In this recent decision, the applicant sought to set aside an adjudicator’s determination as having fallen into jurisdictional error by refusing to consider the applicant’s argument that there was no valid “reference date” or, alternatively by ignoring that submission the adjudicator denied it natural justice. The adjudicator found that the applicant had raised matters in the adjudication response that were not raised in the payment schedule, and therefore, he would not take them into account. In dismissing the application, Brown J found that the adjudicator was incorrect in finding that the matters were “new”, and that even if they hadn’t been raised in the payment schedule, ss 24(4) and 26(2) of the Act did not apply to the adjudicator’s decision. In the end, however, her Honour found that the adjudicator had in fact considered the question, and so no jurisdictional error occurred.
29 March 2018
This matter concerned an application to set aside an adjudicator’s determination for jurisdictional error under the Building and Construction Industry Payments Act 2004 (“BCIPA”).
Watkins Contracting Pty Ltd engaged Hyatt Ground Engineering Pty Ltd to carry out construction works. . Watkins alleged that following an onsite incident involving Hyatt’s drill rig, its contract was terminated by its principal. . Watkins contended that, as a consequence, it terminated its contract with Hyatt in November 2016. .
The dispute arose out of a payment claim which had been made by Hyatt after the contract was allegedly terminated. . An adjudication decision was made in favour of Hyatt. . Watkins argued that the adjudicator had no jurisdiction to determine the matter because there was no available reference date for the payment claim as the contract had been terminated. .
Watkins argued that the adjudicator’s decision was void on the basis of jurisdictional error because (i) the adjudicator refused to consider Watkins’ argument that there was no valid “reference date”; (ii) alternatively, the adjudicator ignored Watkin’s submissions, substantially denying it natural justice; and (iii) the adjudicator decided the adjudication on a basis not contended for by either party, denying Watkins natural justice. .
Brown J noted that there was no dispute between the parties that the existence of a reference date is a jurisdictional fact and as such an error in its determination is a jurisdictional error. . Further, her Honour observed that “[a] substantial denial of the natural justice that the Act requires to be given would invalidate an adjudicator’s decision such that it would be declared void”. .
The adjudicator had found that Watkins had raised matters in the adjudication response which were not raised in the payment schedule and accordingly, he would not take them into account. . Brown J disagreed with the contention that the matters were not raised in the payment schedule and held that the adjudicator would have made a jurisdictional error in failing to consider these “new reasons” which were relevant to the determination of whether there was a reference date and, accordingly, whether he had jurisdiction to determine the matter. . Her Honour held that these “new reasons” were an elaboration of those matters which had already been raised in the payment schedule. .
Her Honour also added that “even if they had not been raised in the payment schedule”, s 24(4) of BCIPA, which provides that an adjudication response cannot include any reasons for withholding payment unless those reasons were included in the payment schedule, “did not apply and the adjudicator was required to consider them”. . Further, her Honour said that s 26(2), which sets out the only matters the adjudicator can consider, would not apply because s 26(2) “applies to the consideration of the subject matter of the adjudication itself and not jurisdiction”. .
However, despite the adjudicator’s statements that he would not take into account the “new reasons”, Brown J found that the adjudicator ultimately did consider the submissions made by Watkins. Although an “adjudicator cannot determine a matter by merely rejecting or disregarding a party’s submissions”, the “adjudicator was ultimately unpersuaded that the additional documents and implied terms [which were alleged to have been breached] formed part of the contract”. . Brown J found that the adjudicators reasons, “albeit brief, revealed a foundation and logical basis for the decision he reached that they were not part of the contract and [were] not simply a bare conclusion”. . Given this finding, the adjudicator “did not have to consider the question of breach and whether termination had occurred”. .
Her Honour thus rejected Watkins’ first argument that the adjudicator had refused to consider Watkins’ argument and Watkins’ alternative argument that it had been denied natural justice. –. Her Honour also rejected the third ground, that the adjudicator had decided the matter on a basis not raised. –.
The application was dismissed. –.