The case involves a claim for set-off which the adjudicator allegedly failed to consider
In a recent construction dispute, the Queensland Supreme Court has found no jurisdictional error despite the deficiency of the adjudicator's reasons concerning one of the claims.
The conflict in Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd & Anor [2023] QSC 218 centres around a payment claim made by Robotic Steel Fab for metal supply and installation works at a project in Stafford. The applicant, Niclin Constructions, submitted a "Payment Schedule", and the matter proceeded to an adjudication.
Niclin contested the adjudication decision, raising concerns about jurisdictional errors. The dispute before the Queensland Supreme Court revolves around the adequacy of the adjudicator's reasons for accepting Robotic's argument regarding a deficiency in Niclin's Payment Schedule. The dispute mainly focuses on an alleged set-off by Niclin for liquidated damages. Robotic claimed that the omission of the Statement of Claim in the Payment Schedule renders the set-off unsubstantiated.
Niclin sought a declaration from the court that the adjudication decision was void and had no effect. The case raises procedural questions about the Building Industry Fairness (Security of Payment) Act, which aims to expedite the resolution of payment disputes in the construction industry. The court acknowledged the importance of maintaining cash flow for builders but emphasized that this policy does not apply if an adjudication decision is void for jurisdictional error.
Niclin's argument centres on the adjudicator's failure to consider its submission regarding the entitlement to set off liquidated damages, claiming a denial of procedural fairness. However, after examining the evidence and submissions, the Supreme Court concluded that the adjudicator's reasons were not so deficient as to demonstrate jurisdictional error.
Niclin argued that the adjudicator appeared to have accepted Robotic's submission that because the Statement of Claim was not attached, the set-off issue was not adequately raised by the Payment Schedule and, having done so, proceeded to reject the set-off claim without further discussion or analysis.
The court explained that an adjudicator might make many errors of fact and law and would not be regarded as going to jurisdiction. In this case, the court found that the adjudicator considered the issue of whether matters contained in the District Court Statement of Claim were raised by the Payment Schedule in circumstances in which the Statement of Claim was not attached to it. The court noted that the adjudicator considered the issue and reached a conclusion. Consequently, the court was not persuaded that the adjudicator failed to consider Niclin's submissions about the set-off issue.
The court noted that the law requires an adjudicator to give written reasons for a decision unless the parties ask the adjudicator not to include the reasons in the decision. A complete failure to give reasons constitutes jurisdictional error. However, the court emphasized that the inadequacy of reasons does not amount to jurisdictional error.
The court explained that there is a dividing line between a deficiency of reasons that demonstrates that the adjudicator has not performed the decision-making task in compliance with the law and a deficiency in reasons that does not. The adequacy of reasons is assessed in the context of the law under which adjudicators provide their determinations in a "somewhat pressure cooker environment."
The court further said that depending upon the circumstances, it may be sufficient if the reasons indicate why the adjudicator arrived at the decision. In other cases, the reasons may, in all the circumstances, reveal a failure to consider submissions. They may reveal "no intellectual justification" for the decision that was made.
The court emphasised that the fact that an adjudicator does not refer to all of the submissions made on an issue does not necessarily mean they did not consider them. After carefully considering the nature of the problem that the adjudicator had to decide in this case, the court was not satisfied that he failed to give reasons for his decision, that his reasons were so inadequate that they revealed jurisdictional error, or that the adjudicator had not performed his statutory task.
The court found that the reasons for the issue were adequate to inform the parties that the adjudicator accepted the submission of Robotic about the consequences of not attaching the Statement of Claim to the Payment Schedule. That conclusion involved a rejection of Niclin's contention to the contrary. The court said that the reasons were sufficient to disclose the adjudicator's view that it was insufficient to substantiate Niclin's liquidated damages claim for the Payment Schedule that Robotic knew about the Statement of Claim.
Moreover, the court said that the liquidated damages set-off issue was one of many that the adjudicator had to decide and give reasons about. The fact that the problem was not a particularly complicated one explains why it was permissible for the adjudicator's reasons on the point to be brief. Accordingly, the court concluded that the adjudicator's reasons were not so deficient as to demonstrate jurisdictional error.
