Adjudicators are increasingly deciding matters on a
basis for which neither party has contended, which invariably leads
to a denial of natural justice.
The decision in Ostwald Bros Pty Ltd v Jaylon Pacific Pty
Ltd & Ors1 is a timely reminder of this point.
Yet again an adjudication decision has been declared void as a
consequence of an adjudicator's failure to comply with the
principles of natural justice.
As Burns J reminded the parties:
"although an adjudicator is not required to
provide an opportunity to the parties to be heard on every point,
there is a clear obligation to do so where the point is material to
the outcome of the adjudication, unless it can be said that no
submission could have been made to the adjudicator which might have
produced a different result".2
Principals, contractors and subcontractors alike should
interrogate the reasoning behind any adjudication decision to
ensure that the adjudicator has not fallen into error.
At adjudication, the adjudicator rejected Ostwald's claim
for liquidated damages (LDs) based on the
adjudicator's independent interpretation (after parties'
submissions had closed) of the extension of time
(EOT) and LDs provisions (clauses 5.4 and 5.7
On Application Ostwald (as applicant) sought:
a declaration that the adjudication decision was void on the
basis that Ostwald had not been afforded an opportunity to make
submissions regarding the adjudicator's interpretation of
clauses 5.4 and 5.7; and
an injunction restraining the adjudication registrar from
issuing an adjudication certificate based on that decision.
The first respondent (Jaylon) submitted that though neither
party had been given opportunity to make submissions on the
interpretation relied upon by the adjudicator, it would have made
no substantive difference to the decision if submissions had been
Burns J held the adjudicators decision was void for denial of
With reference to a number of established authorities, Burns J
also reminded the parties that:
"It is well settled that a substantial denial
of natural justice may invalidate an adjudication decision with the
consequence that such a decision may be declared void. Where an
adjudicator decides a dispute on a basis for which neither party
contended, there will be a substantial denial of natural justice
unless it can be said that no submission could have been made to
the adjudicator which might have produced a different
In reaching his decision, Burns J also made reference to the
following quote of McDougall J in David Hurst Constructions Pty
Ltd v Durham4 which outlines the task of an
adjudicator in determining a dispute:
"[What] is called for is some process of
balancing or evaluating the competing materials supplied by the
The decision serves as a reminder that the matters which an
adjudicator can consider are limited to those listed in section
26(2) of the Building and Construction Industry Payments
Act 2004 (Qld).
These cases provide some guidance as to how the courts have approached the assessment of damages in nervous shock claims.
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