Court decision

When is an Adjudication Application decided?

By Blake Frost / 31 January 2023

Since the decision of Civil Contractors (Aust) Pty Ltd v Galaxy Developments Pty Ltd (2021) 7 QR 34; [2021] QCA 10, claimants, respondents and adjudicators all knew that an adjudicator’s decision out of time is void as the obligation in section 85(1) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) is jurisdictional.

What was not clear is at what point has an adjudicator decided an adjudication application.

The answer is contained in a thorough analysis of the BIF Act and Justice Williams’ reasons in the recent decision of Karam Group Pty Ltd as Trustee for Karam (No. 1) Family Trust v HCA Queensland Pty Ltd & Ors [2022] QSC 290 (Karam Group) handed down 16 December 2022, in which Partner Blake Frost acted for the successful applicant.

Relevant facts

The relevant undisputed facts in the decision were:

  1. pursuant to the BIF Act, the adjudicator in question was required to decide the relevant adjudication application by 25 August 2022 (as extended by the parties);
  2. instead, on the next day (being 26 August 2022) the adjudicator via his agent notified the parties that the purported decision was completed but refused to release the decision until the adjudicator’s fees and expenses were paid; and 
  3. following payment that same day, the decision was released to the parties on 26 August 2022.

At no time before the end of 25 August 2022 did the adjudicator inform the parties that he had decided the relevant adjudication application. The successful applicant therefore contended that the adjudicator had failed to make an adjudication decision within the timeframe mandated by section 85(1) of the BIF Act, as extended by section 86. 

Given the adjudicator’s communication to the parties on the 26 August 2022, the issue in dispute was whether the requirement for an adjudication to decide an adjudication application as per section 85(1) of the BIF Act can be satisfied before the expiry of the time period in question where:

  1. a copy of the adjudicator’s decision was not given to the registrar and the parties before the expiry of the prescribed time period to deliver a decision; and 
  2. the adjudicator had not communicated that the adjudicator would not communicate his decision until his fees and expenses were paid, before the expiry of the prescribed time period.

Whilst this might not seem controversial at first, there are in fact many different ways in which it could be said that a decision maker has made a decision. Why is it than an adjudicator cannot be said to have made a decision in his or her mind, the reasons of which are later recorded in a document? Many people make decisions mentally before they record them in writing.
Alternatively, is it then the date and time upon which those reasons are recorded in writing (regardless of whether they are provided to the parties) that a decision is made?

Outcome 

In short, because of the rights the parties have in circumstances where a decision is not made within time, a proper construction of the BIF Act requires that the making of a decision involve some form of overt or public act.

Typically this will come in the form of either publication of the written reasons, or informing the parties that a decision has been made which will later be released once an adjudicator's fees are paid, both of which are contemplated by the BIF Act.

Where an adjudicator records his or her written reasons for a decision, but fails to inform the parties of this until outside of the timeframe to make a decision, it cannot be said that an adjudicator has made a decision. One key rationale for this is the operation of section 94 of the BIF Act.

Under section 94, where an adjudicator does not decide a decision within time, a claimant has a right to refer the adjudication application to a new adjudicator or make a fresh application. However, there is only a limited to do this - that being 5 business days.

Taking Karam Group as the prime example, where an adjudicator has produced a document containing written reasons but upon the expiration of time, has not informed the parties of this, the claimant is presented with a right to make a new application. To give the parties clarity about their rights under the BIF Act, there must be some overt or public act by an adjudicator, to avoid this confusion.

In Karam Group, Williams J ultimately held that the proper construction of sections 85(1), 86 and 88 of the BIF Act is that an adjudicator decides an application by attending to all aspects specified in section 88, within the time period prescribed by section 85(1), save for where an adjudicator has elected to refuse to communication the decision until his or her fees and expenses are first paid by the parties, holding the adjudication decision void and set aside.

Making a decision but failing to inform the parties does not accord with the purpose of the BIF Act, as there is then no temporal requirement for the adjudicator to actually pass on these written reasons to the parties. Again, for that reason, there must be some overt or public act by an adjudicator such as the publication of reasons or the request for payment within the statutory timeframe, to ensure purpose is given to the legislative scheme.

Whilst adjudicators will no doubt take note of this decision, parties too should think carefully about its implications.
As we know from Galaxy, a failure to have made a decision within time renders that decision void, so coupled with the Court's confirmation as to when a decision is said to have been made, it may be that parties are taking a look at past adjudication decisions to determine whether or not those decisions are void for having been made outside of time.

Find out more about HopgoodGanim’s Construction practice
 

Key Contacts
Blake Frost
Partner
Blake is a Partner and leads our Construction practice.

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