Adjudication determinations - Additional avenue for challenge in Queensland

By Frazer Moss and Kyle Trattler.

Key Points:
Adjudication determinations under the Building and Construction Industry Payments Act 2004 (Qld) are judicially reviewable under the Judicial Review Act 1991 (Qld).

Background – Decision not reviewable unless void

Over recent years there has been a range of decisions in New South Wales which have given guidance on the operation of the Building and Construction Industry Security of Payments Act 1999 (NSW) ("NSW SOP Act"). One particular area of focus of the cases has been whether adjudication determinations are subject to challenge and in what circumstances.

As discussed in our January edition, there was an initial line of authority which held that an adjudication determination could be challenged under section 69 of the Supreme Court Act 1970 (NSW) and could be quashed if an adjudicator had made a jurisdictional error (eg. where an adjudicator has refused to exercise jurisdiction or acted beyond his or her power). However, in November 2004, the New South Wales Court of Appeal in its decision Brodyn Pty Ltd v Davenport [2004] NSWCA 394 decided that the line of authority was wrong. It held that section 69 did not apply to adjudication determinations under the NSW SOP Act, that such determinations could be void in very limited circumstances, but they would not otherwise be set aside. The only circumstances where a determination would be void was if:

• an "essential pre-condition" to the determination or a "basic and essential requirement" of the NSW SOP Act was not satisfied;
• there was a substantial denial of natural justice (such as a failure to receive and consider the respondent's submissions); or
• the purported determination was not a bona fide attempt by the adjudicator to exercise the power granted under the NSW SOP Act.

Current development – Decisions reviewable under the Judicial Review Act 1991 (Qld)

Commentators have speculated that, given the almost identical security of payment legislation in Queensland (the Building and Construction Industry Payments Act 2004 (Qld) ("Queensland SOP Act")), that the Queensland courts would be likely to follow the NSW Court of Appeal approach in Brodyn, with the result that the intervention of the courts would be similarly limited.

However, in a recent decision of the Supreme Court of Queensland, the court has held that there is an additional and potentially wider avenue for review of adjudication determinations in Queensland. In the recent case of J J McDonald & Sons Engineering Pty Ltd v Neil Gall & Ors (Queensland Supreme Court, 12 October 2005, unreported), Justice Dutney determined that the Judicial Review Act 1991 (Qld) applies to determinations made under the Queensland SOP Act.

The application of the Judicial Review Act has the effect of widening the potential circumstances in which an adjudication determination may be challenged, because the Judicial Review Act grants a statutory right of review of a decision where:

(a) a breach of the rules of natural justice happened in relation to the making of the decision;

(b) procedures that were required by law to be observed in relation to the making of the decision were not observed;

(c) the person who purported to make the decision did not have jurisdiction to make the decision;

(d) the decision was not authorised by the enactment under which it was purported to be made;

(e) the making of the decision was an improper exercise of the power conferred by the enactment under which it was purported to be made;

(f) the decision involved an error of law (whether or not the error appears on the record of the decision);

(g) the decision was induced or affected by fraud;

(h) there was no evidence or other material to justify the making of the decision; or

(i) the decision was otherwise contrary to law.

These available grounds, particularly those in (f), (h) and (i), will facilitate a wide review process. It is likely that this will lead to an increase in court challenges to adjudicators' determinations in Queensland, and thereby generally delay the payments process.

The future in Queensland – Exclusion of the Queensland SOP Act from the Judicial Review Act

Interestingly, in J J McDonald, Justice Dutney noted that unless decisions made under the Queensland SOP Act are excluded from the operation of the Judicial Review Act, the benefit of prompt payments to contractors, which is the stated goal of the Act, is likely to be defeated by applications for review.

The Queensland SOP Act is currently being reviewed as a part of an evaluation of its effectiveness over the one year it has been in operation. The application of the Judicial Review Act is now very much an issue in that review process. There is likely to be strong lobbying that one of the recommendations of that review should be that the Queensland SOP Act be removed from the operation of the Judicial Review Act.

Until those legislative amendments are made, however, there is a wide avenue for challenge of adjudication determinations in Queensland.

For further information, please contact Frazer Moss.