Court of Appeal in NSW just made it harder to overturn an Adjudication decision. Get your payment schedule correct -or expect to lose

In Ceerose Pty Ltd v A-Civil Aust Pty Ltd [2023] NSWCA 215 ,the appellant, Ceerose Pty Ltd, was a building contractor undertaking two developments, one at York Street, Sydney, and another in Elizabeth Bay. The respondent A-Civil Aust Pty Ltd (A-Civil), was Ceerose’s subcontractor for both those developments.

In May 2022, A-Civil served Ceerose with payment claims under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”) in relation to each development. Ceerose disputed some of the claims and set out its reasons for that dispute in a payment schedule. A-Civil applied for adjudication under the Act in each case and Ceerose filed an adjudication response. The Adjudicator determined that Ceerose was obliged to pay A-Civil $2,045,453.97, and for the Elizabeth Bay dispute, $349,324.36.

Ceerose brought proceedings in the Supreme Court, seeking to set aside both determinations for jurisdictional error. The primary judge held that both determinations were affected by jurisdictional error but, applying s 32A of the Act, set aside only those parts of the determinations said to be affected by jurisdictional error.

The Court of appeal in NSW  made a number of important findings:

  1. The Act lists the “only” matters the adjudicator is “to consider”. Consideration is a private mental process. Some of that process may be revealed in the adjudicator’s written decision, but failure to refer to a matter does not necessarily show the adjudicator failed to consider it. The adjudicator must “consider” only those submissions that are “duly made”, not submissions improperly made, or submissions that are irrelevant.
  2. Only in a rare case will it be possible to infer that an adjudicator has failed to consider a matter within s 22(2) of the Act. For example, failure to refer to a submission on a centrally important matter, clearly articulated and based on uncontested facts, may demonstrate a failure to consider that matter.
  3. An adjudicator is under no obligation to investigate the “true merits” of the payment claim advanced by a party. The adjudicator’s task is to decide the dispute between the parties, on the limited matters the Act requires the adjudicator to consider and the limited material the Act allows the parties to submit for determination.
  4. The Act limits the respondent in an adjudication to resisting payment only on those grounds already included in their payment schedule. If a respondent gives no reason for resisting payment, it is not an error to award the payment claimed without further investigation as there is no relevant dispute for the adjudicator to consider. The same applies if the adjudicator rejects a respondent’s reasons for resisting payment. The adjudicator’s task is to decide the parties’ dispute, not investigate the “true merits” of the claim.
  5. Therefore, when a decision is affected by jurisdictional error, the correct approach is to sever and set aside those parts of the decision concerning whatever component of payment was in dispute.
  6. The adjudicator was not required to wade through the voluminous material presented to him by Ceerose to try and find a basis for Ceerose’s contention which was not a substantial, clearly articulated argument relying upon established facts presented by Ceerose in its payment schedule.

 Key Takeaway 

A decision of a Court of Appeal in another state will be persuasive to Courts in Qld.

The payment schedule needs to clearly articulate all reasons for non-payment as the Adjudicator is only required to consider contractual or other reasons that are clearly raised in the schedule.

It will be difficult to argue that an Adjudicator has failed to consider one of the parties’ submissions.


Key contacts:

Stephen Pyman – Director


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