Summary

• Following amendment in September 2007, the Judicial Review Act 1991 (QLD) (“QLD JR Act”) no longer applies to adjudication determinations under the Building and Construction Industry Payments Act 2004 (QLD) (“BCIP Act”).
• This may result in Queensland courts following the NSW approach in Brodyn whereby an adjudication determination can only be reviewed by the court if:

• Obiter by Douglas J in Bezzina suggests that, in Queensland, a failure to give work the same value as that given to it in a previous determination by an adjudicator might constitute a failure to comply with a basic and essential requirement of the BCIP Act and enliven the court’s jurisdiction to review the second determination.

Bezzina Developers P/L v Deemah Stone (Qld) P/L [2007] QSC 286

This case arose out of an agreement to supply stone work to a construction project in Surfers Paradise. The original contract was entered between Bezzina (as Principal) and an associated company of Deemah (as supplier). The benefit of the contract was then assigned to Deemah, however the obligations remained upon Deemah’s associated company.

When Bezzina failed to pay Deemah its two final payment claims, Deemah applied for adjudication in respect of each claim. Each application was determined by a different adjudicator. Both adjudicators found in favour of Deemah. The second adjudicator was informed of the existence of the earlier application but was unaware of the first adjudicator’s decision. In those circumstances, the second adjudicator failed to fulfil his obligation under section 27(2) of the BCIP Act to give the work the same value as that given to it in the previous adjudication. He came to a significantly different valuation of the works, his valuation being approximately $500,000 more that than of his predecessor in respect of the same work. Bezzina applied for judicial review of the second adjudicator’s decision.

Bezzina submitted that it was circumscribed from informing the second adjudicator of the result of the earlier adjudication because it had not included the result of the earlier adjudication in its payment schedule as a reason to withhold payment. Section 24(4) of the BCIP Act provides that only those reasons included in the payment schedule may be raised in the determination.

Held

Douglas J held that the obligation under section 27(2) of the BCIP Act, to give work the same value as that given to it in previous adjudications, is not limited only to those previous adjudication determinations of which the adjudicator has been informed.

Although the second adjudicator had not been informed of the result of the first adjudication application, he had been informed that the application had been made. He had the power under section 25(4)(a) to deal with his potential duty under section 27 by asking the parties for further submissions on the result of that earlier application. Douglas J held that by failing to give the work the same value as that of the first adjudicator the second adjudicator had failed to comply with an important provision of the BCIP Act.

This failure to comply with the statutory procedure involved an error of law which, by virtue s20(2)(f) of the QLD JR Act, constituted a ground for judicial review.

Amendments to the QLD JR Act

The recent amendments to the QLD JR Act mean that Douglas J would no longer be able to review the decision under the QLD JR Act. Since 28 September 2007 (just ten days prior to the date on which the Bezzina decision was handed down), by virtue the Justice and Other Legalisation Amendment Act 2007 (QLD) the QLD JR Act no longer applies to Part 3, Div 2 of the BCIP Act. That is, this amendment exempts the decisions of adjudicators made under the BCIP Act from review under the QLD JR Act. It is consistent with the BCIP Act’s aim to create a dispute resolution process whereby adjudicators can quickly resolve payment disputes between parties to a construction contract on an interim basis.

This amendment raises the question whether, and on what bases, adjudication determinations in Queensland may be reviewed by the courts given the QLD JR Act no longer applies.

NSW Position

Following Brodyn Pty Ltd t/as Time Cost and Quality v Davenport I [2004] NSWCA 394 and Transgrid v Siemens Ltd [2004] NSWCA 395, adjudications under the SOP Act can only be the subject of judicial review if it can be shown that:

• the adjudicator failed to comply with the basic and essential requirements laid down by the SOP Act as essential for such a determination to exist. These requirements include:

• a purported determination is not a bona fide attempt by the adjudicator to determine the dispute; or
• there is a substantial denial of the measure of natural justice required by the SOP Act.

Failure to give work the same value as that given in a previous determination - comparison of QLD and NSW

Since adjudications in NSW are not governed by a state judicial review act, the recent amendment in Queensland, which carves out adjudications from the application of the QLD JR Act, could operate to align the approach in both states more closely in the future. It seems likely that the Queensland Supreme Court will follow the NSW Supreme Court’s approach in Brodyn, including in allowing review if an adjudicator has failed to comply with the basic and essential requirements laid down by the QLD JR Act as essential for such a determination to exist (see Douglas J at 27).

The NSW courts are still settling upon which requirements of the SOP Act are ‘basic and essential’ as contemplated by Brodyn. In Rothnere v Quasar [2004] NSWSC 1151 it was decided that a failure by an adjudicator to give work the same value as that determined in a previous adjudication application, (that is, a failure to comply with section 22(4) of the SOP Act) is not sufficient to render a determination void.

However, the Queensland Supreme Court might deviate from its southern counterpart in this regard. Douglas J seems to suggest as much in his obiter in Bezzina, in particular by his comment that the case involved “a failure to comply with an important provision of the [BCIP] Act in circumstances where … a very different result would have occurred if the obligations imposed by the Payments Act had been met” (at 34, see also at 29). Thus it might be that if a scenario akin to Bezzina were to arise in Queensland today, the case would still be subject to the court’s review although no longer by virtue of the QLD JR Act.