The decision of Applegarth J in BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd (No 2) (BMA v BGC) handed down on 22 March 2013 will have significant ramifications for unsuccessful Respondents at adjudication.

It has been established law since the decision in Lanskey Constructions Pty Ltd v Noxequin Pty Limited (in liquidation) that an adjudication decision which is infected (even only partially or to a minor extent) by jurisdictional error and/or a denial of natural justice is void in its entirety. The effect of this for Respondents was that it was only necessary to identify one jurisdictional error or denial of natural justice by the adjudicator (even if only minor) to have the entire adjudication decision declared void.

In BMA v BGC the adjudicated amount was $28.16 million and the court held that $4.345 million of this was infected by jurisdictional error. As such, and in accordance with the previous long line of case authority, BMA sought a declaration that the entire adjudication decision was void and order requiring repayment of the $28.16 million which had been paid to BGC pursuant to the decision.

However, Applegarth J held that the relief being sought by BMA (i.e. a declaration that the adjudication decision was void) was discretionary and that, upon an undertaking by BGC to repay to BMA the sum of $4.345 million plus interest (the infected amount), justice was better served by refusing to set aside the adjudication decision and as such, dismissed the application by BMA.

Such a decision has significant consequences for unsuccessful Respondents at adjudication. It will now be necessary to not only identify grounds of jurisdictional error and/or a denial of natural justice by the adjudicator but also identify and quantify the consequence of the purported error. If this decision is followed by other Supreme Court judges it may no longer be as simple as simply obtaining a declaration that the entire adjudicated decision is void.

Conclusion

It is essential that, particularly Respondents, understand the consequences of this decision and consider the potential ramifications when making a decision as to whether or not to apply to have an adjudication decision declared void. Similarly, it is important for Claimants to be aware of the decision and to understand the significant shift in the law which this decision represents.