Adjudicators appointed to adjudicate on payment claims under the Building Industry Fairness (Security of Payment) Act 2017 are subject to certain limitations and they are prohibited from considering certain matters in the decision-making process. The Supreme Court of Queensland was recently asked to consider such prohibited matters and when, as a result of an adjudicator considering such a matter, will an adjudication decision be void.
In Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No. 2) QSC 231, the Court considered ‘prohibited matters’ referred to in section 88(3) of the Building Industry Fairness (Security of Payment) Act 2017 (Act) and whether the adjudicator’s decision was compromised by jurisdictional error.
Section 88(3) provides:
“(3) … the adjudicator must not consider any of the following—
(a)an adjudication response, to which the adjudication application relates, that was not given to the adjudicator within the time required …
(b)a reason included in an adjudication response to the adjudication application, if the reason is prohibited from being included in the response …”
The parties’ dispute was the subject of four payment claims, two applications to the Supreme Court and three adjudications in total.
The particular adjudication decision, the subject of the Supreme Court application, had been remitted back to the adjudicator on 2 separate occasions.
The application was brought on the basis that the adjudicator had (in his decision) taken into account a ‘new defence’, which the applicant argued was a prohibited matter within section 88(3).
The ‘new defence’ was brought to the attention of the applicant when in the adjudication response, a reason was included that had not previously featured in the payment schedule.
The applicant argued that the adjudicator fell into jurisdictional error because he considered the ‘new defence’ in this decision.
The Court provided guidance on the requirement under section 88(3).
Justice Freeburn considered the meaning of ‘must not consider’ in section 88(3) and held that ‘considering’, does not necessarily require the adjudicator to regard the new defence as a factor of the adjudicator’s ultimate decision.
It does however require ‘having regard to’ the relevant matter.
His Honour held that the adjudicator had applied an ‘active intellectual process’ to the new defence, and therefore had ‘had regard to it’ and ‘considered’ it in his reasoning. As a result, the decision was affected by jurisdictional error.
Despite the inherent and discretionary power of the Court to remit the proceeding back to the adjudicator a third time, the Court held it was not appropriate to remit it again when the adjudicator had already considered the issues twice before.
Instead, the relevant parts of the adjudication decision that were affected by jurisdictional error were declared void.
Justice Freeburn explained that in this instance, while ordinarily it might be appropriate to remit the proceeding back, the remission of the dispute related to only one of three components of the disputes and the existence of the other proceedings were strong discretionary factors.
For adjudicators and practitioners, the decision is a reminder and helpful analysis of what may cause a decision to be remitted or voided under section 88(3) of the Act.
At Rose Litigation Lawyers we are experts in Building and Construction Litigation. If you have any questions in relation to this topic and would like to discuss how this may impact you or your business, please give us a call and we would be happy to assist.