Introducing review mechanisms into statutory construction adjudication

Statutory adjudication was introduced into the security of payment legislation as a fast-track payment dispute resolution process aiming to facilitate cash flow within the construction contractual chain. However, in recent years, courts have been more willing to intervene in the adjudication process due to poor quality of adjudication outcome, particularly in relation to large and/or complex payment claims. This situation has encouraged aggrieved parties to challenge adjudication determinations by way of judicial review resulting in numerous judicial review applications, particularly in Australia. This has eroded the original object of the security of payment legislation. The mission has been compromised particularly in ensuring that contractors are paid quickly for the work they do on an interim basis. With that, some jurisdictions allow for an express limited right of aggrieved parties to apply for review against erroneous determinations as a way to remedy injustice caused by the speedy adjudication process. The aim of this thesis is to examine whether the Australian statutory adjudication would benefit from introducing a review mechanism, and if so, what would be the guidelines for devising an effective review mechanism. The study adopts a combination of doctrinal legal research and socio-legal research (empirical research) involving 23 interviews with industry experts. The research starts by extensively analysing the effectiveness of the operation of the security of payment laws in Australia. Then, it thoroughly examines the factors affecting the quality of adjudicating complex cases. The study reveals that the lack of full review mechanisms within the security of payment legislation is one of the identified factors leading to poor adjudication outcome and/or excessive judicial intervention. The study draws upon this analysis and evaluates the operation of review mechanisms in various jurisdictions to examine whether or not a legislative review mechanism, should be an essential characteristic of any effective statutory adjudication scheme. The study concludes that an appropriately designed full review mechanism is a pragmatic and effective measure to improve certainty, reinstate disputants’ confidence and diminish judicial intervention. The study identifies some barriers resulting from introducing review mechanisms, namely, additional time and cost, and persistent availability of judicial review. Thus, a set of detailed guidelines for devising an appropriate review mechanism is proposed to counter those barriers and avoid any abuse of process. With regard to time, the guidelines make it incumbent on respondents to release the undisputed portion of the adjudicated amount to claimants. Also, respondents will be required to pay the disputed portion to claimants against a bank guarantee. If claimants cannot provide a bank guarantee, respondents must pay the disputed portion into a trust account. This requirement will not only improve the flow of cash in a timely manner but also deter respondents from benefiting from the additional time in the adjudication process. also, the review mechanism is devised as a swift process where the total review duration may take 20 to 25 business days in normal cases and 25 to 30 business days in complex cases. Arguably, this is a little price to pay to obtain a reliable and more certain adjudication outcome away from curial proceedings. With regard to cost, the guidelines provide that the review can only be accessed if the adjudicated amount in dispute is $100,000 or more. This monetary threshold will ensure there is sufficient substance in economic terms to make the review process economical and convenient to both parties. Also, review adjudicators should take into account the conduct of the parties (acting unreasonably) in the apportionment of fees and award of legal costs. In addition, review adjudicators can reduce fees of errant original adjudicators. With regard to judicial review, the guidelines make it clear that a party to an adjudication determination may not bring judic al proceedings to set aside an adjudicator’s determination without having first obtained a review determination with respect to the adjudicator’s determination. This requirement is consistent with the observations of the WA Supreme Court in Re Graham Anstee-Brook; Ex Parte Mount Gibson Mining Ltd [2011] WASC 172 at [64] (referring to various authorities including the High Court's decision in The Queen v Cook; Ex parte Twigg [1980] HCA 36) that the “availability of prerogative relief will be undermined by circumstances where parties could avail themselves of alternative remedies by way of rehearing, appeal or review.” The findings of this study, whilst they are very relevant to Australia, can be applied with minor alterations to suit other jurisdictions operating equivalent security of payment legislation. It is hoped that the recommendations of this study will be considered by concerned policy makers and governmental agencies seeking to apply best practices to improve security of payment laws.