Judicial Review of Adjudication Determinations After Entry of Judgement?

Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2015] VSC 233

Among the orders normally sought in an application for judicial review of an adjudication determination under the Building and Construction Industry Security of Payment Act 2002 (Vic) (Victorian SOP Act), is an injunction to restrain the adjudication applicant from enforcing the adjudication determination by seeking an adjudication certificate for the amount adjudicated in its favour from the authorised nominating authority.

The recent decision of the Victorian Supreme Court decision in Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2015] VSC 233 addressed the question as to whether judicial review was still available in circumstances where an adjudication certificate had been obtained and judgment entered under section 28R of the Victorian SOP Act.

Background

An adjudication determination in favour of Asta Developments was made on 18 November 2014. Following non-payment of the adjudicated amount, Asta Developments requested and obtained an adjudication certificate from the authorised nominating authority issued under section 28Q of the Victorian SOP Act and entered judgment on or about 12 December 2014 against Amasya Enterprises in the sum of $2,030,222.86 pursuant to section 28R of the Victorian SOP Act.

On 16 December 2014, Amasya Enterprises commenced judicial review proceedings seeking an order in the nature of certiorari to quash the adjudication determination on the grounds that the adjudicator did not have jurisdiction to make the adjudication determination and/or committed an error of law on the face of the record and/or jurisdictional error. Amasya Enterprises also sought an order setting aside the judgment on the basis that the adjudication determination was invalid.

The proceeding was opposed by Asta Developments who submitted that an application for judicial review of an adjudication determination that had been entered as a judgment of the court pursuant to section 28R was an abuse of process. Asta Developments argued that, even if the court had theoretical power to review the adjudication determination, there was no utility in it doing so in circumstances where the express wording of section 28R(5)(a)(iii) precluded the court from entertaining the challenge. That subsection states:

If a person commences proceedings to have the judgment set aside, that person—

(a) ... is not, in those proceedings, entitled--

(iii) to challenge an adjudication determination or a review determination;

In response, Amasya Enterprises submitted that the subsection did not prohibit an application for judicial review of an adjudication determination and, if it was to be construed as prohibiting judicial review, that it was void to the extent it did so.

The question as to whether section 28R(5)(a)(iii) of the Victorian SOP Act acted as a privative clause to prevent an adjudication determination from being subject to judicial review after judgment had been entered had not previously been considered. Accordingly, Vickery J ordered that the following question be fixed for separate trial:

Whether the Plaintiff’s challenge to the adjudication determination dated 18 November 2014 can be sustained in the light of s 28R(5) of the Building and Construction Industry Security of Payment Act 2002?

Is section 28R(5)(a)(iii) a privative clause?

A clause will be a privative clause if it excludes judicial review of acts and decisions of the executive, inferior courts or tribunals by stripping the court of supervisory judicial power.

The similarly worded section 25(4)(a)(iii) of the Building and Construction Industry Security of Payment Act 1999 (NSW) had been considered, by way of obiter dictum, in Chase Oyster Bar v Hamo Industries (2010) 78 NSWLR 393. In that case, the adjudication certificate had not yet been entered as a judgment of the court in accordance with section 25 of the NSW SOP Act. However, both Spigelman CJ and Basten J made comments to the effect that section 25(4)(a)(iii) of the NSW SOP Act was not a privative clause and therefore respondents to adjudication determinations under the NSW SOP Act may be able to seek judicial review for both jurisdictional error and error on the face of the record after the judgment is entered.¹

These obiter comments were considered by Vickery J in his judgment in Amasya Enterprises v Asta Developments. Ultimately, Vickery J distinguished the operation of the Victorian SOP Act from the NSW SOP Act and held that section 28R(5)(a)(iii) of the Victorian SOP Act was a privative clause. His reasoning may be summarised as follows.

Under section 25 of the NSW SOP Act, an adjudication certificate is enforceable "as if it were a judgment of a court". The process does not require the court to be satisfied of any matters and therefore entering judgment has been held "not [to be] the product of the exercise of judicial power".In contrast, under section 28R of the Victorian SOP Act, the court must be satisfied before entering judgment that there is an adjudication certificate filed with the application and that there is an affidavit to prove that all or some of the amount provided for in the certificate has not been paid. This requires an exercise of judicial power. Therefore, Vickery J held that section 25 of the NSW SOP Act and section 28R of the Victorian SOP Act are in fact "different in form and substance". Within the context of section 28R, section 28R(5)(a)(iii) sought to limit or curtail the review of the exercise of judicial power and this restrictin more readily lends itself to characterisation as a privative clause.⁶

Additionally, Vickery J considered the operation of the Constitution Act 1975 (Vic) (Victorian Constitution) and its provisions regarding the jurisdiction of the Supreme Court of Victoria. Section 85 of the Victorian Constitution provides for the unlimited jurisdiction of the Supreme Court of Victoria, while section 85(5) of the Victorian Constitution provides that legislation may be passed which limits the jurisdiction of the Supreme Court of Victoria if defined steps are taken. Section 51(2) of the Victorian SOP Act expressly provides that "It is the intention of section 28R to alter or vary section 85 of the Constitution Act 1975". Vickery J noted that there had been no challenge in relation to the passage of the Bill that enacted section 28R in accordance with the process in section 85(5) of the Victorian Constitution. Vickery J therefore applied the presumption of regularity to hold that section 28R validly alters section 85 of the Victorian Constitution and restricts the power of the Supreme Court of Victoria.

Section 51(2) of the Victorian SOP Act has no counterpart in the NSW SOP Act and Vickery J held that this amounted to an additional ground on which to distinguish the operation of section 28R(5)(a)(iii) of the Victorian SOP Act from the operation of section 25(4)(a)(iii) of the NSW SOP Act and hold that section 28R(5)(a)(iii) of the Victorian SOP Act amounts to a privative clause despite the obiter comments in Chase Oyster Bar that section 25(4)(a)(iii) of the NSW SOP Act does not.

What is the effect of section 28R(5)(a)(iii) being a privative clause?

After concluding that section 28R(5)(a)(iii) of the Victorian SOP Act did indeed amount to a privative clause, Vickery J went on to consider the effect of this finding in light of the decision of the High Court in Kirk v Industrial Relations Commission of New South Wales (2010) 239 CLR 531.

In Kirk, the High Court held that state parliaments cannot "alter the constitution or character" of their Supreme Courts so that they cease to meet the constitutional description of a "Supreme Court of a State" as required by Chapter III of the Commonwealth of Australia Constitution.⁹ The High Court went on to hold that the "grant of prohibition, certiorari and mandamus" is "a defining characteristic of those courts".

However, according to the High Court, this did not prevent there being "legislation affecting the availability of judicial review in the State Supreme Courts". The validity of State privative clauses was instead held to be decided by the distinction between jurisdictional and non-jurisdictional error, with the High Court concluding that:

Legislation which would take from a State Supreme Court power to grant relief on account of jurisdictional error is beyond State legislative power. Legislation which denies the availability of relief for non jurisdictional error of law appearing on the face of the record is not beyond power.

Therefore, in Amasya Enterprises v Asta Developments, Vickery J held that section 28R(5)(a)(iii) of the Victorian SOP Act did not operate to prevent judicial review of an adjudication determination after judgment has been entered if the review was grounded on jurisdictional error. Further, that the operation of the subsection as a privative clause was confined to denying relief where the error relied upon is an error on the face of the record in an adjudication determination which is the foundation of the judgment. In other words, it is not open to challenge an adjudication determination in a proceeding to set a judgment aside on the basis of an error on the face of the record in the relevant determination.

What is the distinction between jurisdictional error and error on the face of the record?

Vickery J noted that while jurisdictional error and error on the face of the record are separate and distinct bases on which a Supreme Court may make an order in the nature of certiorari, there is "difficulty in 'drawing a bright line’" between the two. Further, that what may or may not constitute an error on the face of the record defies definitive or exhaustive statement. It remains to be determined judicially on the facts of each case whether, as apparent on the face of the record, there is an error which warrants review.

In the context of a challenge to an adjudication determination his Honour made reference to a number of authorities which provide guidance as to what amounts to a jurisdictional error. By way of example only, a jurisdictional error will arise where the adjudicator falls into an error of law which causes him or her to identify a wrong issue, to ask a wrong question, to ignore relevant material or to rely on irrelevant material.Added to these examples we can include bad faith and breach of natural justice.Vickery J also noted the comment of McDougall J in Chase Oyster Bar where it was held that an incorrect finding in relation to compliance with certain timeframes as a condition of the right to make an adjudication application is vitiated with jurisdictional error which may be subject to an order in the nature of certiorari to quash the adjudicator’s determination.

Comment

In answer to the question fixed for separate trial, his Honour held that the challenge to the adjudicator’s determination could be sustained but only to the extent that the challenge is founded on a jurisdictional error in the making of the determination.

While the decision leaves the door open to challenge an adjudicator's determination for jurisdictional error after a judgment has been entered pursuant to section 28R of the Victorian SOP Act, it shuts the door on a challenge for error on the face of the award. In circumstances where the challenge is not one clearly (or solely) founded on jurisdictional error, respondents to adjudication determinations under the Victorian SOP Act will need to bring any application for judicial review in a timely manner and before judgment has been entered in accordance with section 28R of the Victorian SOP Act or risk being prevented from challenging the adjudication determination on the grounds of error on the face of the award.

This article first appeared in Australian Construction Law Bulletin 2015/Volume 27 No 5 -- July 2015

¹Chase Oyster Bar v Hamo Industries (2010) 78 NSWLR 393; [2010] NSWCA 190 [59] (Spigelman CJ), [86]–[91] (Basten JA).
² Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2015] VSC 233 [58].
³ Birdon Pty Ltd v Houben Marine Pty Ltd [2011] FCAFC 126 [53].  
⁴ Amasya [2015] VSC 233 [45].
⁵ Amasya [2015] VSC 233 [52].
⁶ Amasya [2015] VSC 233 [56].
⁷ Amasya [2015] VSC 233 [32]-[33].
⁸ Amasya [2015] VSC 233 [57].
⁹ Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 [96].
¹⁰ Kirk (2010) 239 CLR 531 [98].
¹¹ Kirk (2010) 239 CLR 531 [100].
¹² Kirk (2010) 239 CLR 531 [100].
¹³ Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163, 179.
¹⁴ M Groves and HP Lee, Australian Administrative Law: Fundamentals, Principles and Doctrines (Cambridge University Press, 2007) 330, 336.