In December 2021, Williams J in separate cases in the NSW Supreme Court decided the same issue regarding the proper application of s13(4) of the NSW SOP Act in separate appeals of separate adjudication decisions concerning the same project in Cronulla NSW (see https://www.caselaw.nsw.gov.au/decision/17d9da0b78ec783e0dfa6507 & https://www.caselaw.nsw.gov.au/decision/17d9dbe51b382db74fd630b7).
At issue in both appeals was whether the respective payment claims were properly served within 12 months of when the subject work was last completed and if incorrectly decided (or if not decided at all), whether the consequence is that the adjudication decisions were void. Enter the concept of first and second category jurisdictional matters (NSWCA 2018 – Icon case). In Icon, the NSW Court of Appeal held first category matters are jurisdictional facts that must exist before a decision maker can lawfully exercise power and second category matters concern related opinions formed by a decision maker (although not determinative of the lawful exercise of power) that must be reasonably and lawfully formed.
The result being, if a first category matter is incorrectly decided it will invalidate the decision. If a second category matter is incorrectly decided, it will not invalidate the decision, provided it was reasonably and lawfully arrived at.
Applying these principles, the Court held the adjudicator’s opinions regarding compliance with s13(4) of the NSW SOP Act fell into the second category because answering that question often involved a complex assessment of the nature of the work claimed and evidence regarding its performance.
The result being, if a first category matter is incorrectly decided it will invalidate the decision. If a second category matter is incorrectly decided, it will not invalidate the decision, provided it was reasonably and lawfully arrived at.
Therefore, provided the respective adjudicators formed reasonable and lawful opinions of compliance with s13(4) of the Act, even if incorrect, the ultimate decision remains valid. In the one instance the Court found the decision of compliance with s13(4) was reasonably and lawfully arrived at, but not so for the other, where it was found that consideration of s13(4) was so misguided that no opinion was arrived at. In the absence of a reasonable and lawful opinion regarding s13(4), the adjudication decision was void.
