(ii) Was the determination thereby void?
54 The appellant put its submissions in two ways.
55 First, the appellant submitted that the determination was void because the adjudicator had asked himself, at [104], whether s 14 allowed incorporation by reference of material extrinsic to the payment schedule, instead of asking (in the words of s 14(3)), what the payment schedule indicated. It referred to Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd [2007] NSWCA 32, in which it was said at [26]-[27] that an adjudicator who had arrived at an adjudicated amount by a process wholly unrelated to a consideration of the matters in s 22(2) had not performed the task required by the Act and had not complied with an essential precondition to the existence of a valid determination. It submitted that the adjudicator had similarly not performed the task required by the Act.
56 This was an extraordinary submission. In Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd the adjudicator did not value the completed work on evidence. He said expressly he did not have evidence on which he could arrive at the value. Rather, he valued the completed work by adopting one party's valuation in preference to that of the other because the other party had made unmeritorious challenges to the validity of the payment claim. In the present case there was nothing like the failure to act in accordance with the Act found in Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd. The adjudicator recognised in terms that s 14(3) required indication of reasons. In his understanding, the scheme of s 14 meant that this could not be done by incorporation by reference. Although I consider his understanding to be incorrect, he was applying the Act, and a view of the Act with which the trial judge was prepared to agree.
57 Adjudicators must come to their determinations under strict time limits, often having to grapple with detailed and confusingly presented materials without great assistance from the parties' submissions. Being human, they can make errors, although often what is called error is only because of preference for a different view. Wholesale departure from an adjudication according to the Act, as in Halkat Electrical Contractors Pty Ltd v Holmwood Holdings Pty Ltd, is quite different from error, and should not lightly be charged against an adjudicator. I do not accept the appellant's submission, and it so lacked substance that it should not have been made.
58 Secondly, the appellant submitted that the determination was void because , having taken the view he took of s14(3) and so declined to take into consideration the February payment schedule and the backcharge letters, the adjudicator failed to consider the March payment schedule as required by s 22(2)(d) of the Act. It was said that whether the March payment schedule indicated, as reasons for $nil being less than the claimed amount and for withholding payment, the reasons in the February payment schedule was an objective matter, open to review by a court, and that if objectively it did so indicate the adjudicator failed to make a determination compliant with the obligations imposed on him under s 22(2) of the Act. It was said also that whether objectively there was the indication was a "jurisdictional fact" of the kind discussed in Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55.
59 The foundation for the submission, as it was put, was that s 22(2)(d) of the Act imposed a statutory obligation to consider any payment schedule, and so to consider what (objectively) was indicated in it. Section 22(2) states that the adjudicator "is to consider the following matters only", and operates to exclude matters from consideration rather than to state matters for consideration. It may nonetheless be accepted that, either by implication from s 22(2) or as a necessary part of the adjudicatory function, an adjudicator must consider a payment schedule, and the respondent did not submit to the contrary.
60 The submission is contrary to the current jurisprudence.
61 Brodyn Pty Ltd v Davenport [2004] NSWCA 394; (2004) 61 NSWLR 421 disapproved the test of whether an adjudicator's error is jurisdictional or non-jurisdictional. The question is "whether a requirement being considered was intended by the legislature to be an essential pre-condition for the existence of an adjudicator's determination" (at [54]).
62 Hodgson JA, with whom Mason P and I agreed, identified certain "basic and essential requirements" for the existence of an adjudicator's determination, and said -
"55 In my opinion, the reasons given above for excluding judicial review on the basis of non-jurisdictional error of law justify the conclusion that the legislature did not intend that exact compliance with all the more detailed requirements was essential to the existence of a determination: cf. Project Blue Sky Inc. v. Australian Broadcasting Authority (1998) 194 CLR 355 at 390-91. What was intended to be essential was compliance with the basic requirements (and those set out above may not be exhaustive), 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 (cf. R v. Hickman; Ex Parte Fox and Clinton (1945) 70 CLR 598), and no substantial denial of the measure of natural justice that the Act requires to be given. If the basic requirements are not complied with, or if a purported determination is not such a bona fide attempt, or if there is a substantial denial of this measure of natural justice, then in my opinion a purported determination will be void and not merely voidable, because there will then not, in my opinion, be satisfaction of requirements that the legislature has indicated as essential to the existence of a determination. If a question is raised before an adjudicator as to whether more detailed requirements have been exactly complied with, a failure to address that question could indicate that there was not a bona fide attempt to exercise the power; but if the question is addressed, then the determination will not be made void simply because of an erroneous decision that they were complied with or as to the consequences of non-compliance.
56 It was said in the passage in Anisminic quoted by McDougall J that a decision may be a nullity if a tribunal has refused to take into account something it was required to take into account, or based its decision on something it had no right to take into account. However, in Craig v. South Australia (1995) 184 CLR 163 at 177 the High Court said that this would involve jurisdictional error if compliance with the requirement in question was made a pre-condition of the existence of any authority to make the decision. I do not think that compliance with the requirements of s.22(2) are made such pre-conditions, for the same reasons as I considered the determination not to be subject to challenge for mere error of law on the face of the record. The matters in s.22(2), especially in pars.(b), (c) and (d), could involve extremely doubtful questions of fact or law: for example, whether a particular provision, say an alleged variation, is or is not a provision of the construction contract; or whether a submission is "duly made" by a claimant, if not contained in the adjudication application (s.17(3)(b)), or by a respondent, if there is a dispute as to the time when a relevant document was received (ss.20(1), 22(2)). In my opinion, 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. To that extent, I disagree with the views expressed by Palmer J in Multiplex Constructions Pty. Limited v. Luikens [2003] NSWSC 1140."
63 This approach has been adopted in many subsequent cases, although as noted in Downer Construction (Australia) Pty Ltd v Energy Australia [2007] NSWCA 49; (2007) 69 NSWLR 72 at [95] it has not gone unquestioned. It has been applied in holding that matters akin to whether a payment schedule indicates reasons are for the adjudicator to decide, and that incorrect decision is not failure in a basic and essential requirement for a determination.
64 Whether a payment claim identifies the construction work or related goods and services to which the payment relates, as required by s 13(2) of the Act, is generally a matter for the adjudicator to determine: Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd at [26] per Hodgson JA, [43]-[46], [51] per Basten JA. Section 13(2) requires also that a payment claim indicate the claimed amount, and more generally in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) [2005] NSWCA 409; (2005) 64 NSWLR 462 at [76] Ipp JA said that the merits of a claim including whether the claim complies with s 13(2) "is a matter for adjudication under s 17". In Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9 Basten JA said at [71], referring to this observation -
"But the merit (or lack of merit) of a claim is, as Ipp JA expressly accepted, a matter for determination by the adjudicator. Similarly, his Honour accepted that the express elements of a valid claim set out in s 13(2) are matters for the adjudicator. As suggested in Coordinated Construction Co v Climatech (Canberra) Pty Ltd (at 380 [43]-[46]), (a passage cited without disagreement by Hodgson JA in Nepean Engineering (at 473 [32]-[34])), determination of the existence of essential preconditions to a valid claim are matters for the adjudicator, not for objective determination by a court."
65 In John Holland Pty Ltd v Roads & Traffic Authority of New South Wales (2007) NSWCA 19 whether a submission had been "duly made" (s 22(2) of the Act) was said to be a matter for the adjudicator, whose error in that respect would not invalidate his determination. It was not a matter for objective determination by the Court: see at [57] per Hodgson JA, with whom Beazley JA agreed, and at [71]-[72] per Basten JA referring to what he had said in Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd.
66 In Downer Construction (Australia) Pty Ltd v Energy Australia I held, referring to these cases and with the agreement of Santow and Tobias JJA, that determination of the scope and nature of the payment claim was similarly a matter for the adjudicator. The reasons at [80]-[98] included -
"81 … An adjudicator's determination may be incorrect, but it can still be a valid determination. Many cases have recognized that a determination under the Act is of an interim nature, often made in "pressure cooker" circumstances; that the purpose of the Act is to enable speedy resolution of claims to progress payments without excessive formality or intervention by the courts; and that the scope for invalidity for non-jurisdictional error is limited: for example: Brodyn Pty Ltd v Davenport at [51]; Co-ordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd at [45]; Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462 at [44]."
67 In my opinion, what a payment schedule indicates as the reasons for the scheduled account being less than the claimed amount and for withholding payment is also a matter for the adjudicator, and if the adjudicator makes an error in that respect it does not invalidate the determination. Added reference to s 22(2)(d) does not take this further, see Brodyn Pty Ltd v Davenport at [56] holding that it is sufficient that the adjudicator bona fide address the requirements of s 22(2) as to what is to be considered. By s 22(2) the legislature has committed to the adjudicator consideration of the payment claim, any payment schedule, and all submissions duly made. There is no reason to regard a correct view of what a payment schedule indicates as more basic and essential to a valid determination than an adjudicator's view of what a payment claim identifies or indicates, or whether a submission has been duly made.
68 The appellant referred to the "factors" stated in the reasons of Basten JA in Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd -
"45 In the present case, three factors militate in favour of treating elements identified in s 13(2) as properly dependent upon the satisfaction or opinion of the adjudicator. First, what is or may be a sufficient identification of matters for the purposes of a claim falls within the special experience which a qualified adjudicator is intended to bring to the task and is one which may well require evaluative judgment. Secondly, the requirement relates to a procedural step in the claim process, rather than some external criterion. Thirdly, the overall purpose of the Act, as reflected in its objects and procedures, is to provide a speedy and effective means of ensuring that progress payments are made during the course of the administration of a construction contract, without undue formality or resort to the law."
69 It sought to distinguish s 14(3) by submitting that what is indicated in a payment schedule does not require an adjudicator's special expertise, and that provision of a payment schedule, albeit a procedural step, is a significant step because it operates to define the issues upon which the provider of the payment schedule can rely (s 20(2B)). What a payment schedule indicates may involve an adjudicator's expertise, and his Honour's point about a procedural step was one of contrast with an "external criterion": as I understand it, meaning a separately stated criterion for a valid determination. There is no separately stated criterion relevant to s 14(3). I do not think the suggested distinction is sound.
70 In Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd Basten JA expressed a possible qualification -
"47 It does not follow that the formation of a relevant opinion by an adjudicator with respect to compliance with s 13(2) will in all circumstances be beyond review. The principle stated by Latham CJ in R v Connell; Ex parte Hetton Bellbird Collieries Ltd (1994) 69 CLR 407 at 432, as applied by Gummow J in Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [133], was to the following effect:
'If the opinion which was in fact formed was reached by taking into account irrelevant considerations or by otherwise misconstruing the terms of the relevant legislation, then it must be held that the opinion required has not been formed. In that event the basis for the exercise of power is absent, just as if it were shown that the opinion was arbitrary, capricious, irrational or not bona fide.'
Thus, as noted in Brodyn , an essential element in the formulation of such an opinion is that is must be undertaken in good faith, but that is not a sufficient condition of validity."
71 The appellant did not invoke the possible qualification in relation to "misconstruing the terms of the relevant legislation". It could be said that the adjudicator's error was misconstruction of s 14(3), in that he considered that s 14(3) did not permit indication by incorporation by reference. However, I do not think that an argument that such a misconstruction vitiated the determination is consistent with the cases. Underlying the invalidity of a determination only for want of "an essential precondition for the existence of an adjudicator's determination" (Brodyn Pty Ltd v Davenport at [54]) is that a determination may be valid although the adjudicator has made an error of fact or law, and it has been accepted that this includes error in the construction of the Act.
72 So in Minister for Commerce v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142, Hodgson JA said, Bryson JA and Brownie AJA relevantly agreeing -
" [49] In my opinion, an error of fact or law, including an error in interpretation of the Act or of the contract, or as to what are the valid and operative terms of the contract, does not prevent a determination from being an adjudicator's determination within the meaning of the Act. Section 22(2) does require the adjudicator to consider the provisions of the Act and the provisions of the contract; but so long as the adjudicator does this, or at least bona fide addresses the requirements of s 22(2) as to what is to be considered, an error on these matters does not render the determination invalid."
73 This was said as to the effect of s 34 of the Act, with reference to his Honour's reasons in Transgrid v Siemens Ltd [2004] NSWCA 394; (2004) 61 NSWLR 521 at [33]-[34]. In Transgrid v Siemens Ltd his Honour said, with the agreement of Mason P, that error in the construction of s 9(a) of the Act and of the contract "would be a mere error of law, and not such as to render the determination invalid". Subsequently in Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd [2005] NSWCA 228; (2005) 63 NSWLR 385 at [46] his Honour said that, if a determination is valid because the basic and essential requirements of the Act are complied with "an error of law by the adjudicator, even in interpreting the Act itself, would not make the determination unlawful …".
74 In Plaza West Pty Ltd v Simons Earthworks (NSW) Pty Ltd [2008] NSWCA 279 it was noted at [27-[28] that there was no challenge to authorities in this Court "to the effect that an error of fact or law by the adjudicator was not sufficient to vitiate an adjudication", and at [32] that in that case "there may have been legal error but that did not mean that the adjudicator did not fulfil his statutory task in s 22": per Allsop P, with whom I and Hodgson JA agreed.
75 There is not a clear line between the construction and the application of a statutory or contractual provision, or between the construction of a statutory provision and the construction of a contractual provision, and all have been committed by the legislature to the adjudicator. Construction of the Act necessarily arises in the course of an adjudication, and in accordance with Brodyn Pty Ltd v Davenport and subsequent cases incorrect construction does not necessarily invalidate a determination. It could do so if the construction negated an essential precondition as spoken of in Brodyn Pty Ltd v Davenport, but the construction of s 14(3) as part of deciding what a payment schedule indicates is not of that nature.
76 In my opinion, the correct construction and application of s 14(3) were not essential preconditions for a valid determination. Accordingly, although I consider the adjudicator to have been incorrect in the respect considered earlier in these reasons, the determination was not thereby void.