KEYWORDS: RE-AGITATION OF PAYMENT ISSUES
KEY TAKEAWAY
A claimant under the Building and Construction Industry Payments Act 2004 (Qld) (BCIP Act) cannot re-agitate issues that were essential to a previous adjudicator's determination, even if the issues were previously cast in the context of a variation claim and later re-agitated as an extension of time claim.
If an adjudicator's decision is affected by jurisdictional error, the new section 100(4) of the BCIP Act permits the affected part of the adjudicator's decision to be severed, allowing the rest of the decision to stand. Section 100(4) operates retrospectively.
The facts
Sunshine Coast Regional Council (Council) engaged Earthpro Pty Ltd (Earthpro) to carry out earthworks at a landfill site. The contract was an amended form of AS2124-1992.24
The contract required practical completion by 3 June 2013 but this was extended. The Council terminated the contract on 26 March 2014. Earthpro had not reached practical completion. After termination, Earthpro served a payment claim seeking more than $3 million including prolongation costs. In response, the Council's payment schedule recognised a liability of under $6,500.
In late August 2014, Earthpro brought an adjudication application. The adjudicator, Mr Spain, determined that the Council was required to pay Earthpro $1.4 million. Of this amount, approximately $1.081 million related to prolongation costs. On appeal, the Council argued that the adjudicator's decision was void for jurisdictional error on three grounds:
- the adjudicator had exceeded his jurisdiction by deciding issues that had been determined by a prior adjudicator;
- it was denied natural justice; and
- the adjudicator failed to consider the Council's case properly.
Decision
Byrne J concluded that jurisdictional error was established in relation to the Council's claim that the adjudicator had allowed Earthpro to re-agitate issues which formed the basis of "EOT 10". The other two grounds were not made out.
Under EOT 10, Earthpro claimed that it was delayed due to handling sloppy alluvium and that it was open to the Superintendent to award an EOT to allow the alluvium to dry out before removal.
Earthpro maintained its claim for EOT 10 in reliance on several claimed facts that Earthpro had advanced in a previous adjudication as essential to its claim for a variation. In that adjudication, the adjudicator, Mr Uher, found against the assertions made by Earthpro.
Earthpro asserted that Mr Spain was not obliged to follow the previous adjudicator's findings as:
- the latest claim was for an extension of time for practical completion, whereas the previous claim was for a contractual variation; and
- additional expert evidence and new arguments had been advanced.
Byrne J found that the new expert evidence did not overcome the fact that the "factual foundations underpinning the EOT claim were fundamental to the variation claim". 25 These common factual issues had already been determined by the first adjudicator.
In his Honour's opinion, the BCIP Act inferentially precludes "re-agitation of the same issue where that issue was essential to a determination in an earlier adjudication". 26 Accordingly, the second adjudicator had exceeded his jurisdiction in allowing EOT 10.
Byrne J's finding is in keeping with the decision of Philip McMurdo J in Caltex Refineries (Qld) Pty Ltd v Allstate Access (Australia) Pty Ltd27 (on which Byrne J relied) that there is a finality to an adjudicator's decision in the sense that a claimant is precluded from pursuing a claim where the fundamental or cardinal matters have already been determined.
The second issue was whether section 100(4) of the BCIP Act applied to the proceedings. Section 100(4) took effect on 15 December 2014. The section commenced after the adjudication decision and the commencement of the application. Section 100(4) states:
- identify the part affected by the error; and
- allow the part of the decision not affected by the error to remain binding on the parties to the
- proceeding."
Byrne J observed in passing that the evident purpose of section 100(4) was to address the inconvenient consequences of the then current judicial rule that "jurisdictional error which affects one part of a decision will render the whole of [the decision] void". 28 His Honour noted that purpose did not assist here because the proceedings were commenced before the amending Act became operative.
Ultimately, Byrne J held that section 100(4) did apply and declared the adjudicator's decision invalid to the extent it involved jurisdiction error in respect of EOT 10. In reaching this conclusion, his Honour found that the "transitional version" of the BCIP Act under section 116 of the BCIP Act applied.
Justice Byrne was guided by a "distinct textual indication"29 that section 100(4) applies to a proceeding started before the amending Act took force. His Honour concluded that because "[s]ection 100(4) can only be relevant to an application to the Court to have an Adjudication Decision declared void for jurisdictional error'",30 it must therefore be an "outstanding matter" or section 116(5)(e) would make no sense.
http://archive.sclqld.org.au/ qjudgment/2015/QSC15-168.pdf
Footnotes
24 Corrs acted for the Sunshine Coast Regional
Council in this dispute
25 At [42]
26 At [42]
27 [2014] QSC 223 at [55]
28 BM Alliance Coal Operations Pty Ltd v BGC
Contracting Pty Ltd [2012] QSC 145 at [58]
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.
 |
 |
| Most awarded firm and Australian deal of
the year Australasian Legal Business Awards |
Employer of Choice for
Women Equal Opportunity for Women in the Workplace (EOWA) |