Bright Days Herston Pty Ltd v ATG Project & Property Solutions Pty Ltd [2024] QSC 94

Michael Creedon  |  Matt Hammond  |  Tara Vele

Key takeout

The Building Industry Fairness (Security of Payment Act 2017 (Qld) (BIF Act) provides a mandatory regime by which an adjudicator is appointed to make a determination arising out of a disputed payment claim. In their deliberations, adjudicators must take into account submissions provided by the parties, and address the considerations set out within the BIF Act. Bound by a statutory code of conduct, an adjudicator must remain impartial. It is well-established that an adjudicator must accord the parties procedural fairness and detachment, which involves the absence of actual, or perceived, bias.

When considering the question of apprehended bias on the part of an adjudicator, this decision confirms that the legal standard is firmly established and the conclusion of bias should not be drawn lightly. It is not enough that the fair-minded lay observer may have a vague sense of unease or disquiet.

Facts

Bright Days Herston Pty Ltd (Bright Days) entered into a building contract with ATG Project & Property Solutions Pty Ltd (ATG) whereby ATG undertook to perform construction work for the development of a child-care centre.

The first adjudication

On 20 October 2023, ATG lodged an adjudication application in respect of a disputed payment claim. On 13 December, Mr Morrow (Adjudicator) was appointed.

On 22 January 2024, the Adjudicator issued his determination, which decided that Bright Days was liable to pay ATG $1,004,306plus GST and was responsible for 100% of his fees and expenses.

On 19 February 2024, Bright Days wrote to ATG stating that it considered no amount was due and payable as the entire adjudication decision was infected by jurisdictional error, and liable to be set aside.  ATG subsequently lodged a charge over the relevant property pursuant to the BIF Act.

The second adjudication

On 14 March 2024, ATG lodged a second application to determine another disputed payment claim. Shortly after, the Adjudicator notified the parties that he had been appointed to adjudicate the second adjudication application.

On 22 April 2024, Bright Days filed an originating application in the Queensland Supreme Court naming ATG and the Adjudicator as respondents, seeking a declaration that the first adjudication determination was void for jurisdictional error. No specific relief was sought against the Adjudicator, and the Adjudicator advised that he would not play an active role in the proceeding.

On 23 April, Bright Days wrote to the Adjudicator stating that, given he was a named respondent, a fair-minded lay observer might reasonably apprehend that he might not bring an impartial and unprejudiced mind to the second adjudication.

The Adjudicator requested submissions on the allegation of an apprehended bias, which were subsequently provided by the parties. On 26 April, the Adjudicator notified the parties that he had considered the submissions and that he intended to continue with the determination of the second adjudication.   On 3 May 2024, Bright Days filed an application seeking an injunction to restrain the Adjudicator from making a decision in respect of the second adjudication.

Potential bias of the Adjudicator

Bright Days contended that apprehended bias was made out because:

• review proceedings in a court would likely cause the Adjudicator a level of embarrassment;
• if the court published reasons which were adverse to the Adjudicator, this could result in unconscious feelings against Bright Days;
• unlike a judge, an adjudicator does not have the training to put such feelings aside;
• by not giving reasons for his decision not to recuse himself, the Adjudicator suggested a non-engagement with Bright Days’ submissions and unconscious feelings against them; and
• the fact that the Adjudicator determined in the first adjudication decision that the applicant pay 100 per cent of the fees and costs (contrary to the statutory presumption of a 50/50 basis) indicated negative feelings towards Bright Days.

Bright Days submitted that a fair-minded lay observer would recognise that the Adjudicator, in contrast to a judicial officer, is not equipped with the same training, tradition and oath to place them in a position to discard the irrelevant information in the decision-making process.

In response, ATG contended that none of Bright Days’ contentions met the legal standard laid out by the High Court in QYFM v Minister for Immigration, Citizenship, Migration Services and Multicultural Affairs (2023) HCA 15. While a named party in the proceedings, a fair-minded lay observer would be aware that the Adjudicator is not being sued for anything. Additionally, the fact that the Adjudicator decided Bright Days would bear 100 per cent of the costs on the first adjudication was based on the relative success of ATG’s claim.

Decision  

The application was dismissed. The court found that in determining what a fair-minded lay observer might reasonably apprehend, in the totality of circumstances, it was ‘the court’s view of the public’s view, not the court’s own view, which is determinative‘.

Brown J found that there was no reasonable apprehension of bias because:

• The proceedings did not threaten to involve the Adjudicator, nor would he be playing any role in the proceedings, such that he might harbour subconscious feelings against Bright Days as the applicant.
• A fair-minded lay observer would appreciate the Adjudicator is qualified to carry out a quasi-judicial role, which mimics that of a judge and his considerations in the adjudication are governed by statute.
• The fair-minded lay observer would be aware that Bright Days was not successful in the first adjudication decision and had costs awarded against it, but also that the Adjudicator made that decision based on Bright Days being unsuccessful, and this determination was open to him under the BIF Act.
• While the fair-minded lay observer would be aware that the Adjudicator did not give reasons for his decision to continue with the second adjudication application, they would be aware that the Adjudicator had considered the question of apprehended bias. The fair-minded lay observer would have been aware he had received submissions from both parties, which detailed opposing views, and he had identified those submissions in reaching a decision. This decision had to be made quickly in light of the statutory time constraints under the BIF Act.