By Owen Hayford
Senior Fellow in the Melbourne Law Masters and Partner, PwC Legal
Construction lawyers were very excited last week, when Australia’s highest court handed down two decisions on the rights of principals to construction contracts to seek judicial review of adjudications made under security of payment legislation — Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd  HCA 4, and Maxcon Constructions Pty Ltd v Vadasz  HCA 5.
Security of payment legislation has been enacted in every Australian state and territory to ensure that that construction contractors and sub-contractors are promptly paid for the work that they have performed. Although different in each state and territory, the legislation establishes a fast-track process for the interim resolution of progress payment disputes under construction contracts by an adjudicator. The two cases arose when decisions by adjudicators in relation to progress payments were sought to be challenged by principals for alleged errors of law.
The High Court answered the question of when an error by an adjudicator will entitle the principal to apply to the court to have the adjudication declared void and set aside. Numerous judges have provided different answers to this question since it was first considered in detail in the 2003 decision of Musico v Davenport  NSWSC 977. The sad news, for those who have funded the intervening litigation, is that the High Court has basically taken us back to the position that was espoused in Musico almost 15 years ago.
Sadder still, the High Court hasn’t exhaustively determined when a court will be allowed to set aside a determination because the requirements of the security of payment legislation have not been satisfied. As such, further litigation on the grey areas can be expected. Continue reading