I refer to earlier postings regarding Kirk; N.K Collins and more recently Thiess in relation to jurisdictional error in the purview of judicial reviews and the supervisory role of the Supreme Court.

Allens Arthur Robinson

The Supreme Court of Queensland has held that an adjudicator’s failure to consider various spreadsheets which formed part of the Principal’s adjudication response, but which were not included in its payment schedule, amounted to jurisdictional error. The Court clarified that even if the spreadsheets were not included in the Principal’s payment schedule, section 26(2)(d) of the Building and Construction Industry Payments Act 2004 (Qld) still required the adjudicator to consider the spreadsheets in making his determination.

The Court also concluded that natural justice required the adjudicator to inform the parties that he was determining the matter without reference to the spreadsheets. The failure to give that notice denied the Principal the opportunity to advance any explanation for the omission.

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

Allens Arthur Robinson

The Supreme Court of Queensland has made an award of damages under the Corporations Act 2001 (Cth) for the ‘improper’ conduct of a company director. On the facts, the director had caused the company to enter into a joint venture agreement principally for the benefit of someone other than the company; indeed, it was a positive detriment to the company. The case highlights the importance of company directors understanding and distinguishing the interests of the company from their own personal commercial interests and the commercial interests of others. The Court affirmed that it is sufficient for the purposes of a claim for damages that the Court has jurisdiction to grant an injunction restraining the director.

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

Ceresola TLS AG v Thiess Pty Ltd & John Holland Pty Ltd [2011] QSC 115

The Supreme Court of Queensland has refused to grant an injunction restraining a party from calling on a bank guarantee despite there being serious questions to be tried. The Court affirmed the general rule that, in the absence of fraud and unconscionability, courts will not grant an injunction. Bank guarantees have two purposes: one is to provide security, and the other is to allocate risk as to which party should be out of pocket while a dispute is resolved. The Court took the view that the terms of the contract when taken together with the unconditional nature of the bank guarantee showed an intention that the contractor should be out of pocket pending resolution of the dispute; that intention was independent of the seriousness of the questions to be tried.

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

Project Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd & Anor [2011] QCA 102

The Queensland Court of Appeal has allowed an appeal and ordered that a party be added as a plaintiff to a case yet to be heard. The court below had dismissed the application on the basis that the pleading did not disclose a cause of action. While following the principle established by the High Court (that a subsequent purchaser of commercial premises could not recover from the builder damages caused by defects in the building resulting from faulty construction unless it demonstrated vulnerability) the Court observed that the principle was framed in circumstances where the purchaser had an arms length relationship with the vendor and could therefore take steps to protect itself. That principle may be of no application where the purchaser and the vendor are part of the same corporate group, since the nature of the transaction is quite different.

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

Mitchell v Pacific Dawn Pty Ltd [2011] QCA 98

The Queensland Court of Appeal has affirmed that a threatened breach of contract may amount to normal commercial negotiations if the party exerting the pressure does so in good faith and on a reasonable and honest view of its legal rights. On the facts, the Court found that a settlement agreement was not the result of economic duress, unconscionable conduct, or misrepresentation. Though the builder had claimed that the principal had concealed its inability to make payments, had wrongly asserted a right to delay costs (despite having caused substantial delays), and threatened to breach the contract, the builder actually knew the principal was financially stretched, and that the principal’s delay claim views were legitimate in the circumstances.

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

The Supreme Court of Queensland has dismissed an application to set aside an adjudication decision on the basis of jurisdictional error. Though it agreed with the NSW Court of Appeal that the legislation is not intended to permit a fresh adjudication application in respect of work that has already been the subject of an adjudication decision, that prohibition does not extend to instances where an adjudication decision does not address the merits of the claim.

On the facts, the Court found that an adjudicator’s mere determination that a payment claim was invalid because it included claims for services provided after the reference date did not address the underlying merits of the claim. This left the applicant free to issue a valid payment claim in respect of the same work and meant that an adjudicator did not commit a jurisdictional error by determining the subsequent adjudication application. [Case references: VK Property Group Pty Ltd and Ors v Conias Properties Pty Ltd and Anor [2011] QSC 54; Dualcorp Pty Ltd v Remo Constructions Pty Ltd [2009] NSWCA 69.]

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

The Queensland Court of Appeal has held that a construction manager, which provided only construction management services and did not undertake any building works, was obliged to rectify defective building work if so directed by the Queensland Building Services Authority under the Queensland Building Services Authority Act 1991 (Qld). In doing so, the Court distinguished an earlier case (on the basis that it related to unlicensed work) which limited the QBSA’s powers to order such rectification in those instances where the entity providing the construction management services also carried out the building works. [Case references: McNab Constructions Australia P/L v Queensland Building Services Authority [2010] QCA 380; Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd [2008] QSC 356.]

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

The Queensland Court of Appeal has followed the High Court and found that, despite the specific exclusion of the Building and Construction Industry Payments Act 2004 (Qld) from the operation of the Judicial Review Act 1991 (Qld), the legislature cannot exclude the power of a State Supreme Court to exercise its supervisory jurisdiction as to jurisdictional error in executive and judicial decision making. On the facts, it upheld the lower Court’s finding that the adjudicator had not made a decision beyond the scope of his legislative powers; that is, there had not been any jurisdictional error. [Case ref: Kirk v Industrial Court (NSW) (2010) 239 CLR 531; Northbuild Construction P/L v Central Interior Linings P/L & Ors [2011] QCA 22.]

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

Allens Arthur Robertson

The Supreme Court of Queensland has applied the balance of convenience test and ordered an applicant (which had the benefit of an earlier restraining order that prevented a respondent enforcing an adjudication determination against the applicant) to provide an additional bank guarantee to secure the interest that would accrue on an adjudicated amount up until the conclusion of a pending trial. Given the nearly two-year delay in bringing the matter to trial, the initial security provided was insufficient. Failure to provide that additional security would mean that the earlier restraining order would lapse; the respondent would then be free to take steps to enforce that determination.

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

Allens Arthur Robinson

The Queensland Court of Appeal has confirmed that a builder can claim compensation under the Property Law Act 1974 (Qld) if it made lasting improvements to land in the genuine but mistaken belief that the land was owned by the party with whom the builder had contracted. It may do so even if the builder’s belief was unreasonable or careless. While unreasonableness or carelessness does not preclude compensation, the unreasonableness of an asserted belief may point to the improbability of it in fact being held.

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.