The NSW Court of Appeal has delivered judgment (16th December 2011) in this case.
The first adjudication was by Philip Davenport. As with several others of his decisions in other cases, this one was declared void and of no effect in August 2010.
The claimant then sough to excercise his right to make a new application on the statutory basis that the adjudicator had failed to determine the application within the time allowed. A second adjudciation took place.
“Quite right”, said McDougall J in November last year ( NSWSC 1367). However, the right to a new adjudication is subject to a time limit of 5 business days, and he said that that 5 days starts to run – not from the time when the first decision is quashed – but from the expiry of time when the first adjudication decision should have been made. Accordingly, the second adjudication was well out of time.
On appeal, the Court of Appeal (Macfarlan JA and Tobias AJA; Basten JA dissenting) has now upheld McDougall J’s decision.
Is there a moral to be drawn? Perhaps this: that if a Claimant is driven to the conclusion that a first adjudication decision is obviously void, and wants to avail; himself of the right to a new adjudication on the same payment claim (and thus taking advantage of any paucity in the relevant payment schedule) than he should make his new application without delay, and not wait until the first decision has been declared void.
The Court of Appeal’s decision is as follows:
- BASTEN JA : The background to this appeal is recounted by Macfarlan JA. In short, it concerns the effect of a declaration that an adjudication determination under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Security of Payment Act “) is “void”. The primary judge, McDougall J, held that a further adjudication application made within five days of the declaration was ineffective, because the adjudication determination had been void at all times and therefore the five day period, which ran from the time by which the adjudicator had to make a valid determination, had long since expired. The second determination was therefore void: Cardinal Project Services Pty Ltd v Hanave Pty Ltd  NSWSC 1367.
- The primary judge distinguished a number of cases which had permitted a further adjudication application to be made by a claimant after a determination had been quashed pursuant to proceedings under s 69 of the Supreme Court Act 1970 (NSW). The questions raised on appeal were, first, whether those decisions were, in their terms, correct and, secondly, if so, whether they could be distinguished on the basis that the relief sought in those cases had not been, as in the present case, a declaration of voidness.
- The developer (who was the respondent to the payment claim and the respondent in this Court) asserted that the earlier decisions were incorrectly decided. The basis for those decisions involved reading language into the Act, which was an impermissible exercise. That submission should be accepted. Nevertheless, the result in the earlier cases was correct for a different reason, namely that the determination had not been ineffective for all purposes and, in particular, the existence of a purported determination was sufficient to preclude the engagement of the right to withdraw the adjudication application on which it was based, until the time of the Court’s order or declaration of invalidity.
- In the event that the builder succeeded in overturning the reason for the order of the primary judge, it then sought to challenge the validity of the determination on other grounds which had not been considered by the primary judge. That exercise cannot properly be undertaken by this Court and the matter must be remitted to the Equity Division for determination of the remaining issues. The appeal should be allowed with costs.
- The position of the parties with respect to the second determination appeared to contradict the need for an appeal. Both the appellant and the respondent agreed with each other, and with the order of the primary judge, that the determination was invalid. However, the reason for invalidity was of critical importance. Although an appeal is brought not against the reasons for judgment, but from the orders, the present appeal was justifiable on the basis that the appellant had sought declarations as to its rights, in addition to a declaration that the determination was void. There is, however, some irony in this situation as the order setting aside the first determination was made by consent, without any attempt to identify the ground on which it was declared void. In any event, to determine the effect of the declaration that the first determination was void it is necessary to consider the legislative scheme of the Security of Payment Act .
Background to statutory scheme
- For more than a decade there has been legislation in this State (and more recently in all other States and Territories) permitting builders to make claims for work done under construction contracts, on an interim basis, pending final determination of any dispute as to their respective rights and liabilities. Keane JA has noted that the Queensland statute “seeks to preserve the cash flow to a builder notwithstanding the risk that the builder might ultimately be required to refund the cash in circumstances where the builder’s … inability to repay could be expected to eventuate”: R J Neller Building Pty Ltd v Ainsworth  QCA 397;  1 Qd R 390 at . Adopting that understanding in Chase Oyster Bar v Hamo Industries  NSWCA 190; 272 ALR 750, McDougall J described the Security of Payment Act as operating “to alter, in a fundamental way, the incidence of the risk of insolvency during the life of a construction contract”: at , Spigelman CJ agreeing at .
- The Security of Payment Act permits a builder to make a claim for a progress payment (known as a payment claim), to which the developer may respond by service of a document (known as a payment schedule) disputing, in part or in whole, the amount of the claim. In the case of a dispute, the claimant may apply for an adjudication, to be undertaken by an adjudicator appointed by a specified authority. Despite the complexity of some disputes, and in the absence of agreement between the parties to extend time, the adjudicator is required to make a determination within 10 business days after notifying the parties that he or she has accepted the adjudication application. The adjudicator’s determination must be in writing and must include reasons for the decision.
- The Security of Payment Act imposes short and apparently mandatory time constraints on each stage of the process for making claims, disputing liability, applying for adjudication and for determination. In certain circumstances, a claimant may withdraw an adjudication application and make a further adjudication application.
- If a determination remains unpaid by the developer, the claimant may obtain an adjudication certificate, file it in a court of competent jurisdiction, and sue on it to enforce the debt. (The claimant may also suspend work under the contract.) The power of the respondent developer to have the judgment set aside is limited: it may not challenge the determination. However, the limits on the developer’s rights are expressed only in reference to proceedings brought by it to have a judgment based on the adjudication certificate set aside.
- The tightly constrained scheme of the Security of Payment Act suffers from a significant omission: there is no provision dealing with the possibility (or consequences) of proceedings by either party challenging the validity of any earlier (pre-judgment) step taken under the Act, including, as in this case, an adjudicator’s determination.
- The consequence of such an order will partly depend on the basis upon which it is made. For example, if the Court were to hold that the document purporting to be a payment claim was not in fact a payment claim within the meaning of the Act, the process would have to start afresh, assuming that the right to make a payment claim subsisted. On the other hand, if the determination were invalid because of some error on the part of the adjudicator, one would expect that the matter might be returned to the adjudicator to make a fresh determination, according to law.
- Because the consequences of a declaration of invalidity will depend upon the ground, even if made by consent, it is desirable, if not essential, that the declaration should state the ground. In the present case, the parties were content to work on the assumption that the determination was invalid because the adjudicator had rejected the claim on a basis not relied on by the respondent. The result in that circumstance of setting the determination aside, or declaring it void would be to leave unresolved an outstanding adjudication application. However, determination of the extant application was said to be unavailable because the adjudicator was required to determine an adjudication application as expeditiously as possible and, in any case, within 10 days after notifying both parties of acceptance of the application: s 21(3). Almost inevitably, that period had long since expired at the time that the declaration was made.
- The alternative course, relied upon by the builder, was, upon the Court making its declaration, to seek to withdraw the adjudication application and make a new adjudication application. That course, it was asserted, was permitted by s 26 of the Security of Payment Act , which was (and is) in the following terms:
” 26 Claimant may make new application in certain circumstances
(1) This section applies if:
(a) a claimant fails to receive an adjudicator’s notice of acceptance of an adjudication application within 4 business days after the application is made, or
(b) an adjudicator who accepts an adjudication application fails to determine the application within the time allowed by section 21(3).
(2) In either of those circumstances, the claimant:
(a) may withdraw the application, by notice in writing served on the adjudicator or authorised nominating authority to whom the application was made, and
(b) may make a new adjudication application under section 17.
(3) Despite section 17(3)(c), (d) and (e), a new adjudication application may be made at any time within 5 business days after the claimant becomes entitled to withdraw the previous adjudication application under subsection (2).
(4) This Division applies to a new application referred to in this section in the same way as it applies to an application under section 17.”
- It was not suggested that s 26(1)(a) was engaged, but rather that the adjudicator had failed to determine the adjudication application within the time allowed by s 21(3) which, in the absence of agreement between the parties to allow further time, was the period of 10 business days. That provision was engaged because, the builder submitted, the purported determination (made within time) was not a determination for the purposes of that provision which, it must be inferred, refers to the adjudicator validly determining the application. That submission may be accepted.
- Accepting that submission, the builder faced a further difficulty in relying upon s 26, namely that the new adjudication application was required to be made within five business days after the builder became entitled to withdraw the previous application: s 26(3). There were three possible ways of calculating that limitation period. First, the builder became entitled to withdraw the adjudication application immediately upon the expiration of the 10 business days within which time the adjudicator had to make a valid determination and failed to do so. Secondly, the right to make a fresh adjudication application ran for five days after the builder became aware that it was entitled to withdraw the previous adjudication application. Thirdly, for the purposes of s 26, it was not correct to say that the entitlement to withdraw the first adjudication application arose prior to the order of the Court setting the purported determination aside or declaring that it was void or invalid.
- The first reading was relied on by the respondent, but rejected by the builder. The builder sought to support the second approach, though concededly it required reading words into the terms of s 26(2) or (3) which were simply not there. Further, since it was the builder who asserted all along that the determination was invalid, and brought proceedings on the basis of invalidity, so that whatever words were to be read in must be such that they did not require the builder to act on its own view as to invalidity until a court had made an order to that effect.
- The third approach may appear to be inconsistent with the general assumption in the authorities that a decision infected by jurisdictional error is “void ab initio”, being a form of legal nullity which does not require a court declaration or order: the effect of the declaration or order is merely to confirm that which is automatically achieved by the operation of the law.
Authorities dealing with s 26
- It is convenient to refer at this point to the relevant case law, starting with judgments in the Equity Division.
- The operation of s 26 appears to have been first addressed by Palmer J in Multiplex Constructions Pty Ltd v Luikens  NSWSC 1140. Multiplex was the respondent to a determination by an adjudicator, which it sought to set aside by proceedings under s 69 of the Supreme Court Act . His Honour gave careful consideration to whether such relief was available in respect of an adjudicator’s determination, whether it was otherwise excluded by the terms of the Security of Payment Act and, if not, on what grounds relief could be sought. Each of these questions was resolved in favour of Multiplex. His Honour determined that in one respect the adjudicator had fallen into error, which required that the whole determination be quashed. He then turned to the consequences of quashing a determination, at -. Accepting that the consequences of quashing the determination would be inconvenient and expensive for the parties, his Honour noted that if the work under the contract had been completed and there were no further claims to be made, the dispute might appropriately be determined by litigation or other final dispute resolution procedures: at . Where the payment claim arose in the course of the construction work, his Honour noted:
The claimant will no doubt want the payment claim determined before completing construction work. Can the claimant re-submit the dispute constituted by the payment claim and the payment schedule to the same adjudicator to be determined according to the reasons given by the Court in quashing the original determination? Or is the adjudicator, having made a determination under s 22(1), functus officio?”
- Palmer J then opined that the solution lay in s 26: at . The first step in the argument was to hold that a determination made without jurisdiction, even if made within the time stipulated in s 23(3), involved a failure to determine the application for the purposes of s 26(1)(b). For that purpose, he equated the result with a determination procured by fraud, concluding that “the determination is of no effect: it is as if the adjudicator had made no decision at all”: at . He continued at :
“When an adjudication under the Act is quashed pursuant to judicial review, in my opinion the claimant becomes entitled to withdraw its adjudication application under s 26(2) upon and from the date upon which the quashing order is made because on that date it has been ascertained that the adjudicator did not determine the adjudication according to law within the time allowed by the Act, for the purposes of s 26(1)(b). The claimant may then, within five business days of the quashing order, make a new adjudication application under s 26(3).”
- In practical terms, there may be much to recommend this solution. However, there are problems in reaching such a result, by way of construing s 26 alone. These problems are not addressed in his Honour’s reasoning, no doubt because these comments were entirely obiter and did not affect the outcome of the case, although a contrary view might well have been relevant to the exercise of what his Honour accepted was a discretionary power to quash the determination, in the event of identified error on the part of the adjudicator.
- The next case was a decision of Barrett J, Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd  NSWSC 116. That case also involved a claim for relief in respect of an adjudication determination, the claim being made under s 69 of the Supreme Court Act . His Honour identified error and made an order quashing the determination. He noted that the contract was no longer on foot and that, accordingly, any dispute would need to be resolved on a final basis. He also noted the possibility of the claimant obtaining another adjudication, referring to the mechanism identified by Palmer J in Luikens . The comment was neither relied upon as part of the reasoning supporting relief, nor was there any further exposition of the reasoning supporting the comment.
- The issue arose squarely for determination in Emergency Services Superannuation Board v Sundercombe  NSWSC 405. The claimant was a builder, Lipman Pty Ltd. (For reasons which remain obscure, the adjudicator, who should not be an active party, is generally named, inappropriately, as the first defendant.) In earlier proceedings, the Board (being the respondent to a payment claim) had sought to set aside an adjudicator’s determination in judicial review proceedings: Emergency Services Superannuation Board v Davenport  NSWSC 697. McDougall J upheld challenges in respect of two individual items within the determination, and rejected a third challenge. Nevertheless, his Honour noted that there was but one determination and that if he “were to quash that Determination, Lipman would be deprived of the benefit of the entire Determination, including that portion which … is not affected by reviewable error”: at . Noting that relief under s 69 of the Supreme Court Act was “discretionary”, he indicated that he would grant relief but only upon the developer accepting liability to pay the unaffected amount: at . The builder then withdrew the adjudication application, pursuant to s 26, within five days of the orders made by McDougall J and made a new adjudication application. Before Bergin J, the Board challenged the builder’s claim to take those steps in reliance on s 26. It challenged the decision of Palmer J in Luikens . Bergin J accepted that the order of McDougall J quashing the determination triggered the operation of s 21(3): at . She accepted that “in the circumstances where the Act is otherwise silent as to what is to happen in respect of a quashed determination” the approach adopted in Luikens was “persuasive”. She upheld the procedure adopted by the builder as within the terms of the Act: at -.
- In John Holland Pty Ltd v Made Contracting Pty Ltd  NSWSC 374, Nicholas J was required to address the circumstances in which an adjudication application could properly be withdrawn. Although his Honour referred to the discussion of s 26 by Palmer J in Luikens , it was for the purpose of identifying what was covered by the reference to an adjudicator who “fails to” determine an application within the permitted time. He held that it was equivalent to “does not”: at . Whether there is a precise equivalence may be doubted: for example, it may be an awkward use of language to say that a person “fails to” take a step of which he or she has no notice or which is precluded by the act of a third party: cf Brennan v New South Wales Land and Housing Corporation  NSWCA 298 at . However that issue need not be pursued in the present case.
- It remains to address the reasoning of the primary judge in the present case, which was as follows:
(1) a determination made without jurisdiction was void ab initio – at ;
(2) there was, therefore, no determination made within the time provided by s 26(1)(b) – at ;
(3) the power to make a new adjudication application was confined to the period ending five business days after the entitlement to withdraw the previous application arose;
(4) that entitlement arose at the expiration of the 10 day period, absent a valid determination, and
(5) a fresh adjudication application could not be made many months later, after the determination had been declared void by a court.
- There are two further aspects of the reasoning to which reference should be made. First, the primary judge was at pains to note that he was dealing with a case in which the respondent to an adjudication application had sought and obtained a declaration that the determination was void and not an order quashing a determination, pursuant to s 69 of the Supreme Court Act : at . The significance of that distinction was, perhaps, that it provided a basis for not following the earlier judgments discussed above. However, the legal quality of the determination does not depend upon the nature of the relief sought; indeed, on the assumption set out at step (1) of his Honour’s reasoning, the invalidity of the decision arose by operation of law. Furthermore, in adopting this approach, the primary judge overlooked the fact that an order quashing the determination had been sought in the amended summons and was one of the orders which he made.
- Secondly, McDougall J placed significant weight on the distinction between void and voidable decisions. In so doing, he made reference to passages in the judgment of Hodgson JA (with whom Mason P and Giles JA agreed) in Brodyn Pty Ltd v Davenport  NSWCA 394; 61 NSWLR 421. It will be necessary to return to this issue below. However, before addressing matters of principle, reference should be made to the authorities construing similar legislation in other jurisdictions.
- There is equivalent legislation in Queensland, being the Building and Construction Industry Payments Act 2004 (Qld). Section 32 of that Act is equivalent to s 26 of the Security for Payment Act . The language is not identical: one potentially relevant difference is that where s 26(1) refers to a person who “fails to” receive a notice or decide an application, the Queensland statute uses the words “does not”. In Spankie v James Trowse Constructions Pty Ltd  QCA 355 Fraser JA (Holmes and Chesterman JJA agreeing) considered whether the right to make a new adjudication application might provide a basis for concluding that an amount included in one payment claim cannot be included in a subsequent claim. (The issue was similar to that raised in this Court in Dualcorp Pty Ltd v Remo Constructions Pty Ltd  NSWCA 69; 74 NSWLR 190, subject to the qualification that there was in Spankie no pre-existing valid determination.) In dealing with the argument based on s 32 of the Queensland Act, Fraser JA noted that the appellant had sought support in the various decisions in this Court with respect to the power to make a new adjudication application following the setting aside of an earlier invalid determination. His Honour made no comment on the correctness of those decisions but merely stated at :
“Assuming that is so, it does not suggest error in the primary judge’s conclusion that s 32 did not exclude the respondent’s right to make a subsequent payment claim for an amount the subject of the void adjudication determination. As the primary judge held, s 32 does no more than exhaustively define the rights of the respondent in respect of a new adjudication application based upon the earlier payment claim.”
- This Court’s attention was not drawn to any case in which the equivalent provision in the Building and Construction Industry Security of Payment Act 2002 (Vic), namely s 28, has been addressed.
Construction of section 26
- The proper construction of s 26 was addressed in submissions on the basis that it was necessary to adapt the express words in some way to accommodate the circumstance not addressed by the legislature, namely the result of a court order that a purported determination of an adjudicator was in fact invalid. It is convenient to address that issue next, as it involves affirming the conclusion of the primary judge that such an approach is not available. A second issue concerns the underlying assumption upon which that approach was based, namely that, being “void ab initio”, the purported determination had no effect in law at all. Both semantically and substantively, that assumption is unsupportable. It follows that the approach adopted by Palmer J in Luikens , and subsequently followed by judges in the Equity Division, was correct, although the basis for the conclusion requires restatement.
(a) approach to construing section 26
- The terms of s 26 have been set out at  above. The problem raised by the present circumstances may be addressed from different perspectives.
- On one view, if the statutory right of the builder to obtain an interim payment for work done cannot be given effect within the terms of the Security of Payment Act , the builder has lost no more than the promise of a special statutory entitlement which the Act appeared to provide. The builder would retain all its entitlements under law (other than the Security of Payment Act ) to pursue its remedies against the developer. On the other hand, a result which deprives the builder, through no fault on its part, of the special right deliberately conferred by the Security of Payment Act , is a construction which is to be avoided if possible, because it negates the purpose of the Act in circumstances which may appear arbitrary.
- There are other competing policy considerations which may apply in some cases, though not in others. In some circumstances, where the construction work has not been completed, it may be open to a builder to make a further payment claim in respect of the same work the subject of the aborted claim. However, if the time period within which a payment claim may be served, pursuant to s 13(4), has expired, that alternative course will not be available. There is a further consideration, which may be relevant in some circumstances, namely that a respondent to a payment claim cannot seek to resist the claim on any basis not set out in its payment schedule, which must be served within (at most) 10 business days after service of the payment claim: s 14(4). If some further basis for resisting the payment claim has become known to the respondent at a later stage, there will be a tactical advantage to the builder in seeking an adjudication on its original payment claim and the payment schedule served in response thereto. On the other hand, the respondent could claim unfairness resulting from the fact that it is precluded in such circumstances from relying upon what may be a totally valid defence, which is now known to it.
- There being no existing authority binding on this Court as to the proper construction of s 26, it is to be considered as a matter of principle. In this respect, a number of propositions relied upon by the appellant should be accepted. First, it is necessary to follow the statutory mandate to “prefer” a construction that would promote the purpose or object underlying the Act, to one that would not: Interpretation Act 1987 (NSW), s 33. Secondly, as noted by Dawson J in Mills v Meeking  HCA 6; 169 CLR 214 at 235, in relation to the Victorian equivalent to s 33, the approach prescribed “needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction”. Thirdly, this is a form of “contextualism”, in that it will require not merely the reading of whole sentences, rather than individual words, but reading a particular section in the context provided by the whole statute and the industrial background in which the statute was expected to operate, which will be the usual way of identifying statutory purpose.
- Questions as to inherent ambiguity may arise if reliance is sought to be placed on extrinsic material, such as the second reading speech or background reports preparatory to the enactment of the legislation: Interpretation Act , s 34. No reliance was placed on such material in the present case.
- The appellant sought to call in aid a passage in the judgment of Mahoney JA (McHugh and Clarke JJA agreeing ) in Tokyo Mart Pty Ltd v Campbell (1988) 15 NSWLR 275, a case involving the construction of very detailed regulations relating to the sale and consumption of food. His Honour succinctly identified the issue as concerning “an omission not of purpose but of verbiage and as such appropriate to be cured”: 283G. In a more extended explanation he stated at 283A:
“Legislative inadvertence may consist, inter alia, of either of two things. The draftsman may have failed to consider what should be provided in respect of a particular matter and so fail[ed] to provide for it. In such a case, though it may be possible to conjecture what, had he adverted to it, he would have provided, the court may not, in my opinion supply the deficiency. In the other case, the legislative inadvertence consists, not in a failure to address the problem and determine what should be done, but in the failure to provide in the instrument express words appropriate to give effect to it. In the second case, it may be possible for the court, in the process of construction, to remedy the omission.”
- That passage from Tokyo Mart was set out by Beazley JA in Taylor v Centennial Newstan Pty Ltd  NSWCA 276; 76 NSWLR 379 at . (It was not relied upon by other members of the Court.) The precise nature of the distinction is obscure, although it may amount to no more than the proposition that, to remedy such an omission, it must be “possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law”: being the third condition identified by Lord Diplock in Wentworth Securities v Jones  AC 74 at 105-107, applied in this State in R v Young  NSWCCA 166; 46 NSWLR 681 at - (Spigelman CJ, referring to the line of authorities in which it had been applied). That test is not satisfied in this case.
(b) the concept of nullity
- In Minister for Immigration and Multicultural Affairs v Bhardwaj  HCA 11; 209 CLR 597, a case involving a decision of the Refugee Review Tribunal established under the Migration Act 1958 (Cth), Gaudron and Gummow JJ stated at :
“In our view, it is neither necessary nor helpful to describe erroneous administrative decisions as ‘void’, ‘voidable’, ‘invalid’, ‘vitiated’ or, even, as ‘nullities’. To categorise decisions in that way tends to ignore the fact that the real issue is whether the rights and liabilities of the individual to whom the decision relates are as specified in that decision. And, perhaps more importantly, it overlooks the fact that an administrative decision has only such force and effect as is given to it by the law pursuant to which it was made.”
- In the same case, Gleeson CJ quoted, with apparent approval, a passage from the judgment of Finkelstein J in Leung v Minister for Immigration and Multicultural Affairs  79 FCR 400 at 413 in respect of a decision which could be impugned for “jurisdictional error”:
“There is no doubt that an invalid administrative decision can have operational effect. For example it may be necessary to treat an invalid administrative decision as valid because no person seeks to have it set aside or ignored. The consequence may be the same if a court has refused to declare an administrative decision to be invalid for a discretionary reason. In some circumstances the particular statute in pursuance of which the purported decision was taken may indicate that it is to have effect even though it is invalid or that it will have effect until it is set aside.”
- The assumption that a decision made without jurisdiction must be without any legal status or effect is false. At the very least, it may be the subject of a declaration and an order in the nature of certiorari setting it aside. In statutes providing for an appeal, an invalid decision (made in breach of rules of procedural fairness) may be the subject of an appeal: Calvin v Carr  AC 574. As explained pithily by Aronson, Dyer and Groves, Judicial Review of Administrative Action (4 th ed, Law Book Co, 2009) at [10.35]:
“It is a mistake to assume that jurisdictional errors always lead to the same consequence, namely, nullity. It is also a mistake to assume that nullity represents the same legal consequence (namely, legal non-existence) for all contexts. Nullity does not automatically follow from jurisdictional error, and when it does follow, its effects can vary.”
- In short, labels do not engage automatic consequences: context is critical. Especially is that so where a step in a statutory process, expressed in mandatory terms, has been omitted. In such a case, the legal consequences will not necessarily flow from reliance on the truism that jurisdiction cannot be conferred by consent and a defect which goes to jurisdiction therefore cannot be waived: cf Strachan v Gleaner Co Ltd  1 WLR 3204 at  (Lord Millett speaking for the Privy Council). If a statute expressly or impliedly provides that a subsequent step is not invalidated by the omission of an essential requirement at an earlier stage, the essential requirement may be treated as, to that extent, contingent. Thus, it is well established that procedural unfairness at one stage does not undo everything that follows – it can be “cured”: see Calvin v Carr , above at .
- Berowra Holdings Pty Ltd v Gordon  HCA 32; 225 CLR 364 involved a challenge to proceedings for damages in relation to a workplace injury, commenced prematurely in contravention of s 151C of the Workers Compensation Act 1987 (NSW). The Court identified the issue at  as being:
“does the prohibition apparently imposed by s 151C deny legal effect both to proceedings for common law damages commenced in contravention of that prohibition and to all steps later taken by the parties under the relevant Rules of Court with respect to such proceedings?”
- The joint judgment (of Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) applied to judicial proceedings the statement in Bhardwaj of the dangers attendant on labelling an administrative decision as “invalid” or a “nullity”: at . The Court concluded that s 151C was not a precondition to the jurisdiction of the trial court, nor did it “inevitably result in the invalidity of proceedings commenced in contravention of it”: at -. The reasoning of the Court need not be rehearsed in detail: suffice it to say that the characterisation of the provision depended upon its purpose and context, which included the potential diminution of common law rights of an injured plaintiff and a constriction of the jurisdiction of the trial court.
(c) application of principles
- In applying these principles, it is necessary to refer to the approach taken by this Court in respect of the Security of Payment Act in Brodyn (see  above). Aspects of Brodyn have been the subject of reconsideration in later judgments of this Court, including, most recently, Chase Oyster Bar (see  above) at - (Spigelman CJ); - (McDougall J); -,  and  (in my reasons). It is now established that the determination of an adjudicator may be the subject of proceedings in the nature of judicial review under s 69 of the Supreme Court Act , for jurisdictional error. The present issues concern a different aspect of the judgment in Brodyn .
- An adjudication determination in favour of the claimant gives rise to a statutory right to payment by the respondent of the amount so determined: s 23. If not paid within the permitted period, the claimant may request an adjudication certificate under s 24, which can then be filed as a judgment in a court of competent jurisdiction, pursuant to s 25. The latter provision assumes that the respondent may commence proceedings to have the judgment set aside, but, in doing so, may not “challenge the adjudicator’s determination”. In Brodyn , the primary judge had declined to grant relief setting aside the adjudicator’s determination on the basis that the only utility of such an order would be to provide a basis for setting aside the judgment, but that such a step involved challenging the adjudicator’s determination and was thus not available: Brodyn at . This Court held that conclusion to be erroneous: -. As explained by Hodgson JA, “if the determination was quashed or declared void, reliance on there being no determination to support the judgment would not be to challenge the adjudicator’s adjudication within s 25(4): this wording assumes that there is a determination which is challenged”: at . After referring to the possibility of a forgery, his Honour held that “if the respondent could show that for some other reason recognised in law a purported adjudicator’s determination did not amount to an adjudicator’s determination within the meaning of the Act, that would not be challenging an adjudicator’s determination: this … assumes that there is such a determination to be challenged”: at .
- In considering whether judicial review was available under s 69 of the Supreme Court Act, Hodgson JA repeated the proposition that a determination which did not comply with the essential conditions for its existence “will not in truth be an adjudicator’s determination within the meaning of the Act”, and could be subject to relief by way of declaration or injunction: at .
- In the event, the appeal in Brodyn was dismissed for other reasons, so that there was no basis upon which to correct the error which had been identified in the approach of the trial judge. Further, the specific provision in respect of which the effect of the purported determination needed to be assessed was that permitting (subject to constraints) proceedings to set aside a judgment based on the determination, namely s 25(4). That is not the issue at stake in the present case. Accordingly, the present appeal may be determined without reconsidering the reasons given in Brodyn for describing a purported determination as “void”. (It is also unnecessary for present purposes to consider what constitutes a “challenge” to a determination.)
- There are two aspects of s 26 which should be noted before considering its application in the present circumstances. The first is that, while sub-s (1) identifies the precise time from which an adjudication application may be withdrawn, sub-s (2), which confers on the claimant the power to withdraw such an application, does not itself prescribe a limited period. Secondly, sub-s (3), which deals expressly with the right to make a further adjudication application, is not said to be contingent upon withdrawal of the existing application. These apparent anomalies, however, are removed if the section is read as a whole. Thus, reading the various sub-sections together, s 26 confers on a claimant a single power having two limbs (namely withdrawal of an existing adjudication application and making a new adjudication application) each of which must be exercised within five business days after the entitlement to withdraw, as identified in sub-s (1) arises.
- The first step requires reference to the status of a determination not made within the period prescribed by s 21(3). If both parties wait for the determination beyond the 10 day period, in circumstances which do not constitute “agreement” to allow further time for the purposes of paragraph (b), is the determination ineffective because not made within the prescribed period? If it were, either party could ignore it or have it set aside on that basis alone. That conclusion is not in conformity with the purpose of the statutory scheme. That scheme envisages that delay will affect the claimant adversely and thus confers on it a right to make a further adjudication application, pursuant to s 26. No remedy is conferred on the respondent. Failure to comply with s 21(3) should not, of itself, permit either party to treat any subsequent determination as totally ineffective.
- What then is the situation where a determination is set aside for other reasons? On one view, for which neither party argued in the present proceedings, if the time limit in s 21(3) is not inflexible, it might be open to the Court to remit the matter to the adjudicator for reconsideration of the adjudication application, according to law, without the need for a new adjudication application under s 26. Putting that possibility to one side, the only alternative basis upon which the unresolved dispute can be determined is by the making of a new adjudication application. Between the date of the determination and the order of the court, no one can be sure whether the adjudicator has failed to determine the application validly. It is only the order of the court which resolves that question. To say that the question has been previously resolved by operation of law is to deprive the claimant of its entitlement to have the payment claim determined at all. To say that the determination is effective for the purposes of s 26(1)(b), until set aside or declared ineffective by a court, provides the claimant with an opportunity, under s 26(3), to make a new adjudication application. The construction of these provisions which promotes the purpose of the legislation is to be preferred over one that does not: Interpretation Act , s 33. Such a construction is not to be precluded by labelling the first determination “void”, a term not used in the statute. Accordingly, it should be preferred.
- One example of giving indirect effect to an invalid determination may be found in the first Emergency Services decision of McDougall J referred to at  above. As a condition of the respondent to a payment claim obtaining an order setting aside the adjudicator’s determination, his Honour required that it pay the amount unaffected by the jurisdictional error on the part of the adjudicator. The amount was not arbitrarily selected and can only have been justified by reference to the otherwise invalid determination.
- Such an approach has much to recommend it, particularly, it might be added, if the claimant is otherwise unable to pursue its original payment claim to achieve a second adjudication. However, such conditional relief can itself only be valid if it is designed to achieve a legitimate purpose: cf Minister for Immigration and Multicultural Affairs v Wang  HCA 11; 215 CLR 518 at - (Gleeson CJ);  (McHugh J);  (Gummow and Hayne JJ). If the determination is indeed legally ineffective in all respects, it would be doubtful whether the Court could condition declaratory relief (or an order setting aside the decision) upon the applicant making such payment as would be required by the determination if validity could be determined part by part, like the curate’s egg. Accordingly, the underlying assumption was inconsistent with total invalidity for all purposes.
- Further consequences of the ‘void ab initio’ theory should also be noted. The respondent to the claim is required to pay the amount of the adjudication within five days: s 23(1)(a). If it does not, the claimant can take steps to suspend work and seek to enforce the debt. If the respondent challenges the validity of the determination, very likely more than five days after the expiration of the 10 day adjudication period, the claimant, on the basis that the determination was void at all times, is without a remedy, through no fault of its own. It has lost the benefit of the scheme.
- Where it is the claimant which wishes to challenge the determination, in theory it can protect itself by immediately withdrawing the adjudication application, but it must make a fresh adjudication application within five days after the expiration of the 10 day period: s 26(3). However, there is no provision in the statute to suspend what happens thereafter in respect of the new adjudication application, pending determination of any challenge to the validity of the first determination in the Supreme Court. If the claimant took that course, the inevitable result would be legal confusion and, no doubt, the incurring of costs against an unknown outcome. Thus, whether it is the claimant or the respondent which challenges the validity of the determination, in neither case does the ‘void ab initio’ approach accord with the statutory purpose.
- For these reasons, the approach adopted in Luikens is correct and, despite the fact that his reasoning was, in its terms, sound, the primary judge was in error in departing from the earlier authorities. The error derived from the assumption that a determination which had been declared to be void had no effect, and never had had any effect for the purposes the Security of Payment Act .
- On 23 November 2010 the primary judge made the following substantive orders:
“The Court declares:
1. That the second defendant’s adjudication determination dated 3 September 2010 (corrected 8 September 2010) is void.
The Court Orders:
2. That the second defendant’s adjudication determination … be quashed.
3. That the Amended Summons otherwise be dismissed.”
- In the event that the appellant established error in the reasoning of the primary judge, the appellant invited this Court to uphold a claim that the determination was void on various grounds going to the substance of the decision. It is inappropriate to accept that invitation to deal as a trial court with matters going to the validity of the determination which have not been addressed below. The matter must be remitted if the appellant seeks to pursue those grounds.
- One further point may be made in this context. In seeking remittal, the respondent suggested, perhaps in terrorem , that determination of the additional issues would “require consideration of hundreds of documents and an assessment of the facts be drawn from the documents”: written submissions, par 11. If this suggestion bore any resemblance to the reality of the process engaged in by parties seeking to review the determinations of adjudicators, it reveals a serious misunderstanding of the nature of such proceedings. As explained in Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd  QCA 22 at , by Margaret McMurdo P, in reference to the scheme established by the Queensland Act:
“In essence, it provides for the speedy, interim only determination by adjudicators of disputed claims under construction contracts. These adjudications are not intended to be scrutinised in the same way as considered final determinations: Bezzina Developers Pty Ltd v Deemah Stone (Qld) Pty Ltd  2 Qd R 495 at  and  and Intero Hospitality Projects Pty Ltd v Empire Interior (Australia) Pty Ltd  QCA 83 at .”
- To similar effect in Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2)  VSC 426, Vickery J considered an application to quash a determination under the Victorian Building and Construction Industry Security of Payment Act . After noting that the adjudicator was required to determine difficult questions of fact and law, his Honour stated:
“ Nevertheless, in approaching the question of procedural fairness in the decision-making of an adjudicator under the Act, not too fine a point should be taken in relation to what is done. The shortcomings of the statutory procedure provided for in the Act point to the need for a large measure of practicality, flexibility and commonsense being observed to make it work. The procedures will call for adaptation in each case in the light of the clear legislative intention of the Act, namely that an adjudicator’s determinations are to be carried out informally: s 22(5A); and speedily: s 22(4); and ‘on the papers’: ss 23 and 28I; and bearing in mind that there is always the facility for erroneous determinations to be corrected upon a final hearing of the issues in dispute between the parties: s 47(3).
 The legislative intention, in my opinion, points strongly to the position that, in approaching his or her task, an adjudicator’s determination will only be brought into question if there has been a substantial denial of the measure of procedural fairness required under the Act.”
- Each of the sections referred to by Vickery J at  has its equivalent in the Security of Payment Act . The further remark that there must be a “substantial” denial of procedural fairness is not consistent with the approach adopted in Re Refugee Tribunal; Ex parte Aala  HCA 57; 204 CLR 82. However, there are different ways of achieving the same result: for example, the content of procedural fairness may be diminished, taking into account the factors which his Honour referred to, so that it is substantially less demanding than that which would be required in a judicial proceeding in a civil court. His Honour’s comment should be so understood.
- Furthermore, some evidence of an over-rigorous approach is to be found in decisions which analyse the reasons of adjudicators, to determine whether some matter raised by one party or the other has been “taken into account”, where the consequence of failure would constitute jurisdictional error, as if the reasons required by s 22(3) approach those required of a trial judge. It may be that proceedings in the Court’s supervisory jurisdiction are undertaken with limited consideration of statutory context and adopting an unduly broad view of what constitutes jurisdictional error. Suffice it to say in the present case that the scope of the inquiry required to deal with any suggestion of procedural unfairness, or other jurisdictional error, in the determination of the adjudicator would not have engaged the kind of inquiry foreshadowed by the respondent.
- The appeal should be allowed and the following orders made:
(1) Allow the appeal and set aside the orders made in the Equity Division on 23 November 2010.
(2) Remit the proceedings to the Equity Division for determination of the remaining issues.
(3) Order that the respondent pay the appellant’s costs in this Court.
(4) Grant the respondent a certificate under the Suitors’ Fund Act 1951 (NSW), if not disqualified pursuant to s 7(4).
(5) Direct that the costs of the proceedings in the Equity Division so far be determined by the Court as constituted to deal with the further issues.
- MACFARLAN JA : On 21 April 2008 the appellant (“Cardinal”) and the first respondent (“Hanave”) entered into a Minor Works Contract under which Cardinal agreed to perform excavation and shoring works for Hanave.
- On 30 November 2009 Cardinal served on Hanave a payment claim pursuant to s 13 of the Building and Construction Industry Security of Payment Act 1999 (“the Act”) claiming entitlement to a progress payment of $611,545.89. In response Hanave served a payment schedule pursuant to s 14, indicating that it did not intend to pay any part of the amount claimed. On 17 December 2009 Cardinal applied for adjudication of its payment claim and on 8 January 2010 Mr Phillip Davenport, the appointed adjudicator, issued a determination in favour of Cardinal in the sum of $354,181 (“the First Determination”).
- Hanave took the view that Mr Davenport had found in Cardinal’s favour on a submission that Cardinal had not put to him and that Hanave was therefore denied procedural fairness. As a result Hanave commenced proceedings in the Supreme Court for a declaration that the First Determination was “void and of no effect”. Cardinal recognised the force of Hanave’s complaint and consented to the Court making a declaration in these terms on 6 August 2010.
- In reliance on s 26(1)(b) and s 26(2) of the Act, Cardinal purported on 9 August 2010 to withdraw its first adjudication application and on 12 August 2010 to lodge a second adjudication application.
- Section 26 is in the following terms:
” 26 Claimant may make new application in certain circumstances
(1) This section applies if:
(a) a claimant fails to receive an adjudicator’s notice of acceptance of an adjudication application within 4 business days after the application is made, or
(b) an adjudicator who accepts an adjudication application fails to determine the application within the time allowed by section 21 (3).
(2) In either of those circumstances, the claimant:
(a) may withdraw the application, by notice in writing served on the adjudicator or authorised nominating authority to whom the application was made, and
(b) may make a new adjudication application under section 17.
(3) Despite section 17 (3) (c), (d) and (e), a new adjudication application may be made at any time within 5 business days after the claimant becomes entitled to withdraw the previous adjudication application under subsection (2).
(4) This Division applies to a new application referred to in this section in the same way as it applies to an application under section 17.”
- Section 21(3), to which reference is made in s 26(1)(b), is in the following terms:
” 21 Adjudication procedures
(3) Subject to subsections (1) and (2) [which are not of present relevance], an adjudicator is to determine an adjudication application as expeditiously as possible and, in any case:
(a) within 10 business days after the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the application, or
(b) within such further time as the claimant and the respondent may agree.
- Subsequently Mr David Campbell-Williams, the second respondent, was appointed as adjudicator to determine Cardinal’s second adjudication application. By his determination dated 3 September 2010 (“the Second Determination”) Mr Campbell-Williams found that there was no money owing by Hanave to Cardinal pursuant to Cardinal’s payment claim of 30 November 2009. Cardinal responded by pointing out to Mr Campbell-Williams that he had made an arithmetical error in his determination. This led to Mr Campbell-Williams issuing an amended determination, concluding that Cardinal was entitled to a progress payment of $28,201 exclusive of GST.
- In the adjudication before Mr Campbell-Williams, Hanave unsuccessfully contended that Mr Campbell-Williams lacked jurisdiction because Cardinal had not been entitled to lodge a further adjudication application after the First Determination had been declared void. Hanave’s contention was that the time for Cardinal to lodge such an application had long since expired because the 5 business day period specified in s 26(3) commenced in January 2010 when Mr Davenport failed to issue a valid determination within the time allowed by s 21(3).
- On 13 September 2010 Cardinal commenced the present proceedings seeking declarations that the Second Determination is void and that, upon the Court making that declaration, Cardinal “may, within 5 business days, withdraw its adjudication application dated 12 August 2010 under s 26(2) of the Act, and make a new adjudication application under s 26(3) of the Act” (Amended Summons ). Cardinal’s complaint concerning the Second Determination is that the adjudicator “did not properly consider the submissions and documents put” before him with the result that Cardinal was denied procedural fairness (List Statement [A8]).
- In its Response to Cardinal’s List Statement, Hanave contended that the Second Determination was void because, as it had submitted to Mr Campbell-Williams, Cardinal’s second adjudication application was made out of time and Mr Campbell-Williams accordingly lacked jurisdiction to determine it. Hanave contended that the time for Cardinal to make a second adjudication application ran, not from the date that the First Determination was declared void, but from the expiration of 10 business days from the date upon which Mr Davenport (the first adjudicator) notified his acceptance of Cardinal’s first adjudication application (as the parties had not agreed to extend that period: see s 21(3) of the Act). This contention was based on the proposition that if the First Determination was void it did not constitute a determination and Mr Davenport had therefore failed to determine the application within the time allowed by s 21(3) (see s 26(1)(b)).
- Whilst acceptance of Hanave’s contention would have led to the granting of the same primary relief as Cardinal sought, namely a declaration that the Second Determination was void, its acceptance would have denied Cardinal’s asserted right to lodge a third adjudication application (because Cardinal would be long out of time to do so).
- The proceedings were heard by McDougall J.
THE JUDGMENT AT FIRST INSTANCE
- In his judgment of 23 November 2010 the primary judge accepted Hanave’s contention that the Second Determination should be declared void, and quashed, because Mr Campbell-Williams lacked jurisdiction to make it. In these circumstances his Honour did not need to, and did not, consider whether the Second Determination was void for the reason that Cardinal advanced (namely that Cardinal was denied procedural fairness) nor whether, as Hanave contended, Cardinal had (by asking Mr Campbell-Williams to amend his determination) elected not to assert that the Second Determination was void.
- The primary judge reasoned as follows in relation to the question of whether the circumstance referred to in s 26(1)(b) had occurred:
“24 Thus, where a determination is declared to be void, the legal consequence, which the parties bound by the declaration cannot controvert, is that there is and was no determination. In my view, it follows in those circumstances that the adjudicator did not ‘determine the application’ for the purposes of s 26(1)(b) of the Act. I agree with the view of Nicholas J in [ John Holland Pty Ltd v Made Contracting Pty Ltd  NSWSC 374] at  that the expression ‘fails to determine’ in s 26(1)(b) means, in effect, ‘does not determine.’ In circumstances where a declaration is declared to be void, there is thus no determination of the matters set out in s 22(1) of the Act.”
- This view accorded with that which Palmer J expressed in Multiplex Constructions Pty Ltd v Luikens  NSWSC 1140 at .
- The primary judge then concluded that the new adjudication application that Cardinal had made after the Court declared the Second Determination void was not made within the time specified in s 26(3) because, contrary to Cardinal’s submission, time did not only commence to run from the date upon which that declaration was made. Rather, it commenced on the much earlier date when one of the circumstances referred to in s 26(1) occurred. His Honour considered this to be so because “a declaration that a determination is void does not avoid the determination. It declares a state of affairs which in law exist[s] already” (Judgment ).
- His Honour referred to the following different view that Palmer J had expressed in Multiplex v Luikens :
“103 When an adjudication under the Act is quashed pursuant to judicial review, in my opinion the claimant becomes entitled to withdraw its adjudication application under s.26(2) upon and from the date upon which the quashing order is made because on that date it has been ascertained that the adjudicator did not determine the adjudication according to law within the time allowed by the Act, for the purposes of s.26(1)(b). The claimant may then, within five business days of the quashing order, make a new adjudication application under s.26(3).”
- Palmer J’s view was followed by Barrett J in Quasar Constructions v Demtech Pty Ltd  NSWSC 116 at , by Bergin J (as her Honour then was) in Emergency Services Superannuation Board v Sundercombe  NSWSC 405 at  –  and by Nicholas J in John Holland v Made Contracting . The primary judge in the present case however considered that Palmer J’s view did not accord with the language of s 26 (Judgment ).
- Multiplex , and the cases which followed it, were concerned with orders quashing an adjudicator’s determination rather than, as with the present case, a declaration that a determination was void. McDougall J did not appear to regard this distinction as of any significance. Nor do I, as the effect of an order quashing a decision upon the ground of denial of procedural fairness is that the decision is a nullity unless the relevant statute expressly or impliedly provides otherwise ( Minister for Immigration and Multicultural Affairs v Bhardwaj  HCA 11; 209 CLR 597 at  – ,  and  – ; and see Berowra Holdings Pty Ltd v Gordon  HCA 32; 225 CLR 364 at  – ).
THE ISSUES ON APPEAL
Does an adjudicator who issues a void determination “fail to determine” the relevant adjudication application?
- Hanave submitted that to construe s 26(1)(b) as applying where an adjudicator issues a purported but void determination is to add a third circumstance to the two circumstances expressly identified in s 26(1) and thereby to depart from the language of the statute.
- I do not agree. Unless the relevant statute indicates otherwise, a void determination is not a determination at all (see  above). There is no such contrary indication in the Act.
- As a result, if an adjudicator issues only a purported but void determination within the time allowed by s 21(3) the adjudicator has failed to determine the application and s 26(1)(b) is satisfied. I accordingly agree with the view expressed on this issue by the primary judge and by Palmer J in Multiplex v Luikens (see  –  above).
When does the time for filing a new adjudication application commence to run?
- Before answering this question it is appropriate to refer to the objects of the Act, as identified in s 3. In essence they are to ensure that persons undertaking building and construction work are able to obtain progress payments (whether or not their contracts provide for them) and to establish a mechanism by which this may be achieved. It is plain from consideration of the Act as a whole that the legislature intended that the mechanism would facilitate prompt payment and would ensure that disputes as to contractors’ entitlements were resolved in an expeditious fashion. To this end the legislature imposed tight timetables for relevant steps to be taken.
- I turn then to the question posed above. The answer that the text of s 26 provides is in my view a clear one. If, as I have concluded to be the case, an adjudicator who (having accepted an adjudication application) issues only a void determination “fails to determine” the adjudication application within the time allowed by s 21(3), the date upon which that period of time expires is the date upon which one of the preconditions to the operation of s 26(2) is first satisfied and from which the claimant may, under s 26(2)(a), withdraw its application. It follows that under s 26(3) the claimant has 5 business days from that date to lodge a new application.
- In the present case Mr Davenport had ten business days after he notified his acceptance of the adjudication application within which to make a determination. I shall assume, for the purposes of illustration, a notification date of 4 January 2010. As the First Determination of 8 January 2010 is void, and was therefore never made, Mr Davenport failed to make a determination when the time to do so expired on 18 January 2010 (ten business days after the notification date of 4 January 2010). Section 26(1) was thereby first satisfied, and Cardinal became entitled to withdraw its application and make a new application within five business days after 18 January 2010. This period expired on 25 January 2010. Cardinal did not however lodge its purported new application until 12 August 2010, and was thus long out of time to do so.
- This view accords with that of the primary judge. It does not accord with the view expressed by Palmer J in Multiplex v Luikens at , as adopted in the subsequent cases to which I have referred (see  –  above), but those cases do not identify any textual or other reasons for taking a different view to that of the primary judge.
- In his submissions on the present appeal, counsel for Cardinal did at one point submit that the relevant provisions of s 26 were ambiguous but he was unable to advance any compelling reason why that was so. Instead, understandably, his submissions concentrated upon what he contended was an inconvenient and unfair consequence that could flow from the primary judge’s view, namely that a claimant could be outside the time within which it was permitted to lodge a new adjudication application before the adjudicator’s determination was declared void, or quashed by the Court, and therefore before the claimant knew of its right to make a new application.
- In construing legislation it is appropriate to consider the consequences that may flow from the interpretations for which the parties contend. However the Court’s primary focus must be upon the text of the provision in question (here s 26) and upon the other provisions of the relevant legislation “with which it interacts” ( Saeed v Minister for Immigration and Citizenship  HCA 23; 241 CLR 252 at  – ; see also Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue  HCA 41; 239 CLR 27 at , ,  and ; Federal Commissioner of Taxation v BHP Billiton Ltd  HCA 17; 85 ALJR 638).
- It is of course necessary that the subject provision be construed so that it is harmonious with other provisions of the Act ( Project Blue Sky Inc v Australian Broadcasting Authority  HCA 28; 194 CLR 355 at ,  – ) but Cardinal was not able to point to any other provision of the Act which indicates that the construction of s 26 for which it contended should be adopted. Cardinal’s submissions did not, and could not, rise higher than a contention that the primary judge’s construction might in some circumstances lead to an inconvenient or unjust result.
- Even if that contention is correct, it is insufficient to warrant departure from the clear textual meaning of s 26:
“[I]f the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligently applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust … On the other hand, if two constructions are open, the court will obviously prefer that which will avoid what it considers to be inconvenience or injustice” ( Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation (Cth)  HCA 26; 147 CLR 297 at 305; see also Australian Broadcasting Commission v Australasian Performing Right Association Ltd  HCA 36; 129 CLR 99 at 109).
- Consideration of the objects of the Act does not in my view provide any assistance to Cardinal’s submissions as to the proper construction of s 26(3) but it is nevertheless appropriate to note the following cautionary observation that Dawson J made in Mills v Meeking  HCA 6; 169 CLR 214 at 235, which is applicable when a departure from the text of a statute is sought:
“if the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman. Section 35 [of the Interpretation of Legislation Act 1984 (Vic) requiring regard to be had to the purposes or objects of legislation, of which an equivalent provision exists in s 33 of the Interpretation Act 1987 (NSW)] requires a court to construe an Act, not to rewrite it, in the light of its purposes.”
- To the same effect is the following observation of Basten JA in Taylor v Centennial Newstan Pty Ltd  NSWCA 276; 76 NSWLR 379 at :
“where some variation is sought of the statutory language, it is an essential precondition to any legitimate exercise of the power of statutory construction that it be ‘possible to state with certainty’ what words would have been adopted by the drafter and approved by Parliament had their attention been drawn to the problem: [ Wentworth Securities v Jones ]  AC 74 at 107; R v Young  NSWCCA 166; 46 NSWLR 681 at - (Spigelman CJ).”
- This principle constitutes an insurmountable hurdle for Cardinal. Even if (contrary to my view) it could be concluded that the legislature could not have intended that s 26(3) bear its literal meaning that where a void determination has been issued the time for lodging a new adjudication application runs from the expiration of the time allowed by s 21(3), it would not be possible to state with certainty what alternative meaning the legislature intended s 26(3) to have.
- Cardinal submitted that s 26(3) should be construed as if it said that time commences to run from the date upon which “the claimant becomes aware that it is entitled to withdraw the previous adjudication application”. However it could equally well be contended that, had the legislature’s attention been drawn to this issue, it might have instead incorporated the words “the claimant becomes or ought to have become aware” in s 26(3) to cover the possibility that the claimant’s lack of awareness of its entitlement to withdraw the previous application resulted from its own carelessness.
- Alternatively, if the legislature had adverted to the question of what should happen when a purported but void determination is issued pursuant to an adjudication application, it may have provided that that application should remain on foot but be remitted to the original adjudicator.
- For the Court to fasten on one, rather than another, of these alternatives would in my view involve it engaging in speculation and an impermissible re-writing of the statutory provision.
- I should add that the fact that the time within which a claimant might be entitled to lodge a new application could expire before it knows of that entitlement does not necessarily point strongly against the primary judge’s construction of s 26(3). A long period of time might elapse between a purported determination and a court declaring it void. In the present case that period was seven months, but in others the period might be much longer.
- An entitlement of a claimant to lodge an adjudication application so long after service of the payment claim to which the application relates seems difficult to reconcile with the purpose of the Act to provide an efficient and expeditious mechanism for resolution of payment claims. On Cardinal’s construction, a payment schedule provided in response to the payment claim may be long out of date by the time the new application for adjudication is lodged. The respondent may in the meantime have discovered defects in the claimant’s work which would in ordinary circumstances entitle the respondent to resist payment of any progress claim. Yet if what is to be adjudicated is the claimant’s original payment claim, the respondent is confined in resisting payment to the reasons that it gave in its original, and perhaps significantly out-dated, payment schedule (see s 20(2B)).
- If a claimant took the view that a purported determination was void because, for example, the claimant had been denied procedural fairness, it would be open to it, on the primary judge’s construction of s 26(3), to lodge a new adjudication application within days of receipt of the purported determination. If the respondent did not agree that the determination was void, the dispute might have to be resolved by litigation. Nevertheless the claimant would have preserved its right to lodge a new adjudication application. If litigation did ensue, the parties could avoid the possibly unnecessary expense of procuring a determination pursuant to that new application by agreeing, as contemplated by s 21(3)(b), to extend the time for the determination to be made.
- Furthermore, in assessing whether the primary judge’s construction might produce an inconvenient and unjust consequence, as Cardinal contends, it is relevant to note that whether or not the claimant is able to lodge a new adjudication application under s 26(3), it is able (subject to s 13(4)) to lodge a new payment claim which embraces the subject matter of the (undetermined) earlier claim (s 13(6)). In any event, the claimant retains its rights under its construction contract (s 32).
- In these circumstances even if (contrary to my view) non-textual considerations were here decisive, they would not in my view support the construction for which Cardinal contends.
- As Cardinal has failed in its challenge to the primary judge’s decision, its appeal must be dismissed with costs.
- TOBIAS AJA : In this matter I have had the benefit of reading in draft the separate judgments of Basten JA and Macfarlan JA. I agree with the orders proposed by Macfarlan JA and with his Honour’s reasons. However, as I respectfully disagree with aspects of Basten JA’s approach to the resolution of this appeal, it is appropriate that I should shortly state my reasons for holding that view.
- The primary judge held that the effect of the court’s declaration on 6 August 2010 that the First Determination was ” void and of no effect ” resulted in that determination being regarded as a nullity or as no determination at all. Basten JA holds at  of his reasons that in effect that finding was in error insofar as it was implied that the determination was ineffective for the purpose of the Security of Payment Act .
- Thus, at , his Honour considers that between the date of a purported determination and an order of the court setting it aside, no-one could be sure whether the adjudicator had failed to validly determine the application and it was only the order of the court which would resolve that question. To say that the question had been previously resolved by operation of law would be to deprive the claimant of its entitlement to have its payment claim determined at all. Critically his Honour then says:
“To say that the determination is effective for the purpose of s 26(1)(b) until set aside or declared ineffective by a court, provides the claimant with an opportunity, under s 26(3), to make a new adjudication application.”
- As I comprehend his Honour’s conclusion, it assumes that the purpose of the Act cannot be achieved unless s 26(1)(b) is construed upon the basis that time does not run for the making of a new adjudication application pursuant to s 26(2)(b) unless and until a purported determination otherwise made by the adjudicator within the time limited by s 21(3)(a) (or any extension thereof pursuant to s 21(3)(b)) is set aside or declared “ineffective” by a court.
- However, if such a determination is to be considered effective unless and until so set aside or declared ineffective, it must follow from the plain words of s 26(1)(b) that s 26(2) is never enlivened for the reason that, on the hypothesis contemplated, there is no failure of the adjudicator to determine the application within the time limited by s 21(3).
- To permit a new adjudication application to be made within five business days of an order of the court setting aside or quashing the original determination requires a re-writing of s 26(3) more or less in the manner proposed by the appellant, namely, by incorporating into that provision the words ” ought to have become aware ” immediately after the words ” a claimant becomes “. Such a construction is rightly rejected by Macfarlan JA at  of his reasons and by Basten JA at  of his.
- To accept a construction of s 26(1)(b) and s 26(3) which has the effect that, essentially, time does not run for the making of a new adjudication application until the original determination is curially set aside, runs counter to what I regard as the plain meaning of those provisions. In particular, such a construction would require s 26(1)(b) to be read as if the words ” fails to determine the application ” are construed to mean ” fails to determine or purportedly determine the application “. In a different context, the word ” decision ” has been held, absent statutory amendment, to exclude a ” purported decision “: Mitchforce Pty Ltd v Industrial Relations Commission of New South Wales  NSWCA 151; (2003) 57 NSWLR 212 at  –  per Spigelman CJ; Solutions 6 Holdings Ltd v Industrial Commission of NSW  NSWCA 200; (2004) 60 NSWLR 558 at  –  per Spigelman CJ with whom Mason P agreed.
- Even if s 26(1)(b) extends to a purported determination, the ” effectiveness ” of that determination still means that there has been no failure to determine the application within the meaning of s 26(1)(b). In these circumstances s 26(2) is not engaged even if subsequently the court sets aside the determination or otherwise declares it to be void.
- There are two further comments I wish to make with respect to  and  of Basten JA’s reasons. As to the former his Honour has considered that s 26 confers on a claimant a single power having two limbs each of which must be exercised within five business days after the entitlement to withdraw arises. With respect I do not agree. The legislature has, in my view, deliberately provided a claimant with two options once s 26(1)(b) is engaged. The first is to withdraw the application at any time without making a new adjudication application because, for example, to do so is regarded as futile, unnecessary or a waste of time and money. The second is to withdraw the original adjudication application and to make a new one. It is only if this second option is adopted that the making of the new application is subject to five business days limitation.
- In my view a claimant could adopt the second option without formally withdrawing the first application. He may do so either within or without the five-day limitation period for the making of a new adjudication application. There is nothing in the Act that in my view makes it a condition precedent for the making of a new application that the first application be withdrawn. I therefore do not regard the two matters referred to by his Honour at  of his reasons as anomalous requiring s 26 to be construed as conferring on a claimant a single power of the nature of that referred to.
- Nor, with respect, can I agree with his Honour’s reasoning at . In the example he postulates, the failure of the adjudicator to make a determination at all within ten business days (where the parties do not agree to extend that period) results in there being no effective determination. True it is that in those circumstances the claimant can make a new adjudication application provided it does so in accordance with the time limited by s 26(3). But there is no reason why that time should not run from the expiration of the ten days mandated by s 21(3)(a). Accordingly I cannot endorse his Honour’s conclusion that in the circumstances referred to, the claimant may treat a determination made outside the time limit provided by s 21(3) as effective. In my opinion it is not.
- In a sense it is true that the statutory scheme envisages that delay will affect the claimant only. Certainly the delay will, in the circumstances envisaged by s 26(1)(b), entitle the claimant to make a new adjudication application provided it does so within the statutory time limit. It is also literally true that no remedy is conferred in those circumstances by the Act upon the respondent. But the Act is not entirely one-sided. The time limit which it mandates with respect to the issues in this appeal are imposed on the claimant but are also there to protect the respondent if they are not strictly complied with. Another example is the time limited by s 13(4) for the making of a payment claim as well as the time limited by s 14(4) for the making of a payment schedule. If either is not made in accordance with those time limits, then in the one case the claimant and in the other case the respondent, are, as it were, respectively ” out of court “. The same comment applies to the time limit for the making by a claimant of an adjudication application: see s 17(3)(c), (d) and (e).
- The problem in the present case is that it is apparent that the legislature simply never envisaged a situation such as the present where a determination is made by an adjudicator within the time limit mandated by s 21(3) but is later set aside or declared invalid. If that situation is to be remedied in a manner that departs from the text of the Act, then it is for the legislature and not the courts to achieve that end. I fully appreciate, as Basten JA notes at  of his reasons, that the factual situation with which the Court is faced in the present case was not of the appellant’s making. Nor was it that of the respondent. There is a lacuna which, in my view, only the legislature can fill. It cannot be filled by a construction of the relevant sections of the Act which in my respectful opinion they cannot reasonably bear.
- For the foregoing reasons, I prefer the approach of Macfarlan JA in the resolution of this appeal.