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[2023] QSC 218
In this significant case, the applicant contended that an adjudicator had committed jurisdictional error or failed to afford it procedural fairness by refusing to consider a statement of claim that was incorporated by reference into its payment schedule. Ultimately, Applegarth J concluded that any error was not jurisdictional, as the adjudicator had taken into account the applicant’s submissions, had given it the opportunity to make submissions, and had given adequate reasons in the circumstances.
Applegarth J
29 September 2023
The first respondent (“Robotic”) made a payment claim against the applicant (“Niclin”) for works carried out for the supply and installation of metal at a project in Stafford. [1]. In response to this claim, Niclin submitted a payment schedule to the adjudicator. [1]. Annexure A to the payment schedule stated that “For the reasons set out in the attached statement of claim, Niclin is entitled to set off the sum of $476,000.00…”. [7]. The payment schedule did not attach such a statement of claim. [7]. Accordingly, Robotic contended that Niclin’s deduction claim should not be allowed. [8]. Ultimately, the adjudicator accepted Robotic’s claim and determined that the deduction should not be allowed because no reasons were given for the claim in the payment schedule. [12].
Niclin commenced proceedings seeking a declaration that the adjudication decision is void and has no effect. [3]. It advanced three main arguments in support of this contention.
First, it submitted that the decision was affected by jurisdictional error because the adjudicator failed to take into account a mandatory consideration set out in s 88(2) Building Industry Fairness (Security of Payment) Act 2017 (“BIF Act”) by apparently accepting Robotic’s submission that the set-off issue was not properly raised by the payment schedule. [17]–[18]. As to this, Applegarth J determined that the valid exercise of an adjudicator’s decision is not conditioned on their reaching an objectively correct conclusion on all questions of fact or law. [18]. Rather, there are many errors which they may make which do not go to jurisdiction. [18]. Here, Applegarth J found that the adjudicator had considered whether the matters contained in the statement of claim were raised by the payment schedule and reached a conclusion. [19]. Accordingly, his Honour was not persuaded that the adjudicator failed to consider Niclin’s submissions about the set-off issue. [20].
Second, Niclin contended that the adjudicator failed to take into account its submissions and therefore denied Niclin procedural fairness. [21]. In addressing this point, Applegarth J observed that there was a distinction between whether the adjudicator had failed to consider a matter required by a provision like s 88(2), and a denial of procedural fairness. [23]. The former considers the conduct of the adjudicator towards the parties, whereas the latter involves an inquiry as to the private decision-making processes of the adjudicator. [23]. Ultimately, Applegarth J was not satisfied that any denial of procedural fairness had been substantiated as both parties had the opportunity to make submissions about the failure to attach the statement of claim to the payment schedule. [24].
Finally, Niclin contended that the adjudicator failed to give written reasons under s 88(5)(b) BIF Act that were adequate. [25]. As to this, Applegarth J started by finding that the “inadequacy of reasons does not of itself amount to jurisdictional error”. [26]. Rather, the question is whether the failure to give adequate reasons reveals the existence of a jurisdictional error. [26]. His Honour therefore distinguished between deficiencies in reasons that demonstrate “that the adjudicator has not performed the decision-making task in compliance with the Act” (which will give rise to jurisdictional error) and those that do not. [28]. Where the deficiencies sit is to be assessed in the context, including the “somewhat pressure cooker environment” of the scheme of the Act. [28].
Within this context, Applegarth J considered that in some contexts, it may be sufficient for an adjudicator to merely indicate why they have arrived at a certain decision. [29]. In others, the reasons may reveal that there was “no intellectual justification” for the decision that was made or that there was a failure to consider a party’s submissions. [29]. However, care should be taken with reliance on whether there was an “intellectual justification”, as the High Court has warned that it is a gloss on the duty “to consider”. [29]. The failure to refer to a party’s submissions does not necessarily mean that they were not considered. [31]. Ultimately, his Honour considered that the courts should give adjudicators “very considerable latitude” in considering the form and adequacy of an adjudicator’s determination, so long as it is apparent that they have considered pertinent issues in good faith. [34].
Applying these principles, Applegarth J considered that the reasons given by the adjudicator here were adequate to inform the parties that he had accepted Robotic’s submissions about the incorporation of the statement of claim into the payment schedule. [33]–[34]. While the adjudicator may have erred in reaching this conclusion, any such error was within jurisdiction. [34].
In the event, Applegarth J concluded that no jurisdictional error had been established and he dismissed the application with costs. [37]–[38].
M Paterson of Counsel