Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd & Anor [2023] QSC 218

David Pearce  |  Petrina Macpherson  |  Jarryd Cox

Key takeout

The Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) imposes requirements that adjudicators must comply with when deciding adjudications. Noncompliance with these requirements constitutes a jurisdictional error. However, adjudications are decided in pressure cooker environments, as such the length of reasons does not necessarily reflect the thoroughness of the adjudicator’s deliberation.

This case is a reminder that in Queensland a payment schedule must contain reasons as to why the certified amount differs from the claimed amount.

To the extent the reasons for withholding payment are set out in a separate document it is essential that the separate document be attached to the payment schedule, irrespective of whether both parties are familiar with the document in question. The consequence of not including reasons in payment schedule means that a respondent will be precluding from introducing new reasons in a subsequent adjudication.

Facts

Robotic Steel Fab Pty Ltd (Robotic) issued a payment claim for $72,324.39 for works carried out for the supply and installation of metal.  Niclin Constructions Pty Ltd (Niclin) delivered a payment schedule and the matter proceeded to adjudication. The adjudicator determined that $70,148.17 was payable to Robotic. Niclin applied to the court for a declaration that the adjudication decision was void for jurisdictional error and should have no effect on the basis that the adjudicator failed to consider its submissions. 

Adjudication

Niclin’s payment schedule advanced numerous arguments, including that it was entitled to set-off the sum of $476,000 for liquidated damages, and cited reasons that were in the ‘attached statement of claim’.  However, the statement of claim was not attached to the payment schedule. Robotic submitted that the omission of the statement of claim meant that no reasons had been given in the payment schedule.

The adjudicator accepted Robotic’s submission, refusing Niclin a deduction for liquidated damages. The adjudicator concluded ‘that the statement of claim forms part of the reasons given in the payment schedule and as they were not provided with the payment schedule, I find that [the set-off] has not been substantiated‘.

Niclin’s Supreme Court submissions – jurisdictional error

Niclin submitted that the adjudicator accepted Robotic’s submission and rejected Niclin’s set-off claim without discussion or analysis, and consequently the decision was affected by jurisdictional error. Niclin contended that this was a failure to consider a matter that the BIF Act required the adjudicator to consider. Under the BIF Act, an adjudicator must consider the payment schedule, together with all submissions, including relevant documents, that have been properly made in support of the schedule. Niclin also submitted that the adjudicators failure to consider its submissions was a denial of procedural fairness.

Decision

Niclin’s application was dismissed.  

The valid exercise of an adjudicator’s jurisdiction requires the adjudicator to have considered the matters set out in the BIF Act, and not reaching what is objectively the correct conclusion on the questions of fact or law that are required.  The court was not persuaded that the adjudicator failed to consider the set-off issue.

The court said that Niclin’s complaint appeared to be about the adequacy of the adjudicator’s reasons. The parties provided supplementary written submissions on the adequacy of the reasons.  Section 88(5)(b) of the BIF Act requires an adjudicator to give written reasons for a decision, unless the parties both request the adjudicator to not include the reasons in the decision.  A failure to comply with section 88(5) would amount to jurisdictional error. 

The court considered that in order for the adjudicator to have failed to comply with section 88(5), the reasons would have to be so deficient that they did not constitute ‘reasons‘ within the meaning of s 88(5)(b).  Further, the adequacy of reasons is to be assessed in the context of the BIF Act, under which adjudicators provide their determinations in a pressure cooker environment.  The court decided that the reasons were adequate to indicate a rejection of Niclin’s argument and an acceptance of Robotic’s argument.

There was no finding of jurisdictional error or denial of procedural fairness.  It was noted by the court that the adjudicator’s reasons may be in error in light of relevant authorities about what must be included in a payment schedule and the possibility of incorporating another document by reference. However, this was a separate issue relating to the correctness of a decision made within the adjudicator’s jurisdiction, which was not the basis of Niclin’s application before the court.