16 February 2021

Adjudicators & Contractors Warned – Don’t Be Late; Know Your Licence

The Effect of a Late Adjudication Tony Mylne
Tony Mylne Litigation Lawyer

This recent Queensland Court of Appeal decision clarifies the effect of a late adjudication and reiterates why it is important for contractors to frequently review their licensing position.

The Court of Appeal in early February reviewed the decision of the Supreme Court in Civil Contractors (Aust) Pty Ltd (CCA) v Galaxy Developments Pty Ltd.  Three matters were in issue on the appeal: –

    1. Whether lateness of the Adjudicator’s decision made it void.
    2. Whether the costs of the Adjudicator were payable.
    3. Whether the works were excluded from the definition of building work requiring a licence and whether in the circumstances the adjudicator had any jurisdiction to decide the builder was entitled to a progress payment under the Building Industry Fairness (Security of Payment) Act.

Facts 

Late Adjudication Decision

CCA issued a payment claim for over $1.4 million and Galaxy served a payment schedule for less than $55,000. Extensions of time were granted to Galaxy to deliver its response and on three separate occasions the Adjudicator was granted extensions of time by the parties under s. 86(1) to deliver his decision – which required a final decision to be delivered on 24 October 2019.

It was not until 28 October that any decision was available for distribution to the parties and the decision referred to a “decision date” of 24 October. It was clear that the Adjudicator was still finalising the terms of the decision on 28 October, given correspondence with the Registrar. During the course of proceedings before the Supreme Court, CCA admitted that the decision was delivered on 29 October – outside the time required by the Act.

Adjudicator’s Fees

The Supreme Court in its original decision required the Adjudicator to repay the funds paid to him.

It was alleged that the misrepresentation of the date of the decision was inconsistent with what the Adjudicator knew to be the date of the decision. This was demonstrated by the repeated requests by the Adjudicator for extensions which showed he was acutely aware of his obligation to make the decision within the required time ending 24 October.

Galaxy argued at the original hearing that there was some lack of good faith shown by the Adjudicator in making the misrepresentation referred to above. The appeal by the Adjudicator complained that no notice had been given of these serious allegations.

Licensing Issue

CCA only had a licence restricted to structural landscaping. Only a small part of the works contracted to CCA were contended to be outside of its licence (referred to as bus stop works by the original Supreme Court decision). Those works consisted of the removal of a garden seat fixed to a concrete footpath and re-fixing that seat to new concrete paving. They also included the removal of a prefabricated metal shelter and its relocation to a new concrete footpath, as well as the fixing of a metal bike rack. If any of the building work was outside the scope of its licence CCA had no entitlement to be paid for the performance of any work, and as such, the Adjudicator had no jurisdiction to decide CCA’s progress payment entitlement.

Original Supreme Court Decision

Late Adjudication Decision

The Court considered that the mandatory timing provisions in s. 85(1) of the Act tended to suggest that strict compliance was required. The Court examined alternative interpretations from both Victoria and New South Wales which suggested late decisions were not void. The Court indicated that these interstate decisions shouldn’t be followed given the different wording of each statute. Accordingly, the Adjudicator’s decision was not made within jurisdiction and therefore void.

Adjudicator’s Fees

The Supreme Court took the view that the Adjudicator was not entitled to payment of any fees as he had failed to deliver a ‘decision’ – see s. 95(6) of the Act. The Court also considered s. 95(8), explaining that the Adjudicator did not make a decision in good faith as the Adjudicator was well aware of the time within which he was required to determine the adjudication and he purported to make a decision within that time (when it was not in fact the case).

Licensing Issue

Central to the original decision was the belief by the primary judge that there were no exemptions applicable in Schedule 1 of the QBCC Regulation. The primary judge in reviewing Items 14 and 15 of the exempted building work could not class the works as falling within “working on roads and tunnels” or “working on bikeways or foot paths”. In her view “unfortunately for the first respondent, while structures in on or under a road are excluded from the definition of building works, there is no similar provision in relation to structures in, on or under footpaths.”

The relevant parts of Items 14 and 15 of schedule 1 detailing exception to “Building Work” are as follows: –

14 Work on roads and tunnels
1) Construction, maintenance or repair of a road or a tunnel for a road.
2) in this section –

……

road –

a) means an area of land –

(i) whether surveyed or unsurveyed, dedicated, notified or declared to be a road for public use; or
(ii) whether surveyed or unsurveyed, taken under an Act, for the purpose of a road for public use; or
(iii) developed, or to be developed, for the public use of driving or riding of motor vehicles; and

b) includes –

….

(iii) a structure in, on, or under a road that is associated with the road;

15. Work on bikeways and footpaths

(1) Construction maintenance or repair of a bikeway or footpath or a tunnel for
a bikeway or footpath.

 

(2) in this section –

……

 

            footpath-

a) means a path that has as 1 of its main purposes the public use of the path by pedestrian traffic; but
b) does not include a path within private property

While her Honour decided that the road was almost certainly a dedicated road she found that the bus stop works were in each specific case not structures on a road but were instead structures on the footpath. A similar provision in Item 15 concerning bikeways and foot paths does not have within it the same terminology as Item 14(2)(b)(iii) and as a consequence she found CCA fell outside of the exemptions.

Court of Appeal Decision

Late Adjudication Decision

The Court of Appeal took little time to agree with the primary judge’s decision that the adjudication decision was void because it was not strictly made within the time periods under s. 85 or extended periods under s. 86. None of the decisions made by Victorian or New South Wales Courts were followed as the legislation is significantly different in this respect.

Adjudicator’s Fees

Justice McMurdo gave the lead judgement. On this issue, it was an appeal brought by the Adjudicator against the primary judge’s decision for refund of the payment made to the Adjudicator. His Honour was critical only of the lack of opportunity provided to the Adjudicator when the Court made its findings of bad faith and misrepresentation.

Aside from that finding, there was general agreement with the primary judge that not supplying a decision within the strict timeframes of s. 85 and without extensions under s. 86, meant there was no decision and no sums should have been payable to the Adjudicator.

Section 86 was not to be read (as the Adjudicator submitted) that somehow there was to be extra time added should there not be an answer to a request for extension.  Because there had already been extensions of time given to the Adjudicator by the parties, the five extra business days added to the time allowable under section 85(1) wasn’t applicable.

Licensing Issue

Unlike the primary judge, Justice McMurdo did not agree that the bus stop works performed by CCA fell outside of both Items 14 and 15 of Schedule 1 to the Regulations. Justice McMurdo preferred the interpretation that CCA’s works fell within Item 14 as in his view the items were “structures on a road, and which were associated with a road”. His Honour made the observation that the items were not on private land but an area dedicated for public use. As a consequence, he considered the work to fall within Item 14.

His Honour did not concede that footpaths should only be dealt with under Item 15. He went on to say that whereas a road as defined here would include the adjoining footpath, not every footpath would be within a road – stating “Examples of pedestrian laneways come to mind.”

Takeaways – Late Adjudication

  1. Adjudicators should have close regard to the timing of decisions or risk being unpaid for substantial work.
  2. The good faith provisions would seem only to apply in relation to guaranteeing payment where decisions are made within time.
  3. Decisions dealing with whether or not certain works are exempted under Schedule 1 of the QBCC Regulations can be fine line determinations. Reasonable minds may differ as to interpretation with significant differences in results. Contractors should closely analyse their scope of works and licensing position as part of their due diligence before final contracts are entered into.

If you would like more information on this article, please contact Tony Mylne.


Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

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