The Supreme Court of Queensland in this case (Nebmas Pty Ltd
–v– Subdivide Pty Ltd, 1 May 2009),
examined whether certain provisions of Sections 21(2) and 21(3) of
the Building and Construction Industry Payments Act
(2004)(Qld), which relate to the role/decision of an
adjudicator of a dispute, are mandatory or "an essential
precondition" for the existence of an adjudicator's
determination. Those experienced in the area will know that the
phrase "an essential precondition" is particularly
important when dealing with matters where it is alleged that the
adjudicator has acted without jurisdiction. Acting without
jurisdiction is one of the few occasions when an adjudicator's
decision will be voided.
In this instance an adjudication was made in favour of the
subcontractor in circumstances where, on any interpretation, the
subcontractor had failed to provide a notice required under Section
21(2) which provides:
"An adjudication application to which Section 1(b)
applies [which is where the respondent failed to both serve a
payment schedule and pay amounts owing] cannot be made
The claimant gives the respondent notice within 20 business
days immediately following the due date for payment, of the
claimant's intention to apply for adjudication of the payment
The notice states that the respondent may serve a payment
schedule on the claimant within 5 business days after receiving the
Under Section 21(3) an adjudication application must be made
within 10 business days after the end of the 5 day period referred
to in Section 2(b) as mentioned above.
The terminology used, i.e. "cannot be made" (Section
21(2)) and "must" (Section 21(3)) suggests these steps
are essential preconditions for a valid determination by an
The Court made the observation that these particular
stipulations had never before been identified as part of basic and
essential requirements "for a valid determination". In
the test referred to in the case of Brodyn Pty Ltd
–v– Davenport (NSW case) the judge,
Hodgson JA, refers to the following:
"... it is preferable to ask whether the requirement
being considered was intended by the legislature to be an essential
precondition for the existence of an adjudicator's
The applicant in the proceedings, Nebmas, cited the decision of
Kell and Rigby Pty Ltd –v– Guardian
International Properties Pty Ltd which suggested that the
equivalent provision in the New South Wales legislation was a
The Court approved comments made by the New South Wales Court of
Appeal in Co-ordinator Construction Co Pty Ltd
–v– Cliamatech (Canberra) Pty Ltd in which
it was stated on review of another section as to whether it was an
essential precondition (section 13(2) – this provision in
the NSW Act relates to what a payment claim must set out) that
there were three points in favour of an argument that that section
13(2) was not a mandatory condition:
Identification of matters for the purposes of a claim is within
the special experience of an adjudicator and he is intended by the
legislation to bring to that task some evaluative judgment;
It relates to a procedural step in the claim process rather
than some external criterion (unlike say, for instance, a payment
schedule having been served within 12 months of the work being
"The Act reflects in its objects and procedures provisions
for a speedy and effective means of ensuring progress payments are
made during the construction contract without undue formality or
resort to the law."
In accordance with these principles and the fact that in
Brodyn the Court did not mention the equivalent of section
21(2) was an essential precondition, the Court found that the
non-compliance with 21(2) did not result in the adjudicator's
decision being void.
It is difficult to be convinced by the Court's reasoning.
The decision narrows further the circumstances in which
adjudications can be declared void. The Queensland decision of
Nebmas –v– Subdivide is in apparent
direct conflict with Kell and Rigby Pty Ltd
–v– Guardian International Properties Pty
Ltd a decision on the equivalent New South Wales provision.
The apparent inconsistencies and uncertainties associated with
timing of notices and the effect on adjudications are likely to
continue and be an area for conflict.
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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