Reviewing a BIFA adjudication decision – Number 1 complete guide – Construction & Planning

Reviewing a BIFA adjudication decision is an option for a party
who believes that there has been jurisdictional error, including a
lack of procedural fairness in the adjudication decision.

The Supreme Court of Queensland has a supervisory jurisdiction
to review an adjudicator’s decision under the Queensland Building Industry Fairness (Security of
Payments) Act 2017 (Qld)
(“BIFA“).

The only way that a BIFA adjudication decision can be reviewed
is on grounds of jurisdictional error.

There are many ways that jurisdictional error can arise, and
some common examples are where the adjudicator:

1. fails to do something they are required to do – such as
   consider a document required by legislation to be considered, or
   give a party an opportunity to express their position;




2. does something they are not allowed to do – such as consider a
   document they are prohibited by legislation from considering or
   deny a party an opportunity to express their position; or




3. proceeds as if they have jurisdiction, but in fact the
   jurisdictional “threshold” requirements have not been
   met.

It is impossible to identify all the potential jurisdictional
errors, but this article sets out some of the issues which commonly
arise.

This article on reviewing a BIFA adjudication decision is
co-written by our building and constructions lawyers and
Merissa Martinez of
Counsel, building and construction barrister from
Paloma Chambers in Townsville.

The Purpose of BIFA

The main purpose of BIFA is to help people who work in the
building and construction industry to get paid. Cash is the life
blood of the industry, and therefore it must be kept flowing.

BIFA provides a procedure for sending invoices (payment claims)
with strict time limits and content requirements; and responding to
payment claims (payment schedules) within strict time limits and
content requirements to enable the payee to better understand how
much, and when, they will get paid.

BIFA also has a mechanism for the adjudication of disputed
payment claims and the recovery of money claimed by the payee. This
is a quick and cost-effective resolution to building and
construction payment disputes.

Whilst it does not have a costs jurisdiction per se, the
adjudicator will decide, as part of their decision, who pays the
adjudicator’s fees.

The fast-track resolution means that not every mistake of fact
or law will amount to jurisdictional error. Put simply, there are
certain errors which are within an adjudicator’s jurisdiction
to make.

Errors which do not go to jurisdiction are “precisely
the kind of departure from contractual and legal precision which
the legislature has accepted as part of the ‘trade-off’ for
speed and efficiency”: Laing O’Rourke Australia Construction Pty
Ltd v Samsung C&T Corporation [2016] WASCA 130, per
Martin CJ at [107].

BIFA does a lot of other things in relation to payment, but the
scope of this article is limited to identifying the line between
errors within jurisdiction to make, and errors which amount to
jurisdictional error.

This line is sometimes difficult to discern. Set out below are
some examples of both jurisdictional errors and non-jurisdictional
errors.

Jurisdiction to Adjudicate the Application

Section 84(2)(a)(i) of BIFA requires the adjudicator
to decide whether they have jurisdiction to adjudicate the
adjudication application.

Even if the respondent does not make any jurisdictional
challenges about the applicant’s entitlement to make the
payment claim and adjudication application, the adjudicator must
nonetheless be satisfied that BIFA applies in order to proceed
further.

An adjudicator has jurisdiction if:

1. there is a “construction contract” to which BIFA
   applies;




2. there is an entitlement to make a payment claim with a
   “reference date”;




3. a valid “payment claim” has been properly served on
   the payer at the right time;




4. an adjudication application has been made to the registrar in
   the approved form within the correct time period;




5. the application had been referred to, and accepted by, an
   eligible adjudicator within the correct time period; and




6. the adjudicator determines the claim strictly in accordance
   with their powers.

Each of these jurisdictional issues that can be used when
reviewing a BIFA adjudication decision are expanded on briefly
below.

Existence of a Construction Contract

A construction contract (whether written or oral, or partly
written and partly oral) is defined as:

The standard questions of formation of contract arise, but in
this industry, there can sometimes be questions of whether the
contract is an excluded contract or does not in fact cover
“construction work” as that expression is defined.

Section 65 of BIFA defines construction work.
It is an extensive list which includes (but is not limited to) the
following:

Section 65(3) expressly excludes certain
work:

There are also relevant provisions in the Regulations. As BIFA
only applies to construction contracts, the statutory right to
payment and adjudication are predicated upon the relevant works
being caught by the statutory definition. So this is the first
consideration when reviewing a BIFA adjudication decision.

Entitlement to Make a Payment Claim

In relation to the entitlement to make a payment claim, section 70 of BIFA says:

Whether a reference date arises is a matter to be determined
under the contract and within the legislative framework of
BIFA.

Section 67 of BIFA gives us a definition of
“reference date”. It says:

Without a reference date, there is no statutory right to
payment. Therefore, careful analysis of the statutory regime, the
contractual regime and the factual matrix is important to ascertain
if a reference date has arisen.

If not, then this can be another reason for reviewing a BIFA
adjudication decision.

Service of a Payment Claim

In relation to service, section 102 of BIFA says that a notice or
other document under this chapter can be served pursuant to a term
or terms in the construction contract; or pursuant to section 39 of the Acts Interpretation Act 1954
(QLD) which says:

There are also temporal requirements in relation to serving
payment claims.

Section 75(2) of BIFA states that a payment
claim must be given in the period worked out under the construction
contract or 6 months after the construction work to was last
carried out:

If the payment claim is a final payment claim, then section
75(3) of BIFA states that the claim must be given before the end of
whichever of the following periods is the longest:

For more on payment claims read our article on making BIFA payment
claims.

It is important to ascertain as a matter of fact when the last
construction work was carried out, or when the goods and services
were last supplied – this will permit the clock to start ticking.
If not, then this may allow the review of a BIFA adjudication
decision.

Adjudication Application made to Registrar in the Approved
Form

The Registrar is the Queensland Building and construction Commission
(“QBCC“).

The approved form for the QBCC adjudication application in
Queensland is QBCC Form S79 Adjudication Application.

The application is made if it is delivered in person to a QBCC
regional office or posting it to the QBCC. There are strict time
limits.

Section 79(2)(b) of BIFA says that an
application must be made within:

For an application relating to a failure to give a payment
schedule and pay the full amount stated in the payment
claim-30 business days after the later of the
following days:

So, a claimant has either 20 or 30 business days to make an
application for adjudication depending on the particular
circumstances of your dispute. These are guillotine deadlines with
which applicants must comply.

Adjudication Application Referred and Accepted by an Eligible
Adjudicator

A list of adjudicators is kept by the QBCC – https://www.qbcc.qld.gov.au/about-us/adjudication-registry

The adjudicator must be a registered and licensed
adjudicator.

For more on making adjudication applications read our article -
How to Make an Adjudication
Application.

Valid Determination by the Adjudicator

Section 88 of BIFA outlines how the adjudicator must decide the
adjudication application. Section 88 of BIFA includes directions in
relation to:

1. What the adjudicator must decide;




2. What the adjudicator must consider;




3. What the adjudicator must not consider; and




4. The form and procedure of the adjudication decision.

The relevant provisions of BIFA for each of these are identified
below.

What the Adjudicator must Decide

Section 88(1) of BIFA states:

This section operates in two ways: first, it identifies what
must be determined, and a decision which does not fulfil the
requirements is not a valid decision.

Second, it identifies the extent of the adjudicator’s
jurisdiction, so that if the adjudicator steps outside of these
limits, the decision will be ultra vires.

What the Adjudicator must Consider

Section 88(2) of BIFA states:

Therefore if an adjudicator considers something outside of this
in reaching their decision, this may be grounds for challenging the
enforceability.

What the Adjudicator must not Consider

Section 88(3) of BIFA states:

Section 88(4) of BIFA states:

The importance of these decisions by an adjudicator about what
they are entitled to consider and not entitled to consider are
discussed in greater detail below.

The Form and Procedure of the Adjudication Decision

Section 88(5) of BIFA states:

Section 88(6) of BIFA states:

Section 88(6) of BIFA states:

Whilst the technical compliance with the decision being in
writing and submitted appropriately is obvious, this section does
raise issues about the adequacy of the reasons provided, as
discussed further below.

Jurisdiction of the Supreme Court

An adjudicator’s decision under BIFA is an administrative
decision over which the Supreme Court of Queensland has a supervisory
jurisdiction to review a BIFA adjudication decision.

In Brodyn Pty Ltd t/as Time Cost and Quality v
Davenport & Anor [2004] NSWCA 394, Hodgson JA with
Mason P and Giles JA agreeing, looked at the line of authorities
and said at [44]:

The Court has inherent jurisdiction to grant declaratory and
injunctive relief in relation to adjudicators’ determinations
under BIFA.

Adjudications which do not comply with the essential statutory
requirements are void and the Court may, when non-compliance has
been demonstrated, make declarations and/or grant injunctions to
prevent a party acting on a void adjudication.

What is Jurisdictional Error?

The main reason for reviewing a BIFA adjudication decision is
because of jurisdictional error.

The High
Court of Australia in Kirk v Industrial Relations Commission [2010]
HCA 1 confirmed that jurisdictional error may arise due to
“the absence of a jurisdictional fact”. The Court said at
[72]:

In Chase Oyster Bar v Hamo Industries [2010]
NSWCA 190, McDougall J referred to Kirk v Industrial Court
of New South Wales and said at [158]:

In accordance with the purpose of BIFA, even if an adjudicator
has made an obvious mistake (including error of law or fact), as
long as the adjudicator had the power to make the mistake, the
courts will not likely disturb the adjudicated decision.

In Brodyn Pty Ltd (t/as Time Cost & Quality)
v Davenport (2004) 61 NSWLR 421; and Transgrid v Siemens Ltd (2004) 61 NSWLR
521, Hodgson JA with Mason P and Giles JA agreeing, said that
judicial review will be allowed in the following circumstances:

1. The adjudicator failed to comply with the requirements of
   [BIFA] for valid determination;




2. The adjudicator denied natural justice to one (or both) of the
   parties; and/or




3. The adjudication was fraudulent (with complicity of the
   adjudicator).

Examples of jurisdictional error can arise across an indefinable
gambit, including where the adjudication decision:

1. was given by fraud or in bad faith;




2. was made where there is a reasonable apprehension of bias




3. was made without complying with the statutorily imposed short
   time frames;




4. was one which the adjudicator had no power to make due to the
   lack of a jurisdictional fact;




5. was reached by the adjudicator determining a question which was
   not submitted for adjudication;




6. did not deal with the question submitted for adjudication;
   and/or




7. was reached by the adjudicator failing, neglecting, or refusing
   to take into account something which the Act required.

What do the Cases Say about Jurisdictional Error?

To assist the reader in understanding if jurisdictional error
applies to their matter, and therefore capable of judicial review,
several common examples of jurisdictional error are discussed
below.

The Threshold Issues must be Met

The first thing to consider is whether all of the threshold
issues have been adequately or correctly considered in the
adjudication decision. Set out above are some of the threshold
issues, which can commonly include:

1. Was/is there a relevant construction contract to which the Act
   applies;




2. Was/is the builder licensed to do the works the subject of the
   Contract;




3. Was the payment claim properly made by the applicant, and
   within the requisite time;




4. Was a payment schedule properly made by the respondent, and
   within the requisite time;




5. Was the adjudication application properly made by the
   applicant, and within the requisite time; and




6. Was the adjudication response properly made by the respondent,
   and within the requisite time.

If these things have not been done correctly, then the
adjudicator may not have grounds to make the adjudication
application.

The adjudicator must fulfil their statutory function.

The Adjudicator Must Fulfil their Statutory Function

As above, section 88 of BIFA states what the statutory
functions of the adjudicator are. The statutory functions are the
adjudicator are:

1. To decide the amount of the progress payment, if any, to be
   paid by the respondent to the claimant.




2. To decide the date on which any amount became or becomes
   payable.




3. To decide the rate of interest payable on any amount.




4. To consider the provisions of this chapter and, to the extent
   they are relevant, the provisions of the Queensland Building
   and Construction Commission Act 1991, part 4A.




5. To consider the provisions of the relevant construction
   contract.




6. To consider the payment claim to which the application relates,
   together with all submissions, including relevant documents, that
   have been properly made by the claimant.




7. To consider the payment schedule, if any, to which the
   application relates, together with all submissions, including
   relevant documents, that have been properly made by the
   respondent.




8. To consider the results of any inspection carried out by the
   adjudicator of any matter to which the claim relates.




9. To not consider an adjudication response that was not given to
   the adjudicator within the time required under section 83.




10. To not consider a reason included in an adjudication response
    to the adjudication application, if the reason is prohibited from
    being included in the response under section 82.




11. To disregard an adjudication application or adjudication
    response to the extent that the submissions or accompanying
    documents contravene any limitations relating to submissions or
    accompanying documents prescribed by regulation.




12. To provide the adjudication decision in writing.




13. To include the reasons for the adjudication decision.




14. To give the registrar a copy of the decision at the same time
    the adjudicator gives a copy of the decision to the claimant and
    the respondent.




15. To give the registrar notice of all fees and expenses paid, and
    to be paid, to the adjudicator for the decision at the same time
    the adjudicator gives a copy of the decision to the claimant and
    the respondent.

New Reasons in Adjudication Response

Section 88(3)(b) of the BIFA says:

Section 82(4) of the BIFA says:

There are two types of decisions which can arise in relation to
“new reasons”. The first is where an adjudicator
erroneously makes a decision to consider reasons which were in fact
“new reasons”. The second is where an adjudicator makes a
decision that reasons are “new reasons” and refuses to
consider them. The former is reviewable, the latter is not.

In Acciona Agua Australia Pty Ltd v Monadelphous
Engineering Pty Ltd [2020] QSC 133
(Acciona) the Court considered
whether the respondent’s reasons were “new reasons”
not raised in the payment schedule and whether the adjudicator, in
improperly considering these reasons, fell into jurisdictional
error.

His Honour Justice Bond concluded that the adjudicator’s
acceptance of the “new reasons” in the
adjudication response treated the distinction between a reason in
the payment schedule and a “new reason” in an
adjudication response “in such a way as would undermine
the policy underlying the introduction of the new provisions in ss
82 and 88“, thereby denying the claimant the opportunity
to engage with those submissions in its adjudication
application.

There, the adjudicator’s decision was attended by
jurisdictional error because he had improperly considered a
“new reason” and accordingly, the adjudicator failed to
comply with the condition in section 88(3)(b).

However, Acciona is fundamentally different (both
conceptually and in the line of some of the authorities addressing
it) from a decision by an adjudicator who has decided to exclude
consideration under section 88(2)(d) of adjudication submissions
on the basis they were not “properly made” or prohibited
by operation of section 82(4) or section 88(3)(b).

In Acciona, Justice Bond referred to John Holland Pty Ltd v Roads & Traffic
Authority of New South Wales [2007] NSWCA 19 at [54],[55]
and [71]; Acciona per Justice Bond at [36(c) and (d)]:

John Holland is also cited with
approval in Annie Street JV Pty Ltd v MCC Pty Ltd &
Sons [2016] QSC 268 per Flanagan J at [72].

In Civmec Electrical and Instrumental Pty Ltd v
Southern Cross Electrical Engineering Limited [2019] QSC
300 at [31] – [38], her Honour Justice Mullins found that an
adjudicator’s decision to treat parts of the adjudication
response as not being properly made (even if in error) is a
decision within jurisdiction and not reviewable.

In Wiggins Island Coal Export Terminal Pty Ltd v
Monadelphous Engineering Pty Ltd & Ors [2016] QSC 96
at [12], [57] – [84], his Honour Justice Philip McMurdo rejected
WICET’s complaints of both jurisdictional error and breach of
natural justice when an adjudicator refused to consider a new delay
report (the “Evans & Peck Report”) on the basis it
contained new EOT periods and went beyond the reasons in the
payment schedule. Justice McMurdo concluded he was unable to find
there was an error, but even if there was one, it was not an error
which affected validity.

Neither of these decisions were included in Acciona, likely because of their lack
of direct relevance to the line of authorities which was
determinative of the dispute therein.

A further example is Thiess Pty Ltd v Civil Works Australia Pty
Ltd [2010] QSC 187 where there was no jurisdictional error
on the part of the adjudicator in failing to consider sections of a
contract which were raised for the first time in the adjudication
response but not the payment schedule.

The Court determined that s 26(2)(b) of the Act (s 88(2) of BIFA (Qld)) did not provide a
positive obligation on the adjudicator to consider arguments
relating to sections of the contract which were new and independent
assertions made for the first time only in the adjudication
response.

Denial of Natural Justice

Jurisdictional error will be established if the necessary level
of procedural fairness has not been accorded to a party.

In John Holland Pty Ltd v TAC Pacific Pty Ltd
[2009] QSC 205 at [66] (John Holland)
referred to by White JA with approval in Northbuild Construction P/L v Central Interior
Linings P/L & Ors [2011] QCA 22 at [92], the Court
said:

Again, this is in line with the purpose of BIFA, being a quick
resolution to payment claims in what is sometimes referred to as a
“pressure cooker” environment.

However, in certain circumstances, such as where an adjudicator
decides a point on a basis not argued by the parties, the error may
amount to a denial of natural justice, thereby affecting the
validity of the decision.

In order to be successful, the applicant must show both:

1. The denial of natural justice; and




2. That it was material or substantial.

For the second “materiality” limb, John Holland at [61] stated that the
question is whether:

It is not that the adjudicator would have changed their
mind, but that they could have changed their mind. The Court
said it is sufficient that there be “something to be put
that might well persuade the adjudicator to change his or her
mind.”: John Holland at [40]; Cragcorp Pty Ltd v Qld Civil Engineering Pty
Ltd & Ors [2018] QSC 203 per Lyons SJA at [89].

So, if there has been a material or substantial denial of
natural justice, together with materiality, then this may establish
a jurisdictional error and allow for the Court to review a BIFA
adjudication decision.

Failure to Determine the Amount of the Payment Claim

In relation to reviewing a BIFA adjudication decision, if an
adjudicator fails to determine an adjudicated amount, then this may
result in a jurisdictional error.

This is distinct from determining the amount which a party
alleges is wrong. The adjudicator must decide an amount which is
due.

Section 88(1)(a) of the BIFA states:

By failing to adjudicate an adjudicated amount, an adjudication
decision can be void for jurisdictional error.

In Parrwood Pty Ltd v Trinity Constructions
(Aust) Pty Ltd [2020] NSWCA 172 the adjudicator
adjudicated the amount of the adjudication to be
“no amount” (instead of
say, $nil or $0.00).

The Court of Appeal said at [27]:

So, there must be a determination, even if the determination is
$nil or $0.00, in order to fulfil the statutory function.

Incorrect or Multiple Building Contracts

The payment claim (or claims) must be from the relevant contract
and cannot be from different contracts.

If the adjudicator fails to make a determination about this, or
makes the incorrect determination about the building contract, then
this may allow for review for jurisdictional error.

In Trinco (NSW) Pty Ltd v Alpha A Group Pty
Ltd [2018] NSWSC 239 McDougall J said at [60] to [61]:

In Matrix Projects (Qld) Pty Ltd v Luscombe
[2013] QSC 4, Douglas J said at [20]:

In Acciona Infrastructure Australia Pty Ltd v
Holcim (Australia) Pty Ltd [2020] NSWSC 1330 at [40] -
[42], Hammerschlag J decided that the Adjudication Determination
2020061EA made by the second defendant was void and quashed on the
basis that the relevant payment claim was subject to more than one
(1) contract:

In S.H.A. Premier Constructions Pty Ltd v Lanskey
Constructions & Ors [2019] QSC 81, it was also
submitted that the works were subject to different contracts.
However, Boddice J found at [48] and [49] that they were not
different contracts, but approved variations, and so the
adjudication decisions were not invalid.

Each matter will be determined on the basis of its own
contractual matrix.

Reasonable Apprehension of Bias

The test for the reasonable apprehension of bias was given in Johnson v Johnson [2000] HCA 48,
where Gleeson CJ, Gaudron, McHugh, Gummow, and Hayne JJ of the High
Court said:

In Reiby Street v Winterton [2005] NSWSC
545 the Court there was apprehended bias and that determination
of the adjudicator was void because of a previous dispute between
the adjudicator and the plaintiff. Master Macready said at
[56]-[58]:

In Allpro Building Services Pty Ltd v Micos
Architectural Division Pty Ltd [2010] NSWSC 474 the Court
decided an adjudicator’s determination was void due to the
appearance of bias arising from the adjudicator being in a dispute
with the plaintiff over fees from another adjudication. Einstein J
said at [16]:

So, whilst very rare, a reasonable apprehension of bias may also
provide grounds for declaring an adjudication decision void.

Fraud

The Courts have found that fraud can be a sufficient reason to
raise jurisdictional error.

Where the adjudicator is complicit in the fraud, the
adjudication decision can be void.

Where the adjudicator is not complicit in the fraud, the
adjudication can be voidable and can be set aside.

This is perhaps the rarest of the jurisdictional errors.

In Brodyn Pty Ltd (t/as Time Cost & Quality)
v Davenport (2004) 61 NSWLR 421 Hodgson JA found, with
Mason P and Giles JA agreeing:

In Hansen Yuncken Pty Ltd v. Ian James Ericson
trading as Flea’s Concreting [2010] QSC 156, the
subcontractor provided documents to the adjudicator which were
falsified, and therefore fraudulent. These documents had not been
provided at the same time to the contractor. McMurdo J said at
[14]:

In QC Communications NSW Pty Ltd v CivComm Pty
Ltd [2016] NSWSC 1095, the adjudication determination in
favour of the defendant was set aside for fraud. Ball J followed
the precedent discussed above at [31], [33] and [36]:

If the claimant or respondent have submitted documents which are
falsified, which would have a substantial effect of the
adjudicator’s decision, then this may be jurisdictional error,
allowing a party to apply for judicial review.

Quantum Meruit Claims

An adjudicator must confine the adjudication to the items
prescribed at section 88 of the BIFA.

In Unifor Australia Pty Ltd v Katrd Pty Ltd atf
Morshan Unit Trust t/as Beyond Completion Projects [2012] QSC
252, the adjudicator decided the amount of the claim by
reference to irrelevant or unrelated considerations not prescribed
by section 88. Daubney J decided at [35]:

The adjudicator must adhere strictly to the prescribed process
at section 88 of the BIFA. This involves consideration of the
contract, and as quantum meruit claims are extra-contractual
assessments based on reasonableness, they are outside the
legislative regime.

Awarding More Than the Payment Claim

An adjudicator does not have the jurisdiction to award an amount
greater than what was claimed in the payment claim.

In Creative Building Services Pty Ltd v TIO Air
Conditioning Pty Ltd [2016] ACTSC 367, the claimant
claimed $41,710.67 for the payment claim. However, the adjudicator
determined that the plaintiff was liable to pay an amount of
$143,293.27. Mossop AsJ said at [50]:

In Fulton Hogan Construction Pty Ltd v QH & M
Birt Pty Ltd [2019] QSC 23, the Court decided the
adjudicator was in error where the adjudicator had not valued work
in accordance with the contract.

Adjudicator not Giving Reasons for the Decision

An adjudicator must give reasons for the decision.

Section 88(5) of the BIFA says:

In Sierra Property Qld Pty Ltd v National
Construction Management Pty Ltd [2016] QSC 108, Jackson J
held at [67]:

In Annie Street JV Pty Ltd v MCC Pty Ltd
[2016] QSC 268, Flanagan J said, at [23]:

So, the adjudication decision must be accompanied by adequate
written reasons. This is not a low bar, and successful challenges
on this basis are rare.

What are Non-Jurisdiction Errors in Adjudication
Applications?

When thinking about reviewing a BIFA adjudication decision,
non-jurisdictional errors are errors which are not jurisdictional
in nature, and therefore do not allow for review of the
adjudicator’s decision. Non-jurisdictional errors can
include:

1. Non-jurisdictional error of law;




2. Failure to interpret the contract correctly; and/or




3. Getting the facts of the case wrong.

We will explain these in more detail below.

Non-Jurisdictional Error of Law

An error of law on the face of the record does not automatically
allow for the adjudication decision to be challenged, if it was a
decision within the adjudicator’s jurisdiction to make.

In Shade Systems Pty Ltd v Probuild Constructions
(Aust) Pty Ltd (No 2) [2016] NSWCA 379 the full court of
the New South Wales Court of Appeal reviewed a decision from the
Supreme Court alleging both a denial of procedural fairness and
errors of law. The primary judge rejected the claim of procedural
unfairness but stated that the Court could review
non-jurisdictional errors of law. The appellant appealed to the
Court of Appeal, asserting that there was no power to decide
non-jurisdictional errors of law.

Allowing the appeal, the Court held that the NSW BIFA did not
allow the review of the decision of an adjudicator for anything but
jurisdictional error. The Court held at [73]:

This was followed in EQ Constructions Pty Ltd v A-Civil Aust Pty
Ltd [2021] NSWSC 1604 at [58] where Williams J said:

A similar approach has been adopted in Queensland, for example
in Civmec Electrical and Instrumental Pty Ltd v
Southern Cross Electrical Engineering Limited [2019] QSC
300 Mullins J said at [66]:

Failure to Interpret the Contract Correctly

When reviewing a BIFA adjudication decision, an error in the
identification or interpretation of a term of the contract will not
automatically be jurisdictional error allowing a party to challenge
the adjudicator’s decision, unless it pertains to a
jurisdictional threshold issue such as the existence of a
construction contract.

In John Holland Pty Ltd v TAC Pacific Pty Ltd
& Ors [2009] QSC 205 Applegarth J said at [57]:

In Northbuild Construction Sunshine Coast Pty Ltd
v Beyfield Pty Ltd [2014] QSC 80 when discussing the
misinterpretation of a term (or terms) of a construction contract
by the adjudicator, Philip McMurdo J said at [34]:

Northbuild (above) is supported by Caltex Refineries (Qld) Pty Ltd v Allstate
Access (Aust) Pty Ltd [2014] QSC 223 where Philip McMurdo
J held that misinterpretation of a term (or terms) of the
construction contract is not jurisdictional error. His Honour said
at [36]:

This is in line with the overall principles of BIFA and other
security for payment legislation in different Australian states and
territories.

Getting the Facts or Law Wrong

Similarly, if the adjudication decision is decided in error but
was an error within the jurisdiction of the adjudicator, it is not
automatically reviewable.

Quasar Constructions v Demtech Pty Ltd
[2004] NSWSC 116, Barrett J says at [13]:

A similar conclusion was reached in WA, in WQUBE Port of Dampier -v- Philip Loots of
Kahlia Nominees Ltd [2014] WASC 331 Chaney J said at
[27]:

Therefore, when reviewing a BIFA adjudication decision, errors
of fact or the effect of law which do not go to jurisdiction are
unlikely to be sound bases for challenging enforceability.

What are the Consequences of Jurisdictional Error

The Court has options including:

1. declaring all or part of the adjudication decision void;




2. remitting it back to an adjudicator; and/or




3. seeking further recourse from the Courts.

We will explain these in more detail below.

Declaring all or part of an Adjudication Decision Void

If a Supreme Court judge is convinced that an adjudicator’s
decision is unenforceable, the most common outcome is a declaration
that the decision is void. Any payments made in accordance with the
decision must be returned.

In a review of an adjudication decision, the Queensland Supreme
Court is now able to sever the portion of the decision affected by
jurisdictional error.

This statutory change, introduced in s.101(4) of BIFA in 2017
overturned the common law, and stops the entire adjudication
decision from being void if only one part of it is properly
impugned, and that part may be severed.

The case law leading to that amendment is interesting. In BM Alliance Coal Operations Pty Ltd v BGC
Contracting Pty Ltd [2013] QCA 394 Holmes and Muir JJA and
Ann Lyons J of the Queensland Court of Appeal overturned the
earlier decision of Applegarth J in BM Alliance Coal Operations Pty Ltd v BGC
Contracting Pty (No 2) [2013] QSC 67.

In the first case, Applegarth J decided that parts of the
adjudication decision not affected by jurisdictional error should
be allowed, and the parts of the adjudication affected by
jurisdictional error should be denied.

In the appeal the original decision was set aside because the
Court found at [71] that:

The Court then concluded at [77]:

These were the findings of Muir JA, with Holmes JA and Lyons J
agreeing.

This appeal decision was followed in J Hutchinson Pty Ltd v Cada Formwork Pty Ltd
& Ors [2014] QSC 63 at [81] where Lyons J said:

Following these decisions, s.101(4) was introduced,
providing:

Therefore, in Queensland, severance is legislatively permitted.
The position in other States and Territories will be determined by
their own legislation.

So, once the adjudication is declared void and set aside, then
what?

Remitting it Back to an Adjudicator

In some cases, when reviewing a BIFA adjudication decision, a
Court can remit the decision back to the adjudicator for further
determination.

This is discretionary, and a number of factors must be
considered. However, the essential considerations appear to be:

1. where the adjudicator lacked jurisdiction, the matter should
   not be remitted back to the adjudicator; and




2. where there is a jurisdictional error, the matter can be
   remitted back to the adjudicator.

It is not a common outcome. Indeed, Heavy Plant Leasing Pty Ltd v McConnell Dowell
Constructors (Aust) Pty Ltd [2013] QCA 386 identifies a
number of problems with remitting back to the adjudicator.

Ultimately, considering all of the discretionary factors (or
lack thereof), the Court of Appeal refused to exercise its
discretion to remit, Muir JA said at [67], with Gotterson JA &
Morrison JA agreeing:

The Adjudication Review Procedure

The procedure for reviewing an adjudication decision is to file
an originating application in the Supreme Court of Queensland.

The originating application may require the following
orders:

1. an undertaking as to damages;




2. payment of the adjudicated amount into Court;




3. the parties being restrained from enforcing the adjudication
   decision or adjudication certificate pending final
   determination;




4. the dates on which the parties have to file written
   submissions; and




5. a date for the hearing by a Supreme Court judge.

This would be supported by an affidavit in support of the application.

It is very important that you seek advice and assistance
with prosecuting or defending reviewing a BIFA adjudication
decision, contact our construction lawyers today. We work closely
with specialist counsel to obtain the best outcomes for our
clients.

CONTACT A CONSTRUCTION LAWYER TODAY

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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.