Sun Engineering (Qld) Pty Ltd v Registrar Appointed under section 150 of the Building Industry Fairness (Security of Payment) Act 2017 & Anor

In this significant judgment, Kelly J considered whether a claimant under the Building Industry Fairness (Security of Payment) Act 2017 was entitled to request that the Registrar refer their application to a different adjudicator, where the original adjudicator made a decision affected by jurisdictional error. His Honour concluded that, under the applicable legislative scheme, a decision affected by jurisdictional error was not “no decision at all”, and so the claimant was not entitled to make the request of the Registrar.

Kelly J

31 July 2023

The applicant and the second respondent are, respectively, the “contractor” and “principal” under a construction contract dated 22 September 2021 which is subject to the Building Industry Fairness (Security of Payment) Act 2017 (“BIF Act”). [1]. An adjudicator made a decision in the contractor’s favour, in respect of which the principal commenced judicial review proceedings. [2]–[3]. The day before the principal commenced proceedings, the contractor wrote to the first respondent (the “Registrar”), seeking the adjudication application to be referred to another adjudicator to preserve its position in the event the Supreme Court declared the adjudicator’s decision void. [4]. The Registrar refused to make the referral. [5]. The contractor commenced the instant proceedings, seeking urgent orders requiring the Registrar to refer the adjudication application to another adjudicator. [5]–[7].

In considering the contractor’s application, Kelly J focused on s 94 BIF Act, which permits a claimant to make a new adjudication application in certain circumstances. [12], [18]. His Honour interpreted s 94(1) as conferring upon the claimant an entitlement to act under s 94(2) within five business days “...if an adjudicator… does not decide the application within the period required under section 85”. [18].

Contrary to the contractor’s submission, Kelly J considered that the words “does not decide the application” in s 94(1) relate to “where there has been a failure to decide as distinct from a situation where a decision is made which is void and unenforceable because of jurisdictional error”. [18]. His Honour found support for this distinction in s 95 BIF Act, which on the one hand does not require payment of an adjudicator’s fees where they failed to make a decision, and on the other still requires payment where the decision is subsequently void and unenforceable, so long as they were still acting in good faith. [13], [18]. In his Honour’s view, when the BIF Act is read as a whole having regard to its purpose, it contemplates that even if the decision is affected by jurisdictional error, it will still have factual consequences. [19]. For this reason, and because of the evident purpose of the BIF Act to provide commercial certainty and facilitate the recovery of progress payments, a decision affected by jurisdictional error will not be “no decision at all” for the purposes of s 94. [19]–[21].

Accordingly, Kelly J concluded that (subject to the situations in s 95(7)), whether the adjudicator has delivered a decision which is in writing, with reasons, and which decides the amount of the progress payment, the date it becomes payable and the rate of interest should be “readily and easily ascertainable as a matter of objective fact”. [18]. It is only where the adjudicator has failed to do this within the relevant time period that a claimant becomes entitled to request that their application be referred to another adjudicator or to make a new application. [18]. His Honour observed that, to the extent that New South Wales authorities stand against this conclusion, they are distinguishable because of the different statutory scheme in that State. [23].

In the event, the claimant’s application was dismissed.

M Paterson