Tick, tick, tick…the Adjudication Application Time Bomb

It is trite that the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIFSOPA) (and its predecessor[1]) provides strict timeframes. Historically, those timeframes have applied to Claimants[2] and Respondents.[3]  Now, BIFSOPA may be said to apply to Adjudicators.

Background

Subject to extensions of time, section 85(1) of BIFSOPA provides that an Adjudicator must determine an Adjudication Application within 10 business days (standard payment claim[4]) or 15 business days (complex payment claim[5]). Generally, the Courts have held,[6] in the context of equivalent provisions in other States:

  1. An Adjudicator’s failure to comply with the time limits does not invalid an Adjudication Decision;
  2. The consequence for a failure to comply, is that the Adjudicator is not entitled to payment.

Galaxy Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd t/as CCA Winslow and Ors [2020] QSC 51

On 30 March 2020, the world changed radically. An Adjudication Decision which is made outside the time limit imposed by BIFSOPA is, at least according to the decision of Dalton J in Galaxy Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd, void. In English, that means the Adjudication Decision is without legal consequences and, most importantly, it cannot be enforced by the Claimant.

Interestingly, the Court held that the Adjudicator was not entitled to keep any of the fees which had been paid to him by the Claimant (he had to repay a substantial sum of money).

Take Home Points

We note that Galaxy Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd is currently under appeal, and there are certain arguments that might be raised in relation to its correctness, however the present take away points are:

  1. Be aware – An Adjudication Decision given outside of the time limits imposed by BIFSOPA is unenforceable (meaning that you have spent a good chuck of change to get the Adjudication Decision, but it is worthless to you). You need to know the time limit which applies to your matter or you might miss out (through no fault of your own); and
  2. Be proactive – As a Claimant you need to ensure that the Adjudicator makes their decision on time. You may need to prompt the Adjudicator to ask for extensions of time. Alternatively, you may need to ask for a referral to a new Adjudicator or to make a new Adjudication Application.[7]

If you are an Adjudicator, you should be complying with the mandated time limits, as the failure to do so might leave you significantly out of pocket.

[1] Building and Construction Industry Payments Act 2004 (Qld) (BCIPA).

[2] For example, section 79(2) BIFSOPA provides timeframes for lodgement of Adjudication Applications.

[3] For example, section 83(1) BIFSOPA provides timeframes for Adjudication Responses.

[4] Up to $750,000.00 ex GST.

[5] More than $750,000.00 ex GST.

[6] For example Ian Street Developer Pty Ltd v Arrow International Pty Ltd and Anor [2018] VSCA 294; MPM Constructions v Trepcha Constructions [2004] NSWSC 103; Cranbrook School v JA Bradshaw Civil Contracting [2013] NSWSC 430.

[7] You only have 5 business days after the decision is due; see section 94 BIFSOPA.

Queries

If you have any questions about this article please get in touch with the author or a member of our Building & Construction team.

Disclaimer

Please note that the regime discussed in this article is particular to Queensland, other legislation governs payment claims in other Australian States and Territories. This information and contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders and is for reference purposes only.  It does not constitute legal or financial advice.  If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.

The Author

Brent Turnbull

PARTNER, BRISBANE

Key Contacts

Brent Turnbull

PARTNER, BRISBANE

Ian Heathwood

PARTNER, BRISBANE

Richard Hutchings

PARTNER, MELBOURNE