Jurisdictional error as ground for review under the Security of Payment Act in Victoria
Amasya Enterprises Pty Ltd & Anor v Asta Developments (Aust) Pty Ltd & Anor  VSC 233
Vickery J looked at applications to set aside judgments under s.28R(5)(a)(iii) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act) and the availability in this context of challenges based on jurisdictional error (available) and error on the face of the record (not available).
Asta Developments (Aust) Pty Ltd (the defendant) obtained an adjudication determination on 18 November 2014 against Amasya Enterprises Pty Ltd (the plaintiff). Following non-payment of the adjudicated amount an adjudication certificate was issued. The defendant subsequently commenced proceedings to enter judgment for a debt in the amount of the adjudication certificate pursuant to s.28R of the SOP Act.
The plaintiff issued proceedings under Order 56 of the Supreme Court (General Civil Procedure) Rules 2005, and/or the inherent jurisdiction of the Court, seeking judicial review of the adjudication determination, that the decision be quashed or set aside, on the grounds including:
- the First Defendant did not serve a valid payment claim under the Act;
- any such payment claim was served by the First Defendant in bad faith and is void and of no legal effect;
- the adjudication application was invalid and of no effect;
- the Second Defendant failed to accord the Plaintiffs a reasonable opportunity to respond to submissions made by the First Defendant;
- the Second Defendant failed to assess the value of the construction work the subject of the adjudication in accordance with the relevant construction contract, including inter alia by reference to the approval of a quantity surveyor as required by special condition SC7 of the contract;
- the Second Respondent took into account an irrelevant consideration, being a report by a quantity surveyor as to the market value of the work, no the value of the work under the relevant construction contract;
- further, by reason of the foregoing, the Second Defendant 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.
The defendant sought to rely on s.28R(5)(a)(iii) of the SOP Act which provides:
(5) If a person commences proceedings to have the judgment set aside, that person—
(a) subject to subsection (6), is not, in those proceedings, entitled— …
(iii) to challenge an adjudication determination or a review determination; …
The plaintiff argued that this section did not prevent it from seeking a review on the grounds of jurisdictional error of the adjudicator (namely, an alleged failure to afford procedural fairness and absence of a jurisdictional fact).
His Honour, Justice Vickery, determined that it was open to the plaintiff to seek judicial review of the adjudication determination notwithstanding this section. He held that:
- s 28R(5)(a)(iii) of the Act has been validly passed by the Legislature in accordance with s 85 of the Victorian Constitution;
- it is a privative provision which operates in circumstances where a person commences proceedings to have a judgment entered under s 28R of the Act set aside;
- in this case the Plaintiffs have commenced such proceedings, and s 28R(5)(a)(iii) of the Act applies;
- section 28R(5)(a)(iii) of the Act is limited in its operation by the requirements of Chapter III of the Australian Constitution as found in Kirk;
- section 28R(5)(a)(iii) of the Act cannot be applied to take from the Supreme Court of Victoria power to grant relief in the nature of certiorari on the basis of jurisdictional error on the part of an adjudicator appointed under the Act in challenging an adjudication determination which is the foundation of a judgment entered under s 28R;\
- the operation of the privative clause in s 28R(5)(a)(iii) is confined to denying relief being granted by a court in Victoria, including the Supreme Court, in the course of a proceeding to set aside a judgment entered pursuant to s 28R, 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, pursuant to s 28R(5)(a)(iii) of the Act, it is not open to challenge an adjudication determination (or a review determination) in a proceeding to have a s 28R judgment set aside, on the basis or an error on the face of the record in the relevant determination.
His Honour concluded:
“It follows in this case that, if the Plaintiffs are able to establish a jurisdictional error in the Adjudication Determination, they are not precluded by the operation of s 28R(5)(a)(iii) of the Act from challenging the Adjudication Determination on that basis.”