Andrew Kelly and Sam Speechly

Adjudicators on notice: Supreme Court demands strict compliance with deadlines

Andrew Kelly and Sam Speechly

31 March, 2020

Security of payment

Thomson Geer’s Brisbane Construction Team recently acted for the successful party, Galaxy Developments (Developer), in the Supreme Court of Queensland proceeding Galaxy Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd t/a CCA Winslow & Ors [2020] QSC 51.

The proceeding was the first in Queensland to deal with the scenario where an adjudicator failed to make an adjudication decision within the statutory timeframes prescribed by the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act).  The Supreme Court of Queensland held that the late adjudication decision was void and unenforceable.  Importantly, the decision confirms that strict compliance with the deadlines imposed by the BIF Act is required from all parties involved in an adjudication, including the adjudicator.

The decision

The proceeding related to an adjudication decision given by the Adjudicator, Mr Thomas Jones, that required the Developer to pay the sum of approximately $1.3 million to the civil works contractor (Contractor).

The Developer brought an application to declare the adjudication decision void on the following grounds:

  1. the building contract under which the Contractor claimed to be paid was void because the Contractor was not appropriately licensed under the Queensland Building and Construction Commission Act 1991 (Qld); and
  2. the Adjudicator’s decision was void because it was delivered after the maximum period prescribed by the BIF Act.

The Queensland Supreme Court found in favour of the Developer on both grounds.  The second being of particular interest as it affirms adjudicators’ obligation of strict compliance with the timeframes prescribed under the BIF Act.

In respect of the second ground, the issue was whether or not the BIF Act should be construed as showing a legislative purpose that an adjudication decision delivered outside the maximum time prescribed by the statute is void.

The Developer submitted that:

  1. the language adopted in Chapter 3 Parts 3 and 4 of the BIF Act show that the purpose of the legislature was to achieve a rapid extra-curial determination of disputes around progress claims;
  2. the Courts have recognised that non-compliance with time limits set by mandatory language is fatal to the validity of actions to be undertaken by either claimant or respondent; and
  3. accordingly, the statutory purpose in ensuring speedy resolution of these claims must mean that the same result arises when there is a failure to meet statutory deadlines by the adjudicator.

The Supreme Court agreed with the Developer, concluding that the decision of the Adjudicator was void because it was delivered after the statutory time limit imposed by s 85(1) and s 86(2)(a) of the BIF Act.Additionally, it was held that an adjudicator has no entitlement to be paid any fees where his or her decision was made out of time. In reaching its decision, the Supreme Court distinguished earlier cases from the Victorian Court of Appeal and Supreme Court of New South Wales, which had held that an adjudication decision was not invalidated by virtue of being late.  The Court agreed with the Contractor’s argument that the language of the Queensland legislation demands stricter compliance with adjudicator’s deadlines than that required under the equivalent interstate legislation.  Interestingly, however, the Court dismissed some of the analysis employed by the Supreme Court of New South Wales in reaching their earlier decision, which leaves the door ajar for further debate in that state.

Summary

This decision is important because the Supreme Court of Queensland has confirmed that adjudicators are to be held to the same standard as a claimant or respondent in complying with the deadlines imposed by the BIF Act.  This means that an adjudicator’s jurisdiction lapses upon the expiry of the statutory deadline – a late decision is invalid and unenforceable.

If you have any questions about this decision or the security of payment regime more broadly, please contact us below.

Authors

Andrew Kelly | Partner | QLD | +61 7 3338 7550 | akelly@tglaw.com.au

Samuel Speechly | Lawyer | QLD | +61 7 3338 7529 | sspeechly@tglaw.com.au

Sam Lenz | Law Graduate | QLD | +61 7 3338 7942 | slenz@tglaw.com.au