Karam Group Pty Ltd ATF The Karam (No. 1) Family Trust v HCA Queensland Pty Ltd & Ors [2023] QSC 212

Sarah Ferrett  |  Matt Hammond  |  Lochlan Andrew

Key takeout

If an adjudicator criticises the construction of a building contract when making a request for submissions under the Building and Construction Industry Payments Act 2004 (Qld) (BIF Act), it is not grounds to restrain a decision due to an adjudicator’s apprehended bias.

Facts

In July 2020 Karam Group Pty Ltd ATF The Karam (No. 1) Family Trust (Karam) and HCA Queensland Pty Ltd (HCA) entered into a contract for the design and construction of Maasra Apartments in Brisbane, Queensland (Contract).

In March 2023 HCA served a payment claim on Karam seeking payment of over $15 million.  In response, the superintendent issued Karam with a payment certificate of $23,812.  HCA lodged an adjudication regarding part of the payment claim for approximately $4.6 million.

In August 2023 the appointed adjudicator issued a request for submissions by the parties as to the construction of the Contract.

The request for submissions identified:

• differences between the relevant Australian Standard contract and the Contract regarding the duties of the superintendent, and queried the extent to which those differences were notified to HCA under the copyright licence granted by Standards Australia;
• that certain powers and discretions granted to the superintendent under the Contract appeared to be an attempt to ‘contract out’ of the BIF Act, invoking s 200 of the BIF Act; and
• that certain provisions of the Contract appeared to be aimed at limiting the superintendent’s discretion in favour of Karam and placed HCA in a position where its right to be paid for completed work was subject to the whim of the superintendent potentially acting on the directions of Karam.

In September 2023 Karam filed an application for an interlocutory injunction restraining the adjudicator from delivering a decision. This was on the basis that the request gave rise to a reasonable apprehension of bias against Karam.  It was contended that the adjudicator might have prematurely decided relevant issues and might no longer be open to persuasion or bring an impartial mind to his determination.

Decision

The court dismissed Karam’s application for an injunction.

In making its decision, the court emphasised the importance of contextualising the adjudicator’s actions. The comments relating to the construction of the Contract and whether it undermined HCA’s right to be paid must be seen in the context in which they were made. This included a request seeking submissions on the interpretation of clauses and inviting consideration and comment.

By raising his concerns in specific terms and allowing both parties to provide submissions in response, the adjudicator had acted consistently with his legislative role and was procedurally fair to both parties.

In considering whether the adjudicator’s conduct amounted to a jurisdictional error, the court noted that many of Karam’s complaints were based on its subjective perception that the adjudicator’s interpretation of the Contract was incorrect. This was not a failure to make a decision or gave rise to apprehended bias.

Karam failed to persuade the court that:

• the adjudicator’s language and questions indicated a rigid and final determination on matters; and
• any perceived bias would be material to the adjudicator’s decision, which primarily involved the valuation of the claim.

The court further noted the lack of any evidence supporting maintaining the status quo with further interim orders and the public policy and legislative intent behind the BIF Act to facilitate quick and efficient resolution of payment disputes for construction work performed in Queensland.