Ostwald Bros Pty Ltd v Jaylon Pacific Pty Ltd

Ostwald Bros Pty Ltd (the applicant) and Jaylon Pacific Pty Ltd (the first respondent) were parties to a construction contract. The first respondent served a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) for work claimed to have been performed under the contract as well as additional work by way of variations. The applicant disputed the claim and sought to claim an amount for liquidated damages for late performance by the first respondent. An adjudication decision was purportedly made under the Act. The applicant sought to have the adjudication decision quashed. The applicant contended that the adjudicator had been denied procedural fairness because the adjudicator determined the dispute on a basis that was not the subject of submissions from either party.

The court was required to decide whether the adjudication decision should be declared void because of jurisdictional error. The court considered whether the adjudicator had acted beyond the scope of his or her jurisdiction by deciding the dispute on a basis that was not the subject of submissions from either party. The court considered whether the adjudicator had breached the rules of natural justice by failing to give the parties an opportunity to make submissions on the basis on which the dispute was decided. The court also considered whether the adjudicator had made an error of law by misconstruing the relevant provisions of the construction contract.

The court found that the adjudicator had acted beyond the scope of his or her jurisdiction and had breached the rules of natural justice. The court found that the adjudicator had decided the dispute on a basis that was not the subject of submissions from either party. The court found that the adjudicator had misconstrued the relevant provisions of the construction contract by construing them as requiring the applicant to prove that the first respondent was not entitled to any extensions of time and that, in the absence of such proof, the first respondent must succeed and the applicant must fail. The court found that the adjudicator had not given the parties an opportunity to make submissions on this basis. The court found that the adjudicator had acted beyond the scope of his or her jurisdiction and had made an error of law. The court declared the adjudication decision void.

The court declared that the adjudication decision of the third respondent dated 24 February 2016 upon adjudication application number QBCC10046 is void. The court directed the parties to confer within seven days of this order with a view to agreeing upon the orders to be made to give effect to paragraph 1 of this order and any consequential orders. The court directed the parties within 14 days of this order to provide written submissions as to the further orders to be made having regard to Order 1 and the reasons published this day, limited to no more than five pages. The court otherwise adjourned the hearing of the application to a date to be fixed. The court reserved costs.