Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd  VSC 233
30 September 2015 Hugh Foxcroft QC
1 In Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd Vickery J determined a preliminary question concluding that s 28R(5)(a)(iii) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (the Act) could not 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. The privative clause in s 28R(5)(a)(iii) of the Act did operate to deny relief where the error relied upon was an error on the face of the record. Section 28Rand the Constitution of Victoria
2 Section 85(1) of the Constitution Act 1975 (Vic) (the Victorian Constitution) confers jurisdiction upon the Supreme Court of Victoria to hear claims in respect of Victorians: Subject to this Act [the Supreme Court of Victoria] shall have jurisdiction in or in relation to Victoria its dependencies and the areas adjacent thereto in all cases whatsoever and shall be the superior Court of Victoria with unlimited jurisdiction.
3 To exclude s 85 jurisdiction a provision must indicate an intention to alter (s 85(5)(a)) and provide a statement of the reasons for doing so (s 85(5)(b)). A provision will be void if it fails to meet these requirements(s 85(6)).
4 Section 51(2) of the Act complied with s 85 of the Victorian Constitution: It is the intention of section 28R to alter or vary section 85 of the Constitution Act 1975.
5 Accordingly, s 28R of the Act validly altered or varied s 85(1) of the Victorian Constitution and had effect as an amendment of that section by limiting the power of the Supreme Court as provided.
6 By s 28R of the Act, the State of Victoria provided: 28R Proceedings to recover amount payable under section 28M or 28N
(1) If an authorised nominating authority has provided an adjudication certificate to a person under section 28Q, the person may recover as a debt due to that person, in any court of competent jurisdiction, the unpaid portion of the amount payable under section 28M or 28N.
(2) A proceeding referred to in subsection (1) cannot be brought unless the person provided with the adjudication certificate files in the court— (a) the adjudication certificate; and (b) an affidavit by that person stating that the whole or any part of the amount payable under section 28M or 28N has not been paid at the time the certificate is filed.
(3) If the affidavit indicates that part of the amount payable under section 28M or 28N has been paid, judgment may be entered for the unpaid portion of that amount only.
(4) Judgment in favour of a person is not to be entered under this section unless the court is satisfied that the person liable to pay the amount payable under section 28M or 28N has failed to pay the whole or any part of that amount to that first-mentioned person.
(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— (i) to bring any cross-claim against the person who brought the proceedings under subsection (1); or (ii) to raise any defence in relation to matters arising under the construction contract; or (iii) to challenge an adjudication determination or a review determination; and (b) is required to pay into the court as security the unpaid portion of the amount payable under section 28M or 28N pending the final determination of those proceedings.
(6) Subsection (5)(a)(iii) does not prevent a person from challenging an adjudication determination or a review determination on the ground that the person making the determination took into account a variation of the construction contract that was not a claimable variation.
(7) A claimant may not bring proceedings under this section to recover an adjudicated amount under an adjudication determination if the claimant has made an adjudication review application in respect of that determination and that review has not been completed.
(8) Nothing in this section affects the operation of any Act requiring the payment of interest in respect of a judgment debt.
7 A privative clause (sometimes referred to as a ‘preclusion’ or ‘ouster’ clause) may simply be described as a clause or provision included in a piece of legislation by a legislative body to exclude judicial review of acts and decisions of the executive by stripping the courts of their supervisory judicial function. Some privative clauses purport to oust judicial review completely.
8 In Kirk v Industrial Relations Commission of New South Wales  HCA 1 the High Court of Australia determined that the Parliaments of the States could not alter the constitution or character of their Supreme Courts so that they ceased to meet the constitutional description of a ‘Supreme Court of a State’. The power ‘to confine inferior courts and tribunals within the limits of their authority to decide’ by granting prohibition, mandamus and certiorari on the grounds of jurisdictional error was a ‘defining characteristic of State Supreme Courts’ which could not be removed by State Parliaments. Background
9 In early December 2014 the first defendant, Asta Developments (Aust) Pty Ltd (Asta) entered judgment against the plaintiffs, Amasya Enterprises Pty Ltd and another, (Amasya) in the sum of $2,030,222.86 pursuant to s 28R of the Act. The judgment was entered according to the procedure outlined in the Act, on the basis of an adjudication determination made 18 November 2014 (the Adjudication Determination) by the Second Defendant (the Adjudicator) and a subsequent adjudication certificate issued under s 28Q of the Act, following non-payment of the adjudicated amount (the first proceeding).
10 Later in December 2014 Amasya commenced a proceeding seeking judicial review of the Adjudication Determination on the grounds of jurisdictional error on grounds including, inter alia, that:
(a) there was no valid payment claim which vested jurisdiction on the adjudicator to make a determination;
(b) the adjudicator denied the Plaintiffs natural justice by requesting, and receiving, detailed new submissions from the First Defendant, without giving the Plaintiffs sufficient opportunity to respond to the new submissions, (the second proceeding). Preliminary question for determination
11 In the second proceeding Vickery J ordered, pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2005,the following question be fixed for separate trial: Whether the Plaintiffs’ 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?
12 Amasya submitted that the answer to the question should be in the affirmative as:
(a) Section 28R(5) does not prohibit an application for judicial review of an adjudication determination; and
(b) in the alternative, even if s 28R(5) is to be construed as an attempt to prohibit an application for judicial review of an adjudication determination, or had the effect of so prohibiting, then to the extent that it does so it is void.
13 Asta submitted that, on the proper construction of s 28R(5) of the Act, Amasya’s challenge to the Adjudication Determination could not be sustained as:
(a) there was no utility in the Court considering any application for judicial review of the Adjudication Determination;
(b) there could not be any challenge to the judgment entered against Amasya in the first proceeding by reason of s 28R(5)(a)(iii); and
(c) the second proceeding was therefore an abuse of process and ought be dismissed instanter. Relief Short of Setting Aside the Judgment
14 Amasya also submitted that the operation of s 28R(5)(a)(iii) of the Act could be avoided by the making of an order in the nature of certiorari or for a declaration that the Adjudication Determination be quashed or set aside without more, in circumstances where a judgment entered upon it under the Act remained on the record and untouched. This argument had no appeal to Vickery J.
15 His Honour held that the Court could not proceed to decide whether the Adjudication Determination should be set aside, where to do so with the s 28R judgment remaining in place would produce no more than a theoretical outcome of no utility.
16 However, Amasya had by the second proceeding also sought to have the judgment entered under s 28R of the Act in the first proceeding set aside. Therefore the scope and effect of s 28R(5)(a)(iii) of the Act had to be determined. Judicial Review of Adjudication Determinations
17 Amasya contended that s 28R(5) of the Act does not prohibit an application for judicial review of an adjudication determination.
18 His Honour started his analysis on the basis that on the current authority in Australia an adjudicator appointed under the Act, in exercising the statutory functions of inter alia determining the amount of a progress payment and the date on which such amount becomes payable, fell comfortably within that class of decision-maker who is amenable to the supervisory jurisdiction of the Court by judicial review which may, in an appropriate case where error is shown, expose the adjudication determination to relief in the nature of certiorari and declaration to quash the adjudicator’s determination for either jurisdictional error of law or error on the face of the record. Is s 28R(5)(a)(iii) of the Act a privative clause?
19 Vickery J turned to examine whether s 28R(5)(a)(iii) of the Act operated as a privative clause which purported to restrict the exercise of judicial review by the Supreme Court of Victoria, and thus to an examination of the statutory context of the section.
20 His Honour concluded:
(a) section 28R(5)(a)(iii) imports a valid restriction on the power of the Supreme Court applicable to a person bringing proceedings to set aside a judgment to enforce an adjudicated amount, preventing that person from challenging the adjudication determination or review determination; but
(b) the Act provides for an independent exercise of judicial power in entering a judgment pursuant to s 28R of the Act. The reasoning process is set out below.
21 First, Vickery J looked to s 28R(1) of the Act: If an authorised nominating authority has provided an adjudication certificate to a person under section 28Q, the person may recover as a debt due to that person, in any court of competent jurisdiction, the unpaid portion of the amount payable under section 28M or 28N. His Honour reasoned that under this section it is the operation of sections 28M or 28N of the Act which create the obligation to pay. It was that debt (which is created only by the issue of the certificate under s 28Q) that is to be enforced in a court of competent jurisdiction. The process of obtaining the court’s judgment may then be undertaken ex parte. His Honour said that it was not the adjudication determination itself that was enforced, nor the adjudication certificate that was deemed as a judgment debt. Under the Act, an applicant applied to the Court for a judgment recognising the debt owed, and, once judgment was entered, the procedures for enforcement of judgment debts may be enlivened.
22 The entry of judgment under the Victorian Act was an exercise of judicial power, and not a mere administrative act. Accordingly, his Honour said that the Court must bring an independent mind to the application for a judgment debt. Provided that the Act applied, there were two matters required by s 28R of the Act which the Court must be satisfied of before entering judgment:
(a) was there an adjudication certificate filed with the application; and
(b) was there an affidavit to prove that all or some of the amount provided for in the certificate had not been paid? 23 However, in this process the Court was not required to consider the substance of the adjudication determination itself, nor the reasons for determination mandated to be written under s 23(3) of the Act, and provided to the ‘parties’ under s 23A of the Act.
24 Secondly, his Honour distinguished the procedure under the Act from the process provided for in s 25 of its sister legislation, the NSW Act. By s 25(1) the NSW Act provided that the adjudication certificate itself was ‘filed as a judgment for a debt’. This process which, under the NSW Act made the adjudication certificate enforceable ‘as if it were a judgment of a court’, has been held not to be the product of the exercise of judicial power. Section 25(4)(a)(iii)of the NSW Act, which provided that a party in the position of a respondent to a payment claim may not in proceedings to have a judgment set aside ‘challenge the adjudicator’s determination’, was to be viewed in this context.
25 In Chase Oyster Bar the New South Wales Court of Appeal,in obiter dicta, considered that if s 25(4)(a)(iii) of the NSW Act applied after judgment had been filed pursuant to s 25, it would not oust the jurisdiction of the Supreme Court of New South Wales to grant relief in the nature of certiorari to quash the determination of an adjudicator where it was made in relevant non-compliance with the statute, and it did so because the section was not construed as a privative clause of this character.
26 Vickery J declined to follow the obiter dicta in Chase Oyster Bar. He considered that, in the context of limiting or curtailing a review of the exercise of judicial power, s 28R(5)(a)(iii) of the Act more readily lent itself to characterisation as a privative clause. Further, the application of s 85 of the Victorian Constitution to s 28R(5) of the Victorian Act in combination with the statutory statement provided for in s 51(2) of the Victorian Act, which had no counterparts in the legislation of New South Wales, provided another distinguishing feature justifying departure from applying the obiter dicta in Chase Oyster Bar.
27 Thirdly, Vickery J turned to construe s 28R(5)(a)(iii) of the Act. His Honour considered that the provision was expressed in broad terms: in proceedings to have a judgment entered under the Act set aside, the person who commenced such proceedings was not entitled ‘to challenge an adjudication determination’. The word ‘challenge’ as used in the provision was of wide compass.
28 After restating that the purpose of the clause was to provide a measure of finality and a speedy resolution to the process of adjudication once a judgment has been entered upon a certified adjudication determination which had not been paid, his Honour stated that ‘… it would not serve this end to confine the operation of the clause merely to a challenge to the correctness of the adjudicator’s assessment’. Applying the plain meaning of the text consistently with the apparent purpose of the provision, his Honour was of the view that it was expressed to apply to any challenge that was open in law to be made, including any challenge by way of judicial review made to the Supreme Court which was open.
29 The judge concluded that the statutory scheme pointed to s 28R(5)(a)(iii) operating, insofar as the law otherwise permitted, to any adjudication determination that was made, or purported to have been made, which founded a request under s 28O of the Act for the provision of an adjudication certificate, an adjudication certificate issued under s 28Q, and in turn a judgment entered under s 28R. Whether Judicial Review Open Before Judgment Entered
30 It should be noted that the privative clause in s 28R(5)(a)(iii)of the Act operates only after a judgment has been entered under s 28R and only in respect of a proceeding to have that judgment set aside.
31 However, there are steps which may be taken by a respondent to a payment claim and a subsequent adjudication determination in other proceedings to prevent the entry of a judgment before this occurs. This process commonly gives rise to a challenge to the adjudicator’s determination by way of judicial review. There is no privative clause in the Act which stands in the way of this occurring.
32 Section 28R(5)(a)(iii) of the Act, and the time period within which it can operate, were discussed in obiter dicta in Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd in the following passage: … The provision only comes into operation once a judgment has been entered under the Act. The procedure which precedes this step involves passing through a number of gateways: first, the making of the adjudicator’s determination which makes a finding that money is payable under the construction contract in respect of the progress claim: s 23; second, on any failure on the part of a respondent to pay, within the time limits specified by s 28M and s 28N, the sum determined by the adjudicator, the claimant may request the nominating authority to provide an adjudication certificate: s 28O(1)(a); third, following the issue of an adjudication certificate, an application may be made to a court of competent jurisdiction for the entry of judgment founded on the certificate and founded on evidence that the whole or part of the sum specified in the certificate remains unpaid: s 28R(1)–(4); judgment may then be entered by the relevant court. It is only at this point that proceedings may be commenced to have the judgment set aside. It is also only at this point that the privative clause s 28R(5)(a) comes into operation. At any time prior to the entry of judgment, s 28R(5)(a) has no application, and cannot, for example, work to prevent a challenge to an adjudication determination. Accordingly, during the albeit limited period before the entry of judgment, the provision has no application to proceedings in the nature of certiorari to quash an adjudicator’s determination. Scope of s 28R(5)(a)(iii) limited by the Australian Constitution
33 His Honour then referred to the decision of the High Court of Australia in Kirk where the extent of the operation of privative provisions (such as s 28R(5)(a)(iii) of the Act) was held must remain consistent with the constitutional framework for the Australian judicial system overall, taking into account the requirements of Chapter III of the Australian Constitution.
34 In particular, his Honour referenced the concluding proposition in Kirk: 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 (error on the face of the record) is not beyond power. Jurisdictional error and error on the face of the record
35 Vickery J then considered the extent of jurisdictional error which in turn will serve to define the scope of the limitation of the power of the Supreme Court of Victoria imposed by s 28R(5)(a)(iii) of the Act, for jurisdictional error and error on the face of the record are separate and distinct bases on which a court can make an order in the nature of certiorari where the necessary circumstances are present.
36 As an aside, traditionally the doctrine of jurisdictional error permitted courts to review errors on matters going to jurisdiction, but not errors on matters within jurisdiction, that is, matters ‘going to the merits’. However, there was one major exception: where a tribunal made an error of law on a matter within its jurisdiction, and that error was apparent on the face of the tribunal’s record, its decision was reviewable by certiorari. Because the tribunal’s decision had been made within jurisdiction, it was not a nullity, but merely voidable in the sense of being valid and legally effective until quashed by certiorari.
37 Turning back to the decision, Vickery J proceeded to briefly analyse the distinction between jurisdictional error and error on the face of the record for the purposes of considering an order in the nature of certiorari as he considered the difference to be critical to the operation of s 28R(5)(a)(iii) of the Act as a valid privative clause.
38 After discussing relevant authorities, his Honour referred to exemplar jurisdictional facts, such as the statutory time limits in the Act, as a basis for judicial review, saying: The Victorian Act, as is the case with its interstate counterparts, fundamentally alters the risk of insolvency between the principal actors during the life of a construction contract. As observed by McDougall J in Chase Oyster Bar: The Security of Payment Act gives very valuable, and commercially important, advantages to builders and subcontractors. At each stage of the regime for enforcement of the statutory right to progress payments, the Security of Payment Act lays down clear specifications of time and other requirements to be observed. It is not difficult to understand that the availability of those rights should depend on strict observance of the statutory requirements that are involved in their creation.
39 Vickery J accepted that a ‘jurisdictional fact’ is properly described as ‘a criterion the satisfaction of which enlivens the exercise of the statutory power or discretion in question’, and offered that itwas open to the legislature to make any fact a jurisdictional fact, and that a jurisdictional fact may be the existence or non-existence of a specified state of affairs.
40 Whether a matter is a jurisdictional fact is to be ascertained by a process of construction of the legislation which confers the jurisdiction applying the accepted principles of statutory construction. His Honour accepted the summary provided by McDougall J in Chase Oyster Bar: … the proper approach to construction, where some fact is specified as a pre-condition to the exercise of jurisdiction by a court, is to regard it as a matter for that court to decide whether or not the fact exists, unless the statute clearly precludes that approach.
41 Vickery J then looked at what constituted the ‘record’ for the purposes of entertaining a question as to whether there had been an error on the face of the record. His Honour did not detail any findings, but said that what may or may not constitute an error on the face of the record defies definitive or exhaustive statement, saying that it remains, it seems, 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.
42 His Honour then concluded his reasoning: (a) s 28R(5)(a)(iii) of the Act had been validly passed by the Legislature in accordance with s 85 of the Victorian Constitution; (b) s 28R(5)(a)(iii) of the Act was 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; (c) Amasya had commenced such proceedings, and s 28R(5)(a)(iii) of the Act applied; (d) s 28R(5)(a)(iii) of the Act was limited in its operation by the requirements of Chapter III of the Australian Constitution as found inKirk; (e) s 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; and (f) 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.
43 Vickery J reasoned that if Amasya was able to establish a jurisdictional error in the Adjudication Determination, then it was not precluded by the operation of s 28R(5)(a)(iii) of the Act from challenging the Adjudication Determination on that basis.
44 His Honour added that this conclusion did not in any way detract from the requirement of s 28R(5)(b) of the Victorian Act that the challenging party pay into Court as security the unpaid portion of the amount payable under the determination pending the final determination of the proceeding to set aside the judgment entered under s 28R. Provided that s 28R(5)(b) was able to be complied with, it further followed that if Amasya was successful in a challenge to the Adjudicator’s Determination founded upon jurisdictional error, the Supreme Court may make an order in the nature of certiorari or a declaration to remove the legal consequences or purported legal consequences of the Adjudication Determination under the Act, with the result that the judgment founded upon it, must also be set aside.
45 His Honour then answered the separate question: Whether the Plaintiffs’ challenge to the adjudication determination dated 18 November 2014 can be sustained in the light of s 28R(5) of the Victorian Act? in the following terms: Yes, but only to the extent that the Plaintiffs’ challenge to the adjudication determination is founded upon a jurisdictional error in the making of the determination and compliance with s 28R(5)(b) is able to be achieved.
46 The hearing of the permitted challenge occurred last week.
29 July 2015 Chancery Chambers Hugh Foxcroft
Applying Wingfoot Australia Partners Pty Ltd v Eyup Kocak 303 ALR 64 -, certiorari would not run to the Adjudication Determination because the legal effector the apparent legal effect of that determination was spent upon the entry of the judgment; and applying Ansett Australia Ground Staff Superannuation Fund Pty Ltd v Ansett Australia Ltd & Ors  VSCA 117 and Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 resulted in a similar outcome in respect of declaratory relief. The parties are to be taken to have no real interest in such a result as it would produce no foreseeable consequences for them. In other words, the answer produced would provide no more than an answer to an abstract or hypothetical question.
Relying upon the remarks of Spigelman CJ (at ) and Basten JA (at ) in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd  NSWCA 190 and his Honour’s own decision in Grocon Constructors Pty Ltd. v Planit Conciardi Joint Venture (No 2)(2009) 26 VR 172.Reference was also made to Hickory v Schiavello(2009) 26 VR 112, 134 ; Sugar Australia Pty Ltd v Southern Ocean Pty Ltd  VSC 535 (15 October 2013).
Phoenix International Group Pty Ltd v Resources Combined No 2 Pty Ltd  VSC 425 .
Cf the Building and Construction Industry Security of Payment Act 1999 (NSW) (the ‘NSW Act’).
Birdon Pty Ltd v Houben Marine Pty Ltd  FCAFC 126 , where Keane CJ observed that: ‘It is readily apparent from the terms of ss 22-25 of the [NSW] Act that the adjudication certificate which s 25 makes enforceable as if it were a judgment of a court is not the product of the exercise of judicial power’.
See Chase Oyster Bar  NSWCA 190 (Spigelman CJ), – (Basten JA).
(2009) 26 VR 112, 133.
 (2010) 239 CLR 531, 539.
 Kirk (2010) 239 CLR 531, 581 .
 At .
 At .
 Chase Oyster Bar NSWCA 190 .
 Chase Oyster Bar NSWCA 190 .
 Chase Oyster Bar NSWCA 190 .
 Chase Oyster Bar  NSWCA 190  (McDougall J).