Queensland courts confirm that late adjudication decisions are void

Australia

Summary

In its recent decision in Civil Contractors (Aust) Pty Ltd v. Galaxy Developments Pty Ltd & Ors; Jones v. Galaxy Developments Ltd & Ors [2021] QCA 10, the Queensland Court of Appeal confirmed that an adjudication decision that was made beyond the maximum time limit was void.  The Court of Appeal confirmed that in Queensland, the jurisdiction of the adjudicator is defined by the relevant time limit in the legislation (subject to any extensions agreed by the parties) and that once that time limit has expired the adjudicator has no power to decide the application.

The Court of Appeal also found that certain minor works carried out were not “building work” for the purposes of the relevant Queensland legislation and that a building licence was not required to perform those works.

While the judge at first instance’s decision that the adjudicator had acted in bad faith was overturned by the Court of Appeal, it was still held that the adjudicator was not entitled to be paid any fees or expenses as he failed to deliver a decision until after the time limit had expired.

The adjudicator’s decision

The adjudication decision determined an amount slightly over $1.4 million was payable to the claimant, Civil Contractors (Aust) Pty Ltd (CCA) by the respondent, Galaxy Developments Pty Ltd (Galaxy).

The adjudicator had sought extensions to deliver the adjudication decision on three occasions, to 18 October, 22 October and finally 24 October 2019 (the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) allows the parties to agree to extend the timeframe for delivery of a decision).

On 24 and 25 October 2019 the adjudicator emailed versions of his decision to the registrar under the BIF Act. On 25 October, the registrar identified some “typos” in the decision and a further amended version was sent by the adjudicator that day.  The final version of the adjudicator’s decision was not delivered until 28 October 2019 (notably the decision date in the decision was specified to by 24 October 2019) and on 29 October 2019 it was provided to the parties.

At first instance CCA admitted that the decision was delivered to the parties on 29 October 2019 and was outside the time period allowed for in the BIF Act.  

The Court considered that section 85 (time for deciding adjudication application), section 86 (extending the time for deciding an adjudication application) and section 94 (the circumstances when a claimant may make a new application) of the BIF Act provide a coherent scheme by which the time limits, on an adjudicator’s power to decide an application, are defined. 

In analysing these key provisions, the Court referred to both the permissive and the mandatory language used in the legislation and held that the effect of the language used is that the adjudicator is bound to deliver a decision within the statutory timeframe (subject to section 86(2) which includes where the parties agree to an extension).

The decision is notable because it is the first of its kind by the Queensland Court of Appeal to provide clarity on these issues, and because it arrived at a different conclusion to decisions by the courts of New South Wales and Victoria, where the relevant provisions of the equivalent security of payment legislation are materially different, such that the courts in those jurisdictions have held that an adjudication decision made after the expiry of the relevant period was not void.

Adjudicator’s entitlement to payment

At first instance, the primary judge had held that the adjudicator could not have said to have acted in good faith, because he was well aware of the time limit for his determining the application and that the adjudicator had made a misrepresentation, by falsely representing that he had decided the matter by a certain date, when that was not the case. As a result, it was held that the adjudicator was not entitled to be paid any fees or expenses because of the effect of section 95(8) of the BIF Act, despite no express reference to that provision being made in submissions. 

The Court of Appeal held that a finding the adjudicator had not acted in good faith and that he had made a misrepresentation ought not to have been made without providing the adjudicator the opportunity to be heard on the subject.  Nevertheless, it was held that the adjudicator was not entitled to any fees or expenses for adjudicating the application pursuant to section 95(6) of the BIF Act, which provides that there is no entitlement to payment of fees if the adjudicator fails to make a decision, which the Court of Appeal held occurred in these circumstances. 

Conclusion

The key take away from this case is that the mandatory language used in the Queensland legislation means that a failure to meet the timeframes specified in the BIF Act will, absent an extension to that period in accordance with the BIF Act, render a decision delivered late void, in contrast to the situation in some other Australian jurisdictions. 

From an adjudicator’s perspective, while a finding of an absence of good faith within the meaning of section 95(8) of the BIF Act will not be made lightly, and should not be made without the adjudicator being heard, a late decision in a Queensland statutory adjudication will still disentitle the adjudicator to payment of their fees pursuant to section 95(6) of the legislation.