Baguley Build Pty Ltd v Olcon Concrete & Construction Pty Ltd & Anor [2025] QSC 126

• [1] By application filed on 3 April 2025 the applicant seeks a declaration that a decision made by the second respondent ("the adjudicator") on 17 September 2024 is void. The decision was made or purported to be made pursuant to s 88 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) ("the Act").
• [2] The adjudicator submitted an appearance abiding any order of the Court save as to costs.
• [3] The applicant asserts that the decision is void because it is affected by jurisdictional error, alternatively, because the adjudication process miscarried due to fraud or misleading conduct on the part of the first respondent. The parties agree determination of the issue of jurisdictional error does not require the Court to decide any disputed facts and so should be resolved now. They agree that if the applicant does not succeed on jurisdictional error, directions will be required concerning a trial of the other issue.
• [4] The applicant submits that jurisdictional error is to be considered by determining whether the adjudicator erred in concluding that s 82(4) of the Act precluded the applicant from relying on paragraphs 80-135 of its adjudication response as reasons for withholding payment of a payment claim. The first respondent submits that jurisdictional error is to be considered by addressing the question of whether the adjudicator breached the obligation in s 88(2) to consider submissions "properly made" in support of a payment schedule.
• [5] For the purposes of this case it is sufficient to note that a payment claim is a written document that identifies construction work to which a progress payment relates and states the amount of the progress payment claimed to be payable.[1] A payment schedule is a written document that states why the amount proposed to be paid in relation to the claim is less than the amount sought and includes reasons why the payment is withheld.[2]
• [6] For the reasons set out below the application for a declaration that the decision is void on the ground of jurisdictional error is refused.

• [7] The first respondent, a concreting contractor, was subcontracted to the applicant. On 13 July 2024 the first respondent gave the applicant a payment claim in the form of a tax invoice (numbered 1369) for $137,075.40 (incl. GST) for works carried out relating to the construction of sports facilities. Ultimately, the adjudicator issued his decision in favour of the first respondent for 100% of the sum claimed.
• [8] Tax invoice 1369 reproduced exactly the labour line items for some earlier payment claims (numbered 1354, 1355 and 1357) that the first respondent had given to the applicant; it also claimed an additional 20 hours of labour on 2 February 2024 (which the first respondent accepts was a new item); provided a daily breakdown of labour from an earlier payment claim (numbered 1351) but reduced to a total of 583.5 hours; and did not reproduce claims for accommodation.
• [9] On 25 July 2024 the applicant issued a payment schedule, which the first respondent accepts comprised a cover email and an attached payment schedule. The email stated:

"I note invoice 1369 which was sent on the 13th of July.

This appears to be the consolidation of the previous claims (Inv 1351, 1354, 1355, 1357).

This invoices have been previously address via payment summaries and the QBCC process that you initiated. (sic)

The most recent version of these previous claims has been reviewed, and our position remains unchanged. In that, all monies due and payable have been addressed."

• [10] The payment schedule attached was for $0 and stated:

This is a consolidation of the previous invoices 1351, 1354, 1355, 1357

• [11] The first respondent had issued the earlier payment claims on 31 January 2024 in the cases of invoices 1351 and 1354 (for $70,153.60 and $10,575.40 respectively), 22 February 2024 in the case of invoice 1355 (for $44,559.90) and 8 March 2024 in the case of invoice 1357 (for $30,163.10). The applicant issued payment schedules in response to each of these claims on 19 March 2024, scheduling negative amounts for each claim except for invoice 1351 which scheduled $0.00. The payment schedules stated reasons for withholding payments, specifically, unsigned timesheets, no receipts for accommodation, inefficient work and excessive downtime, and defective works including incorrect falls, finishes and stairs.
• [12] On 13 August 2024 the first respondent applied pursuant to s 79 of the Act for adjudication of the payment claim concerning only invoice 1369. In submissions made to the adjudicator in support of the application the first respondent contended that the effect of ss 69(c), 82(4) and 88(2)(d) of the Act meant that the applicant could not "use 'past explanations' for withholding payment not included in its Payment Schedule in its Adjudication Response".
• [13] In the adjudication response, made pursuant to s 82, the applicant contended that it was permissible for a payment schedule to incorporate reference to material extrinsic to the payment schedule where that material was specifically identified with sufficient particularity and had recently passed between the claimant and the respondent. The applicant contended that the claimant (the first respondent) knew the reasons relied on for withholding payment because it had identified those reasons in its adjudication application.

• [14] The adjudicator set out the competing submissions of the parties as follows:

"70. Contrasting submissions around compliance with s69(c) of the Act have been provided by the Claimant and Respondent in relation to the validity of the reasons included in the payment schedule for withholding payment.

1. The payment schedule provides 2 reasons for withholding payment. Firstly, 'This is a consolidation of the previous invoices 1353, 1354, 1355, 1357' and secondly, 'Reasons for withholding a payment have not changed'.
2. The Claimant submits that the payment schedule does not provide any reasons for withholding payment, and instead relies on previous reasons which have not changed. For the purposes of the adjudication the Claimant relies on s69(c) of the Act for the requirement to provide reasons; s82(4) of the Act for the inability of the Respondent to include new reasons in an Adjudication Response; and s88(2)(d) of the Act to confirm the Adjudicator can only consider the payment schedule to which the application relates. The Claimant has also provided case law to support their position.
3. The Respondent submits reasons have been adequately provided within the payment schedule with a supporting case law example. An additional case law example has been included to confirm it does not matter how reasons are expressed, with what formality or lack of it, and with what facility or awkwardness. Further case law examples have also been included to confirm examples of valid reasons included in other payment schedules. Finally, case law examples have been included to confirm that a covering email which attaches documents in response to a payment may form part of the schedule.
4. The Respondent also provides an alternative view of the case law relied upon by the Claimant in relation to past reasons." (Footnotes omitted)

• [15] The adjudicator then considered the merits of the submissions:

"75. For compliance with s69(c) of the Act, when the amount proposed to be paid is less than the amount stated in the payment claim, the payment schedule must state why the amount proposed to be paid is less, including the respondent's reasons for withholding any payment. The practical application of s69(c) is summed up well in Minimax Fire Fighting Systems Pty (WA Pty Ltd) Ltd v Bremore Engineering [2007] QSC 333 at [27] which states 'The whole purpose of such a document is to identify what amounts are in dispute and why. The delivery of a payment claim and a payment schedule is meant to identify, at an early stage, the parameters of a dispute about payment'.

1. Whilst I generally agree with the Respondent's submission that the Claimant had knowledge as to what the reasons for withholding payment related to given the content of the Adjudication Application, it is not possible from the provided reasons in the payment schedule to distinguish what the exact reasons are, what reason relates to which claimed item and for what claimed value.
2. 77. I have particularly considered the Respondents submission and provided case law around the included reasons contained in the payment schedule subject of the adjudication but I find they are not particularly relevant to this adjudication.
3. The Claimant has not simply submitted the same unchanged payment claim again which may justify a reference to a previous payment schedule. Instead, time has passed, circumstances have changed from the previous assessment as evidenced in the correspondence included by both parties, and the Claimant has provided their previously unpaid claims in a new claim and format. This is a reasonable course of action permitted by s75(5) of the Act. Therefore, reasons in a payment schedule should be specific to the claim it is responding to.
4. This position is further reinforced in the Statutory Declaration of Simon Vigliante included in the Adjudication Response. At paragraph 15 it states 'I responded with the payment schedule that is the subject of the Application. I had understood that there was no reference date and that they could not keep trying to send payment claims so my response referred to my previous payment schedules and I confirmed that our position was unchanged'. From this statement it appears that the Respondent relied on their belief that there was no reference date rather than a belief that the previous reasons remained appropriate.
5. My view is not changed when considering the other items raised by the Respondent in relation to the reasons included on the payment schedule. The formality, or lack thereof, of the provided reasons does not impact my decision as to their appropriateness. The information contained in the covering email also does not assist in advancing the detail of the provided reasons if it were to form part of the payment schedule.
6. Regardless of the above, the Respondent has strictly complied with of the Act in that they have provided reasons for their payment being less than the amount stated in the payment claim. I therefore find in favour of the Respondent on this issue and decide that the payment schedule dated 26 July 2024 is valid in accordance with of the Act.

1. The Respondent has provided a substantial Adjudication Response and included submissions in relation to the claim and valuation. However, none of these reasons raised in the Adjudication Response for withholding payment were included in the payment schedule when given to the Claimant. I therefore decide these to be new reasons pursuant to s82(4) of the Act. Pursuant to s88(3)(b) of the Act I am unable to consider new reasons." (Footnotes omitted)

• [16] The parties accept that the reference to "the Adjudication Application" in paragraph 84 is a mistake and should be treated as "the Adjudication Response".

• [17] The applicant argues that jurisdictional error occurred because the adjudicator wrongly applied s 82(4) when he characterised the applicant's submissions in the adjudication response as new reasons for withholding payment. The adjudicator was wrong not to recognise that reasons in a payment schedule may be incorporated by referring to earlier payment schedules and correspondence between the parties.[3] The result of this erroneous characterisation was that the adjudicator failed to consider a matter s 88(2) obliged him to consider and this too constituted jurisdictional error.[4]
• [18] The first respondent argues that the adjudication decision was reached after a consideration of the matters s 88(2) required the adjudicator to consider. The adjudicator had regard to the applicant's adjudication response and that response included submissions about why the adjudicator should take into account not just the payment schedule referrable to Invoice 1369 but also other documents incorporated by reference in the payment schedule and what those other documents were. Having had regard to these submissions the adjudicator found that the adjudication response included reasons for why the applicant withheld payment that were not included in the payment schedule even if the schedule was understood as incorporating other documents and so the adjudication response included new reasons for withholding payment. In these circumstances ss 82(4) and 88(3)(b) prohibited the adjudicator from considering new reasons. The first respondent argues that even if the adjudicator was wrong in not considering this aspect of the adjudication response such an error does not constitute jurisdictional error, it would only be an error the adjudicator's jurisdiction. Lastly, to establish jurisdictional error the applicant needs to prove that the error was material in the sense that had it not been made there was a realistic possibility the adjudication decision could have been different.

• [19] The statutory provision which confers functions on an adjudicator is the correct point from which to commence when considering the issue of jurisdictional error. That provision is s 88, though it assists to notice the statutory context in which s 88 appears.
• [20] The relevant provisions are as follows:

(1) A payment claim, for a progress payment, is a written document that -

(a) identifies the construction work or related goods and services to which the progress payment relates; and

(b) states the amount (the claimed amount) of the progress payment that the claimant claims is payable by the respondent; and

(d) includes the other information prescribed by regulation.

A payment schedule, responding to a payment claim, is a written document that -

(a) identifies the payment claim to which it responds; and

(b) states the amount of the payment, if any, that the respondent proposes to make; and

(c) if the amount proposed to be paid is less than the amount stated in the payment claim - states why the amount proposed to be paid is less, including the respondent's reasons for withholding any payment; and

(d) includes the other information prescribed by regulation.

(1) A person (the claimant) who is, or who claims to be, entitled to a progress payment may give a payment claim to the person (the respondent) who, under the relevant construction contract, is or may be liable to make the payment.

(5) A payment claim may include an amount that was included in a previous payment claim.

(1) If given a payment claim, a respondent must respond to the payment claim by giving the claimant a payment schedule ...

(1) A claimant may apply to the registrar for adjudication of a payment claim (an adjudication application) if -

(a) ...

(b) the amount stated in the payment schedule, given in response to the payment claim, is less than the amount stated in the payment claim.

(3) The adjudication application may be accompanied by submissions relevant to the application.

(1) After being given notice of an adjudicator's acceptance of an adjudication application under section 81, the respondent may give the adjudicator a response to the adjudication application (the adjudication response).

(2) However, the respondent must not give an adjudication response if the respondent failed to give the claimant a payment schedule as required under section 76.

(b) must identify the adjudication application to which it relates; and

(c) may include the submissions relevant to the response the respondent chooses to include.

(4) However, the adjudication response must not include any reasons (new reasons) for withholding payment that were not included in the payment schedule when given to the claimant.

(5) The adjudicator may require the respondent to resubmit the adjudication response without the new reasons.

(1) An adjudicator is to decide -

(a) the amount of the progress payment, if any, to be paid by the respondent to the claimant (the adjudicated amount); and

(b) the date on which any amount became or becomes payable; and

(2) In deciding an adjudication application, the adjudicator is to consider the following matters only -

(a) the provisions of this chapter and, to the extent they are relevant, the provisions of the Queensland Building and Construction Commission Act 1991, part 4A;

(b) the provisions of the relevant construction contract;

(c) the payment claim to which the application relates, together with all submissions, including relevant documents, that have been properly made by the claimant in support of the claim;

(d) the payment schedule, if any, to which the application relates, together with all submissions, including relevant documents, that have been properly made by the respondent in support of the schedule;

(e) the results of any inspection carried out by the adjudicator of any matter to which the claim relates.

(3) However, the adjudicator must not consider any of the following -

(a) an adjudication response, to which the adjudication application relates, that was not given to the adjudicator within the time required under section 83;

(b) a reason included in an adjudication response to the adjudication application, if the reason is prohibited from being included in the response under section 82.

(b) include the reasons for the decision, unless the claimant and the respondent have both asked the adjudicator not to include the reasons in the decision.

• [21] Section 88(1) provides that the adjudicator's function is to decide the amount of the progress payment, if any, which is to be paid, the date on which it is due and payable and the rate of interest. Section 88(2) provides that in deciding an application the adjudicator is only to consider the matters set out in subparagraphs (a) to (e) of s 88(2). Of particular relevance to this case is the requirement to consider the provisions of chapter 3 of the Act and the payment schedule along with all the submissions, including relevant documents, that were properly made by the respondent in support of the schedule. However, s 88(3) provides for matters an adjudicator must not consider. Relevantly, the adjudicator must not consider a reason included in an adjudication response if the reason is prohibited from being included in the response under s 82. Section 82(4) provides that the adjudication response must not include any reasons (new reasons) for withholding payment that were not included in the payment schedule when it was given to the claimant. The adjudicator may require a respondent to resubmit the adjudication response without the new reasons: s 82(5).

• [22] Examination of the adjudicator's reasons shows that the adjudicator discharged the function of deciding the amount of the progress payment in accordance with s 88(2) and (3). The reasons evidence consideration of the applicant's payment schedule and the submissions the adjudicator regarded as properly made in support of the schedule. From paragraph 71 it is apparent that the adjudicator regarded the payment schedule as advancing two reasons for the applicant having withheld payment. In doing so he considered the payment schedule from two standpoints.
• [23] First, confined to the two reasons set out in paragraph 71 the adjudicator did not regard the schedule as persuasive because he said it was not possible from those reasons "to distinguish what the exact reasons are, what reason relates to which claimed item and for what claimed value" (paragraph 76). The adjudicator said he "particularly considered" the applicant's submissions and the case relied on about "included reasons" (paragraph 77). Having found that the first respondent had not submitted the same payment claim and had included "previously unpaid claims in a new claim and format" the reasons in a payment schedule had to be responsive to the new claim (paragraph 78).
• [24] Second, even if the payment schedule was regarded as containing the "other items raised by the Respondent in relation to the reasons included on the payment schedule" that information did not assist the applicant's argument for resisting the payment claim (paragraph 80). Paragraph 89 demonstrates that the adjudicator considered whether the additional reasons the applicant sought to rely on were to be considered. He said "none of these reasons raised in the Adjudication Response for withholding payment were included in the payment schedule when given to the Claimant" and so they were new reasons which s 88(3) prevented him from considering. So in arriving at the conclusion that the applicant could not rely on new reasons for resisting the claim the adjudicator considered the applicant's contentions about why the payment schedule was not to be regarded as confined in the way that the first respondent argued that it should.
• [25] The adjudicator's statutory function was to "consider" the payment schedule for invoice 1369 along with all submissions, including relevant documents, that were "properly made" by the applicant in support of the payment schedule. There was no legislative obligation to accept the submissions, just to consider them and only to the extent that the adjudicator regarded them as properly made. As long as the adjudicator considered them he discharged his function in accordance with s 88(2). Section 88(3) prevented the adjudicator from considering a reason advanced in the applicant's adjudication response if the reason was prohibited from being included in the response under It was a matter for the adjudicator to determine whether the adjudication response included any new reasons for withholding payment that had not been included in the payment schedule. This is apparent from Authorising the adjudicator to require a person in the applicant's position to resubmit an adjudication response without the new reasons demonstrates that the legislature has made plain that whether an adjudication response contains new reasons is a matter for the adjudicator to determine.

"... difference between an adjudicator's decision made in error that a submission was not properly made (which would be a decision within jurisdiction) and an adjudicator's failure to consider a submission that the adjudicator found was properly made (which may amount to a jurisdictional error, because the adjudicator has not performed the function required by s 88(2)(d) of the Act)."

"To the extent the adjudicator ... did not consider the adjudication response to the extent that it included reason for withholding payment that were not identified in the payment schedule or were determined by the adjudicator not to be valid reasons for withholding payment, the adjudicator made a decision, as to which part of the adjudication response could be characterised as a properly made submission. ... it was within the adjudicator's jurisdiction to make those decisions as to what was a properly made submission. Even if the adjudicator made an error (which it is not apparent that he did) in concluding that parts of the adjudication response should be rejected on the basis of not being a properly made submission, that would be an error within jurisdiction and not reviewable."

• [28] This approach to s 88(2) accords with that adopted in Niclin Constructions Pty Ltd v Robotic Steel Fab Pty Ltd where Applegarth J said:[9]

"[18] The valid exercise of an adjudicator's jurisdiction is conditioned on the adjudicator having considered the matters set out in s 88(2) of the Act. The valid exercise of an adjudicator's decision is not conditioned on the adjudicator reaching what is objectively the correct conclusion on the questions of fact or law that are required by the consideration of the matters set out in s 88(2). Expressed differently, 'there are many errors of fact and law which might be made by an adjudicator which would not be regarded as going to jurisdiction'. (Footnotes omitted)

[19] In this matter, the adjudicator considered the issue of whether matters contained in the District Court Statement of Claim were raised by the Payment Schedule in circumstances in which the Statement of Claim was not attached to it. Having considered that issue, the adjudicator reached a conclusion."

• [29] Notwithstanding an adjudicator's error in determining what could be considered under a provision analogous to s 88(2) in Perform (NSW) that error was not regarded as a jurisdictional error.[10]
• [30] The approach taken in these cases towards jurisdictional error in s 88 is not at all inconsistent with what was said in Acciona. In that case, Bond J said:[11]

"Second, the valid exercise of an adjudicator's jurisdiction is conditioned on the adjudicator having arrived at his or her conclusion by a process which considers the matters set out in s 88(2) of the Payment Act. But as to this, the following important matters must be noted:

(a) The valid exercise of an adjudicator's jurisdiction is not conditioned on the adjudicator reaching what is objectively the correct conclusion on all of the questions of fact or law required by the consideration of the matters set out in s 88(2). Or, to put it another way, there are many errors of fact and law which might be made by an adjudicator which would not be regarded as going to jurisdiction.

(b) On an application to set aside an adjudicator's decision for jurisdictional error, the question is not whether the Court would have come to the same conclusion as the adjudicator. Rather, the question is whether the adjudicator arrived at his or her conclusion by a process which failed to consider the matters set out in s 88(2).

(e) Adjudicators under the Payment Act do not have to get the answer right, but if it is demonstrated that they have not gone about their task by carrying out the active process of intellectual engagement with the issues and the submissions before them that the Payment Act requires, then they will have fallen into jurisdictional error because they will not have done the very thing s 88(2) of the Payment Act required them to do." (Footnotes omitted)

• [31] Though in aid of the contention that there is a jurisdictional error the applicant submits that paragraph 81 of the adjudicator's reasons conflicts with paragraphs 82 and 83 of his reasons, if this is indicative of error it is not an error which goes to jurisdiction.
• [32] As jurisdictional error has not been established it is unnecessary to consider the issue of materiality raised by the first respondent.

• [33] I make the following order:
  1. The application for a declaration that Adjudication Decision 2625181 is void on the ground of jurisdictional error is refused.
• [34] I will hear the parties as to costs and about the directions necessary for the trial of the remaining issue.

[1] Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 68.

[2] Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 69.

[3] Reliance was placed on Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd & Anor [2009] NSWCA 157 at [50] (Perform (NSW)).

[4] Reliance was placed on Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd [2020] QSC 133; (2020) 4 QR 410 at [35], [35](b) and [35](e) (Acciona).

[5] LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12; (2024) 418 ALR 152 at [7].

[6] [2019] QSC 300.

[9] (2023) 16 QR 336 at [18]-[19].

[10] Perform (NSW) at [58]-[63] and [76].