Australia: Achieving practical justice: ‘upsetting the applecart’ of relief on jurisdictional challenges to adjudication decisions

It has been established law for a number of years that a respondent who is unsuccessful in an adjudication under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) is entitled to have the adjudicator's decision set aside or declared void in its entirety if that respondent can establish that any part of the decision was infected by jurisdictional error.1

In the decision of BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd & Ors [2013] QSC 67 delivered on 22 March 2013 (BMA v BGC), Applegarth J may have upset the proverbial applecart by reminding the parties (and interested industry spectators) that while the "usual" result of a finding of jurisdictional error will be that the entirety of the infected adjudication decision is declared void, it is also within the discretion of the court to decline to issue such a declaration in the event that another, more convenient or satisfactory, remedy is available.

That is, BMA v BGC demonstrates that it should not be considered inevitable that if a respondent can establish an instance of jurisdictional error, however small, the entire decision will be void. In that case, Applegarth J exercised his discretion to decline to make the declaratory order sought by BMA (the respondent in the subject adjudication) on the basis that it would be unjust to do so in circumstances where only $4.345 million of the entire adjudicated amount of $28.16 million was infected by jurisdictional error.

Instead, His Honour sought to achieve "practical justice" by dismissing BMA's application on the condition that BGC repays BMA the amount of $4.345 million, which His Honour had earlier found2 was awarded by the adjudicator in excess of his jurisdiction.

In exercising his discretion in this somewhat less "usual" manner, it seems that His Honour was addressing what he had earlier in the proceeding observed to be a situation that might trigger legislative reform – that is, the situation where jurisdictional error may be found in respect of a relatively minor part of a claim and a contractor would be deprived of the entire benefit of the adjudication decision unless legislative reforms are enacted to allow the invalid part of the decision to be severed from the rest of the decision.3

In his earlier decision, His Honour also appeared to suggest that the manner in which such a situation could be addressed (absent legislative reform) was for an order to be made remitting the matter to the adjudicator for reconsideration.4 The question of remittal was apparently advanced by BGC as a secondary argument in BMA v BGC, although having declined to exercise his discretion to declare the adjudication decision void, it was not necessary for His Honour to decide that question.

His Honour did however make observations regarding the potential complexities presented by the matters that have long been advanced as arguments made against remittal of adjudication decisions under BCIPA. Such arguments are that there is no specific provision in the legislation that allows an invalid decision to be remitted to the adjudicator, coupled with the fact that s25(3) provides the adjudicator with a limited timeframe within which to make a valid decision – in most cases within 10 business days of receiving the adjudication response and any order remitting the decision would ordinarily be made well outside of that timeframe.

What does this mean?

In circumstances where the historical exercise of judicial discretion to declare adjudication decisions void has often appeared to be done (understandably) with some reluctance given relevant policy considerations regarding the intended effect of BCIPA as a quick and effective mechanism to facilitate cash flow in the construction industry, it seems that the approach taken by Applegarth J in BMA v BGC may potentially prove attractive to other members of the bench and provoke a new trend in the nature of the relief granted in applications challenging an adjudicator's decision on the grounds of jurisdictional error that is limited to a finite part of the adjudicator's decision.

If such a trend does develop, in order to have a decision declared void in the future a respondent will likely have to establish either that a jurisdictional error exists that infects the entirety, or most of, the decision, or that the consequences of the error are unable to be clearly separated from the rest of the decision. This will have significant ramifications for respondents in considering whether it is viable, or desirable, that such an application be pursued. Furthermore, while not decided in BMA v BGC, it is likely that Applegarth J's observations regarding the suggestion that an adjudication decision could be remitted to the adjudicator will lend impetus to a decision being made on that issue in the near future. If the court ultimately decides that it is able to remit a decision to an adjudicator in such circumstances, such a decision by the court would likely have even more significant ramifications for not only respondents, but for claimants and adjudicators as well – watch this space.


1 For a recent example, see James Trowse Constructions Pty Ltd v ASAP Plasterers Pty Ltd & Ors [2011] QSC 145 in which it was held that the common law doctrine of severance could not be applied to save an adjudication decision infected by jurisdictional error.

2 In BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd & Ors [2012] QSC 346 at [56]-[57]

3 Refer to BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd & Ors [2012] QSC 346 at [59]

4 Refer to BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd & Ors [2012] QSC 346 at [62]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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