Question 2: Identifying Jurisdictional Error
33 There is no single test or theory or logical process by which the distinction between jurisdictional and non-jurisdictional error can be determined. (See M Aronson et al Judicial Review of Administrative Action, 4th ed (2009) Lawbook Co esp at [1.80]-[1.90], [4.185]-[4.200]. See also M Aronson "Jurisdictional Error Without Tears" in M Groves and H P Lee (ed) Australian Administrative Law (2007) Cambridge University Press; P Craig Administrative Law, 6th ed (2008) Sweet & Maxwell, Ch 14.) Nevertheless, as Gleeson CJ has pointed out: "Twilight does not invalidate the distinction between night and day." (A M Gleeson "Judicial Legitimacy" (2000) 20 Australian Bar Review 4 at 11. See also Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 at [163] per Hayne J.)
34 The submissions for the applicant in this Court were based on the proposition that a valid notice under s 17(2) was a jurisdictional fact. With respect to this form of jurisdictional error, the test has been expressed in a number of different, albeit equivalent, ways. The following formulation has found favour in recent High Court authority: the "criterion, satisfaction of which enlivens the power of the decision-maker". (City of Enfield supra at [28]; Gedeon v Commissioner of the NSW Crime Commission [2008] HCA 43; (2008) 236 CLR 120 at [43].)
35 However, the element presently under consideration - "cannot be made unless" - does not, in my opinion, invoke a jurisdictional fact. Like the formulation "must not be granted" considered in Gedeon supra at [46], it "conveys the notion of a contraction in the content of what would be the power otherwise conferred", relevantly in this case, the right to make an application under s 17(1). Similarly, an "integer or element of the right" under s 17(1) "is its exercise by application made within the time specified". (David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 277.)
36 The issue to be determined is whether the adjudicator had jurisdiction to determine an "application" which had been made without compliance with the mandatory (in a negative sense) terminology of s 17(2). The issue is not, contrary to some of the submissions made, whether the adjudicator had jurisdiction to determine that s 17(2)(a) had been complied with. That section is not addressed to the adjudicator and is not a matter which he is directed to "determine" within s 22(1) of the Act. It may be that it is a matter which he must "consider" as one of the "provisions of the Act" within s 22(2)(a). However, that section confers no power to determine the issue.
37 As Hodgson JA recognised in Brodyn, in the passage set out at [23] above, the relevant question is that which was propounded in the joint judgment in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355. Section 17(2) of the Act is a procedural requirement of the kind to which the High Court referred in Project Blue Sky in the following way:
"[91] An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue.
[92] Traditionally, the courts have distinguished between acts done in breach of an essential preliminary to the exercise of a statutory power or authority and acts done in breach of a procedural condition for the exercise of a statutory power or authority. Cases falling within the first category are regarded as going to the jurisdiction of the person or body exercising the power or authority. Compliance with the condition is regarded as mandatory, and failure to comply with the condition will result in the invalidity of an act done in breach of the condition. Cases falling within the second category are traditionally classified as directory rather than mandatory."
38 The joint judgment went on to approve the judgment in Tasker v Fullwood [1978] 1 NSWLR 20, particularly with respect to the doubt expressed by this Court about the utility of the distinction between "directory" and "mandatory" requirements. The High Court concluded:
"[93] … A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. … In determining the question of purpose, regard must be had to 'the language of the relevant provision and the scope and object of the whole statute'. ( Tasker v Fullwood at 24.)"
39 The language of essentiality, extending as it does to words like "mandatory" and "jurisdictional" is, as has frequently been pointed out, a convenient way of expressing a conclusion. This is the result of a process of construction in which all of the relevant principles of the law of statutory interpretation are applied. (See, eg, Tasker v Fullwood supra at 23-24; Project Blue Sky supra at [93]; Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; (1999) 46 NSWLR 55 at [39]; Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; (2008) 237 CLR 146 at [23].) The joint judgment in Project Blue Sky supra at [91], quoted at [37] above, indicated that a range of factors have been identified as relevant to the process of statutory interpretation, but there is neither a "decisive rule" nor "even a ranking of relevant factors … to give guidance".
40 The first textual indicator that is always of significance is the mode of expression of the element directly in issue. Substantial, indeed often, but not always, determinative, weight must be given to language which is in mandatory form. See, for example:
David Grant v Westpac supra esp at 276-277, where the formulation was "may only".
City of Enfield supra at [6], [28] and [32]-[33], where the formulation was "must not be granted".
SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24; (2005) 228 CLR 294 at [68], [136], [173] and [206], where the language "must give" was described as "imperative".
41 The element under consideration in the present case - "cannot be made unless" - has a similar mandatory import. To adapt the words of Gummow J in David Grant v Westpac at 277:
" … it is impossible to identify the function or utility of the words - "cannot be made" - if (they do) not mean what (they) say."
42 The second aspect which must be taken into account, in addition to the text, is the structure of the legislative scheme. This is the context which must be taken into account in the first instance, not only after some ambiguity is identified in the directly operative words. (See CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408.) There are two particularly relevant considerations for present purposes. First, the point of time in the decision-making process at which the element under consideration occurs. Secondly, the treatment of time limits in the scheme as a whole.
43 With respect to the first aspect, it is particularly relevant that the element occurs at the application stage of the decision-making process. It does not involve consideration of matters which can arise during the course of the decision-making process itself. A traditional formulation of the relevant distinction is whether the relevant element is "a fact to be adjudicated upon in the course of inquiry" as distinct from an "essential preliminary to the decision-making process". (Colonial Bank of Australasia v Willan (1874) LR 5 PC 417 at 443. See also the discussion in Timbarra supra at 65-67 and Woolworths Limited v Pallas Newco Pty Ltd [2004] NSWCA 422; (2004) 61 NSWLR 707 at [46]-[49].)
44 As I pointed out in Woolworths v Pallas Newco:
"[47] The word 'preliminary' does not, in this context, refer to a chronological sequence of events, but to matter that is legally antecedent to the decision-making process …
[48] The extrinsic or ancillary or preliminary nature of the relevant fact makes it more likely that the fact is jurisdictional."
45 There are a number of cases in which the absence of an element required to be present in the application which initiates a decision-making process has been held to be jurisdictional. (See, eg, Ex parte Toohey's Limited; Re Butler (1934) 34 SR (NSW) 277; (1934) 51 WN (NSW) 101; Minahan v Baldock (1951) 84 CLR 1; Manning v Thompson [1976] 2 NSWLR 380 (first instance); [1977] 2 NSWLR 249 (Court of Appeal); [1979] 1 NSWLR 384 (Privy Council); David Grant supra at 276-277; and see the analysis in Timbarra supra at [56]-[60].)
46 The significance of this factor is reinforced by a second aspect of the legislative scheme. The legislation provides for a precise sequence of time stipulations, as follows:
A payment claim may be served "only" within the period identified in the contract or 12 months, whichever is later (s 13(4)).
The respondent to a payment claim becomes "liable to pay the claimed amount" if a payment schedule is not provided within the time required by the contract or 10 days, whichever is earlier (s 14(4).
A claimant may recover unpaid monies as a debt or make an adjudication application if the payment schedule has been provided in accordance with s 14(4)(b), and the respondent fails to pay within the time required or 10 days, whichever is earlier (s 16(1)(b)).
Where a payment schedule indicates that an amount less than that claimed is said to be owing, the claimant must make an adjudication application within 10 days (ss 17(1)(a)(i) and 17(3)(c)).
Where a respondent fails to pay any part of the scheduled amount accepted to be owing by the due date for payment, the claimant must make an adjudication application within 20 days after the due date for payment (ss 17(1)(a)(ii) and 17(3)(d)).
Where the respondent fails to provide a payment schedule and the claimant proposes to apply for an adjudication application, in accordance with s 15(2)(a)(ii), rather than to recover the amount claimed as debt, the claimant cannot make an adjudication application unless s/he provides a notice within 20 days of the due date for payment of an intention to apply and the respondent has been given an opportunity to provide a payment schedule for five days after receiving the notice (ss 17(1)(b) and 17(2)).
Any adjudication application pursuant to the notice referred to in the immediately preceding bullet point must be made within 10 days after the end of the five day period for providing a payment schedule (s 17(3)(e)).
The "authorised nominating authority" has a duty to refer an application to an adjudicator "as soon as practicable" (s 17(6)).
Where there has been a payment schedule provided, the respondent may lodge an adjudication response at any time within five days after receiving a copy of the application, or two days after receiving notice of an adjudicator's acceptance of the application, whichever is later (s 20(1)).
An adjudicator is to determine an adjudication application "as expeditiously as possible and, in any case" within 10 days of notifying the claimant and respondent of acceptance of the application, or such further time as the claimant and the respondent agree (s 21(3)).
After the adjudicator has made a determination of the amount payable a respondent is required to pay an adjudicated amount on or before five days after the date of service of the determination (s 23(2)).
A claimant may suspend work or supply of services after two days from giving a notice of intention to do so (s 27(1)).
The right referred to in the immediately preceding bullet point expires three days after payment is made (s 27(2)).
47 This detailed series of time provisions is carefully calibrated to ensure expeditious resolution of any dispute with respect to payments in the building industry. The time limits are a critical aspect of the scheme's purpose to ensure prompt resolution of disputes about payment. It is commercially important that each party knows precisely where they stand at any point of time. Such certainty is of considerable commercial value.
48 Subject only to those provisions which can be varied downwards by the contract and one provision which permits the parties to agree to an extension, there is no indication that Parliament intended the dates for which it provided to be flexible. This significantly reinforces the conclusion available from the mandatory language of s 17(2).
49 Mr B Hodgkinson SC, who appeared for the respondent, submitted that the essential element in s 17(2)(a) was the requirement of notice. The additional element - that such notice be made within 20 days after the due date for payment - was not, he submitted, essential.
50 But for the detailed sequence of the express provisions for time set out at [46] above, there may have been some force in Mr Hodgkinson's submission. However, the structure of the legislative scheme, that I have set out above, strongly suggests that Parliament intended the time limits to operate precisely in accordance with their terms. Such an operation ensures that, at every stage, each party knows exactly where s/he stands on any day.
51 Mr M G Sexton SC, the New South Wales Solicitor General, who appeared for the intervening Attorney, submitted that although the 20 days period is easily ascertained, the commencement date, ie, when payment is due, is not always so clear. This is, in my opinion, of little weight in view of the express stipulation in s 11(1) that a progress payment becomes due and payable on the date specified in the contract or if none is specified, 10 days after a payment claim is made.
52 It is well established that the adverse effects of a finding that an element is jurisdictional should be considered before reaching a final conclusion. In Brodyn it was noted that the determination of a statutory entitlement to payment under the Act does not foreclose the possibility of an ultimate finding that the contractual rights were different. (See Brodyn supra at [51] and [88].) However, as McDougall J indicates, payment does shift the risk of insolvency, not an unknown phenomenon in the building industry.
53 The statute itself also creates another risk which may lead to irreversible contractual consequences. A claimant is given the option, at several stages of the process which I have set out at [46] above, to give notice of an intention to suspend the carrying out work or supplying services. (Section 15(2)(b), s 16(2)(b), s 24(1)(b).) S/he is given statutory protection in the event of such a suspension by s 27 of the Act. In Brodyn, Hodgson JA said at [51] that s 27 "could operate as a trap", if the processes under the Act were subsequently set aside as void. Nevertheless, Hodgson JA went on to observe that the Court may be able to avoid injustice by the terms of any relief which it gives.
54 It may be arguable that s 27(1) applies so long as a bona fide notice of intention to suspend was given, whether or not, as a result of a subsequent court order, the fact or circumstance which authorises the notice to be given has been set aside. This issue was not the subject of submissions and need not be decided.
55 The possibility that s 27 may "operate as a trap" is a material consideration. However, it is not, in my opinion, sufficient to overcome the force of the text and structure of the legislative scheme to which I have referred. As Hodgson JA recognised in Brodyn, the purpose of the legislative scheme is best served by restricting the scope of intervention by the Courts. I do not believe that there will be frequent occasion for such interference - perhaps after a transitional period - once it is realised in the building industry that punctilious compliance with each specific time limit is required if a builder is to have the benefit of the scheme established by the Act.
56 I agree with the answer to Question 2 proposed by Basten JA.