Karam Group Pty Ltd ATF The Karam (No. 1) Family Trust v HCA Queensland Pty Ltd & Ors [2024] QSC 34

Julie Whitehead  |  Alexandria Hammerton |  Abhishek Rishi

Key takeout

• When exercising its discretion to save part of an adjudication decision which is affected by jurisdictional error, the court will only consider the relevance of the error on the decision.
• Personal views and opinions of an adjudicator, however expressed, are not in themselves fatal to a decision.

Facts

Proceedings were commenced by the Karam Group Pty Ltd (Karam) against HCA Queensland Pty Ltd (HCA). The dispute arose out of an adjudicator’s decision regarding a progress payment claim under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act), which was affected by jurisdictional error.

Payment Claim

The adjudicator determined a total amount of $4,529,814.68 was to be paid by Karam to HCA in respect of the claim broken down as follows:

• repayment of liquidated damages previously paid to Karam pursuant to a different decision made by a different adjudicator – $4,134,486.28 (LD Claim);
• variations to agreed works to be performed by HCA – $206,568.40 (Variation Claim); and
• delay costs claim for an EOT caused by another variation – $188,760 (EOT Claim).

The parties agreed that the LD Claim should be set aside due to jurisdictional error, however, they disagreed on the Variation and EOT Claims. The court agreed with the parties and set aside the LD Claim and considered the Variation and EOT Claims.

Jurisdictional errors

It was common ground that in making his decision the adjudicator had made jurisdictional errors by:

• expounded his own theory of the application of the prevention principle;
• expressed his own views about the role of the superintendent under the contract; and
• expressed views about the parties’ amendments to the standard form contract.

Variation

The adjudicator stated that the contract was ‘ambiguous’. Comparing the amended contract to the standard contract, he reasoned that the numerous amendments to the standard form contract made it difficult for a busy contractor to understand them in full and that these ambiguities should be construed in favour of HCA. Karam submitted that this view was a further jurisdictional error. HCA contended that these were errors that were within the adjudicator’s jurisdiction.

EOT Claim

The adjudicator incorrectly interpreted the meaning of ‘days’ under the contract, awarding HCA delay costs for 26 days instead of 18 days. HCA accepted that this was jurisdictional error, however, it submitted that the court declare only the difference between the amounts to be void.

Karam, relying on language used by the adjudicator in other parts of the decision, submitted that the EOT Claim should be set aside on the grounds of apprehended bias and procedural fairness. It also claimed it was denied procedural fairness as the adjudicator raised numerous issues in a request for information.

Decision 

The court set aside the LD Claim and the Variation in full but allowed a modified EOT Claim of $130,680, finding that part of the decision was unaffected by jurisdictional error.

Bradley J stated that the issue before the court was whether the errors affected the decision. He dealt with the two contested claims as follows:

1. Variation Claim
   Contrary to Karam’s submissions, the personal views of the adjudicator were irrelevant to the Variation Claim. HCA was correct in its submission that these views were not within his jurisdiction, however, that was not fatal to the decision. Rather, it was his failure to consider the provisions of the contract that was further jurisdictional error and cause for the decision to be set aside.
   
2. EOT Claim
   The adjudicator was mistaken about the interpretation of the contract, however, he applied the provisions of the BIF Act correctly. The views of the adjudicator were irrelevant to the claim and did not elicit any bias. Similarly, the request for information did not deny Karam procedural fairness as it was not central to the claim.

Accordingly, Bradley J modified the EOT Claim to reflect the correct number of days, saving the unaffected part of the decision and ordering Karam to pay $130,680 to HCA.