Australia: Treat Adjudicator´s Decision As Gospel: Uniting Church Case

The Supreme Court of Queensland has ruled that an adjudicator's decision in a building and construction dispute was final, even though the methodology used to make the decision was questionable.

The case, Uniting Church in Australia Property Trust (Qld) v Davenport & Anor, is a timely reminder to take care when preparing for adjudication. If an adjudicator makes a decision based on a certain methodology, the parties will be forced to treat that as final and binding.

Case background

The applicant, the Uniting Church in Australia Property Trust, entered into two construction contracts with the second respondent, Hindmarsh Construction Queensland Pty Ltd. Two payment claims were made by Hindmarsh against Uniting Church, and Hindmarsh then invoked the adjudication mechanism for payment claims provided under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA). The first respondent, Philip Davenport, was appointed as the adjudicator.

Under the BCIPA, there are certain matters the adjudicator can consider when deciding the amount payable on the payment claims. For example, the adjudicator can consider the terms of the construction contracts, the relevant payment claim, the payment schedule and the results of any inspections carried out by the adjudicator.

After the adjudicator had made his decision, Hindmarsh questioned the methodology used to decide the amount payable, and wrote to the adjudicator to ask that his decision be corrected. Under the BCIPA, an adjudicator can correct certain 'clerical' mistakes in the decision. Uniting Church also wrote to the adjudicator, stating that the matters raised by Hindmarsh were not errors that could be amended by the adjudicator under the BCIPA, and that the adjudicator should not alter his decision.

The adjudicator wrote to the parties to let them know that he agreed with Hindmarsh and was intending to alter his calculation of the preliminary costs distribution for each of the construction contracts. He also requested any further submissions.

This gave rise to the application to the Supreme Court.

Can the adjudicator correct his mistake?

Justice Daubney said that the question was whether the adjudicator's mistake fell within the realm of the BCIPA's definition of a mistake. Given that this was clearly not a clerical mistake, and that the adjudicator's mistakes were not defects of form, it essentially came down to whether the adjudicator's decision contained errors from an accidental slip or omission, a material miscalculation of figures or material mistakes in the description of a person, thing or matter.

The Court held that the adjudicator had not made an unintentional error, and that his original calculations didn't involve any sort of miscalculation. Instead, the adjudicator proposed to use a completely different methodology to calculate the amounts in dispute. The Court said that the proposed alteration would substitute a new calculation, as opposed to simply amending a miscalculation.

Jurisdictional error and the Judicial Review Act 1991

The Court concluded that in this instance, it would be an act of jurisdictional error if the adjudicator amended his decision. It was held that the Court may stop the adjudicator from committing this jurisdictional error by granting appropriate relief – in this case, an injunction to prevent him from changing his adjudication decision.

Hindmarsh argued that the amendments to the Judicial Review Act 1991 prohibited granting such relief. However, the Court held that this was an application for injunctive relief pursuant to the Judicial Review Act and that there would therefore be an avenue open for review.

The powers of an adjudicator

It is clear that an adjudicator may correct certain mistakes made in the decision making process. However, if modifying a mistake could be classed as a 'complete change of reasoning', the adjudicator would be acting outside of his power as an adjudicator. In this case, the adjudicator was permanently restrained from changing his decision.

What this means for you

This case shows that an adjudicator's decision will be final, with the exception of correcting simple clerical errors. It is therefore essential that adjudication submissions are carefully prepared and that they clearly explain your arguments and the circumstances of your dispute. The Supreme Court has demonstrated that once adjudicators formulate the methodology for making their decision, the methodology can't be changed – it can be treated as gospel.

© HopgoodGanim Lawyers

Australia's Best Value Professional Services Firm - 2005 and 2006 BRW-St.George Client Choice Awards

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