Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 2) [2021] QSC 231; Total Lifestyle Windows Pty Ltd v Aniko Constructions Pty Ltd (No 3) [2021] QSC 238

Sarah Ferrett  |  Hazal Gacka  |  Gemma Galloway

Key takeouts

• Courts will strictly apply the requirements of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) for adjudication applications.
• Where an adjudicator considers a new defence included in an adjudication response, which is not included in the payment schedule, this will result in jurisdictional error and the decision will be declared void.
•  When exercising the discretion to remit the proceeding to a different adjudicator, courts will consider the dispute in the context of the parties’ relationship and the purposes of the BIF Act.

Facts

These two cases concern two applications in relation to a contract between Total Lifestyle Windows Pty Ltd (Total) and Aniko Constructions Pty Ltd (Aniko) for supply and installation of windows and doors to an apartment building (contract).   

Total issued several payment claims under the contract to Aniko. When Aniko failed to pay, Total suspended work. Aniko subsequently engaged a new contractor, Tweed Coast Glass Pty Ltd (Tweed), to complete Total’s outstanding work.

An adjudication for the outstanding payment claims resulted in the decision that Aniko was not required to make any payment to Total. This decision was challenged by Total and the court held that parts of the adjudication decision were invalid due to jurisdictional error. As a result, the adjudication application was remitted to the adjudicator. The adjudicator revised his adjudication and decided, again, that no sum was due to Total.

In its first application, Total asserted that the revised decision was again affected by jurisdictional error. In its second application, Total sought an order that the proceeding be remitted to a different adjudicator.

Decision

The court declared parts of the revised adjudication decision void because the adjudicator’s conclusion was affected by jurisdictional error.

The court also found there was little utility in remitting the matter to the adjudicator for a third time.

What was the jurisdictional error?

Section 88(3) of the BIF Act requires that the adjudicator must not consider a reason included in an adjudication response that was not included in the payment schedule.

Total alleged that the adjudicator considered a new defence when the adjudicator considered Aniko’s submission that there was no concluded contract with Tweed within the suspension period and therefore there was no ‘removal’ of any work from Total’s contract until 20 May 2019 (the date of the formal contract between Aniko and Tweed). This defence was raised in Aniko’s adjudication response but was not included in the preceding payment schedule. Aniko contended that the adjudicator did not consider the prohibited material, but merely stated that the evidence was before him.

The court said that the adjudicator applied an active intellectual process to Aniko’s evidence and submissions (and did not simply list the material as was argued by Aniko).  The adjudicator had ‘considered’ a prohibited matter for the purpose of s 88(3).

When will consideration of evidence be a jurisdictional error?

A witness for Total gave evidence that a concluded contract between Aniko and Tweed was in place prior to 20 May 2019..

Total argued that the adjudicator failed to properly consider this evidence, which was a relevant matter he was required to consider under s 88(2) and was a jurisdictional error. Aniko argued that the adjudicator considered the evidence and rejected it.

The court held that the adjudicator had acknowledged the evidence but did not disclose whether he accepted or rejected it, or explain his reasons for doing so. This contradicted the adjudicator’s description of the evidence as ‘key’ and qualified as a jurisdictional error. Further, the consideration of this issue was a new defence and prohibited by section 88(3).

Failing to address the correct questions – the fourth jurisdictional error

The primary focus (on when the contract was concluded) and the secondary focus (on when Tweed commenced work) of the adjudicator’s decision were not matters raised by Aniko in its payment schedule. The adjudicator therefore addressed a new defence and addressed the wrong question, or failed to properly consider the correct question, resulting in a jurisdictional error.

Decision on Second Application – remitting to another adjudicator

The court did not exercise its discretion to remit the proceeding to a different adjudicator for a number of reasons:

• after four contested payment claims, three adjudications and two court applications there was little utility in having another adjudicator consider the same issues
• declaring parts of the adjudicator’s decision to be void effectively leaves part of the dispute undecided;
• if the court was to remit the proceeding to a different adjudicator, the court would be remitting only one of three disputes between the parties as Total’s challenge to the adjudicator’s decision related to only one claim;
• given there were court proceedings on foot for one claim, remitting the proceeding to a different adjudicator would mean that the parties would be litigating one claim in court and one claim in a further adjudication;
• the parties were no longer dealing with each other in an ongoing project, reducing the need for expeditious, interim determinations intended by the BIF Act;
• it was likely that there would be substantial disputes before a new adjudicator as to Total’s claims (including as to quantum) and the parties were likely to be dissatisfied with the adjudicator’s decision;
• the costs were likely to be disproportionate to the amounts in issue; and
• referring one claim to another adjudicator would lead to the parties fighting the claim in an adjudication before a new adjudicator on a non-final basis, and separately contesting the second claim in a court proceeding, with the third claim either abandoned or prosecuted.

As Total was substantially successful on the issues in the proceedings, Total was entitled to costs.