High Court confirms limited scope to overturn adjudicator’s findings; finds certain retention clauses prohibited
17 February 2018
The High Court of Australia has found that an adjudicator’s award under security of payments legislation in New South Wales and South Australia cannot be challenged unless an adjudicator acts beyond power.
In two decisions handed down in February 2018, Maxcon Constructions Pty Ltd v Vadasz  HCA 5 and Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd  HCA 4, the court held that:
“the [court]… may grant relief (whether in the nature of certiorari or otherwise) for jurisdictional error by an adjudicator appointed under the Security of Payment Act; but the provisions of the Security of Payment Act, like the provisions of the New South Wales Act, oust the Supreme Court’s jurisdiction to make an order in the nature of certiorari to quash an adjudicator’s determination for error of law on the face of the record that is not a jurisdictional error.” Maxcon at . The court emphasised that an adjudication did not finally determine the rights of the parties under a construction contract and that it was open to seek relief by commencing separate court proceedings, rather than seeking to challenge the adjudication itself.
The effect of these decisions is that even when an adjudicator misinterprets the law or a construction contract, the court cannot quash the decision unless it can be shown that the adjudicator has acted beyond their jurisdiction or beyond power. This is consistent with findings of the WA Supreme Court in O’Donnell Griffith Pty Ltd v John Holland Pty Ltd  WASC 19 concerning adjudicators appointed under the WA Construction Contracts Act 2004. It highlights the importance of choosing adjudicators wisely.
Additionally, the court in Maxcon found that a retention provision, enabling a head contractor to deduct monies from an amount owing to a subcontractor, pending the release of a certificate of occupancy in respect of the works, which in turn would depend on completion being achieved under the head contract with the owner, constituted a ‘pay when paid’ provision, and was thus ineffective. The court found that a ‘pay when paid’ provision under the South Australian legislation:
“asks whether, on its proper construction, the provision “makes the liability to pay money owing, or the due date for payment of money owing, contingent or dependent on the operation of another contract”. Here,the retention provisions did just that: they made the due dates for payment contingent or dependent on “CFO”. And for “CFO” to be achieved, there had to
be issued a certificate of occupancy and “any other Approval(s) required under Building Legislation which [were] required to enable the Works lawfully to be used for their respective purposes in accordance with [Maxcon’s] Project Requirements”. Those Project Requirements were to be ascertained from the head contract. “CFO” required satisfactory completion of the head contract before the dates for the release of the retention sum could be calculated, let alone for the retention sum to be released. Accordingly, there was no error of law on the part of the adjudicator.”
In view of the above, contracts containing retention provisions ought to be reviewed to ascertain whether they may be construed as ‘pay when paid’ provisions, and thus be inoperative under the relevant legislation in your State.
In WA, the comparable provision (section 9 of the Construction Contracts Act 2004) prohibits provisions that render payment to one person contingent on payment being received from another. In that way, it does not refer more generally to the ‘operation of another contract’ as was the case in Maxcon and may be distinguishable to that extent, but care should still be taken that the drafting of any retention provisions do not ‘indirectly’ rely on payment from another party.
Contact Perth Commercial Lawyers for advice on the implications of the above decisions for your construction contracts.
Native Title Reforms: Options Paper
29 November 2017
An options paper has been released for public comment on broad ranging reforms to the Native Title Act 1993 (Cth), which can be viewed here.
The options for reform relate to:
- validating past section 31 native title agreements and changing the requirements concerning applicants being party to and executing these agreements
- changing the manner in which applicants are authorised and clarifying their functions and duties
- establishing alternative native title agreement making processes that do not require broader group consultation
- enabling registered Indigenous Land Use Agreements (ILUAs) to have minor changes made that do not require re-authorisation and registration
- making minor changes to native title processes to streamline decision-making and future acts (e.g. removing the State as a compulsory party to agreements, removing the requirement for prescribed bodies corporate (PBCs) to consult with land councils, removing compensation requirements from ILUAs)
- enabling native title parties to choose decision-making processes rather than being compelled to use traditional decision-making
- securing regulatory oversight of PBCs by ORIC for compliance with PBC regulations and the management and use of native title compensation monies, including through external trusts
- establishing dispute resolution processes through the National Native Title Tribunal and limiting the hearing of matters under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) to the Federal Court of Australia.
Submissions on the options paper are due on 25 January 2018 by emailing them to firstname.lastname@example.org.
Public consultations will also occur through targeted discussions with native title stakeholders and the engagement of an expert advisory panel to formulate amendment proposals.
An exposure draft amendment bill will be released for comment in around March 2018.
If you would like assistance with preparing a submission or advice on the implications of the reforms for your organisation, please contact Maria Lamattina.
High Court Throws Doubt on Validity of WA Mining Leases
17 August 2017
The High Court of Australia has thrown doubt on the validity of mining leases granted in WA by finding that the lodgement of a mineralisation report is a condition precedent to progressing an application through to a grant. Read more here.
High Court Rules Manus Regional Processing Valid
17 August 2017
The High Court of Australia has ruled that the regional processing arrangements for asylum seekers on Manus Island are valid despite their invalidity under PNG law. Read more here.
Perth Commercial Lawyers Opens its Doors
1 August 2017
Perth Commercial Lawyers is pleased to announce the opening of its new legal practice, under the leadership of its Principal, Maria Lamattina. Maria Lamattina brings to the firm over 13 years of local and international experience in advising a broad range of clients, from individuals and small business, through to government, not-for-profit organisations, Aboriginal corporations and large corporations. Maria’s expertise in commercial, corporate, native title, resources, administrative and regulatory law is well established and will form a strong foundation for the firm’s future practice. Contact Perth Commercial Lawyers today to find out how we can help you.