[2013] WASC 59

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS

CITATION : RE GRAHAM ANSTEE-BROOK; EX PARTE

KARARA MINING LTD [No 2] [2013] WASC 59

CORAM : LE MIERE J

HEARD : 25 JULY 2012

DELIVERED : 1 MARCH 2013

FILE NO/S : CIV 1364 of 2012

MATTER : An Application for a Writ of Certiorari directed to Mr Graham Anstee-Brook exercising jurisdiction pursuant to the Construction Contracts Act 2004 (WA)

EX PARTE

KARARA MINING LTD

Applicant

Catchwords:

Prerogative writ - Certiorari - Order nisi - Construction Contracts Act 2004

(WA) - Application for adjudication - Judicial review - Jurisdictional error -

Error of law - Procedural fairness

Legislation:

Construction Contracts Act 2004 (WA), s 6, s 26, s 27, s 27(1), s 30, s 31,

s 31(2)(b), s 32, s 37(2)(b), s 38, s 39, s 40, s 41, s 42, s 43, s 45(1), s 46

Construction Contracts Regulations 2004 (WA)

State Administrative Tribunal Act 2004 (WA)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Applicant : Ms P E Cahill SC & Mr A D Bereyne

Solicitors:

Applicant : Jackson McDonald

Case(s) referred to in judgment(s):

Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190

Craig v State of South Australia (1995) 184 CLR 163

Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217

Re Carey; Ex parte Exclude Holdings Pty Ltd [2006] WASCA 219

Re Graham Anstee-Brook; Ex parte Mount Gibson Mining Ltd [2011] WASC

172

Re State Administrative Tribunal; Ex parte McCourt [2007] WASCA 125

Witham v Raminea Pty Ltd [2012] WADC 1

1 LE MIERE J : On 16 March 2012 the court made an order nisi for a writ of certiorari to quash a determination by Mr Graham Anstee-Brook (the Adjudicator) under the Construction Contracts Act 2004 (WA) (the Act) in respect of an application for adjudication by DM Drainage and Construction Pty Ltd (DMC) made on 28 February 2012 determining that the applicant, Karara, must pay DMC $4,981,285.50 (the Determination). Karara now applies for the order nisi to be made absolute.

The Determination

2 Karara is developing port, rail and mine facilities required for the mining, transport and export of iron ore deposits at the Karara mine site, approximately 328 km north north-east of Perth. The project is a greenfields project with the bulk of the works being performed at a remote location. Water is required for the mine site operation and potable use. The water will be supplied from Twin Hills Water Supply System which consists of Twin Hills borefield, two transfer pumping stations and a pipeline which is approximately 152 km long and connects Twin Hills borefield to Karara mine site. By a contract dated 6 July 2010 DMC agreed to construct the pipeline and associated works. The Determination relates to a claim for $4,975,650.70 by DMC. Karara refused to pay the claim.

3 DMC applied for an adjudicator to be appointed to determine the dispute under the Act. Mr Graham Anstee-Brook was appointed the adjudicator. DMC served its application for adjudication (Application) on Karara on 24 January 2012. Section 27(1) of the Act provides that a party to a construction contract who was served with an application for adjudication (a respondent) must prepare and serve a written response to the application and serve it on the applicant and the adjudicator within 14 days of service of the Application. The 14 days expired on 7 February 2012. On 10 February 2012 Karara served its response to the Application (Response). On 14 February 2012 the Adjudicator requested the consent of the parties to an extension of time to 29 February 2012 to make his determination. The parties consented. On 28 February 2012 the Adjudicator delivered the Determination. In his reasons for decision the Adjudicator decided that Karara's response had not been served within 14 days of service of the Application on it as required by s 27 of the Act and that he was obliged to ignore the Response and to make the determination only on the Application.

Grounds of application

4 The order nisi was made on two grounds. The first is that the Adjudicator committed a jurisdictional error in that he misapprehended the nature or limits of his functions or power and/or misconstrued the Act and thereby misconceived the nature of the function he was performing or the extent of his powers by concluding that the Act required him to ignore the Response and to make a decision whether or not to dismiss the Application and/or to determine the Application on the basis of the Application only. The second ground is that Karara was denied procedural fairness in that the Adjudicator did not consider the Response for the purposes of making his decision whether or not to dismiss the Application and/or his determination.

Availability of judicial review

5 A determination made pursuant to s 31(2)(b) of the Act can be challenged by judicial review: Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217, Martin CJ [1], McLure P [7] - [8], Murphy JA [92], [95].

6 The position of an Adjudicator is more akin to that of an inferior court than an administrative tribunal for certiorari purposes when exercising the power to make a determination under s 31(2)(b): Perrinepod , Martin CJ [1], Murphy JA [118]. Therefore, a determination under the Act is not amenable to judicial review for non-jurisdictional error of law: Perrinepod Martin CJ [1], Murphy JA [118].

7 In Craig v State of South Australia (1995) 184 CLR 163, 176 the court (Brennan, Deane, Toohey, Gaudron & McHugh JJ) said that, in considering what constitutes jurisdictional error, it is necessary to distinguish between inferior courts which are amenable to certiorari, on the one hand, and tribunals exercising governmental powers which are also amenable to the writ, on the other. The ordinary jurisdiction of a court of law encompasses authority to decide questions of law as well as questions of fact. Demonstrable mistake in the identification of relevant issues or the formulation of relevant questions, while commonly involving error of law which might be corrected by an appellate court, will not ordinarily constitute jurisdictional error: Craig (179 - 180). The same is ordinarily true of a failure by an inferior court to take into account some matter which it was required by law to take into account, or of reliance by such a court upon some irrelevant matter which it was not entitled to take into account, in determining a question entrusted to: Craig (180).

8 In Re State Administrative Tribunal; Ex parte McCourt [2007] WASCA 125 the court (Steytler P, Wheeler & McLure JJA) at [14] said that the basis for the distinction between inferior courts and tribunals exercising governmental powers, and for the consequences that flow from it, rests upon the authority to determine questions of law authoritatively or to make orders or decisions otherwise than in accordance with the law.

9 In Re Carey; Ex parte Exclude Holdings Pty Ltd [2006] WASCA 219 Martin CJ, with whom Wheeler JA, and relevantly, McLure JA agreed at [143] and [158] respectively, having considered the relevant provisions of the State Administrative Tribunal Act 2004 (WA), concluded at [110] that the Administrative Tribunal 'was … given jurisdiction to determine questions of law wrongly, and that error of law would not, of itself, take [it] outside jurisdiction'. In Ex Parte McCourt , having stated that the test to be applied was the same as that which is ordinarily applied in the case of an inferior court, Martin CJ said:

There will consequently be a jurisdictional error only if the Administrative Tribunal makes a decision outside the limits of the functions and powers conferred on it, or if it does something which it lacks power to do: Re Refugee Review Tribunal; Ex Parte Aala (2000) 204 CLR 82 at [163] per Hayne J. There will be no jurisdictional error if all that the Tribunal has done is to decide something, which it is authorised to decide, incorrectly. In Craig at 177 - 178, the High Court identified five categories of jurisdictional error in this narrower sense. These are not exhaustive: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [82] per McHugh, Gummow and Hayne JJ. They are conveniently summarised by McLure JA in Carey (at [181]) as follows:

'First, if an inferior court or an anomalous tribunal mistakenly asserts or denies the existence of jurisdiction. Second, if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist. Third, if it is an essential condition of the exercise of jurisdiction with respect to a particular matter that a certain event or requirement has in fact occurred or been satisfied (which I understand to be a reference to a jurisdictional 'fact') there will be jurisdictional error if the court or a tribunal purports to act in circumstances where that event has not in fact occurred or that requirement has not in fact been satisfied even though the matter is the kind of matter which the Court has jurisdiction to entertain. Fourth, jurisdictional error will occur where an inferior court disregards or takes account of some matter in circumstances where the statute establishing it and conferring its jurisdiction requires that that particular matter be taken into account or ignored as a precondition of the existence of any authority to make an order or decision in the circumstances of the case. Fifth, it will exceed its authority and fall into jurisdictional error if it misconstrues the statute establishing it and conferring jurisdiction and thereby misconceives the nature or [sic] the function which it is performing or the extent of its powers in the circumstances of the case' [16].

Ground 1

10 Ground 1 gives rise to two questions. First, did the Adjudicator err in ignoring the Response and making his decision on the basis of the Application alone. The second question is whether such an error, if established, is amenable to judicial review.

11 The first question involves the interpretation or construction of the Act and requires a consideration of the provisions of the Act taken as a whole and having regard to the purpose and objects of the Act.

The statutory framework

12 The long title of the Act states that it is, amongst other things, an Act to provide a means for adjudicating payment disputes arising under construction contracts. Section 6 provides that a payment dispute arises if, amongst other circumstances, by the time when the amount claimed in a payment claim is due to be paid under the contract, the amount has not been paid in full, or the claim has been rejected or wholly or partly disputed. Part 3 deals with the adjudication of disputes. Division 2 of pt 3 deals with commencing adjudication. Section 26 provides that to apply to have a payment dispute adjudicated, a party to the contract, within 28 days after the dispute arises or, if applicable, within the period provided for by s 37(2)(b) in circumstances where an earlier application for adjudication had been taken to be dismissed, must serve an application for adjudication on each other party to the contract and serve it, if the parties to the contract have appointed a registered adjudicator and that adjudicator consents, on the adjudicator. Section 26(2) deals with the form of the application. The application must contain the information set out in the Construction Contracts Regulations 2004 (WA) and must set out or have attached to it all the information, documentation and submissions on which the party making it relies in the adjudication.

13 Section 27 is central to this case. I will set it out in full:

(1) Within 14 days after the date on which a party to a construction contract is served with an application for adjudication, the party must prepare a written response to the application and serve it on –

(a) the applicant and on any other party that has been served with the application; and

(b) the appointed adjudicator or, if there is no appointed adjudicator, on the prescribed appointor on which the application was served under section 26(1)(c).

(2) The response -

(a) must be prepared in accordance with, and contain the information prescribed by, the regulations;

(b) must set out the details of, or have attached to it, any rejection or dispute of the payment claim that has given rise to the dispute; and

(c) must set out or have attached to it all the information, documentation and submissions on which the party making it relies in the adjudication.

14 Division 3 of pt 2 deals with the adjudication process. Section 30 provides that the object of an adjudication of a payment dispute 'is to determine the dispute fairly and as quickly, informally and inexpensively as possible'. Section 31 sets out the adjudicator's functions. An adjudicator is required to make a determination within a short time. If the adjudicator is served with a response under s 27(1) the adjudicator must within 14 days after the date of the service of the response, or in the extension of time under s 32(3)(a), dismiss the application without making a determination of its merits if certain conditions are met or otherwise determine on the balance of probabilities whether any party is liable to make a payment. If the adjudicator is not served with a response under s 27(1) then the adjudicator must, unless an extension of time is made under s 32(3)(a), within 14 days after the last date on which a response is required to be served under s 27(1) dismiss the application without making a determination of its merits if the stated conditions are met or otherwise determine the dispute on its merits. Section 32(3)(a) provides that the adjudicator may with the consent of the parties extend the time for making a determination.

15 Section 32 is entitled 'Adjudication procedure'. Section 32(1)(a) provides that an adjudicator must act informally and if possible make the determination on the basis of the application and its attachments and, if a response has been prepared and served in accordance with s 27, the response and its attachments. Section 32(1)(b) provides that the adjudicator is not bound by the rules of evidence and may inform himself or herself in any way he or she thinks fit. Section 32(2) provides that in order to obtain sufficient information to make a determination, an adjudicator may, amongst other things, request a party to make a, or a further, written submission or to provide information or documentation, and may set a deadline for doing so.

16 Division 4 of pt 2 deals with the effect of determinations. Section 38 provides that an adjudicator's determination is binding on the parties. Section 39 provides that a party liable to pay an amount under a determination must do so on or before the date specified in the determination. Section 40 provides, in effect, that where an adjudicator determines a payment dispute concerning a claim by a contractor for a progress payment, and the principal has paid the amount determined, the payment is to be taken to be an advance towards the total amount payable under the contract by the principal to the contractor. Section 41 provides that determinations made by the adjudicator of a payment dispute are final and cannot be subsequently amended or cancelled without the consent of the parties and the parties are not permitted subsequently to apply for adjudication of the dispute.

17 Division 5 of pt 3 is concerned with enforcing determinations. Section 42 provides that if a determination requires the principal to pay the contractor an amount and the principal does not pay, then the contractor may suspend the performance of its contractual obligations pending payment, without becoming liable for any loss or damage suffered by the principal or any person claiming through the principal and retain its rights under the contract. Section 43 provides for enforcement by a court. A determination may, with the leave of a court of competent jurisdiction, be enforced in the same manner as a judgment or order of the court to the same effect, and if such leave is given, judgment may be entered in terms of the determination.

18 Section 45(1) provides that an adjudication does not prevent a party from instituting proceedings before an arbitrator or a court in relation to a dispute or other matter arising under the contract. If other proceedings are instituted in relation to a payment dispute that is being adjudicated under the Act, the adjudication is to proceed despite those proceedings unless all of the parties require the adjudicator to discontinue the adjudication. Evidence of anything said or done in an adjudication is not admissible before an arbitrator or court, except for the purposes of an application to the State Administrative Tribunal to disqualify an adjudicator or an appeal under s 46. Section 45(4) provides that an arbitrator or a court dealing with a matter arising under a construction contract must, in making any award or order, allow for any money that has been paid to a party under a determination by an adjudicator and the arbitrator or court has the power to make orders for restitution of any amount so paid.

19 Section 46 provides for a limited right of review to the State Administrative Tribunal. A person may appeal from a decision made under s 31(2)(a), that is, a decision to dismiss the application without making a determination of its merits. Section 46(1) does not authorise an appeal to the Tribunal for review of a decision made under s 31(2)(b): Perrinepod . Section 46(2) provides that if, on a review, a decision made under s 31(2)(a) is set aside and reversed the adjudicator is to make a determination under s 31(2)(b) within 14 days after the date on which the decision under s 31(2)(a) was reversed or any extension at that time consented to by the parties. Section 46(3) provides that except as provided by s 46(1) a decision or determination by an adjudicator on an adjudication cannot be appealed or reviewed. That does not preclude an application for prerogative relief in respect of a decision under s 31(2)(b).

Time for making response

20 In Witham v Raminea Pty Ltd [2012] WADC 1 the defendant argued that s 27 of the Act gave the adjudicator a discretion to extend the time for the defendant to file its response. The defendant conceded that if its response had been filed so late that it undermined the ability of the adjudicator to meet his or her timing deadline under s 31, then it would be a proper exercise of discretion to refuse to accept the response. Commissioner Gething rejected that submission and held that s 27 does not allow the adjudicator a discretion to consider a response prepared and served otherwise than in accordance with s 27. At [58] Gething C said that the language of s 32(1)(a)(ii) 'does not seem to contemplate the adjudicator considering a response prepared and served otherwise than in accordance' with s 27 of the Act. Gething C said:

In my view, CCA s 27 does not allow the adjudicator a discretion to consider a response prepared and served otherwise than in accordance with CCA s 27. The CCA sets out a tight timeframe within which parties are to apply and respond. The intent of the legislature in using the word 'must' is to set mandatory timeframes. The legislative scheme does not contemplate a fluid flow of documents backwards and forwards in order to comprehensively define the issues; there is not even the right of an applicant to file a reply to a response. The adjudicator is to 'if possible' determine the claim on the application and the response: CCA s 32(1)(a). The adjudicator may alleviate some of the strictness of the timeframe by inviting parties to file further materials (as was done in O'Donnell (2) [36]). The adjudication does not finally determine the rights of the parties.

Rather, the objects of the CCA are to provide a 'rapid adjudication process that operates in parallel to any other legal or contractual remedy', so as to 'keep the money flowing in the contracting chain by enforcing timely payment and sidelining protracted or complex disputes': CCA, Second Reading Speech (WA Hansard, 3 March 2004, 275). The imposition of mandatory time limits best gives effect to this object. The requirement to act 'fairly' in CCA s 30 is thus a requirement to do so is the context of the mandatory time limits in the CCA [59].

I agree with Gething C that the Act does not confer on the adjudicator a discretion to extend the time for the defendant to file its response for the reasons stated by the Commissioner. A response filed out of time is not a response for the purposes of s 27 of the Act.

21 The words of s 32(1)(a) are emphatic: the adjudicator must 'if possible' make the determination on the basis of the application and the response. The words 'if possible' make it obligatory for the adjudicator to proceed to his or her determination after receiving the application and the response. If no response has been received then the adjudicator must proceed to make his or her determination after the time for service of a response has expired. In s 32 of the Act 'if possible' refers to when an adjudicator is capable of making a determination consistently with the requirements of the Act and the law. That would require the adjudicator to have sufficient information to make an informed, rational decision.

22 It may be putting it too highly to say that the adjudicator is obliged, in all circumstances, to ignore a response received out of time. There may be circumstances in which an adjudicator who received a response out of time might properly have regard to the material in the response in making his or her determination. Section 32(1)(b) provides that the adjudicator may inform himself or herself in any way he or she thinks fit. Section 32(2) provides that in order to obtain sufficient information to make a determination, an adjudicator may, amongst other things, request a party to make a, or a further, written submission or to provide information or documentation. That does not mean that an adjudicator who receives a purported response out of time is obliged to consider the material in the response before making a determination. The adjudicator is not exercising a discretionary power to extend the time for the service of a response and hence the adjudicator is not bound to consider the cogency of the material in the purported response or questions of delay, explanation for delay and prejudice. To require the adjudicator to carry out such a task is contrary to the scheme of the Act which provides for a quick, informal, inexpensive and provisional determination of the dispute. The determination is provisional in the sense that an applicant or respondent may institute proceedings before an arbitrator or a court which will finally determine the dispute.

23 The Adjudicator made no error in failing to consider the Response. The Adjudicator may have stated the position too highly by saying that he was obliged to ignore the Response but that does not amount to an error of law. The Adjudicator was not required to consider the Response before proceeding to his determination. The Adjudicator was not required to consider the exercise of a discretion to extend the time for the service of a response or to consider the exercise of a discretion to receive and have regard to the Response, notwithstanding that it was served out of time.

Adjudicator made no jurisdictional error

24 The Adjudicator made no error of law in failing to have regard to the Response. In any event, if the Adjudicator had made such an error it would not be a jurisdictional error.

25 The High Court in Craig identified five types or categories of jurisdictional error. The applicant relies upon two of those types or categories. The first is 'if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist'. The second is 'if it misconstrues [the] statute [establishing it and conferring jurisdiction] and thereby misconceives the nature or (sic) the function which it is performing or the extent of its powers in the circumstances of the case': Craig (177 - 178).

26 The Adjudicator did not make an error falling within either category. The Adjudicator did not misapprehend or disregard the nature or limits of his functions or powers. The Adjudicator did not misconceive the nature of the function which he was performing or the extent of his powers in the circumstances of this case as a result of misconstruing the Act.

27 The Act sets out conditions for the exercise of the adjudicator's power to make a determination. The Court of Appeal has held that the matters in subpars (i) to (iv) of s 31(2)(a) are 'jurisdictional facts' which condition the lawful exercise of the function committed to an adjudicator under s 31(2)(a): Perrinepod [1], [115]. The matter set out in s 31(2)(a)(ii) is that the application has not been prepared and served in accordance with s 26. That is, service of the application within 28 days after the dispute arose is a condition for the lawful exercise of the function committed to the adjudicator. By contrast, the Act does not condition the power of the adjudicator to make a determination on the service of a response or the consideration by the adjudicator of a response. To the contrary, s 32(1)(a)(ii) provides for the adjudicator to proceed to make a determination without considering any 'response' where it was not served within 14 days of service of the application. Furthermore, s 32(5) provides an adjudicator's power to make a determination is not affected by the failure of either or both of the parties to make a submission or provide information within time. The consideration of material served out of time by a respondent does not condition the power of the adjudicator to make a determination. The Act does not confer on the adjudicator a discretionary power to extend the time for service of a response. It is not part of the adjudicator's function to ensure that a party to a payment dispute serves a response. It is not part of the adjudicator's function to consider the exercise of a discretionary power to have regard to material served by a party to a payment dispute other than an application served under s 26 and a response served in accordance with s 27.

Ground 2

28 Ground 2 is closely associated with ground 1. The applicant says that owing to his error as to the proper construction of the Act, the Adjudicator did not consider whether the circumstances of the matter warranted the Adjudicator's consideration of the response in order to achieve the objectives of the adjudication.

29 The contents of the requirements of procedural fairness depends on the statutory context and all the circumstances of the case and will necessarily vary from case to case depending on that context and those facts. Whether procedural fairness has been afforded must be viewed in the context of the statutory framework conferring the relevant power. Procedural fairness requires a party being given the opportunity to put information and submissions to the decision-maker.

30 The statutory context of the Act is that the adjudication process is to proceed on a quick, informal and inexpensive basis. A determination is of an interim character. There is still available at a later time an opportunity to establish the substantive right of the parties.

31 The Act gives a party served with an application the opportunity to respond within 14 days of being served with that application. Procedural fairness requires only that a party be given a reasonable opportunity to present his case and not that the decision-maker ensures that the party takes the best advantage of the opportunity to which he is entitled.

32 The applicant submitted that the Adjudicator erred by failing to consider whether the circumstances of the case warranted the Adjudicator considering the Response in order to achieve the objectives of the adjudication. The Adjudicator did not make such an error. The Adjudicator was not exercising a discretionary power to extend the time for service of a response. It is contrary to the scheme of the Act that it be part of the function of the Adjudicator to consider whether or not to have regard to a response served out of time.

33 There was no denial of procedural fairness by the Adjudicator failing to have regard to material furnished by the applicant outside of the 14 day period required by s 27 of the Act.

34 There is authority that a decision of an adjudicator may be judicially reviewed on the grounds of a lack of procedural fairness. In Re Graham Anstee-Brook; Ex parte Mount Gibson Mining Ltd [2011] WASC 172, Martin J expressly held that certiorari is available on the ground of a denial of procedural fairness in respect of a determination by an adjudicator under the Act (at [52]). However, ground 2 fails because there was no denial of procedural fairness by the Adjudicator.

Discretion

35 Certiorari is a discretionary remedy, although it may be that in an ordinary case, where there is a clear case of jurisdictional error, an order will be made 'almost as of right': Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190 [267] - [275] (McDougall J). In this case the respondent says there are a number of reasons why certiorari should be refused on discretionary grounds.

36 The discretionary factors raised by DMC arise from the statutory context rather than the particular circumstances of this case. In view of the decision I have come to in relation to the grounds of the application it is unnecessary and inappropriate to give consideration to the discretionary factors raised by DMC.

Conclusion

37 The application must be dismissed.