HG Alert: Adjudicator’s Decision Declared Void - 22 Jan 2010

Last year was a significant one for decisions under the Building and Construction Industry Payments Act 2004 (Qld), with the law constantly developing in this area. One of these decisions confirmed that there are still some fundamental points that adjudicators need to be mindful of when making decisions, to make sure their decision is not declared void.

In the case of Northside Projects Pty Ltd v Trad & Anor, the Court looked at an adjudication decision in relation to building works carried out to a residential unit development in Cooee Bay.

On 26 June 2008, the claimant, Trad, served a payment claim for $346,500 on the respondent, Northside. Northside served a payment schedule in response to this payment claim.

Following this, on 3 October 2008, Trad served a further payment claim for $346,500, which had the same reference date as the earlier payment claim. Northside served another payment schedule in response to this payment claim.

The matter went to adjudication. In its adjudication response, Northside argued that the delivery of two identical payment claims for a single reference date invalidated the payment claim relied upon by Trad.

The adjudicator asked for submissions on the relevance of some earlier decisions addressing these issues and how these earlier decisions may have impacted on the decision of Doolan v Rubikcon (Qld) Pty Ltd, a Supreme Court of Queensland authority in this area.

The parties both provided submissions on this point. The adjudicator found that the two payment claims were “in all respects identical” and held that, had the judge been aware of the decisions in Impulse Electrical and Brookhollow, he would not have come to the conclusion he did in Rubikcon. Essentially, the adjudicator disagreed with the conclusion that the judge had reached.

The adjudicator went on to state that “the fact that a subsequent payment claim involves the same scope of works and claims and the same amount of money as a previously served payment claim does not constitute a valid reason for withholding payment”.

The Court found that the adjudicator’s decision was void. Section 17(5) of BCIPA only allows for the service of one payment claim per reference date, so that anything else issued in relation to the same reference date isn’t a payment claim. The Court also found that “an adjudicator faced with an objection as to validity must determine whether or not the payment claim before him or her is a payment claim within the meaning of the Act. In this case the adjudicator did address the correct question but misunderstood the decisions to which he referred and came to the wrong conclusion. That is an error which goes to the heart of his capacity to make an adjudication. Without a valid payment claim there is nothing upon which an adjudication can take place. In this case, there was no such valid payment claim and the adjudicator should not have proceeded”.

What does this case mean for claimants?

This case is a reminder for claimants to be careful when serving multiple payment claims, and to take the necessary steps to be able to rely on payment claims the first time around, when you want to proceed to adjudication for the work claimed.

What does this case mean for respondents?

Always put all the reasons for non-payment into your payment schedules. An adjudicator may not agree with you on one of these points, but this case shows that a Supreme Court judge might.

For more information on this case or the Building and Construction Industry Payments Act 2004, please contact HopgoodGanim’s specialist Construction, Infrastructure and Major Projects practice.