Where a decision of an adjudicator made under the Building
and Construction Industry Payments Act 2004 (Qld) (BCIPA)
determines an issue in dispute on a ground for which neither party
contended, and the adjudicator fails to notify of that intended
determination or allow submissions, the decision may be declared
void. The decision in John Holland Pty Ltd v TAC Pacific Pty
Ltd & Ors, recently handed down by the Supreme Court,
John Holland Pty Ltd and TAC Pacific Pty Ltd were parties to a
construction contract. A dispute over a payment claim that TAC
submitted went to adjudication under BCIPA.
A key issue, which the adjudicator needed to determine, was
whether certain contractual conditions that John Holland relied
upon were void by reason of section 99 of BCIPA, and whether TAC
was entitled to be paid its claim, where it was alleged that TAC
had not complied with certain contractual provisions governing
claims for variations.
The adjudicator concluded that TAC was entitled to be paid the
amount in the claim and relied on the decision in Plaza West
Pty Ltd v Simon's Earthworks (NSW) Pty Ltd. John Holland
had relied on the authority of John Goss Projects Pty Ltd v
Leighton Contractors in its submissions.
The adjudicator commented that he felt he was compelled to deal
with Plaza West, as it was his view that the case
effectively overturned the decision in Goss. At no stage,
however, did TAC submit that Goss did not reflect the
John Holland's argument, that TAC's failure to meet
conditions precluded TAC from payment of its claim, was rejected by
the adjudicator, who relied on Plaza West in deciding that
TAC was entitled to the full amount claimed together with GST,
which totalled more than $1 million.
Off to Court: application to have the decision declared
John Holland applied to the Supreme Court to have the
adjudicator's decision declared void. The Court considered the
Was there a denial of natural justice by the adjudicator? The
complaint related to the adjudicator's referral to Plaza
West, which neither party referred to in their submissions,
and the fact that the adjudicator did not notify the parties of his
intention to rely on this decision or allow the opportunity to make
Did the adjudicator fail to make a genuine attempt to
understand and apply the contract?
Justice Applegarth decided the first of these grounds in favour
of John Holland - that is, that there was a substantial denial of
natural justice and the adjudicator's decision was declared
In deciding whether natural justice had been denied, His Honour
noted the following points:
Although BCIPA allows an adjudicator to make unreviewable
errors of law in the interests of expedience, BCIPA does not permit
an adjudicator to make a determination on the basis of a view of
the law for which neither party has contended.
There will be a denial of natural justice where:
there is a significant or critical legal issue on which the
decision is likely to turn;
the adjudicator intends to make his or her decision on a basis
for which neither party contended; and
the adjudicator made the decision for the reason that a legal
authority, upon which a party placed particular reliance, had been
overturned, and was no longer the current law.
This decision does not require adjudicators to expose their
provisional views on legal issues or seek submissions from the
parties on every authority upon which the adjudicator intends to
Significance to the building and construction industry
The general intent of BCIPA is to allow an adjudicator to
quickly decide complex legal issues. The adjudicator's
reasoning is protected from challenge under BCIPA.
However, in certain circumstances, an adjudicator's
reasoning will be subject to the scrutiny of the Courts, and this
decision serves as a timely reminder to all building industry
participants that where there has been a possible denial of natural
justice, the decision may be able to be reviewed by the Court.
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