Multiplex Constructions Pty Ltd v Luikens [2005] NSWCA 228 | Case summary

Court of Appeal (NSW)|2005-06-10|Before: Hodgson JA, Ipp JA, Basten JA, McDougall J

The application of Brodyn 69 As noted by Hodgson JA at [47], there was an application to reargue the principles relating to the scope of the Court's supervisory jurisdiction set out in Brodyn Pty Ltd v Davenport [2004] NSWCA 394. Although it is apparent that leave should not be granted in this case, because the issue does not arise (see [49] above), Hodgson JA also expresses the view that, perhaps for other reasons, he is not persuaded that there are grounds to give leave to reargue Brodyn. That conclusion may be shown to be correct, but in my view there are aspects of the reasoning in Brodyn which may bear elucidation. 70 The principles which should be applied in considering such an application are set out in the judgment of Gleeson CJ in Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86 at 99C-101C. Like the Full Court of the Federal Court, see eg Transurban City Link v Allan (1999) 95 FCR 553 at [26]-[31], this Court has accepted that it should follow an earlier decision unless satisfied that it was clearly wrong. The principles were reaffirmed in Roberts v White [1999] NSWCA 12 by five members of this Court: see Mason P at [42]-[45]. To the factors commonly addressed must be added a further and critical consideration, namely that the reasoning adopted in an earlier decision may be inconsistent with relevant High Court authority, particularly authority decided after the decision in question, or not referred to in that decision. Two factors which appear to weigh in favour of reconsideration in the present case are doubts about parts of the reasoning in Brodyn and the force of that reasoning in the light of the more recent decision of the High Court in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24. 71 Subject to an expression of doubt on one issue - see below at [79], Brodyn accepted that relief could be sought in the Court in relation to a failure by an adjudicator to exercise his or her statutory powers, with the result that there was no valid determination. The judgment in Brodyn at [54] posited the relevant question as "whether a requirement being considered was intended by the legislature to be an essential pre-condition for the existence of an adjudicator's determination". So much may be conceded: that description reflects the concept of "jurisdictional error" under the general law as identified in Craig v South Australia (1995) 184 CLR 163 at 179 and in Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 232 at [82]. The question in a particular case will be whether the adjudicator has, by acting in a particular way, exceeded or failed to exercise the authority or powers given to him or her by the Act. 72 The next step in the reasoning in Brodyn was to say, at [55], that all that was intended by the legislature was compliance with certain identified "basic requirements", which may not have been exhaustively stated in that case, and "a bona fide attempt by the adjudicator to exercise the relevant power relating to the subject matter of the legislation and reasonably capable of reference to this power" - for which proposition R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 is cited - and that there be "no substantial denial of the measure of nature justice that the Act requires to be given". Each of these three elements could require further consideration. 73 First, although the statement of "basic requirements" is said not necessarily to be exhaustive, one of the factors which appears to have been excluded is compliance by the claimant with s 13(2) of the Act. According to that provision, a payment claim "must" do certain things. The basis for reading "must" as "must but need not" is not explained. It does not appear to accord with the approach adopted, albeit in relation to very different legislation, in SAAP. On the other hand, Brodyn may be read as saying that satisfaction of this condition depends on the opinion of the adjudicator: see Climatech [2005] NSWCA 229 at [43]-[48]. 74 Further, at [56] Brodyn cast doubt on the proposition that "compliance with the requirements of s 22(2)" is a precondition to a valid exercise of power. It is suggested that the matters identified in that provision could involve "extremely doubtful questions of fact or law". The judgment continues: "… it is sufficient to avoid invalidity if an adjudicator either does consider only the matters referred to in s 22(2), or bona fide addresses the requirements of s 22(2) as to what is to be considered."

That is suggested to be inconsistent with views expressed by Palmer J in Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140. This reasoning would seem to say that what might be required by s 22(2) is not merely consideration of the matters (and only the matters) there identified, but also reaching a legally correct conclusion. That, however, is not what the section requires. Nor did Palmer J, in my view, suggest otherwise. 75 Secondly, the reliance on Hickman is arguably misplaced. That case required the reconciliation of apparently mandatory provisions of certain regulations with a privative clause which purported to exclude all forms of prerogative relief. There are no such provisions requiring reconciliation in the Act. 76 Thirdly, the argument that a failure to accord the statutory measure of natural justice is only a basic requirement if the denial is "substantial" is inconsistent with the reasoning of the High Court in Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at [17]. What may have been intended was a reflection that the content of procedural fairness, given the statutory context, was limited, but that is a different point. 77 These considerations suggest that there may be room for debate as to the second question identified by Hodgson JA at [47] above, namely whether Brodyn "set the requirements for validity too low, particularly in relation to the application of s 22 of the Act". However, the answer to that question may well depend upon a particular understanding of what Brodyn decided in this regard, a matter which has yet to be debated. 78 The first question identified in relation to Brodyn, at [47] above, implies that, according to Brodyn, a determination may be challenged if invalid, in the sense that it is attended by jurisdictional error, but may not be "quashed, for example for error of law on the face of the record". If Brodyn in fact drew a distinction in those terms, there is an arguable case for reconsideration. That is because, to state the question in this way, would appear to involve a departure from the question set out in Brodyn at [54] which asks whether a requirement was intended by the legislature to be an essential precondition to the exercise of power. In relation to questions of law, the issue is whether the adjudicator was intended by Parliament to have power to determine such questions or, as it is sometimes put, only to apply the law correctly. As Craig v South Australia demonstrates, there is an important distinction to be drawn (at least in this country) between administrative decision-makers and courts of law: 184 CLR at 179. Properly understood, Brodyn may be saying that the structure of the Act demonstrates that, contrary to the general rule with respect to administrative tribunals, an adjudicator has been given power to determine a payment claim so long as he or she takes into account the legal parameters prescribed by the Act and the contract, and whether or not the decision actually made reflects a correct understanding of the legal principles to be derived from those sources. If that is the correct understanding of the judgment of Brodyn in this Court, it would appear to accord with the judgment of Einstein J at first instance, and with the approach adopted by McDougall J in Musico v Davenport [2003] NSWSC 977, as noted by Palmer J, in reaching a similar conclusion, in Multiplex Constructions Pty Ltd v Luikens (supra) at [42]. Nothing put to the Court in this case demonstrated any basis for reconsideration of that aspect of Brodyn, so understood. 79 There was a further matter argued in this appeal, which, given the conclusion that there was no relevant error, need not be resolved. It was the proposition that prerogative relief, granted under s 69 of the Supreme Court Act, would not be available in relation to the determination of an adjudicator because, as noted in Brodyn at [46], there is "a real question whether an adjudicator is properly considered [to be] a tribunal exercising governmental powers". This question was not determined, but rather Brodyn proceeded on the basis that such relief was, in principle, available, as had been held by McDougall J in Musico (supra) at [32]. That question was given more detailed consideration by Palmer J in Multiplex Constructions (supra), his Honour coming to the same conclusion. In particular, his Honour noted that such relief had been held to be available in relation to decisions of arbitrators in R v National Joint Council for Dental Technicians; Ex parte Neate [1953] 1 QB 704 at 707-708 (Lord Goddard CJ) and at 709 (Croom-Johnson J), Pearson J agreeing at 710. That holding was applied by Malcolm CJ in Re Real Estate and Business Agents Supervisory Board; Ex parte Cohen (1999) 21 WAR 158 at 189; see Multiplex at [23]. The reason for doubting the correctness of this conclusion was not identified in Brodyn, and need not be addressed further here. 80 I agree that the Court should make the orders proposed by Hodgson JA. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION: Coordinated Construction Co. Pty. Ltd. v. J.M. Hargreaves (NSW) Pty. Ltd. & Ors. [2005] NSWCA 228

Baese Pty. Ltd. v. G.A. Bracken Building Pty. Ltd. (1990) 6 BCL 137 Brodyn Pty. Ltd. v. Davenport [2004] NSWCA 394 CIC Insurance Ltd. v. Bankstown Football Club Ltd. (1997) 187 CLR 384 Clutha Developments Pty. Ltd. v. Barry (1989) Coordinated Construction Co. Pty. Ltd. v. Climatech (Canberra) Pty. Ltd. [2005] NSWCA 229 Craig v. South Australia (1995) 184 CLR 163 Kembla Coal & Coke Pty. Ltd. v. Select Civil Pty. Ltd. [2004] NSWSC 628 Lawson v. Wallasey Local Board (1883) 11 QBD 229 Minister for Aboriginal Affairs v. Peko Wallslend Ltd. (1986) 162 CLR 24 Minister for Immigration & Multicultural Affairs v. Yusuf (2001) 206 CLR 232 Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 Musico v Davenport [2003] NSWSC 977 Project Blue Sky v. The Australian Broadcasting Authority (1998) 194 CLR 355 CASES CITED: Quasar Constructions Pty. Ltd. v. Demtech Pty. Ltd. [2004] NSWSC 116, 20 BCL 276 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 R v National Joint Council for Dental Technicians; Ex parte Neate [1953] 1 QB 704 Re Real Estate and Business Agents Supervisory Board; Ex parte Cohen (1999) 21 WAR 158 Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 Roberts v. White [1999] NSWCA 12 SAAP v. Minister for Immigration & Multicultural & Indigenous Affairs [2005] HCA 24 Solution 6 Holdings Ltd. v. Industrial Relations Commission of NSW [2004] NSWCA 200, 60 NSWLR 558 State Government Insurance Office (Qld) v. Crittenden (1996) 117 CLR 412 The Minister for Commerce v. Contrax Plumbing (NSW) Pty. Ltd. [2005] NSWCA 142 Theophanous v. Herald & Weekly Times Ltd. (1994) 182 CLR 104 Transgrid v. Siemens Ltd. [2004] NSWCA 395 Transurban City Link v. Allan (1999) 95 FCR 553

30 Similarly, Mr Parnell reasoned that V 65 was for "the additional cost to the Claimant through delays attributable to the Respondent which had extended the completion date ie "the works took longer to complete".". He reasoned, by reference to both the decision of Barrett J in Quasar Constructions v Demtech Pty Ltd [2004] NSWSC 116 and my decision in Kembla Coal, that the claim was for construction work "within the scope of that envisaged in the quoted references from" Quasar .

POSSIBLE ERROR OF PRIMARY JUDGE 50 Before concluding, I wish to note what I believe may be an important error in the judgment of the primary judge, not bearing on the outcome of the case. In the second half of para.[51] of his judgment, the primary judge said this: An adjudicator is bound to consider the provisions of the Act, the provisions to the construction contract, the payment claim and payment schedule and submissions made by the claimant and respondent respectively and the results of any inspection: s 22(2). It seems to follow from all this that, if the point that an amount claimed is not "for" construction work is not taken in the payment schedule, it cannot thereafter be relied upon by the respondent in the adjudication process. The adjudicator would be bound to determine the matter on the basis of the material to which she or he could properly have regard; and if the adjudicator decided that all the reasons advanced by the respondent were invalid, the adjudicator would determine the amount of the progress payment in favour of the claimant. 51 That passage could be read as asserting that, if a respondent to a payment claim does not raise any relevant grounds for denying or reducing the progress claim made by the claimant, then the adjudicator automatically determines the progress claim at the amount claimed by the claimant. My tentative view is that such an assertion would be incorrect. 52 The task of the adjudicator is to determine the amount of the progress payment to be paid by the respondent to the claimant; and in my opinion that requires determination, on the material available to the adjudicator and to the best of the adjudicator's ability, of the amount that is properly payable. Section 22(2) says that the adjudicator is to consider only the provisions of the Act and the contract, the payment claim and the claimant's submissions duly made, the payment schedule and the respondent's submissions duly made, and the results of any inspection; but that does not mean that the consideration of the provisions of the Act and the contract and of the merits of the payment claim is limited to issues actually raised by submissions duly made: see The Minister for Commerce v. Contrax Plumbing (NSW) Pty. Ltd. [2005] NSWCA 142 at [33]-[36]. The adjudicator's duty is to come to a view as to what is properly payable, on what the adjudicator considers to be the true construction of the contract and the Act and the true merits of the claim. The adjudicator may very readily find in favour of the claimant on the merits of the claim if no relevant material is put by the respondent; but the absence of such material does not mean that the adjudicator can simply award the amount of the claim without any addressing of its merits. 53 Indeed, my tentative view is that, if an adjudicator determined the progress payment at the amount claimed simply because he or she rejected the relevance of the respondent's material, this could be such a failure to address the task set by the Act as to render the determination void.

In the light of this express restriction on the response which can be provided to the adjudicator, there is merit in the conclusion that the adjudicator is not entitled to go beyond the terms of the response, in rejecting part or all of the claim. That was the conclusion reached by McDougall J. 67 It is not necessary to resolve this difference of opinion in the present case, nor would I wish to do so. There are factors, not referred to at [50] above and not expressly identified McDougall J, which militate against the conclusion just identified. For example, the claimant may make an adjudication application in circumstances where the respondent has failed to provide a payment schedule at all: see ss 15(1)(a) and (2)(a)(ii) and 17(1)(b). Whether, in the light of s 20(2B) the respondent can give any reasons for withholding payment at all in such a case, is unclear. It is also unclear whether it is intended, in that event, that the adjudicator must allow the claim in full. These issues require consideration. They are dealt with further in a different context in Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229 at [40]-[42]. 68 The judgment of this Court in The Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142 was handed down after the decision of McDougall J in the present case. Accordingly the reasoning relied on by Hodgson JA in that case at [33]-[36] and relied on at [50] above, was not considered by the primary judge. However, it follows from what I have said that I am not persuaded that the reasoning in those paragraphs of Contrax is correct, but a similar conclusion may be attainable by a different course.

Multiplex Constructions Pty Ltd v Luikens

At a glance

Court

Decision date

Before

Source

Judgment (3 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (24)

Cited By (37)