October 11, 2017

In the recent decision of Maxcon Constructions Pty Ltd v Vadasz (No 2) [2017] SASCFC 2 the Full Court of the South Australian Supreme Court was asked to determine the circumstances in which an adjudicator’s decision can be reviewed by the Court.

Vadasz, a subcontractor, commenced adjudication proceedings against Maxcon, the head contractor, in relation to a payment schedule, in which Maxcon sought to deduct the retention sum under the contract from the amount payable. The adjudicator found that the retention sum provisions in the contract were void as they operated as “pay when paid” provisions under the Building and Construction Industry Security of Payment Act 2009 (SA) (SOPA).

Maxcon sought a declaration from the Supreme Court that the determination was void on several bases, including that the adjudicator had made a jurisdictional error, or error on the face of the record, in relation to the operation of the retention provisions in the contract, which meant that the determination should be overturned.

In dismissing the application, the Court held that the adjudicator made an error of law in determining that the retention provisions were “pay when paid” provisions, but there was no jurisdictional error. On appeal, the Full Court upheld the trial judge’s findings.

In reaching its conclusion, the Full Court held that:

  •   The adjudicator had made an error in determining that the retention provisions were “pay when paid” provisions under SOPA, but had correctly understood, and operated within, the limits and functions of its powers.
  •   As the adjudicator had made an “error of law on the face of the record” rather than a jurisdictional error, it was bound to follow decisions of NSW courts and conclude that this type of error was not open to review by a court (despite the Full Court observing that it would have concluded otherwise in the absence of the NSW decisions).

The decision means that South Australia follows the approach taken by the courts in NSW and Western Australia, in limiting the grounds on which an adjudicator’s determination can be reviewed to instances where the adjudicator goes beyond the limits or functions of its powers.

The decision can be found here.

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