties in relation to the construction of the contract the subject of the adjudication.

57 Other provisions of the CC Act and the CC Regulations concerning the content of a determination also reinforce this conclusion. It is clear from s 36 of the CC Act that a determination must be in writing, and must contain certain information of a limited nature, including information set out in the CC Regulations (including the name of the adjudicator, of the applicant and respondent, and the date of the adjudication),[38] the amount to be paid and the date by which it is to be paid, and must give reasons for the determination. These provisions appear to be concerned with ensuring that the outcome of an adjudication is known with certainty by the parties to the payment dispute and by courts or arbitrators who may be called upon to resolve broader disputes arising under the construction contract (and which overlap with the subject of the payment dispute) and in doing so, will be required to take into account the outcome of an adjudication.

58 These considerations suggest that, in assessing whether an adjudicator has made errors of a kind which would render a determination invalid, it would be entirely inapt to engage in a 'line by line' scrutiny of a determination. To do so would be to risk descending into a merits review of an adjudicator's determination. Further, an approach of that kind would have the potential to undermine the objectives of the CC Act to facilitate an informal and speedy means for resolving payment disputes between parties to construction contracts, while preserving a right to litigate or arbitrate about any substantive areas of dispute underlying those payment disputes.[39]

59 Bearing these considerations in mind, I turn to consider the bases upon which Austral contended that the Determination was invalid.

6. Whether the Determination is invalid either on the basis that:

(a) the Adjudicator misconstrued the CC Act in concluding that a jurisdictional fact (upon which his jurisdiction to make the Determination depended) existed, namely that the application was prepared and served in accordance with s 26 of the CC Act; or

60 Austral's case was that the Adjudication Application had not been prepared and served in accordance with s 26 of the CC Act in that Cape Range did not apply for an adjudication within 28 days after the payment dispute arose. Austral submitted that the Determination was, therefore, invalid. Austral's grounds for the invalidity of the Determination in this respect proceeded on two alternative bases, both of which were founded on the view that the reference in s 31(2)(a)(ii) to compliance with s 26 of the CC Act is a jurisdictional fact with respect to an adjudicator's exercise of power under s 31(2)(b) of the CC Act.

61 Austral contended, first, that the matter in s 31(2)(a)(ii) was a jurisdictional fact in what may be described as the 'narrow sense'.[40] On that basis, counsel for Austral submitted that the Adjudicator's jurisdiction would only be enlivened if the criterion in s 31(2)(a)(ii) existed in fact. Counsel for Austral submitted that the matter in s 31(2)(a)(ii) did not, in fact, exist.

62 In the alternative, Austral contended that the jurisdictional fact in s 31(2)(a)(ii) was a jurisdictional fact in what may be described as the 'broad' sense, in that the jurisdictional precondition was that an adjudicator be satisfied of the existence of the matter referred to in s 31(2)(a)(ii). Counsel for Austral submitted that the Adjudicator misdirected himself as to the proper construction of s 6 of the CC Act, relied upon the decision of the Tribunal in Blackadder Scaffolding Services (Aust) Pty Ltd and Mirvac Homes (WA) Pty Ltd[41] which was irrelevant to the issues before him, and failed to take into account relevant considerations, namely the terms of the Contract itself and the possibility that Austral's response, or failure to respond, to Cape Range's invoices constituted an implied rejection of Cape Range's claims.[42]

63 Austral's case in relation to invalidity on these grounds raises several questions:

(i) Are the criteria set out in s 31(2)(a) jurisdictional facts necessary to enliven the jurisdiction of the Adjudicator under s 31(2)(b)?

(ii) If the criterion in s 31(2)(a)(ii) is a jurisdictional fact for the purpose of the jurisdiction of the Adjudicator under s 31(2)(b), is it a matter which must actually exist in order to enliven the Adjudicator's jurisdiction?

(iii) Was the criterion in s 31(2)(a)(ii) met in this case?

(i) Are the criteria set out in s 31(2)(a) jurisdictional facts necessary to enliven the jurisdiction of the Adjudicator under s 31(2)(b)?

64 The term 'jurisdictional fact' is generally used to identify a criterion the satisfaction of which enlivens the exercise of a statutory power or discretion. If the criterion is not satisfied then the decision purportedly made in the exercise of the power or discretion will have been made without the necessary statutory authority required by the decisionmaker.[43]

65 In Perrinepod, the parties agreed,[44] and the Court accepted,[45] that the matters in s 31(2)(a)(i) - (iv) were jurisdictional facts. However, the Court did not finally determine the question whether the matters in s 31(2)(a)(i) - (iv) were jurisdictional facts which enliven the jurisdiction of an adjudicator under s 31(2)(b) to deal with an adjudication on its merits. McLure P expressly accepted that they were.[46] Murphy JA (with whom Martin CJ agreed) held that the matters in s 31(2)(a)(i) - (iv) were jurisdictional facts necessary to enliven the jurisdiction of an adjudicator under s 31(2)(a),[47] but concluded that it was 'not helpful' to confine the issues of statutory construction raised by the appeal in that case by reference to whether the matters in s 31(2)(a)(i) - (iv) were jurisdictional facts for the purpose of the exercise of an adjudicator's power under s 31(2)(b) of the CC Act.[48] The issue has not been addressed in other decisions of this Court in relation to the CC Act. The issue is now squarely raised by Austral's submissions in this case.

66 The question whether the matters in s 31(2)(a)(i) - (iv), and specifically, for present purposes, s 31(2)(a)(ii), constitute jurisdictional facts in relation to an adjudicator's exercise of power under s 31(2)(b) is a question of statutory construction.

67 At the outset, I note that the matters in s 31(2)(a)(i), (ii) and (iv) are expressed in the negative. That is, the adjudicator is required to dismiss an adjudication application, without making a determination of its merits, if the contract is not a construction contract, if the application has not been prepared and served in accordance with s 26, and if it is not possible to fairly make a determination because of the complexity of the matter or if the prescribed time is not sufficient. However, a jurisdictional fact need not be a 'fact' within the ordinary meaning of that term.[49] The criterion specified by the Parliament for the exercise of a power may consist of a variety of elements including, for example, facts, states of affairs, the formation of an opinion or belief by a decisionmaker, or a decisionmaker being satisfied as to a particular matter.

68 For present purposes, insofar as I refer to the question whether the matters in s 31(2)(a)(i) - (iv) are jurisdictional facts for the purposes of s 31(2)(b), the question is whether, on the proper construction of the CC Act, the nonexistence of the matters referred to in each paragraph constitutes a jurisdictional fact for the purposes of the exercise of power in s 31(2)(b). Because the matters in s 31(2)(a)(i), (ii) and (iv) are expressed in the negative, the practical consequence of the nonexistence of those matters will be the positive existence of those matters, but that is not, in terms, the criterion specified by the Parliament.

69 In my view, the matters in s 31(2)(a)(i) - (iv) should be regarded as jurisdictional facts for the purpose of the exercise of power in s 31(2)(b) of the CC Act, for two reasons.

70 First, the language used in s 31 itself indicates that the exercise of the power in s 31(2)(b) is a corollary of the power in s 31(2)(a). That much is clear from the use of the word 'otherwise' in s 31(2)(b), and from the reference in s 31(3) to an adjudication application being 'dismissed or determined under subsection (2)'. Further, under s 31(2)(a) an adjudicator is required to dismiss an adjudication application without making a determination of its merits if any of s 31(2)(a)(i) - (iv) apply. An adjudication application will therefore arise for determination on the merits (under s 31(2)(b)) only if it has not been dismissed (without any determination being made as to its merits) under s 31(2)(a) of the CC Act. Moreover, as the opening words of s 31(2) of the CC Act make clear, if an adjudicator does not dismiss an application for adjudication under s 31(2)(a), he or she must proceed to determine the application on its merits by determining whether a party to the payment dispute is liable to make a payment. Consequently, an adjudication application could only ever arise for determination under s 31(2)(b) if the matters set out in s 31(2)(a)(i) - (iv) do not apply.

71 Secondly, having regard to s 31 as a whole, it is apparent that one of the objectives of that section is to ensure that the determination of an adjudication application is conducted within a specified time frame, both by reference to the prescribed time within which the adjudicator must dismiss or determine the adjudication application,[50] and by reference to the time between the commencement of the adjudication application and its overall resolution.[51] It is consistent with that emphasis on timeliness that compliance with the time frame for the commencement of an adjudication application would be a factor on which the existence of the power to proceed to adjudicate the application on the merits (as much as the existence of the power to dismiss the application without making a determination of its merits) should depend.[52]

(ii) Is the criterion in s 31(2)(a)(ii) of the CC Act a matter which must actually exist in order to enliven the Adjudicator's jurisdiction?

72 This question is concerned with the nature of the jurisdictional fact in s 31(2)(a)(ii). The answer to that question determines the inquiry in which the Court must engage in dealing with an argument based on the alleged absence of that jurisdictional fact.

(a) The process for, and purpose of, the characterisation of jurisdictional facts

73 Determining the nature of a jurisdictional fact is an exercise in statutory construction.[53] Sometimes the outcome of that process of statutory construction is described, in shorthand, as a conclusion as to whether the jurisdictional fact is one in the 'narrow' sense or the 'broad' sense. The difference between jurisdictional facts in the narrow and broad sense was discussed in some detail by Murphy JA in Perrinepod[54] and it is unnecessary to repeat his Honour's observations. It suffices to say that in general terms, the distinction between a 'narrow' and 'broad' jurisdictional fact turns on whether or not the Parliament has made the exercise of the decisionmaker's jurisdiction contingent upon the actual existence of the matter or state of affairs which constitutes the jurisdictional fact.[55] If it has, the jurisdictional fact will be characterised as a jurisdictional fact in the 'narrow' sense. If the jurisdictional fact is a jurisdictional fact in the 'narrow' sense, a court exercising a judicial review jurisdiction will itself be required to determine whether the jurisdictional fact actually existed.[56]

74 Sometimes the Parliament will condition the exercise of a power on the mental state of the primary decisionmaker - by requiring the decisionmaker to form an opinion or belief, or to be satisfied about some state of affairs, for example. In such cases, the construction is often, although not necessarily, against a conclusion of a jurisdictional fact in the narrow sense.[57] Hence, a jurisdictional fact of this kind is sometimes referred to as a jurisdictional fact in the 'broad' sense. In such cases, the court exercising a judicial review jurisdiction does not inquire into the actual existence of the fact about which the opinion (for example) must exist. Rather, the court's task is to determine whether the opinion required by the relevant legislation has really been formed.[58] In making that inquiry the court will consider whether the opinion is one which would be formed by a reasonable person with an understanding of the legislation in question, or which was reached by taking into account irrelevant considerations or by misconstruing the terms of the legislation,[59] or which was the result of serious irrationality or illogicality.[60] If the opinion is marked by characteristics such as these, then the opinion will not be an opinion of the kind contemplated by the Parliament as the condition for the exercise of the statutory power.[61] The conclusion, in such a case, will be that there was a purported exercise of the statutory power in the absence of the necessary jurisdictional fact.[62]

75 Sometimes the exercise of statutory construction to characterise a jurisdictional fact takes place in the context of a broader question of statutory construction, which is concerned with whether the Parliament intended that the decisionmaker could authoritatively determine the existence or nonexistence of certain matters. Sometimes an analysis of this kind will encompass the characterisation of what are said to be jurisdictional facts upon which the jurisdiction of the decisionmaker depends. In those circumstances, a conclusion that the Parliament intended that the decisionmaker would be entitled to authoritatively determine questions of law or fact may also (subject to any contrary indication in the legislation)[63] be relied upon for the conclusion that the Parliament must have intended that the decisionmaker should be able to authoritatively determine the existence or nonexistence of a jurisdictional fact.[64] The kinds of decisionmakers in relation to which an analysis of the latter kind typically arises are inferior courts and decisionmakers which are analogous to inferior courts.

76 If this analysis leads to the conclusion that the decisionmaker is authoritatively entitled to determine the existence of a jurisdictional fact on which his or her jurisdiction depends, then a court engaged in judicial review would examine the decisionmaker's process of reasoning leading to the conclusion that the jurisdictional fact exists (in the manner I have described above) but would not inquire into the actual existence of that jurisdictional fact.[65] I will also refer to jurisdictional facts of this kind as jurisdictional facts in the 'broad' sense.

(b) Characterisation of the jurisdictional fact in s 31(2)(a)(ii)

77 I turn, then, to the characterisation of the jurisdictional fact in s 31(2)(a)(ii). Counsel for Austral submitted that s 31(2)(a)(ii) should be construed as a jurisdictional fact in the 'narrow' sense, having regard to the language used in s 31(2)(a)(i) - (iii), in contrast with the language used in s 31(2)(a)(iv), of the CC Act.[66] However, Austral ran an alternative case which was that s 31(2)(a)(ii) constituted a jurisdictional fact in the 'broad' sense. On either view, Austral's case was that the Determination was invalid, as the criterion in s 31(2)(a)(ii) was not satisfied in this case.

78 Section 31(2)(a)(ii) refers to an application not having been prepared and served in accordance with s 26. At first blush, that appears to be a reference to a fact the existence of which can be determined objectively, which might suggest that the criterion in s 31(2)(a)(ii) should be characterised as a jurisdictional fact in the 'narrow' sense. However, three considerations militate against this view.

79 First, the criterion in s 31(2)(a)(ii) requires the making of a judgment about whether the legal criteria set out in s 26 have not been met. Those legal criteria include the existence of a 'payment dispute' (as defined in the CC Act) and that the application for adjudication was brought within 28 days after the payment dispute arose. Determining whether those criteria are met will involve the construction of the contract between the parties in dispute. In some cases, the contract may be very clear as to when, and in what circumstances, a payment dispute arises. In other cases (and the present case is one example, as I discuss below) the answer to the question as to whether and when a payment dispute arises will be far from clear on the face of the contract, and may involve questions of contractual interpretation. Those considerations suggest that the criterion in s 31(2)(a)(ii) is unlikely to have been intended to be a jurisdictional fact in the 'narrow' sense.

80 Secondly, the context in which s 31(2)(a)(ii) appears also provides support for the conclusion that s 31(2)(a)(ii) should not be understood as a jurisdictional fact in the narrow sense. Section 31(2)(a)(ii) is one of four criteria set out in s 31(2)(a). Section 31(2)(a)(iv) expressly requires that the adjudicator must be satisfied as to a particular state of things. Although not necessarily conclusive of the question, the requirement that the adjudicator be satisfied of a state of things suggests that the Parliament intended that criterion to be a jurisdictional fact in the 'broad' sense. On the other hand, determining whether the requirement in s 31(2)(a)(iii) is met is more likely to involve an exercise in ascertaining the existence of a fact which can be objectively proved. That is not inconsistent with a conclusion that the criterion in s 31(2)(a)(iii) is a jurisdictional fact in the 'narrow' sense.

81 In view of the conclusion that the matters in s 31(2)(a) constitute jurisdictional facts, it seems to me to be unlikely that the Parliament would have intended that some of those matters be characterised as jurisdictional facts in the 'narrow' sense and others in the 'broad' sense. Given that some of the jurisdictional facts in s 31(2)(a) do not appear to be jurisdictional facts in the 'narrow' sense, the preferable conclusion is that the Parliament did not intend that any of the matters in s 31(2)(a) should be understood as jurisdictional facts in the 'narrow' sense.

82 The third consideration is the nature of the decisionmaker required to undertake the task of determining whether the criteria in s 31(2)(a) are met. The CC Act does not make express provision in relation to an adjudicator's jurisdiction to authoritatively determine the questions of law, or mixed law and fact, which may arise in relation to whether the criteria in s 31(2)(a) are met in a given case. However, in O'Donnell Griffin Pty Ltd v John Holland Pty Ltd, Beech J concluded that the nature and effect of an adjudication under the CC Act, having regard to the scheme of the CC Act as a whole, supported the conclusion that an adjudicator has authority to decide questions of law authoritatively and wrongly, and that an adjudicator was therefore more analogous to an inferior court.[67] In Thiess Pty Ltd v MCC Mining (Western Australia) Pty Ltd, Corboy J agreed with that conclusion.[68] So, too, did Murphy JA (with whom Martin CJ agreed) in Perrinepod.[69] I also respectfully agree with that characterisation for the reasons given by Beech J.

83 The fact that an adjudicator under the CC Act is analogous to an inferior court provides some support for the conclusion that the Parliament did not intend that the jurisdictional fact in s 31(2)(a)(ii) would be a jurisdictional fact in the 'narrow' sense.

84 In my view, the criterion in s 31(2)(a)(ii) of the CC Act should not be characterised as a jurisdictional fact in the 'narrow' sense. For present purposes, therefore, the question is not whether the criterion in s 31(2)(a)(ii) in fact existed. Rather, the focus is on the conclusion drawn by the Adjudicator that the criterion in s 31(2)(a)(ii) was met, and on the process by which the Adjudicator came to that conclusion.

(iii) Was the criterion in s 31(2)(a)(ii) satisfied in this case?

85 The criterion in s 31(2)(a)(ii) is that the adjudication application 'has not been prepared and served in accordance with section 26' of the CC Act. With respect to Invoice 1778 and Invoices 1782 - 1796, the Adjudicator concluded that the Adjudication Application was brought within the 28 day time period after a payment dispute arose, as required by s 26 of the CC Act.

86 Because I have determined that the jurisdictional fact in s 31(2)(a)(ii) is not a jurisdictional fact in the 'narrow' sense, it is not necessary to consider Austral's submission that the Adjudication Application was not, in fact, 'prepared and served in accordance with section 26'. It is necessary only to focus on Austral's case that the Adjudicator misdirected himself as to the proper construction of s 6 of the CC Act, relied upon an irrelevant decision of the Tribunal, and failed to take into account a relevant consideration, namely the terms of the Contract itself,[70] in reaching the conclusion that the Adjudication Application was prepared and served in accordance with s 26 of the CC Act.

87 Before dealing with Austral's contentions, however, it is necessary to examine how the Adjudicator construed the Contract, and in particular his findings as to the terms of the system for the payment of invoices.

(a) The Adjudicator's conclusions as to the terms of the Contract with respect to the system for the payment of invoices

88 The system for the payment of invoices was initially set out in the Contract in cl 39 and cl 45 of the GCC. The relevant terms of the Contract as originally agreed, including cl 39 and cl 45 of the GCC, are set out in Appendix A and Appendix B to these reasons.

89 Clauses 39 and 45, in summary, required that at the beginning of each month Cape Range would submit a progress claim setting out the Contract Value of the work performed since the preceding progress claim (or since the commencement of the work and which had not been the subject of a claim) (cl 39(a) of the GCC). Austral would then have 20 days to assess that progress claim, in which period Austral's representative would advise Cape Range of any part of the claim which was not approved or in respect of which further information was required in order to approve the claim, or of any amendments to the progress claim which Austral required (cl 39(e)(i) of the GCC). After any such amendments had been made, Austral's representative was to sign one copy of the claim and certify the value of the undisputed portion of the claim (which would then be known as a progress certificate) (cl 39(e)(ii) and (iii) of the GCC). Once Cape Range provided any further information which might be required by Austral's representative, an additional progress certificate would be issued by Austral's representative for the value of that portion of the claim which was then no longer in dispute (cl 39(e)(iv) of the GCC).

90 Once a progress certificate was issued, Cape Range would be entitled to issue a 'Correct Invoice' (cl 45(d) of the GCC), and within 35 days of the receipt of a Correct Invoice in respect of a Progress Certificate, Austral was required to pay Cape Range 95% of the value of the Progress Certificate (cl 45(e)(i) of the GCC). The balance of Cape Range's claim for payment would (subject to certain other clauses of the GCC) be paid within 35 days after the issue of a Certificate of Practical Completion or a Certificate of Final Completion (cl 45(j) and (k) of the GCC).

91 As the Adjudicator noted, however, 'both [Cape Range] and [Austral] ... confirmed that the payment system under the Contract for certification has not been followed'.[71] Cape Range submitted to the Adjudicator that a modified system for claims and payments had been followed since the commencement of the Contract.[72] That modified system was that Cape Range would lodge an invoice each month for work done, and Austral had 20 days from the issue of the invoice to dispute the amount claimed or require further information. If no changes or further information were required in this period, the invoice was treated as a Correct Invoice under cl 45(e) of the GCC and payment would be due 35 days from the date the invoice was treated as a Correct Invoice.[73]

92 Austral disputed that this was the modified payment system that the parties had agreed. Austral submitted to the Adjudicator that the payment system which applied was that set out in Item 5 of a document entitled 'Summary of Subcontract Conditions' and that the payment of an invoice was required within 35 days from the date of the invoice.[74] An extract from that document, incorporating Item 5, is set out in Appendix A to these reasons.

93 The Adjudicator was thus faced with a situation where the parties, in effect, agreed that the Contract - insofar as it set out a system or procedure for payment of invoices - had been varied. There does not appear to have been any suggestion that the parties reached a subsequent agreement which replaced the Contract in its entirety. Rather, having regard to what the parties submitted to the Adjudicator, it appears that in their view, there was a subsequent agreement which varied the Contract insofar as it dealt with the payment procedure.[75]

94 Although the parties agreed that the Contract had been varied in relation to the payment procedure, there was nothing before the Adjudicator to suggest that there had been an express agreement as to what the new payment procedure was. However, a contract of variation can be inferred from conduct.[76] In order to determine whether an agreement may be inferred from the conduct of parties to a contract, it is necessary to consider 'whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement'.[77]

95 It seems to me that what the Adjudicator did was to accept the parties' submissions that a modified payment system had been applied between them, as opposed to that which was set out in cl 39 and cl 45 of the GCC. He then examined the past conduct of the parties, to ascertain whether it showed that they had reached a tacit understanding or agreement as to the payment procedure by which they would actually abide. The Adjudicator relied on the past conduct of the parties, as manifested in how they had approached the payment of four previous invoices[78]. Having regard to this information, the Adjudicator rejected Austral's contentions about the modified payment system which applied under the Contract[79].

96 The Adjudicator then stated that he had decided to 'ignore' the Terms of Payment set out in the 'Summary of Subcontract Conditions' and stated that he intended 'to give effect to the payment procedure set out in clauses 39 and 45 of the GCC, save for the payment period greater than 50 days'.[80] Having regard to the remaining paragraphs of this part of the Determination, however, it appears that what the Adjudicator in fact meant was that he accepted Cape Range's submission as to the modified way in which cl 39 and cl 45 of the GCC had been applied as between the parties. In other words, the Adjudicator proceeded on the basis that the parties' agreement in relation to the payment system which they would use was a modified version of cl 39 and cl 45 of the GCC, in the terms submitted by Cape Range. Insofar as the modified payment system for which Cape Range contended resulted in a payment period of more than 50 days, however, the Adjudicator applied s 10 of the CC Act, with the result that the payment period was read as within 50 days after payment was first claimed[81].

97 The payment procedure which the Adjudicator found applied under the modified Contract was thus that Cape Range would issue an invoice, and Austral would have 20 days in which to dispute the amount claimed or to require further information. If no changes were sought (that is, if the claim were not disputed) or no further information was required within that 20 day period, the invoice would be treated as a Correct Invoice under cl 45(e) of the GCC and payment would be due 30 days from the date that the invoice was treated as a Correct Invoice. Accordingly, if the amount claimed in the invoice was not disputed, or if further information was not sought in relation to the invoice, within 20 days of the invoice being sent to Austral, payment would be required within a period of 30 days thereafter. It appears that payment in full of the invoice was required.

98 In my view, the Adjudicator's conclusion, having regard to the terms of the CC Act, amounted to a conclusion that once the invoices issued by Cape Range became treated as 'Correct Invoices' (that is, if within 20 days of the receipt of the invoice, Austral did not dispute the amount sought or seek further information) they constituted 'payment claims' for the purposes of the CC Act. I note that counsel for Austral indicated that the Adjudicator's finding - to the effect that the invoices were payment claims within the meaning of the CC Act - was not challenged for the purposes of Austral's application.[82] The Adjudicator's conclusion was that payment became due under those invoices 30 days after the invoices were treated as 'Correct Invoices'.

99 Accordingly, the Adjudicator found that in respect of Invoice 1778, which was dated 27 July 2011, Austral did not issue a notice of dispute within 20 days (that is, by 16 August 2011), with the result that payment became due 30 days later, on 15 September 2011.[83] For the purposes of the CC Act, his conclusion was that a payment dispute arose on that date. The Adjudicator therefore concluded that the last day for Cape Range to submit an Adjudication Application, having regard to s 26 of the CC Act, was 13 October 2011.[84]

100 The Adjudicator found that in respect of Invoices 1782 - 1796, which were dated 28 July 2011, Austral did not issue a notice of dispute within 20 days (that is, by 17 August 2011) with the result that payment became due 30 days later, on 16 September 2011.[85] Again, for the purposes of the CC Act, the Adjudicator's conclusion was that a payment dispute arose on that date. He therefore concluded that the last day for Cape Range to submit an Adjudication Application, having regard to s 26 of the CC Act, was 14 October 2011.[86]

101 The Adjudicator found that as Cape Range served the Adjudication Application by 13 October 2011, then insofar as the Adjudication Application pertained to Invoice 1778, and Invoices 1782 - 1796, the Application had been submitted and served in accordance with s 26 of the CC Act.[87]

102 Austral's claim that the criterion in s 31(2)(a)(ii) had not been satisfied in this case had three planks. First, counsel for Austral submitted that in finding that Austral had not disputed Cape Range's invoices within the 20 day period required under the Contract, the Adjudicator had not considered the possibility that Austral's failure to specifically reject the invoices within that time frame should be construed as an implicit rejection of the amount claimed in the invoices, and that this implicit rejection would give rise to a payment dispute for the purposes of s 6 of the CC Act. Counsel for Austral also relied on a variation of this argument to submit that in relation to Invoice 1778, Austral sent Cape Range an email on 23 August 2011, and that in the light of earlier communications between Austral and Cape Range (including correspondence which predated the issue of invoice 1778)[88] Austral's email of 23 August 2011 should be understood as a request for further information in relation to the invoice. Counsel for Austral submitted that this request for further information should also be understood as an implied or actual rejection of the invoice, until further information was provided.[89]

103 Secondly, counsel for Austral submitted that the Adjudicator had erroneously relied on the decision of the Tribunal in Blackadder, which was irrelevant in the present case, given that the terms of the Contract in this case were quite different from the contractual terms in Blackadder.

104 Thirdly, counsel for Austral submitted that the Adjudicator failed to consider whether in this case there existed a payment claim and a payment dispute for the purposes of the CC Act. Counsel for Austral submitted that the Adjudicator focused on the consequence of an omission to issue a valid notice of dispute in response to a payment claim (as described in s 3 of the CC Act) rather than to focus on what constituted a progress claim under the Contract, and thus to identify when a payment dispute would arise for the purposes of the CC Act. In doing so, counsel submitted, the Adjudicator failed to address the question he was required to address which was when an amount claimed became due and payable under the Contract so as to give rise to a payment dispute.

105 I am unable to accept the submissions made by counsel for Austral. In my view, the overall process of reasoning adopted by the Adjudicator does not suggest that he misconstrued the CC Act. Further, I do not accept that the Adjudicator made the specific errors for which Austral contended. In any event, even if the Adjudicator made errors, those errors were not of a kind which would warrant the conclusion that the jurisdictional fact in s 32(2)(b) was not met in this case.

106 Counsel submitted that in order to decide that an adjudication application was made in accordance with s 26 of the CC Act, it was necessary for the Adjudicator to determine, first, that a payment claim was made, secondly, that the payment claim was rejected or wholly or partly disputed and, if so, the date of rejection or disputation, or in the alternative, that an amount under the payment claim became due, that that amount was not paid on the date that it was due to be paid under the terms of the Contract (in which case the Adjudicator should determine the date by which payment was due) and finally that the date of rejection or disputation, or alternatively the date by which payment was due, was no more than 28 days before the adjudication application was made.

107 When the Determination is viewed as a whole, and in the context of the findings made by the Adjudicator as to the modified terms of the Contract with respect to the system adopted by the parties for the payment of invoices, it is clear that the Adjudicator undertook the exercise identified by counsel for Austral. In undertaking that exercise, the Adjudicator did not misconstrue the requirements of the CC Act insofar as they were relevant to determining whether the criterion in s 31(2)(a)(ii) of the CC Act was made out.

108 The relevant part of the Determination commences with a heading entitled 'Applying for Adjudication under section 26 of the Act'. Under that heading the Adjudicator dealt with issues under three subheadings, 'Payment Claim', 'Payment Dispute' and 'Adjudication Application'.

109 Under the subheading 'Payment Claim', the Adjudicator considered how a 'payment claim' (as that term is defined in s 3 of the CC Act) arose under the Contract. As I have already observed, the Adjudicator concluded that the provisions of the Contract had been modified, and that a new payment system had been adopted by the parties, which represented a modification of cl 39 and cl 45 of the Contract. Nothing in this part of the Determination suggests that the Adjudicator misconstrued, or misunderstood, what was required in order for there to exist a 'payment claim' for the purposes of the CC Act.

110 The Adjudicator then turned to consider when a 'Payment Dispute' would arise under the Contract. Section 6(a) of the CC Act relevantly provided that a payment dispute would arise in two circumstances: either that by the time when the amount claimed in the payment claim was due to be paid under the contract, the amount had not been paid in full, or alternatively by the time the payment claim was due to be paid, the claim had been rejected or wholly or partly disputed. The Adjudicator specifically referred to these requirements.[90]

111 It is apparent from pars 76 - 78 of the Determination that the Adjudicator then applied the requirements of s 6 of the CC Act to his findings in relation to the terms of the Contract (as modified). The Adjudicator found that under the Contract (as modified) 'if no changes or further information ... [were] required 20 days after the receipt of the invoice, the invoice is treated as [a] Correct Invoice under clause 45(e) of the GCC'[91] and that payment would be required within 30 days thereafter.[92] In other words, once an invoice was treated as a Correct Invoice, the obligation to pay arose. Austral then had 30 days in which to pay. If by that time the amount claimed in the Correct Invoice had not been paid in full, or the claim had been rejected, a payment dispute would arise.[93]

112 I turn to the specific claims made by counsel for Austral that the Adjudicator failed to take into account relevant considerations, misconstrued the CC Act or took into account irrelevant considerations.

113 I am not persuaded that the Adjudicator failed to take into account a relevant consideration because he did not consider the possibility that Austral had implicitly rejected Cape Range's invoices. I have reached that conclusion for two reasons. First, that possibility was not open in view of the Adjudicator's findings as to the payment system under the Contract (as modified). The Adjudicator found that in respect of Invoices 1778 and 1782 - 1796 respectively, Austral ought to have given, but did not give, Cape Range a 'notice of dispute' of its claims within the 20 day period required under the Contract (as modified).[94] The Adjudicator's references to a 'notice of dispute' in my view need to be understood by reference to the Adjudicator's earlier finding about what the Contract (as modified) required. In that context, the Adjudicator's reference to Austral's failure to give a 'notice of dispute' must be understood as a conclusion that Austral had not advised Cape Range that it disputed the amount claimed in Cape Range's invoice, or required further information, within the 20 day period after it received the invoice in each case. In those circumstances, each invoice was treated as a Correct Invoice under the Contract (as modified), and payment was required within 30 days thereafter, so that a payment dispute arose when the amount claimed in the invoice remained unpaid at the expiry of that 30 day period.[95] In that context, there was no scope for a conclusion that a failure by Austral to respond to an invoice at all could constitute an implied rejection of the invoice.

114 The effect of the submission by counsel for Austral was that the Contract should be construed such that silence by Austral in response to an invoice should be understood as an implicit rejection of that invoice. In my view, this construction of the Contract would have been impossible to reconcile with the findings of the Adjudicator as to the modified terms of cl 39 of the GCC. It is clear from the Adjudicator's reasons that he concluded that the modified approach to cl 39 of the GCC which the parties had adopted required Austral to do either of two things if it did not consider itself liable to pay the amount in the invoice: to dispute the amount claimed in the invoice, or to require further information. In other words, the Contract (and specifically cl 39(e) of the GCC) (as modified) imposed an obligation on Austral to make its position clear with respect to the amount claimed in the invoice. In those circumstances, the alternative construction of the Contract advanced by Austral was not one which the Adjudicator should have taken into consideration.

115 Secondly, there is nothing on the face of the Determination to suggest that it had been submitted to the Adjudicator that a failure by Austral to respond to an invoice should be construed as an implicit rejection of the invoice. I note for completeness, that in its Adjudication Response, Austral referred to correspondence, including an email of 23 August 2011, which appears to have passed between the parties in relation to the work the subject of Invoice 1778. Counsel for Austral submitted that this correspondence constituted a 'rejection' of Cape Range's invoices,[96] but no submission had been made to the Adjudicator to the effect that the correspondence constituted an implied rejection of Cape Range's invoices. As I have already observed, the nature and role of an adjudicator and the manner and time frame in which an adjudication is to be conducted under the CC Act suggest that it is highly unlikely that the Parliament intended that an adjudicator would give consideration to arguments other than those expressly raised by the parties to an adjudication. A failure to do so in these circumstances could not be regarded as a failure to take into account a relevant consideration.

116 Counsel for Austral also advanced an additional argument, namely that the email of 23 August 2011 should have been construed as a request for further information in respect of Invoice 1778, so that a payment dispute arose on 23 August 2011. The email of 23 August 2011 to which counsel referred was an email from Aaron Turner (a director of Austral) to Amanda Poulter (who appears to have been an employee of Cape Range) (the 23 August 2011 email). The 23 August 2011 email was in the following terms:

As requested previously, we require copies of the material invoices to justify the materials components of the claims. Note: as per your contract with Austral, you need to supply material invoices for variations and can only apply a 15% mark-up on the materials. If you can supply this, I can then submit all details to Rio Tinto for processing.[97]

117 It appears that this email was sent in response to an email from Ms Poulter to Mr Turner earlier on 23 August 2011 in which Ms Poulter advised:

Please find attached the breakdown of the quote for the extras MATV and Comms Variation. If this is not enough information could you please advise what format you require.[98]

118 I am unable to accept the submission that the Adjudicator should have construed the 23 August 2011 email as giving rise to a payment dispute on that date, having regard to the terms of the Contract (as modified). The Contract (as modified) did not contemplate the situation arising that after the point at which an invoice was to be treated as a Correct Invoice, Austral might seek further information. When an invoice became treated as a Correct Invoice under the Contract (as modified) the amount claimed in that invoice became payable within 30 days.

119 For completeness, I have also considered whether a request for further information in relation to Invoice 1778 - after the invoice was treated as a Correct Invoice - could, or should, have been understood by the Adjudicator as an implied rejection of the amount claimed, so as to give rise to a payment dispute for the purposes of s 6 of the CC Act. However, that argument also fails. Counsel for Austral submitted that the payment claim in Invoice 1778 was rejected by the 23 August 2011 email. He submitted that 'on a fair reading of the email (together with earlier correspondence on the topic) it is clear that Austral did not approve payment of the amount claimed in that invoice on the information provided'.[99] However, the 23 August 2011 email does not make any reference to Invoice 1778, and it is not clear, on the materials before the Adjudicator, that there was any link to Invoice 1778 in particular.

120 Assuming for present purposes that the 23 August 2011 email did relate to Invoice 1778, then that email (considered in light of the earlier emails referred to in Austral's Adjudication Response) could not, in my view, be construed as an implied rejection of Invoice 1778. The 23 August 2011 email did not contain any indication that the amount sought by Cape Range in Invoice 1778 was, or would be, rejected by Austral. On the contrary, the terms of that email, on its face, suggested that the invoice would be submitted for processing (and, implicitly, for payment) once further information was supplied. Accordingly, therefore, I am not persuaded that this was a relevant consideration which the Adjudicator failed to take into account.

121 I turn next to the submission by counsel for Austral that the Adjudicator failed to consider whether there was a payment claim and a payment dispute for the purposes of the CC Act and, in particular, that the Adjudicator failed to focus on whether a progress claim under the Contract had become due and payable. In my view, the Adjudicator clearly considered whether, having regard to the Contract (as modified), Cape Range had made a payment claim for the purposes of the CC Act, and whether and when a payment dispute arose. Insofar as counsel for Austral submitted that the Adjudicator had not considered the 'progress claim' required under cl 39 of the Contract, counsel's submissions appeared to proceed on the basis that the terms of the agreement between the parties were reflected in the Contract, and relevantly in cl 39 and cl 45 of the GCC in their original form. However, as I have explained, the Adjudicator found that the parties had varied the Contract so that those clauses were applied in a modified form. Consequently the Adjudicator's focus was not on when a progress claim was made, but rather when invoices were issued, and when those invoices became regarded as 'Correct Invoices' under the Contract, which in turn triggered the obligation to pay the amount claimed in the invoices within 30 days.

122 I turn, finally, to the Adjudicator's consideration of the decision in Blackadder. It is not entirely clear why the Adjudicator referred to the decision in Blackadder. The paragraphs of that decision to which the Adjudicator referred dealt with terms implied into a contract under sch 1 div 5 of the CC Act, and the operation of those terms in relation to when a payment dispute would arise under s 6 of the CC Act. Those terms were not identical to the terms of the Contract in this case.

123 There appear to be two possible explanations for the Adjudicator's reference to Blackadder. The first is that the Adjudicator was seeking to point out that if a payment claim under a contract is not disputed or rejected in the terms required by that contract (including any terms which may be implied by the CC Act) then an obligation to pay the amount claimed in the payment claim may arise. That may well be the explanation for the reference to the paragraphs from Blackadder which are referred to in par 74 of the Determination. The second possible explanation for the Adjudicator's reference to Blackadder is that he was noting that in some cases, terms may be implied into a contract, but that this was not such a case. That may be the explanation for the reference to Blackadder, having regard to par 75 of the Determination.

124 It is not at all apparent that the Adjudicator in fact applied the reasoning in Blackadder to his analysis of the Adjudication Application, or applied that reasoning in any way which materially affected his reasoning process as to whether there had been compliance with s 31(2)(a)(ii) of the CC Act. In assessing this aspect of the Determination, considerations of the kind to which I referred above (in relation to the role of the adjudicator and the process for an adjudication) must be borne in mind. An adjudicator will not necessarily be legally qualified and, as I have already observed, the Parliament did not, in my view, intend that an adjudicator should express reasons for a determination with the same degree of precision as might be employed by, or expected of, a court. Accordingly, whatever the reason for the Adjudicator's references to Blackadder, I am not persuaded that his references to that decision reveal that the Adjudicator applied the ratio of that decision in a manner which resulted in his taking into account an irrelevant consideration, so that the conclusion he reached in relation to compliance with s 26 of the CC Act could not be said to be a conclusion of the kind required by the Parliament under s 32(2)(a)(ii) of the CC Act.

125 In summary, my conclusions in relation to Issue 6 are:

(i) The criterion in s 32(2)(a)(ii) is a jurisdictional fact for the purposes of an adjudicator's exercise of jurisdiction under s 32(2)(b).

(ii) On the proper construction of the CC Act, it is not necessary that the state of things referred to in s 32(2)(a)(ii) in fact exist to enliven the jurisdiction of an adjudicator under s 32(2)(b). An adjudicator is entitled to make a finding as to whether the criterion in s 32(2)(a)(ii) is satisfied and that finding (whether correct or not, as a matter of fact) is sufficient to enliven the adjudicator's jurisdiction under s 32(2)(b).

(iii) A court exercising judicial review therefore does not enquire into whether the state of things referred to in s 32(2)(a)(ii) in fact existed. Instead, the inquiry is confined to whether an adjudicator's conclusion that the criterion in s 32(2)(a)(ii) was met was so unreasonable that no reasonable decisionmaker would have reached that conclusion, was reached by misconstruing the CC Act, took into account irrelevant considerations or failed to take into account relevant considerations, or manifested serious irrationality or illogicality.

(iv) The Adjudicator did not make an error of that kind in concluding that the criterion in s 32(2)(a)(ii) was satisfied in this case.

7. Whether the Determination is invalid on the basis that the Adjudicator failed to consider part of the Adjudication Response and thereby failed to make a determination of the kind contemplated by the CC Act, and/or breached a requirement for procedural fairness in s 32(1) of the CC Act

126 Austral's case was that cl 47 of the Contract gave rise to the setoff claim and that it had raised the setoff claim in its Adjudication Response. Austral submitted that the Adjudicator had not genuinely attempted to understand the Adjudication Response and had failed to consider and make the Determination on the basis of the setoff claim. In his outline of written submissions, counsel for Austral submitted that a determination by an adjudicator who failed to consider an important submission or part of the evidence included in an adjudication application or response would not (having regard to the requirements of s 32 of the CC Act) be a determination made within the power conferred on the adjudicator by Pt 3 Div 3 of the CC Act. Austral's case was that by proceeding in this way the Adjudicator fell into jurisdictional error.

127 Counsel submitted that the set-off claim was material to the issues before the Adjudicator, in that had he had regard to the setoff claim, it may have reduced the amount which Austral was said to be liable to pay by a significant amount.[100]

128 In support of these submissions, counsel for Austral relied on a number of authorities relating to the construction of the Building and Construction Industry Security of Payment Act 1999 (NSW) and the Building and Construction Industry Payments Act 2004 (Qld).[101] Those authorities were concerned with legislation which is in similar, but not identical, terms to the CC Act (particularly in relation to the matters which must be taken into account by an adjudicator) and the authorities largely turned on their own facts. Reference to those authorities did, however, assist to clarify the nature of the contentions made by Austral.

129 Some of the authorities relied upon by Austral in support of this ground of its challenge dealt with breaches of natural justice resulting from a failure by an adjudicator to take into account a matter said to be material to an issue requiring resolution by the adjudicator.[102] I have therefore approached this aspect of Austral's case as also encompassing an alternative contention that the Adjudicator's failure to take into account the set-off claim constituted a denial of natural justice and that because the setoff claim was material to the issues before the Adjudicator, the Determination should be declared to be invalid.

130 In order to resolve the issues raised by this ground of Austral's challenge to the Determination, in this section of my reasons, I deal with the following matters:

(i) the setoff claim and how it was dealt with by the Adjudicator;

(ii) the scope of judicial review of determinations of an adjudicator under the CC Act;

(iii) whether the way in which the Adjudicator dealt with the setoff claim amounted to a jurisdictional error;

(iv) whether the way in which the Adjudicator dealt with the setoff claim amounted to a denial of natural justice; and

(v) if so, whether the setoff claim was material to the issues the Adjudicator had to determine in the adjudication.

(i) The setoff claim and how it was dealt with by the Adjudicator

131 It is necessary at the outset to note what Austral put before the Adjudicator. Counsel for Austral submitted that the set-off claim was set out at pars 6.1 - 6.3, and in Attachments 4 and 7, of the Adjudication Response. On the face of those parts of the Adjudication Response, it was far from evident that what was being put was a claim to a contractual entitlement to setoff, and the basis for such a claim. Paragraph 6.1 of the Adjudication Response stated:

Austral refers to and relies on the Financial Reconciliation contained in Attachment 4 and the deductions made by [Austral] from the [Cape Range] subcontract sum under Clause 47. Attachment 7 contains the details of the deductions made.

132 Paragraphs 6.1 - 6.3 of the Adjudication Response were set out under a heading entitled 'Section Six Financial Status of the Subcontract'. Paragraphs 6.2 - 6.3 did not make any reference to a contractual right to setoff amounts which Austral claimed were due to it against amounts claimed from it by Cape Range, or the source of the entitlement to setoff, or any explanation for any such setoff. Nor did pars 6.1 - 6.3 address why, in the context of an adjudication of a particular payment dispute, any rights of setoff to which Austral might be entitled would be relevant to the determination of the adjudication, or why Austral was entitled (having regard to the terms of cl 47 of the GCC) to make any deductions from amounts Cape Range claimed were owed to it under the invoices the subject of the payment dispute.

133 Attachment 4 to the Adjudication Response contained a copy of a letter from Austral's solicitors to Cape Range dated 3 October 2011 in relation to various claims made by Cape Range. That letter did not refer to a claim by Austral that it had a contractual right to setoff amounts owed to it against amounts claimed from it by Cape Range. The attachments to that letter made a fleeting reference to 'deductions' and to the amounts (or part thereof) sought in some of Cape Range's invoices having been 'rejected', but, to the extent that there was any explanation or justification for those 'deductions' or 'rejections', it did not refer to any contractual right to setoff or explain how that contractual right to setoff applied having regard to the terms of cl 47.

134 Attachment 7 to the Adjudication Response contained copies of emails which appear to have passed between staff of Austral and Cape Range, and copies of invoices issued to Austral from third parties, together with a document entitled 'CRE Koodaideri remedial works'. None of those documents contained any reference to, or explanation for, why Austral was entitled to setoff amounts it claimed Cape Range owed to it, against amounts Cape Range claimed it was owed, or any reference to the source of any such entitlement, or any explanation of how cl 47 of the GCC applied, or to what debts or liabilities of Cape Range, and in what amounts, cl 47 applied.

135 Austral's claim that the Adjudicator did not genuinely attempt to understand the setoff claim, and did not take it into account, was confined to the way in which the Adjudicator dealt with the Adjudication Response at pars 6.1 - 6.3 and Attachments 4 and 7 thereto.

136 This was not a case where the adjudicator failed to give any consideration to Austral's claim. He gave it consideration, but decided it was irrelevant. He explained why in clear (albeit not detailed) terms:

[Austral] has referred to and produced in Attachments 4 and 7, details of the deductions it alleged to be [Cape Range's] liabilities.

For the purposes of this Adjudication Application, I do not see the relevance of this information. I therefore shall not deal with this matter.[103]

137 The question, then, is whether the approach taken by the Adjudicator to the setoff claim constituted a jurisdictional error or a denial of natural justice.

(ii) The scope of judicial review of determinations of an adjudicator under the CC Act

138 As I have already noted, the statutory intention which can be discerned from the terms of the CC Act is that adjudicators under the CC Act are more analogous to inferior courts than to inferior tribunals. As a result, the scope of judicial review of a determination of an adjudicator on the ground of jurisdictional error will be more circumscribed than if an adjudicator were a decisionmaker analogous to an inferior tribunal. The scope of jurisdictional error in relation to inferior courts was considered by the High Court (in the context of an application for certiorari) in Craig v State of South Australia where the Court said:[104]

In considering what constitutes 'jurisdictional error', it is necessary to distinguish between, on the one hand, the inferior courts which are amenable to certiorari and, on the other, those other tribunals exercising governmental powers which are also amenable to the writ. ...

An inferior court falls into jurisdictional error if it mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist. ...

Jurisdictional error is at its most obvious where the inferior court purports to act wholly or partly outside the general area of its jurisdiction in the sense of entertaining a matter or making a decision or order of a kind which wholly or partly lies outside the theoretical limits of its functions and powers. ... Less obviously, an inferior court can, while acting wholly within the general area of its jurisdiction, fall into jurisdictional error by doing something which it lacks authority to do. If, for example, it is an essential condition of the existence of jurisdiction with respect to a particular matter that a certain event or requirement has in fact occurred or been satisfied, as distinct from the inferior court's own conclusion that it has, there will be jurisdictional error if the court or tribunal purports to act in circumstances where that event has not in fact occurred or that requirement has not in fact been satisfied even though the matter is the kind of matter which the court has jurisdiction to entertain. Similarly, jurisdictional error will occur where an inferior court disregards or takes account of some matter in circumstances where the statute or other instrument establishing it and conferring its jurisdiction requires that that particular matter be taken into account or ignored as a precondition of the existence of any authority to make an order or decision in the circumstances of the particular case. Again, an inferior court will exceed its authority and fall into jurisdictional error if it misconstrues that statute or other instrument and thereby misconceives the nature of the function which it is performing or the extent of its powers in the circumstances of the particular case. ...

In contrast, the ordinary jurisdiction of a court of law encompasses authority to decide questions of law, as well as questions of fact, involved in matters which it has jurisdiction to determine. The identification of relevant issues, the formulation of relevant questions and the determination of what is and what is not relevant evidence are all routine steps in the discharge of that ordinary jurisdiction. Demonstrable mistake in the identification of such issues or the formulation of such questions will commonly involve error of law which may, if an appeal is available and is pursued, be corrected by an appellate court and, depending on the circumstances, found an order setting aside the order or decision of the inferior court. Such a mistake on the part of an inferior court entrusted with authority to identify, formulate and determine such issues and questions will not, however, ordinarily constitute jurisdictional error. Similarly, a failure by an inferior court to take into account some matter which it was, as a matter of law, required to take into account in determining a question within jurisdiction or reliance by such a court upon some irrelevant matter upon which it was, as a matter of law, not entitled to rely in determining such a question will not ordinarily involve jurisdictional error.

139 Insofar as Austral alleges that the Adjudicator failed to deal with an aspect of the Adjudication Response and that that constituted a jurisdictional error, Austral needs to establish that the Adjudicator's approach to the setoff claim constituted a failure by the Adjudicator to perform the very task the legislature had assigned to him in conducting an adjudication under the CC Act.

140 The position in relation to Austral's claim to a denial of procedural fairness or natural justice is a little different. In the context of statutory decisionmakers which are not courts (and which are not analogous to courts) a failure to comply with an applicable requirement of procedural fairness (whether imposed by the statute itself, or by the common law) will often be treated as a jurisdictional error.[105] When the decisionmaker is an inferior court, however, there is room for some debate as to whether a denial of procedural fairness should be viewed as a jurisdictional error, or a discrete ground for relief on judicial review. Although sometimes a failure by an inferior court to afford procedural fairness has been viewed as an example of jurisdictional error,[106] the balance of authority to date suggests that a denial of procedural fairness should be treated as a discrete basis for relief on judicial review.[107]

141 That having been said, a breach of the rules of natural justice will not automatically invalidate a decision adverse to the party affected by the breach. This is because not every breach of the rules of natural justice will affect the making of a decision.[108] The general rule is that a breach of natural justice must be material to the decision if the breach is to render the decision invalid. However, it can be very difficult to exclude the possibility that the breach of natural justice made no difference to the result which was reached,[109] and accordingly, it will be an unusual case where relief for a breach of natural justice will be refused on this basis.[110]

(iii) Whether the way in which the Adjudicator dealt with the setoff claim amounted to a jurisdictional error

142 I am not persuaded that the way in which the Adjudicator dealt with the set-off claim amounted to a jurisdictional error.

143 There is nothing to suggest that the Adjudicator ignored the material put before him insofar as it is said to have identified the setoff claim. On the contrary, the Adjudicator clearly considered that material. He noted the material put forward by Austral, and the details of the deductions which Austral alleged constituted Cape Range's liabilities. In that sense, the Adjudicator clearly made the Determination on the basis of the material he was required to consider (including the Adjudication Response).

144 It was also submitted that the Adjudicator did not engage in a bona fide exercise of his power because, had he turned his mind to cl 47 of the Contract, 'he would have immediately seen the relevance of those materials' (in Attachments 4 and 7 to the Adjudication Response). I am also not persuaded that the Adjudicator failed genuinely to try to understand the setoff claim. The setoff claim was inadequately articulated. How or why cl 47 of the GCC applied, and in respect of what debts or liabilities owed by Cape Range to Austral, was not explained. Nevertheless, the Adjudicator clearly looked at the 'deductions' claimed by Austral, and made an assessment, based on the material before him, as to whether those 'deductions' were relevant to the issues before him in the adjudication. Given the inadequate articulation of the setoff claim, it is perhaps not surprising that the Adjudicator did not see the claim as having any relevance in the context of the payment dispute. Having regard to the nature of the adjudication process, the role of an adjudicator and the manner in which an adjudicator is required to perform an adjudication under the CC Act (which I outlined in [51] [57] above), Parliament's intention could not have been that an adjudicator would be expected to address arguments not expressly raised or discern arguments where they were not adequately articulated. A 'failure' to deal with an argument in those circumstances does not constitute a jurisdictional error by an adjudicator.

145 In my view, at the heart of this aspect of Austral's challenge is a complaint that the Adjudicator erred in concluding that material which, according to Austral, was relevant, was in fact irrelevant to the resolution of the matters before him, and that the Adjudicator thereby failed to take into account a relevant consideration. Even if the Adjudicator erred in that conclusion, that was an error which in my view was within his jurisdiction. The error, if there was one, did not mean that the Adjudicator failed to perform the very task the Parliament assigned to him under the CC Act.

146 If Austral has a setoff claim, it is entitled to pursue that claim in the SOC proceedings, as indeed it seeks to do.

(iv) Whether the way in which the Adjudicator dealt with the setoff claim amounted to a denial of natural justice

At a glance

Court

Decision date

Before

Source

Judgment (325 paragraphs)

(i) Are the criteria set out in s 31(2)(a) jurisdictional facts necessary to enliven the jurisdiction of the Adjudicator under s 31(2)(b)?

(ii) Is the criterion in s 31(2)(a)(ii) of the CC Act a matter which must actually exist in order to enliven the Adjudicator's jurisdiction?

(a) The process for, and purpose of, the characterisation of jurisdictional facts

(b) Characterisation of the jurisdictional fact in s 31(2)(a)(ii)

(iii) Was the criterion in s 31(2)(a)(ii) satisfied in this case?

(a) The Adjudicator's conclusions as to the terms of the Contract with respect to the system for the payment of invoices

Legislation Cited (8)

Cases Cited (22)