The decision limits the ambit of argument about the application of 'issue estoppel' in relation to adjudication decisions.
Caltex v Allstate
On 15 September 2014 in the Supreme Court of Queensland Justice McMurdo handed down a decision in Caltex Refineries (Qld) Pty Ltd & Anor v Allstate Access (Australia) Pty Ltd & Ors  QSC 223 ("Caltex") in which the application of issue estoppel to adjudication decisions under the Building and Construction Industry Security of Payment ("SOP") legislation in Queensland was discussed.
Issue Estoppel Defined
Issue estoppel exists when there is a judicial finding of a proposition of law or fact between parties in earlier litigation and when the same question arises in later litigation between the same parties. In the later litigation the established proposition is treated as conclusive between those same parties
A long term equipment hire agreement was entered into between Allstate and Caltex for scaffolding at its oil refineries in Queensland and NSW. Allstate issued payment claims in Queensland and NSW. The payment claims included claims for damage to the scaffolding provided.
The claims were referred to adjudication under each state's respective security of payments legislation ("SOP"). Each claim was decided in substantially the same terms by the same adjudicator, finding that there existed an express term in the agreement that Caltex would pay for any damaged scaffolding equipment.
Caltex applied to set aside the adjudication decisions in the Supreme Court of Queensland on several different grounds.
The Supreme Court disagreed with the adjudicator about the existence of an express term to that effect but found that this was not a jurisdictional error by the adjudicator.
Adjudicator's reliance on argument not advanced by the parties voided decision
The Supreme Court held that in fact, Allstate had not advanced the legal argument relied upon by the adjudicator, and further that Caltex had been denied any opportunity to make submissions in that regard, which was a breach of natural justice, with the effect that the decision was rendered void.
SOP regime create something less than issue estoppel
The court's comments about issue estoppel and the case of Dualcorp Pty Ltd v Remo Constructions Pty Ltd 1 ("Dualcorp ") are of particular interest. The parties in Dualcorp had a history of adjudicating payment disputes.
Previously an adjudicator had decided that Caltex was obliged to pay for damaged scaffolding equipment, albeit for reasons different to the adjudicator in the present payment dispute.
Allstate argued that the decisions of the previous adjudicator amounted to an issue estoppel, and further argued that the subsequent adjudicator was obliged to decide the recent adjudications in the same way.
In rejecting the issue estoppel argument, the court held that an issue estoppel did not arise because each adjudicator had determined different findings of fact in respect of the claims, and applied different reasoning in reaching their decisions.
Additionally, as each of the adjudicators decided relevantly different issues, the subsequent adjudicator was not bound by the decision of the previous adjudicator; and further, only the fundamental foundation underpinning the decision could create a basis for an issue estoppel.
The Court held that there were several bases for the decision of the previous adjudicator, and accordingly the reasons relied upon did not amount to a 'fundamental basis' of the decision and could not found an issue estoppel.
Of particular relevance, the Supreme Court questioned if the concept of issue estoppel even applied to the decisions of adjudicators.
Making reference to Dualcorp, McMurdo J commented on Macfarlan JA's decision in Dualcorp observing that:
'Although Macfarlan JA described the outcome as a result of an issue estoppel, it is clear that His Honour had in mind something less than the operation of the common law doctrine of estoppel as it is usually understood'. 2
McMurdo J was not convinced that such an estoppel arose in the present case, noting:
'The source of this more limited estoppel must be found, if at all, within the legislation. In my view, the legislation does not provide it.' 3
The Caltex decision reinforces the fact that:
- An adjudicator must not make a decision on an argument not advanced by the parties;
- The combined effect of several provisions of the QLD SOP Act created something less than the application of the doctrine of estoppel.
Dualcorp provides for the finality of an adjudicator's decision in the sense of precluding a claimant from pursuing a progress payment inconsistently with the determination of an issue by an adjudicator which was fundamental to that decision'.
The content of this article is intended to provide a general guide to the subject matter. Advice should be sought. For more information on the Building and Construction Industry Payments Act 2004 (QLD), please contact Mr John Merlo, Special Counsel at Broadly Rees Hogan Lawyers, Construction and Infrastructure.
1 (2009) 74 NSWLR 190
2 Caltex Refineries (Qld) Pty Ltd & Anor v Allstate Access (Australia) Pty Ltd & Ors  QSC 223, 54
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.