Adjudicator’s partial mistake voids entire BCIPA adjudication decision

22 January 2013 Topics: Construction and infrastructure, Litigation and dispute resolution

It is well known that challenging decisions made by adjudicators under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) is very difficult.

The Supreme Court of Queensland decision in Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd is a recent example where a challenge to a BCIPA adjudication was successful – in interesting circumstances.

The facts

On 31 December 2011, Warren Brothers delivered a payment claim to Thiess claiming more than $500,000. The dispute centred on item 1 of the payment claim, where Warren Brothers claimed $101,032 from Thiess.

Thiess delivered a payment schedule disputing the payment claim on a number of grounds, specifically alleging that an amount of nil was payable for item 1.

After receiving the payment schedule, Warren Brothers advised Thiess (through a document entitled ‘WBE’s response to payment schedule’) that it had recalculated the amount of its payment claim and was reducing the amount claimed for item 1 by more than $60,000.

On 30 January 2012, Warren Brothers brought an adjudication application under the BCIPA in relation to its claim.

In its adjudication application, Warren Brothers advised the adjudicator that it had recalculated its claim as set out in the ‘WBE’s response to payment schedule’ document. In its adjudication response, Thiess also expressly pointed out to the adjudicator that Warren Brothers had reduced its claim for item 1.

On 20 February 2012, the adjudicator delivered his decision.

Despite the concessions made by Warren Brothers in relation to item 1 of the payment claim, the adjudication decision awarded $101,032.48 to Warren Brothers for item 1, with the total adjudication in favour of Warren Brothers amounting to $480,035.00. There was an obvious error by the adjudicator in relation to item 1.
When the error was brought to the adjudicator’s attention, the adjudicator wrote a letter to the Court and the parties stating as follows:

Although I was fully aware of the submissions made by the parties as it relates to the concession made by the claimant and acknowledged by the respondent, I failed to remind myself of the concession during my deliberations and final drafting of the decision, and I accept full responsibility for my mistake and any resulting consequence or action to be taken in this regard by the Court or by the Registrar. Simply put, ‘I forgot’.

The Court’s decision

Her Honour Justice Ann Lyons declared the entire adjudication decision to be void.

Her Honour held that, in failing to take into account the submission of Thiess in its adjudication response, the adjudicator failed to take into account something he was required to take into account under the BCIPA and that, as such, the entire adjudication decision was void.

In reaching her decision, her Honour expressed the view that this was not a mistake or error that resulted from an accidental slip or omission, so the adjudicator’s error could not be corrected as a ‘clerical mistake’ under section 28 of the BCIPA or under the ‘slip rule’ in rule 388 of the Uniform Civil Procedure Rules 1999 (Qld).

Further, her Honour considered that under the BCIPA there was no scope for the incorrect part of the adjudicator’s decision to be severed from the rest of the decision. This meant that her Honour had no option but to declare the entire decision void. Her Honour expressed the view that legislative reform needs to be considered in relation to this aspect of the BCIPA regime.

Implications

The case confirms that a jurisdictional error that affects part of an adjudication decision will render the entire decision void. In this case, an error over an amount of approximately $60,000 invalidated the entire decision in favour of Warren Brothers for $480,000.

It will be interesting to see whether her Honour’s comments about legislative reform will result in an amendment to the BCIPA. In the meantime, those involved in adjudication proceedings should keep this decision in mind when considering challenges to adjudications.

If you would like more information on these issues, please contact Rocco Russo, Sean Henderson or Lisa Valentine on +61 7 3231 2444.

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