Section 46(3) of the Construction Contracts Act 2004 (WA) (CC Act) broadly provides that except by way of application to the State Administrative Tribunal, a decision or determination of an adjudicator cannot be appealed or reviewed.

While it is established that s 46(3) does not exclude judicial review, the WA Supreme Court decision in Cape Range Electrical Contractors v Austral Construction Pty Ltd [2012] WASC 304 affirms the court’s tendency to limit interference with the decision of an adjudicator.

Background

The case involved a payment dispute which arose from a subcontract for electrical works on a mine site in Western Australia. The subcontractor, Cape Range Electrical Contractors (Cape Range), sought leave to enforce an adjudicator’s determination in its favour. The head contractor, Austral Construction Pty Ltd (Austral), applied for declaratory relief to displace the decision on the basis that the adjudicator lacked the jurisdiction to make the determination and also that Austral had been denied procedural fairness by the adjudicator.

Jurisdictional error

In relation to the allegation of jurisdictional error, Pritchard J found that the relevant enquiry for him to make was whether the adjudicator had misconstrued the CC Act in concluding that the jurisdictional fact upon which he based his jurisdiction existed, and not whether the jurisdictional fact actually existed. His Honour said that to displace an adjudicator’s decision the court must find that the adjudicator’s conclusion that he or she had jurisdiction:

  1. was so unreasonable that no reasonable decision maker would have reached that conclusion;
  2. was reached by misconstruing the CC Act;
  3. was made by taking into account irrelevant considerations or by failing to take into account relevant considerations; or
  4. manifested serious irrationality or illogicality.

Pritchard J held that Austral had not established adequate grounds in this case and the adjudicator’s determination was enforced.

Procedural fairness

In respect of the challenge on the basis of procedural fairness, Austral relied on the adjudicator’s dismissal of its setoff claim arising under the contract to allege that the adjudicator had failed to consider relevant considerations. The court affirmed the adjudicator’s dismissal of the setoff claim, finding that it was within the adjudicator’s jurisdiction to find that the setoff considerations were not relevant to its decision.

Declaratory relief

Cape Range also submitted that any challenge to the validity of an adjudicator’s determination is excluded by s 46(3) unless it is made by a prerogative writ. Pritchard J rejected this and held that it was open for Austral to pursue any means by which a determination of an adjudicator may be reviewed, including by declaratory relief.

What you need to know

The case affirms the court’s tendency to limit interference with the decision of an adjudicator. When our clients are faced with an adverse determination, we would advise that they seriously weigh up pursuing final judgment in court against disputing the determination, given the potential wasted effort at this interim stage.