The adjudication process enshrined in Security of Payment
legislation in New South Wales, Victoria, Queensland and Western
Australia seeks a trade off between speed and efficiency. Despite
the "rough and ready" nature of the process, parties
involved might seek some comfort that adjudicators will act
according to principles of natural justice.
One such principle of natural justice is the doctrine of bias,
which provides that justice should not only be done, but should
manifestly be seen to be done (R v Sussex Justices; Ex parte
McCarthy  1 KB 256). In the adjudication process, this
would mean that the adjudicator should not only make the correct
decision, but should also not engage in any sort of behaviour which
might raise a suspicion of unfairness or bias in the mind of a
"fair-minded lay observer with knowledge of the material
objective facts" (Gascor v Ellicott).
An apprehension of bias has been known to arise in several
instances, including where:
the decision-maker has a pecuniary interest in the outcome of
the matter, such as by owning shares in a party which is a
the decision-maker has appeared to pre-judge the case prior to
hearing both parties on the matter, which might be apparent through
prejudicial comments made by the decision-maker; and
where the decision-maker reads "without prejudice"
correspondence between the parties, which evinces how far a party
might be willing to go to settle the dispute.
In Ace Constructions & Rigging Pty Ltd v ECR
International Pty Ltd, an adjudication application was brought
by Ace Constructions pursuant to the provisions of the
Construction Contracts Act 2004 (WA), which contained
"without prejudice" correspondence relevant to the
dispute the subject of the adjudication. It became apparent to the
parties that the Adjudicator had read the "without
prejudice" correspondence. ERC asked the Adjudicator to
disqualify himself on the grounds of apprehended bias, which he
refused to do, and the Adjudicator went on to determine the
The determination was enforced as a judgement of the Local Court
of New South Wales. ERC appealed the enforcement of the
determination on the grounds that, amongst other things, the
determination was a nullity because ECR was denied natural justice
by the adjudicator refusing to disqualify himself after having read
the "without prejudice" correspondence.
The Court stated that:
The pragmatic commercial considerations that parties take
into their settlement discussions are irrelevant and apt to mislead
or to distort the court's decision-making processes, or to give
rise to the impression that they may do so, if revealed in the
course of the proceedings.
There will be no automatic finding of bias where particular
events, such as a decision maker reading "without
prejudice" correspondence, occur. Apprehended bias will only
be found if, on a consideration of all the circumstances, "a
fair minded lay observer might reasonably apprehend that [the
decision maker] might not bring an impartial mind to the resolution
of the question they are required to decide."
Parties to an adjudication should therefore be careful not to
include "without prejudice" correspondence in their
submissions. In the event that "without prejudice"
correspondence is included and is considered by the adjudicator, an
allegation of bias should be made at the earliest possible moment
so that the adjudicator has an opportunity to consider and comment
on the allegations.
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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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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