March 24, 2025
This week LPC Lawyers looks at a recent Queensland Supreme Court case involving judicial review of an Adjudicator’s decision and options available to the aggrieved party.
A discrete single jurisdictional error in the adjudication was found for the reasons set out in this article. The question of whether the whole of the Adjudicator’s decision is to be set aside or whether the erroneous aspect can be severed from Adjudicator’s decision is yet to be determined. We will keep you updated on this once we know the outcome.
Facts
Tomkins (‘the builder’) was contracted by York (‘the Principal’) to perform works for the development of a residential apartment building. Work was carried out between 12 August 2021 and 29 August 2024, however since late August 2024, the parties have been in dispute. Subsequently, the following has occurred:
(a) 29 August 2024 – Tomkins served a Payment Claim (‘Payment Claim 35’) under clause 37.1 of the General Conditions and the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (‘BIF Act’). This was attached to a letter which specified that 28 August 2024 was a ‘reference date’ under the BIF Act. York responded with a Payment Schedule for $Nil.
(b) 10 September 2024 – Tomkins served a notice terminating the Contract for breach by York.
(c) 12 September 2024 – the Superintendent issued a Payment Schedule responding to Payment Claim 35 and certifying as payable a negative amount of $-957,401.70. York served a notice under clause 39.4 purporting to take work out of Tomkins’ hands (‘the take-out notice’).
The Adjudication
On 25 October 2024, Tomkins lodged an application before an adjudicator (‘second respondent’). York’s response to the adjudication was lodged on 12 December 2024. After slight adjustments on the basis of miscalculations, it was determined that York would have to pay Tomkins in excess of $16,825,279.17 (incl. GST) (‘the Adjudicated Amount’). This remains unpaid.
On 18 February 2025, an interlocutory injunction was granted to restrain Tomkins from enforcing the decision and a firm of solicitors (‘third respondent’), as escrow agent (funds holder), from making a disbursement to Tomkins from an escrow account in relation to the decision.
Both the second and third respondent’s role was merely to abide with any order of the court.
Issue – An Error by the Adjudicator?
While Tomkins opposed the granting of relief , York argued that the adjudicator’s decision was affected by two jurisdictional errors and was void. Contrary to s 88(2) of the BIF Act, the Adjudicator failed to consider the parties’ submissions, which is said to have arisen in two ways (‘the consideration error’):
- a concession by Tomkins which reduced a claim for work on the façade from about $11.8 million to about $8.1 million; and
- submissions by York that the value of a deduction for defective work on the façade had increased from $4 million to over $11 million.
York sought court declarations that the adjudication decision was affected by jurisdictional error and void for this reason.
Decision
Justice Treston of the Queensland Supreme Court determined a jurisdictional error pertaining to a discrete component of the Adjudication being the consideration error.
The Alleged Consideration Error
York alleged that the adjudicator must have ignored evidence and submissions because: (1) he accepted Tomkins’ original claim for the façade being $11.8 million (rather than the later-reduced claim of $8.1 million); and (2) the Adjudicator overlooked that the deduction for the façade had changed from the previous adjudication from $4 million to $11 million.
Justice Treston held that the Adjudicator must not have considered (within the meaning of s 88(2) of the BIF Act) the submissions and material in relation to the correct amount claimed. The fact that Tomkins declared it did not seek the full $11.8 million sum and York still repeatedly referring to it when contending that the adjudicated amount ought to be $Nil is immaterial.
Her Honour explained that amongst other things the adjudicator repeatedly referred to the incorrect sum and made no mention of the sum actually claimed and likely did not ‘seek assistance’ from secondary documents (i.e., declarations and expert reports). The nature, gravity and effect of some difference of $3.7 million was therefore considered by her Honour as significant and amounted to jurisdictional error.
Key Takeaways
There is no right of appeal to an Adjudicator’s decision under the BIF Act.
As such and whilst options may be limited, an Adjudicator’s decision may be affected by jurisdictional error which is a basis for review in the Supreme Court.
Examples of jurisdictional errors can be:
(a) identification of the wrong issue for adjudication;
(b) ignored relevant material or took into account irrelevant material;
(c) failed to observe a requirement of procedural fairness;
(d) made a decision in bad faith;
(e) made a decision without evidence.
If an Adjudicator’s decision is infected by jurisdictional error it may be liable to be set aside by a court upon judicial review, giving the unsuccessful party to the adjudication an avenue to pursue when an appeal is not available to it.