The recent QLD Supreme Court decision of York Property Holdings Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd concerns an appeal by the developer (York) in respect of an adjudication decision in favour of the builder (Tomkins) in the sum of approx. $16.8m. The developer contended 2 x alleged jurisdictional errors by the Adjudicator, firstly that he had improperly declared the show cause provision in the contract void (i.e. as an attempt to contract out of the Act) instead of finding that the provision (cl 39.6) created a suspension of the builder’s right to payment (alleged construction error). Secondly, that the Adjudicator failed to consider relevant material under s88(2) of the BIF Act when assessing the payment claim (alleged consideration error).
Firstly, the Court considered the show cause provision and alleged construction error. The developer argued that the Court should apply the principles from the High Court decision of Southern Han, namely that the show cause provision had the effect of suspending all rights of the builder to payment until after a reconciliation for work taken out of hands was performed.
The Court distinguished Southern Han on the facts, explaining the suspension of payment in Southern Han arose in respect of payment claims issued after work was taken out of hands when no valid reference date could arise. In this instance, the subject payment claim was issued prior to work taken out of hands and was supported by a valid reference date. Accordingly, the payment claim was valid and there was no jurisdictional error committed by failing to apply the alleged payment suspension.
However, this finding by the Court is now the subject of an appeal by the developer to the QLD Court of Appeal which is yet to be determined.
On appeal the developer concedes the subject payment claim is valid, but contends that by the time the payment claim was assessed in the payment schedule, the effect of the show cause provision had taken effect to wholly suspend all rights of the builder to payment.
The developer also argues on appeal that the finding by the Adjudicator that the show cause provision was void may of itself be a jurisdictonal error, because it lead to a failure of the Adjudicator to properly consider the effect of that provision, contrary to his obligations under s88(2) of the Act. Troy Legal will report on the outcome of this appeal in due course.
Getting back now to the primary decision, where the Court also determined the alleged consideration error. The developer argued at first instance that the Adjudicator had failed to consider evidence of the builder’s concession that its façade works claim was reduced from approx. $11.8m to approx. $8m and separately failed to consider the developer’s defective works claim for that work had increased from $4m to over $11m.
The primary judge noted that the Adjudicator had rejected the developer’s defective works setoff entirely and held that references to the incorrect value of defective works were immaterial.
However, the primary judge held the Adjudicator’s failure to acknowledge the reduced value of builder’s façade claim was material because that claim item was ultimately assessed at approx. $11.8m, in excess of the amount claimed by the builder and overlooking the builder’s concessions.
The primary judge concluded the Adjudicator had not properly considered the submissions and relevant to the façade claim and had committed jurisdictional error. As a result, the infected part of the decision was severed and the adjudicated amount reduced from approx. $16.8 to approx. $12.7m.
Adjudicators should be aware that catch all statements in decisions that supporting materials have been considered, without more, may be insufficient. Particularly where the decision also records material facts that, on their face, depart from or contradict, the facts in the supporting materials without reasons. This may invite a Court to make an inference that those materials were not considered at all and result in a void decision.
The recent QLD Supreme Court decision of York Property Holdings Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd concerns an appeal by the developer (York) in respect of an adjudication decision in favour of the builder (Tomkins) in the sum of approx. $16.8m. The developer contended 2 x alleged jurisdictional errors by the Adjudicator, firstly that he had improperly declared the show cause provision in the contract void (i.e. as an attempt to contract out of the Act) instead of finding that the provision (cl 39.6) created a suspension of the builder’s right to payment (alleged construction error). Secondly, that the Adjudicator failed to consider relevant material under s88(2) of the BIF Act when assessing the payment claim (alleged consideration error).
Firstly, the Court considered the show cause provision and alleged construction error. The developer argued that the Court should apply the principles from the High Court decision of Southern Han, namely that the show cause provision had the effect of suspending all rights of the builder to payment until after a reconciliation for work taken out of hands was performed.
The Court distinguished Southern Han on the facts, explaining the suspension of payment in Southern Han arose in respect of payment claims issued after work was taken out of hands when no valid reference date could arise. In this instance, the subject payment claim was issued prior to work taken out of hands and was supported by a valid reference date. Accordingly, the payment claim was valid and there was no jurisdictional error committed by failing to apply the alleged payment suspension.
However, this finding by the Court is now the subject of an appeal by the developer to the QLD Court of Appeal which is yet to be determined.
On appeal the developer concedes the subject payment claim is valid, but contends that by the time the payment claim was assessed in the payment schedule, the effect of the show cause provision had taken effect to wholly suspend all rights of the builder to payment.
The developer also argues on appeal that the finding by the Adjudicator that the show cause provision was void may of itself be a jurisdictonal error, because it lead to a failure of the Adjudicator to properly consider the effect of that provision, contrary to his obligations under s88(2) of the Act. Troy Legal will report on the outcome of this appeal in due course.
Getting back now to the primary decision, where the Court also determined the alleged consideration error. The developer argued at first instance that the Adjudicator had failed to consider evidence of the builder’s concession that its façade works claim was reduced from approx. $11.8m to approx. $8m and separately failed to consider the developer’s defective works claim for that work had increased from $4m to over $11m.
The primary judge noted that the Adjudicator had rejected the developer’s defective works setoff entirely and held that references to the incorrect value of defective works were immaterial.
However, the primary judge held the Adjudicator’s failure to acknowledge the reduced value of builder’s façade claim was material because that claim item was ultimately assessed at approx. $11.8m, in excess of the amount claimed by the builder and overlooking the builder’s concessions.
The primary judge concluded the Adjudicator had not properly considered the submissions and relevant to the façade claim and had committed jurisdictional error. As a result, the infected part of the decision was severed and the adjudicated amount reduced from approx. $16.8 to approx. $12.7m.
Adjudicators should be aware that catch all statements in decisions that supporting materials have been considered, without more, may be insufficient. Particularly where the decision also records material facts that, on their face, depart from or contradict, the facts in the supporting materials without reasons. This may invite a Court to make an inference that those materials were not considered at all and result in a void decision.
