Concerns are often expressed about claims consultants having influence, whether direct or indirect, upon the determination of payment claims under our various security of payment legislations.  The issue has recently come to the attention of the Supreme Court of South Australia in the case of Built Environs Pty Limited v Tali Engineering Pty Limited & Ors [2013] SA SC 84 and proven fatal to the adjudication determination. 

Mr Sain, the manager of the nominating authority (NA) known as ‘Nominator’ had advised Tali, the claimant, concerning its dispute with Built Environs.  The dispute became the subject of an adjudication application lodged with Nominator.  Upon receipt of the application, Mr Sain, mindful of his previous involvement, asked another person to act on behalf of Nominator on the nomination and appointment of an adjudicator.  Ultimately one Matthew Allan was nominated, appointed and made a determination. 

Tali argued that Mr Sain’s ‘stepping aside’ and having another person manage the nomination appointment was analogous to the creation of a ‘Chinese wall’ within a firm of solicitors.  Blue J disagreed finding that the role of a NA is that of a decision maker whereas the role of a firm of solicitors is to represent and advance the interests of their clients.  One involves conflict of interest whereas the other involves issues of apprehended bias.   Further, where solicitors create a ‘Chinese wall’ they have a pre-existing relationship with one or both of the parties and owe a duty to act in the interest of each party.  By contrast, a NA owes a duty not to act in the interest of either party.   Finally, solicitors owe enforceable professional duties to the court which can be enforced by disciplinary proceedings under applicable legislation.  NAs do not owe those duties and are not subject to disciplinary proceedings. 

Blue J held that given the utmost importance that the ultimate decision maker, namely the adjudicator, be and be seen to be independent of the parties, it is equally important that the NA itself be seen to be independent of the parties.  “An independent bystander cannot know what internal communications might take place within a nominating authority between personnel aligned with one party and personnel selecting the adjudicator.”  His Honour then found that there was a reasonable apprehension of bias on the part of Nominator in selecting the adjudicator, which rendered the adjudication determination void. 

The decision is the first of a court of superior record in respect of NAs.  Given the tendency of many claims consultants to also be closely involved in the administration of NAs, it seems unlikely to be the last.