Chevron Park Pty Ltd v Groupline Constructions Pty Ltd & Ors [2024] QSC 202

David Pearce  |  Alexandria Hammerton  |  Jazmin Sherrington

Key takeouts

• Under the Building Industry Fairness (Security of Payment Act 2017 (Qld) (BIF Act) an adjudicator’s role is to decide on the amount payable to a claimant based on the payment claim and corresponding payment schedule relevant to the claim. It is not to take into account or reconcile any previous or subsequent payments.

• The responsibility to verify and reconcile accounting records lies with the parties to the construction contract and is not within the adjudicator’s duties.  

• An adjudicator will not fall into jurisdictional error if they do not take into account payments that were not related to the relevant payment schedule.

Facts

In December 2021, Chevron Park Pty Ltd (Chevron) entered into a contract with Groupline Constructions Pty Ltd (Groupline) to undertake construction work on a residential building, known as the Greenwich Project.

On 16 January 2024, Groupline served a payment claim on Chevron for the value of $2,462,119. On 31 January 2024, Chevron provided a payment schedule to Groupline, certifying a net amount of $919,007.

Adjudication

On 6 March 2024, Groupline applied for adjudication under the BIF Act. On 6 June 2024, the adjudicator delivered a decision in favour of Groupline, with the adjudicated amount being $1,420,090.

Application to set aside the adjudication decision

Chevron sought a judicial review of the adjudication. Its complaint was limited to whether the adjudicator was required to consider partial payments made by Chevron throughout the duration of the contract.

Chevron alleged that after the issue of its payment schedule, but before Groupline’s adjudication application was made, it made six further payments to Groupline totalling over $1 million. These payments were for amounts certified as payable to Groupline and in respect of certain variations. Chevron contended that these further payments should have been taken into account by the adjudicator, because the adjudicator’s role:

1. involved a determination of how much of the amount claimed is remaining to be paid at the date of the decision; and
2. is to determine the balance  ‘to be paid’ after reconciling the accounts and deducting the payments already  made.

Chevron contended that had the adjudicator taken these subsequent payments into account the adjudicated amount would have $318,301.

Chevron also argued that the adjudicator did not afford it procedural fairness by not seeking its submissions on jurisdictional points and new reasons introduced during the adjudication process.

Chevron acknowledged that under the BIF Act, the adjudicator is not obligated to provide a detailed explanation of their decisions or to seek additional submissions. However, Chevron insisted that there was an expectation for the adjudicator to properly consider all relevant submissions as part of the process. Chevron alleged that the adjudicator did not take into account its detailed submissions regarding its subsequent payments, which it argued constituted a breach of natural justice.

Decision

Chevron’s application was dismissed.  The court found that the adjudicator had properly acknowledged Chevron’s prior payments and that the adjudicator’s decision not to personally reconcile those payments was appropriate, because the parties are responsible for account verification and reconciliation.

The court also found that the adjudicator was correct to not consider Chevron’s payments made after the establishment of the payment schedule, as these were not included in the initial schedule and related submissions.

The court clarified the adjudicator’s role under the BIF Act, stating that the adjudicator’s mandate is to determine the amount of the progress payment based on the payment claim and the corresponding payment schedule at the time, not taking into account any previous or subsequent claims and payments. The court underscored that amounts from earlier claims should not be deducted from new ones despite the progressive nature of construction work and payments. Chevron’s assertion that the adjudicator must account for post-adjudication events was rejected, as the BIF Act does not stipulate the consideration of such events.

The court reinforced the rule that respondents are not allowed to introduce new reasons for withholding payment that were not part of the initial payment schedule, in accordance with the adjudication response rules.

There was no denial of natural justice as the submissions made by Chevron, were considered, but rejected.  Procedural fairness does not require an adjudicator to disclose preliminary decisions for external critique or to give a running commentary of what its thinks of the evidence.