Chapter 4
Australia: The East Coast model (Victoria, Tasmania, the Australian Capital Territory and South Australia)


That is no country for old men.
The young in one another’s arms, birds in the trees
Those dying generations – at their song.
The salmon-falls, the mackerel-crowded seas,
Fish, flesh, or fowl commend all summer long
Whatever is begotten, born and dies.
Caught in that sensual music all neglect
Monuments of unageing intellect.
Once out of nature I shall never take
My bodily form from any natural thing.
But such form as Grecian goldsmiths make
Of hammered gold and gold enamelling
To keep a drowsy Emperor awake;
Or set upon a golden bough to sing
To lords and ladies of Byzantium
Of what is past or passing, or to come.1

4.1 All East Coast model jurisdictions have closely modelled their legislation upon the Building and Construction Industry Security of Payment Act 1999 (NSW) [Appendix 3], as amended in 2002 (the NSW Act). This is because the further improvements in the 2010 and 2013 NSW Amendments were pursued after the enactment of relevant legislation in each jurisdiction. However, considering the evolving criticism about the recent NSW Amendments, there is no reason to believe that legislatures in other States will adopt them, at least in the short term.

4.2 All Eastern Coast legislation shares the same object and purpose as the NSW Act. However, each legislation has some differences and additional features. By using the NSW legislation as a benchmark for reference, this chapter serves to demonstrate the key differences and features of each of the other East Coast jurisdictions, namely, Victoria, Tasmania, the Australia Capital Territory and South Australia. Chapter 3 should be referred to (in conjunction with the present chapter) to have an adequate understanding of the legislation in the other jurisdictions.

4.3 In this chapter, considerable attention has been paid to Victoria because, not only it is the most active jurisdiction amongst the rest, but also it includes key differences and features. In addition, the Victorian Supreme Court, in order to deal with and interpret the unique provisions of the Victorian Act, has adopted a relatively different and independent approach from its counterparts in NSW and Queensland, with regard to its supervisory rôle over adjudication determinations. Having said that, the persuasive authorities in NSW and Queensland have always been referred to for guidance in the analysis of cases as applicable.

A. Victoria (Vic)

4.4 The Building and Construction Industry Security of Payment Act 2002 (Vic) (the Vic Act) [Appendix 8.1], commenced on 31 January 2003. Since then, it has been amended on two occasions: the first group of amendments came into operation on 26 July 2006 (Act No. 42 of 2006) and the second group commenced on 30 March 2007 (Act No. 15 of 2002).2 The Vic Act follows the basic process and procedures established in the NSW Act as they share the same object.3 The rationale behind following the NSW legislation was explained in the second reading speech on the original bill as “this has the benefit of allowing building and construction firms with national operations to be subject to common payment requirements in both jurisdictions”.4 Whilst many substantial differences and features have been introduced in the Vic Act, for the purpose of this chapter, the Vic Act refers to the legislation in its latest form (as amended).

4.5 The principle of “Pay now, argue later” established in NSW and Queensland jurisdictions is also applicable under the Vic Act.5 As judicially observed, the Vic Act promotes freedom from excessive legal formality, demonstrating a pragmatic concern to provide a dispute resolution process that is free from unnecessary technicality.6 It was also noted that:

“The Act has had a substantial effect in shifting the power balance between principals and subcontractors in construction contracts in Victoria and in other States and Territories where legislation in similar terms and with the same objects has been enacted.”7

Reference dates

4.6 Unlike the position in NSW, the Vic Act provides a complex arrangement for the calculation of reference dates if the contract is silent about these. Many adjudication decisions have been challenged in court disputing the reference dates.8 The Vic Act provides that, if the contract makes no express provision with respect to the reference date, it will be the date occurring 20 business days after the previous reference date. In the case of the first reference date, it will also be the date occurring 20 business days after the work was first carried out. The Vic Act also provides a method for calculating a reference date where a progress payment is a single, one-off, or final payment, and the contract makes no express provision for a reference date.9 Section 9(2)(d) also refers to the fact that a final payment may include money retained by the respondent for the rectification or omission of works or the supply of goods and services under the construction contract.10

4.7 In Hallmarc Construction v Saville,11 Vickery J dealt with the calculation of reference dates to decide whether payment claims were made out of time. In that case, the construction contract did not include a provision to calculate the reference dates as a trigger for time of payment. Therefore, the default relevant provisions of the Vic Act were applicable, namely sections 9(2)(d) and 14(5) of the Vic Act. Vickery J relied on new evidence to identify when the work was last carried out and concluded that both claims were “hopelessly out of time”. Accordingly, the relevant adjudication determination was rendered void. Vickery J noted that extreme attention should be paid to the statutory time limits in order for a party to maintain its interim right of payment under the Vic Act.

Excluded amounts

4.8 In 2006, the Victorian Act was substantially amended by virtue of the Building and Construction Industry Security of Payments Amendment Act 2006 (Vic) [Appendix 8.2]. Such amendment, whilst improving certain of the existing sections so as to bring the legislation in line with the 2002 NSW Act, was considered a significant departure from the East Coast model in the exclusion of certain claims from the ambit of the legislation and introducing a system for adjudication review.

4.9 The main reason to introduce excluded amounts from the ambit of the Victoria Act is that “they are often attended with considerable complexity and speedy resolution can be an elusive goal”.12 Accordingly, the Act provides that “excluded amounts” must not be included in payment claims,13 the calculation of the amount of a progress payment,14 determinations,15 or in a review adjudication.16 Excluded amounts are defined in the Vic Act as follows:17

  • .1 Any amount that relates to a variation of the construction contract that is not a claimable variation;
  • .2 Any amount (other than a claimable variation) claimed under the construction contract for compensation due to the happening of an event including any amount relating to latent conditions, time-related costs and changes in regulatory requirements;
  • .3 Any amount claimed for damages for breach of contract or for any other claim for damages arising under or in connection with the contract;
  • .4 Any amount in relation to a claim arising at law other than the construction contract; or
  • .5 Any amount of a class prescribed by the regulations as an excluded amount.

4.10 Moreover, in Seabay Properties Pty Limited v Galvin Construction Pty Limited,18 the Court held that the list of “excluded amounts” in the Victorian Act was not exhaustive and liquidated damages were also an excluded amount. It also held that excluded amounts must apply to amounts claimed by both parties. This raft of exclusions has been blamed for adding to the complexity of the Victorian Act itself, resulting in a low adjudication usage rate.19

Claimable variations

4.11 The unique classification of claimable variations was detailed in the Act at section 10A and has been subject of trenchant criticism.20 In that section, which provides a complex statutory scheme, the classes of variation to a construction contract (the claimable variations) that may be taken into account in calculating the amount of a progress payment under the Vic Act were set out. As demonstrated in the relevant explanatory memorandum, there are basically two types of claimable variations. The first type is an agreed variation. The second type is a disputed variation for work done. Subject to certain conditions stated below, a claim for payment for the second class of variation may only be made under the Vic Act (eg claimable variation) where the contract sum under the construction contract at the time the contract was entered into is five million dollars or less or there is no dispute resolution clause in the construction contract.

4.12 If, at any time, the total amount of claims for disputed variations exceeds 10% of the contract sum, the claim that causes that percentage to be exceeded and all subsequent claims will not be claimable variations under the Vic Act if the contract sum exceeds $150,000 unless there is no dispute resolution clause in the construction contract.21

4.13 Judicially, it was held that in order for a construction contract to provide a method for resolving disputes, at least three things are required, namely: 1) a process that could be described as a “method” of dispute resolution; 2) a process that is capable of resulting in a binding resolution; and 3) a process that the contract makes it a binding obligation for the parties to enter upon and participate in.22

4.14 Such complexity in drafting section 10A was not left without criticism and it was judicially commented that it takes:

“[S]everal readings to digest the steps required to apply the provision, and several more steps, combined with a respectable prowess in the science of numbers, to apply it to the case at hand. Although the confounding formula described in s 10A on a close reading is tolerably precise, it fails in the critical task of communicating the legislative stipulations in a ‘user friendly’ and readily comprehensible fashion to its intended audience.”23

New reasons

4.15 Unlike its counterpart in NSW, the Vic Act allows a respondent to include in the adjudication response additional reasons that were not included in the payment schedule. If this occurs, the adjudicator must serve a notice on the claimant setting out the additional reasons and giving the claimant two business days to lodge a response to those reasons.24 This mandatory process was susceptible to judicial consideration as to the implied procedural fairness. In Metacorp Pty Limited v Andeco Construction Group Pty Limited,25 Vickery J held:

“Although s. 22(2B) does not in its terms oblige an Adjudicator to give the other party an opportunity to comment on the submissions supplied by a claimant pursuant to the statutory notice, there may be circumstances where the common law rules of procedural fairness, which sit alongside the Act, demand that this occur.”

His Honour went on to explain the nature of such circumstances where:

  • .1 The section 22(2B) response provided by a claimant raises a new matter of fact or law (or both) that has not been previously canvassed by the parties in the documents provided to the adjudicator in the course of the adjudication application; and
  • .2 Where the matter is material to the determination that the adjudicator is required to make.

Adjudication review

4.16 The Vic Act differs significantly from all other jurisdictions in the introduction of an adjudication review scheme under which either party to an adjudication can apply for review of the determination by a another adjudicator (the review adjudicator).26 The review adjudicator is appointed by the same Authorised Nominating Authority (the ANA) on which the adjudication application was made.27 An application for review may only be made on the ground that the adjudicated amount included an excluded amount. The review is also limited to determinations exceeding $100,000.28 Such threshold was given in order not “to disadvantage small subcontractors who rely on prompt payment to stay in business”.29

4.17 A respondent can only apply for a review of an adjudication determination, if the respondent has identified that amount as an excluded amount in the payment schedule or the adjudication response and has paid to the claimant the adjudicated amount other than the amounts and has paid the alleged excluded amounts into a designated trust account.30 A claimant can also apply for a review of an adjudication determination, but only on the ground that the adjudicator failed to take into account a relevant amount in making an adjudication determination because it was wrongly determined to be an excluded amount.31

4.18 The ANA must provide information to the review adjudicator,32 which includes the original adjudication application and response from the original adjudicator.33 After conducting an adjudication review, a review adjudicator can substitute a new adjudication determination or confirm the determination that is the subject of the adjudication review.34 However, a review adjudicator is bound by the findings of fact of the first adjudicator and he or she should not engage in a re-evaluation of such findings.35

4.19 A review adjudicator can also correct his or her review determination if the review determination contains a clerical mistake, an error arising from an accidental slip or omission, a material miscalculation of figures or material mistake in description of any person, thing or matter referred to in the review determination, or a defect form. The correction may be made on the adjudicator’s own initiative or on the application of the claimant or the respondent.36 The review adjudicator must complete the review within five business days after their appointment or within any further time not exceeding 10 business days after that appointment to which the applicant for review agrees.37 There are also provisions similar to those in NSW for the respondent’s payment of the adjudicated amount as well as adjudication certificates.38

4.20 Presumably, the adjudication review is somehow another legislative solution enforcing partial validity of adjudication determination as sought by the new Queensland model.39 Having said that, both the adjudication determination and review determination are susceptible to judicial review as demonstrated in the only case where a review determination was considered by the Supreme Court.40

4.21 Interestingly, the Victorian Supreme Court has accepted at least two applications by respondents for judicial review bypassing the internal review scheme, which further emphasises that courts give parties the discretion to use either the review system or judicial review avenue.41 In Maxstra Constructions Pty Limited v Gilbert t/as AJ Gilbert Concrete,42 the respondent sought judicial review instead of the available legislative review and the court quashed the adjudicator’s determination remitting it back to the same adjudicator for reconsideration. The reason for bypassing would probably refer to the fact that the respondent seeking judicial review (as a tactic not to pay the claimant) will only be required under the Vic Act to pay the unpaid adjudicated amount (usually the full amount) in court as security.43 However, under the adjudication review scheme, the respondent is required to pay the adjudicated amount to the claimant other than the amounts alleged to be excluded amounts in which the alleged excluded amounts will be paid into a designated trust account as is the case in the review scheme.

4.22 Entertaining such applications in court rather than being reviewed by the alternative review avenue seems inconsistent with the intent of including the adjudication review in the Vic Act as well as the authorities in Western Australia, which have held that “the fact that an alternative remedy was available but not engaged is ordinarily a powerful factor against the grant of a discretionary remedy by way of judicial review”.44

Other key differences

4.23 The list below summarises some other key differences in the Vic Act compared to the NSW legislation:

  • .1 “Business day” is defined as a day that is not a Saturday, or Sunday, or a day that is wholly, or partly, observed as a public holiday throughout Victoria. This means that, unlike all other East Coast jurisdictions, the business days from 27 to 31 December are business days.
  • .2 The payment claim must be served within three months after the reference date if the contract is silent about it.45
  • .3 The adjudication application must be served within 10 business days after receiving the payment schedule or within 10 business days where any part of the scheduled amount has not been paid by the due date.46
  • .4 If there is no payment schedule, the claimant must serve a notice to the respondent of his intention to commence adjudication, within 10 business days following the due date for payment47 and give the respondent a second chance to issue the payment schedule within two business days.48 In this case, the adjudication application must be served within five business days after the expiry of the two business days.49
  • .5 Notwithstanding the 10-day limit to issue the determination, an adjudicator (if the claimant agrees) may make the determination within any further time not exceeding 15 business days after that period and the claimant must not unreasonably withhold its agreement.50
  • .6 If the construction contract to which the payment claim relates lists three or more ANAs, the application must be made to one of those ANAs chosen by the claimant.51
  • .7 Subcontractors can use the adjudication process to recover the adjudicated amount from principals and access amounts clients or head contractors hold on trust for subcontractors until works are completed.52
  • .8 The adjudicator has discretion to permit legal representation in a conference.53

Regulation of ANAs and adjudicators

4.24 Section 43 of the Act permits the Commission to impose conditions of authorisation upon ANAs, and to vary or revoke any existing conditions, in accordance with Ministerial Guidelines. As such, the Authorised Nominating Authorities Conditions of Authorisation54 (the Conditions) were released to set out the general obligations of the ANA, professional conduct, confidentiality and privacy, public access to ANAs for advice, management of adjudication process, record keeping and reporting and complaints system.

4.25 The complaints system provided for in the Conditions has no equivalent in other states (at least as an explicit and detailed one). The system provides that the ANA must establish, and make available to any person involved in the adjudication process, a complaints procedure that provides an independent investigation, particularly if a complaint concerns the ANA, a timely resolution, and appropriate remedies and sanctions where the complaint is proved. The ANA’s complaint procedures must be able to address complaints relating to any process of the ANA in relation to or arising out of the Vic Act or any conduct by an adjudicator nominated by the ANA. The ANA must make any person involved in the adjudication process aware of its complaints procedures.

4.26 The Conditions also include a document (appendix 1) related to Adjudicator Standards of Conduct, which states that the conduct of adjudicators in performing functions under the Vic Act should at all times meet the standards set out in that document. Those standards include guidelines on general obligations, probity, competence, conflict of interest, procedural fairness, confidentiality and privacy, fees and complaints. Notably, those guidelines provide that adjudicators must not accept an adjudication application or undertake an adjudication review that, if doing so, would create any actual or likely conflict of interest or bias on their part. Adjudicators must accept nominations only if they consider they are competent in view of the nature and complexity of the matter.

4.27 The Conditions include another document (appendix 2) related to Adjudicator Core Competencies and provide that ANAs must ensure that the adjudicators they nominate for the purposes of the Vic Act have the qualifications, knowledge and skills set out in that document. The document sets out the nature of recognised qualifications, minimum years of experience and detailed training requirements. However, these conditions do not mention any requirements for legal qualifications or practical legal training for adjudicators dealing with complex claims, which may require application of complicated legal principles to complex facts. In addition, Vickery J noted that “the conditions do not prescribe, as a basic pre-requisite for appointment, qualifications in the disciplines of one or other of architecture, construction, engineering, quantity surveying, building surveying or project management. For example, it is possible for a tertiary qualified lawyer with 5 years’ experience in dispute resolution relating to construction contracts to be appointed as an adjudicator under the Act.”55

The ambit of judicial review

4.28 Until April 2009, no application had been made to challenge an adjudicator’s determination before the Supreme Court of Victoria. This may refer to the influence of Brodyn as well as the very low usage rate of adjudication. In Hickory Developments Pty Limited v Schiavello (Vic) Pty Limited [2009] VSC 156 (Hickory), Vickery J mentioned obiter dicta that the NSW authority in Brodyn to the extent it established that a relief in the nature of certiorari is not available in relation to invalid adjudication determinations cannot be followed in Victoria for the following fundamental reasons:

  • .1 The privative clause (section 28R(5)(a)) contained in the Vic Act provides scope for relief in the nature of certiorari.56
  • .2 During the limited period before the entry of judgment, section 28R(5)(a) provision has no application to proceedings in the nature of certiorari to quash an adjudicator’s determination.57
  • .3 The Vic Act did not intend to limit the court’s jurisdiction (provided by the Constitution Act 1975 (Vic) section 85(1), (5) and (6)) by excluding, or restricting, judicial review by the court of a determination of an adjudicator under the Act.58

4.29 Accordingly, Vickery J continued to say that although an adjudication determination cannot finally resolve all the rights of the parties under the applicable construction contract, it does have the effect of finally determining the right of a claimant to immediate payment of its progress claim, which has an obvious legal effect upon rights, sufficient to found certiorari.59 His Honour went on to conclude that relief in the nature of certiorari is not excluded either expressly or by implication under the Vic Act. In accordance with this reasoning, Vickery J, in Grocon Constructors v Planit Cocciardi Joint Venture (No 2) [2009] VSC 426 (Grocon), confirmed his position in Hickory that determinations by adjudicators are in principle amenable to orders in the nature of certiorari for error of law.

4.30 One year later, and by following the authority of Kirk60 and Chase,61 the NSW Court of Appeal altered the earlier position established in Brodyn and confirmed that certiorari is available if adjudicators committed jurisdictional errors.62 In accordance with these authorities, Vickery J, in Sugar Australia Pty Limited v Southern Ocean Pty Limited,63 reconsidered his previous approach in Grocon64 (which held that the intention of the Vic Act was to “confer upon an adjudicator the capacity to determine the facts which go to his or her jurisdiction”) and held:

“If there be any challenge to the jurisdiction assumed by the adjudicator it must finally be determined on the basis of facts found by the Court on judicial review, in the course of determining whether a jurisdictional error has been exposed which calls for the exercise of the Court’s discretion to grant relief in the nature of certiorari and, if necessary, mandamus. The Court may grant relief on such relevant evidence as may be adduced before it, whether or not such evidence was before the adjudicator at first instance. Further, the Court may grant such relief without regard to any determination which may have been made on the issue of jurisdiction by the adjudicator. The Court is obliged to arrive at its own conclusion as to jurisdiction based on the law and on the facts as found by it.”65

Legal principles

4.31 In Maxstra Constructions Pty Limited v Gilbert t/as AJ Gilbert Concrete,66 Vickery J reviewed the previous Supreme Court authorities in Victoria and usefully summarised the established legal principles related to the availability of judicial review and of associated remedies in respect of adjudication determinations made under the Vic Act. These principles are as follows:

  • .1 An adjudication determination made pursuant to the Act is amenable to the writ of certiorari on all the grounds available under that writ, including as a result of jurisdictional error or error on the face of the record;67
  • .2 A declaration of invalidity of an adjudication determination is only available if:68

    • .1 The basic and essential requirements of the Act for a valid determination are not satisfied,
    • .2 The purported determination is not a bona fide attempt to exercise the power granted under the Act, or
    • .3 there is a substantial denial of the measure of natural justice required under the Act;

  • .3 What amounts to the “basic requirements” of the Act or the “essential preconditions for the existence of an adjudicator’s determination” may be equated to jurisdictional error;69 and
  • .4 The granting of an order in the nature of certiorari and the granting of a declaration are subject to discretionary considerations.70

4.32 Some other important legal principles stem from the current authorities of the Victorian courts as follows:

Remittal of invalid determinations

4.33 Despite the fact the Vic Act is silent about remittal, the Victorian Supreme Court has remitted a few cases to the ANA for further remittal to the original adjudicator.82 In Maxstra Constructions Pty Limited v Joseph Gilbert,83 the Court held that, where an order in the nature of certiorari is granted, the usual form of relief is to quash the decision (or part thereof) under review and remit it back to the tribunal for reconsideration according to law. In Plenty Road v Construction Engineering (Aust) (No 2),84 Vickery J examined whether the flawed determination should be remitted to the original adjudicator, or a different one, and decided to remit the case to the original adjudicator in order to avoid delay in the process, since the original adjudicator was fully familiar with the case. Vickery J further asserted that “minimisation of delay in the decision-making process promotes a central aim of the Act”.85

Severance of invalid parts of determinations

4.34 Unlike other jurisdictions, the Victorian Supreme Court accepts the proposition that the two options whether to remit the invalid determination to an adjudicator or to sever the invalid parts of determinations are technically valid. In Maxstra Constructions Pty Limited v Gilbert trading as AJ Gilbert Concrete,86 Vickery J considered the option whether to sever the valid parts of an adjudicator’s determination affected by jurisdictional errors, or to remit the case to the adjudicator and said:

“Although severance of part of a determination which is valid from part which is determined to be invalid so as to preserve that part which is valid, is technically possible in some cases, this is not the case for such relief. Section 11(1)(b) of the Act requires a person in the position of an Adjudicator to value the work in dispute having regard to the four factors specified in the sub-paragraphs which follow. Each of these statutory elements, so far as they may be applicable, need to be considered, both individually and as a whole in arriving at the value. If any one element of the four is changed, this may have a bearing on the remainder for the purposes of the valuation. Accordingly, where it has been found that one of the factors which was potentially open to have been considered, was not considered, there is little option but to remit the whole of the valuation back to the Adjudicator to determine afresh.

4.35 Indeed, in Gantley Pty Limited v Phenix International Group Pty Limited,87 the Victorian Supreme Court has extensively analysed the possibility to apply the legal principles of severance on adjudicator’s determination and held that severance would operate to achieve the purpose and object of the Vic Act and would not operate to diminish the attainment of these goals.

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