High Court to hear appeal in Southern Han Breakfast Point security of payments case - analysis for legal professionals

Insurance eBulletin - 25 August 2016

Summary

The High Court has granted leave to appeal against a controversial decision of the NSW Court of Appeal, in which an adjudicator's finding that a reference date arose after a construction contract was terminated was held not to be appealable.

The appeal, which will be the first security of payments case ever heard by the High Court, is expected to be heard in October 2016.

In this eBulletin, we review the proceedings and discuss the special leave application.

 

Quick links

The High Court has granted leave to Southern Han Breakfast Point Pty Ltd to appeal against the decision of the New South Wales Court of Appeal.1 Justices Keane and Nettle granted leave in respect of two questions only, being:

  1. whether the existence of a reference date in relation to a security of payments dispute is a jurisdictional fact amenable to judicial review; and
  2. whether certiorari is available as a remedy in respect of non-jurisdictional errors of law.

Different approaches to both of these questions are currently taken in different states.

 

Proceedings

The proceedings concern a security of payments claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act), where a Contractor (Lewence) purported to terminate a construction contract on the basis of repudiation by the Principal (Southern Han). Lewence's payment claim was served in December 2014 in respect of work completed between the last progress payment reference date (8 October 2014) and the termination of the contract (28 October 2014).

The payment claim was submitted to an adjudicator, who determined that an available reference date had arisen between the termination of the contract and the service of the payment claim.

Southern Han successfully obtained a declaration at first instance that the adjudication was void. Justice Ball held that the adjudicator had made a jurisdictional error in determining that a reference date had arisen after termination by Lewence for Southern Han's purported breach.

 

Reference dates

Reference dates are dates calculated in accordance with the construction contract, or in accordance with the Act if the contract does not provide for this. They are the dates on and from which claims for progress payment may be made. Entitlement to payment may only be calculated up to the reference date, and multiple claims may not be submitted in respect of the same reference date.

Without an available (unused) reference date, Lewence would not be entitled to a progress payment under the Act, although it could still seek payment for work performed on a quantum meruit basis.

 

Court of Appeal decision

The Court of Appeal held that the existence of a reference date is not a jurisdictional fact, and is not an essential precondition for the making of a valid payment claim, as people who "claim to be entitled" to progress payments under the Act are entitled to serve payment claims. Accordingly, it is for the adjudicator to determine whether or not a right to payment has arisen (including whether an available reference date exists), and this is not appealable to the Court.

In obiter, Sackville AJA questioned Southern Han's decision not to seek certiorari2 in accordance with s 69 of the Supreme Court Act 1970 (NSW) in respect of the adjudicator's determination, stating that this remedy remains available in respect of non-jurisdictional errors of law.

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Special leave application

Southern Han submitted that the NSW Court of Appeal decision has led to divergence between New South Wales and Queensland, where the existence of a reference date has been held (at least at first instance) to be a jurisdictional fact amenable to judicial review. Nationally, the present proceedings currently constitute the only appellate decision on this point.

In the event that Southern Han is unsuccessful on the jurisdictional argument, it argues that the adjudicator's purported error in determining that a reference date had arisen is a (non-jurisdictional) error of law on the face of the record, in respect of which certiorari should be able to issue.

 

Comment

Certiorari is available in respect of non-jurisdictional error on the face of the record in New South Wales on the current state of authority, but is limited in other jurisdictions including Victoria (contrary to the submission of Counsel for Southern Han.3

Non-jurisdictional errors of law may only be reviewed to the extent that they appear on the face of the record, which generally comprises any originating process or notice of appeal, pleadings, and any final order or decision of the relevant tribunal (although this may be varied by statute from jurisdiction to jurisdiction).

Accordingly, the outcome of this appeal may have significant consequences far beyond the construction industry, as it will affect the finality of adjudicated determinations in all fields of public law.

The full special leave application transcript can be viewed here.

Authors
Ralph Bankes | Special Counsel
Pierce Hartigan | Lawyer 

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Further information


1 Lewence Construction Pty Ltd v Southern Han Breakfast Point Pty Ltd [2015] NSWCA 288.

2 A writ of certiorari allows a superior court to quash the ultimate determination of an inferior tribunal if that determination has been made on the basis of an error of law that appears on the face of the record, among other things.

3 See Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2015] VSC 233 at [93(f)]).

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