JKC Australia LNG Pty Ltd v Inpex Operations Australia Pty Ltd

In this case, JKC Australia LNG Pty Ltd (the appellant) appealed against a decision of the Supreme Court of the Northern Territory, which quashed a determination made by an adjudicator under the Construction Contracts (Security of Payments) Act (NT) (the Act). The primary dispute between the appellant and Inpex Operations Australia Pty Ltd (the respondent) involved the validity of an adjudication determination made by the adjudicator regarding a payment claim made by the appellant. The respondent disputed the amount claimed by the appellant, leading to the adjudication process being initiated. The main legal issues before the court were whether the adjudicator failed to provide procedural fairness and whether the adjudicator made a bona fide attempt to comply with the essential requirements of the Act. The court below had quashed the adjudicator's determination, finding that the adjudicator did not provide the respondent with procedural fairness by notifying it of the proposed conclusions that could not be easily anticipated, thus depriving the respondent of the possibility of a successful outcome.

The court's reasoning focused on the principles of procedural fairness and the adjudicator's compliance with the Act. The court held that while an error of law construing provisions of the Act which vest an adjudicator with jurisdiction to make a determination will render a determination a nullity, non-jurisdictional errors of law or fact made by an adjudicator in the process of making a bona fide attempt to carry out the functions conferred by the Act are not amenable to review. However, if an adjudicator has not made a bona fide attempt to comply with the essential requirements of the Act or if there has been a substantial denial of procedural fairness, an adjudication will be reviewable. The court below found that the adjudicator did not warn the parties that he was considering making a determination based on the implied terms in the EPC Contract and the Act, and did not provide the respondent with a fair opportunity to address that proposed basis. Therefore, the court below concluded there was jurisdictional error and quashed the determination.

The court allowed the appeal and set aside the order of the Supreme Court quashing the adjudicator's determination. The court held that the adjudicator's determination was valid and that the respondent was liable to pay the amount of the claim. The court found that there was no obligation for the adjudicator to determine whether the underlying work had been performed and correctly valued under the construction contract or whether the payment claim was a valid claim within the meaning of the Act, as the respondent had failed to give notice of dispute within the prescribed time. As a result, the respondent's contention that the order quashing the adjudicator's determination should stand was dismissed.