Key takeaway points
- Where the parties have agreed on a methodology for calculating a payment claim, the adjudicator must have regard to that methodology when determining the award.
- Failure to diligently consider the parties’ submissions in an adjudication hearing can form a defensible ground for the setting aside of the determination both at common law and under statute.
Introduction
On 11 September 2025, the Queensland Supreme Court delivered the judgment of Tomkins Commercial & Industrial Builders Pty Ltd v Starline Interiors Pty Ltd [2025] QSC 226 which adds to the jurisprudence on the setting aside of adjudication decisions for jurisdictional error. This decision particularly reinforces the robust regime surrounding the adjudication process enshrined in the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act). Further, it specifically focuses on a denial of procedural fairness which led to an adjudication decision being void for jurisdictional error.
Background Facts
Tomkins Commercial & Industrial Builders Pty Ltd (Tomkins) was engaged by York Property Holdings Pty Ltd (York) as the head contractor for the project known as Midwater in August 2021. In late 2023, Tomkins entered into a subcontract (through an amended AS4901-1998 instrument) with Starline Interiors Pty Ltd (Starline) for a portion of the project works. The scope of Starline’s engagement was the completion of a ceilings partition package, the provision and installation of insulation, cladding and soffits, speed panel, carpentry, internal doors and cavity sliders, door frames, hardware and bathroom accessories and other related works. Starline agreed to deliver this scope for a lump sum of $9,300,253.73 (excluding GST).
During the performance of the subcontract, the head contract between York and Tomkins was terminated on 10 September 2024. As a result, Tomkins terminated the subcontract with Starline that same day despite Starline’s portion of the scope of work being incomplete.
Events Preceding the Dispute
To understand the genesis of the dispute between the parties, it is necessary to summarise each of the key components which ultimately led to the present litigation.
Final Payment Claim and Payment Schedule
On 14 October 2024, Starline issued to Tomkins its final payment claim (being the tenth payment claim) which outlined a claimed amount of $1,908,040.70 (excluding GST). Contextually, this was not a final payment claim as that phrase is usually understood (i.e. the payment claim following the expiry of the final defects liability period), it was instead the last payment claim submitted following termination of the subcontract. At the time this claim was issued:
- payment claims one through eight had been paid in full; and
- Tomkins had certified (by way of payment schedule) that it was required to pay $1,350,225.88 to Starline for the ninth payment claim, notwithstanding that only $1,000,937.82 of this claim had been paid (leaving approximately $349,288.06 outstanding) (all figures excluding GST).
The final payment claim relevantly identified how the amount was calculated, effectively claiming payment for the cumulative value of the work performed by Starline, less the amount previously paid by Tomkins (above) and accounting for retention monies which were held by Starline. However, on 4 November 2024, Tomkins’ corresponding payment schedule asserted that the certified amount payable to Starline was only $101,926.37 (excluding GST).
District Court Hearing – Ninth Payment Claim
In relation to the ninth payment claim, on 14 February 2025, Starline filed an application in the District Court, which claimed $177,074.95 (excluding GST) as a debt for the purposes of s 78(2) of the BIF Act or as a progress payment under the subcontract. The intricacies of how the claimed amount was determined are not clear (as it was less than what was unpaid to Starline at the time), but it was acknowledged that Tomkins had slowly attended to payments in relation to the outstanding balance for the ninth payment claim. Starline subsequently obtained judgment for the sum of $205,500.45 (a sum which included GST and interest).
Adjudication Hearing – Final Payment Claim
In relation to the final payment claim, on 16 December 2024, Starline lodged an adjudication application. As indicated by the claimed and scheduled amounts, the parties were of differing views as to the quantum of completed work under the subcontract at the date of termination. In this application, Starline sought a lesser amount to be paid by Tomkins being $1,204,711.56 (excluding GST) (Revised Claim Amount). The Revised Claim Amount was calculated through determining the value of work performed by Starline less amounts previously certified by Tomkins, and the removal of some duplicated costs in relation to unfixed items and goods which appeared in the final payment claim. Contrastingly, the final payment claim amount (in the first instance) was determined by instead deducting the amount which had been previously paid by Tomkins. On 21 February 2025, Tomkins lodged its adjudication response, where three interlinked submissions were made:
- the first being that the final payment claim was void and the adjudicator had no jurisdiction;
- the second being that there were a variety of jurisdictional issues affecting the final payment claim and adjudication application; and
- the third relating to the merits of the final payment claim.
Tomkins, however, in its adjudication response, concurred with the method of calculation adopted by Starline in its adjudication application (which gave rise to the Revised Claim Amount). The adjudicator later requested further submissions from the parties concerning the jurisdictional issues raised by Tomkins. No further submissions were made in relation to the manner of calculation.
On 17 April 2025, the decision of the adjudicator was handed down, which awarded Starline $1,354,892.05 (excluding GST). Notably, this was $150,180.49 (excluding GST) more than Starline had claimed as the Revised Claim Amount. It came to light that the adjudicator arrived at such determination through using the methodology which was adopted by Starline in issuing its final payment claim (i.e. taking the work performed by Starline and subsequently deducting amounts previously paid by Tomkins). This was inconsistent with how the Revised Claim Amount was determined by Starline, being the methodology that the parties were aligned in applying.
Contentions
As a result of the adjudication, Tomkins alleged that there were grounds for the adjudicator’s decision to be reviewed. Those grounds were as follows:
- the adjudication decision was vitiated by jurisdictional error; and
- Starline failed to comply with the requirements codified in s 79(2)(a) of the BIF Act.
Legal Principles
Pertinently, Justice Muir outlined key legal principles pertaining to jurisdictional error in adjudication decisions. The meaning of jurisdictional error was adopted from Ceerose Pty Ltd v A-Civil Aust Pty Ltd (2023) 112 NSWLR 255, where it was simply put that ‘a decision-maker exceeding the authority to decide conferred on them, or failing to exercise that authority required to do so’ is characteristic of jurisdictional error (at [38]). Her Honour then acknowledged relevant jurisprudence, highlighting that jurisdictional error is an amorphous concept, but referred to the seminal principles relating to the valid exercise of an adjudicator’s jurisdiction, outlined by Bond J (as his Honour then was) in Acciona Agua Australia Pty Ltd v Monadelphous Engineering Pty Ltd (2020) 4 QR 410. The proper exercise of such jurisdiction is contingent on a variety of factors, which encompass:
- the adjudicator having acted in compliance with their essential statutory requirements;
- the adjudicator reaching a conclusion having actively considered the matters set out in s 88(2) of the BIF Act; and
- the adjudicator having afforded the parties the necessary level of procedural fairness.
Further, it was emphasised that a material error by the adjudicator in applying the law or facts may not necessarily go to jurisdiction (and thus may not be considered a jurisdictional error). This reinforces the robust thresholds in place regarding the review of adjudication decisions, to ensure the fundamental purpose of the BIF Act (i.e. to aid in securing cashflow in the form of payment) is not undercut by excess court intervention.
Decision
The Court ultimately found that Tomkins’ first ground of review was made out and the adjudication decision was affected by jurisdictional error and void.
Reasoning
Ground 1
The ground that the adjudication decision was affected by jurisdictional error was underpinned by two separate sub-issues. The first being that there was a denial of procedural fairness and the second being that there was a failure to consider the payment schedule and the parties’ submissions (as required by s 88(2) of the BIF Act). These paradigms will be considered in turn.
Denial of procedural fairness
In conducting an adjudication, it is a necessary condition of such a hearing to afford the parties procedural fairness. Justice Muir outlined that to ensure the purpose of the BIF Act is not undermined, a denial of procedural fairness in an adjudication must be substantial and carry practical significance prior to a finding of jurisdictional error being entered. However, her Honour accepted Tomkins’ submission, as the adjudicator had calculated the adjudication amount through a methodology which neither party contemplated in their submissions. The parties were also not invited to make further submissions on this point. Her Honour concluded that if the parties had the opportunity to make further submissions, this would have impacted the adjudicator’s approach in calculating the award. Additionally, the effect of the adjudication decision was that Starline was unjustly enriched through being entitled to the adjudication amount and the District Court judgment amount (in so far as these amounts overlapped). It was further noted that due to the complexity of the errors, severance of the adjudication determination, as provided for by s 101(4) of the BIF Act, would not be practical.
Failure to consider payment schedule and parties’ submissions
While the denial of procedural fairness was significant enough to justify a finding of jurisdictional error, Muir J also briefly turned to the second component regarding the adjudicator’s failure to consider the payment schedule and the parties’ submissions, as required by s 88(2) of the BIF Act. Considering that the approach to calculation was uncontroversial between the parties (as seen in their adjudication submissions) and was clearly evidenced in the payment schedule, the failure of the adjudicator to adopt this approach constituted more than mere oversight. Justice Muir concluded that the only reasonable inference that could be drawn was that consideration of the submissions and payment schedule did not occur.
Ground 2
Though not required to be discussed (due to the finding on ground 1 being enough to warrant the voiding of the adjudication decision), Muir J stated that she was not satisfied that Starline failed to comply with the requirements enshrined in s 79(2)(a) of the BIF Act. The requirement of this section is that an adjudication application must be made in the approved form. Tomkins submitted that Starline had failed to comply, on the basis that the approved form required the full and complete payment schedule to be attached as part of the adjudication application. This was raised because the attachment in the application only contained a portion of the payment schedule. However, her Honour dismissed this point, considering that the adjudicator outlined a 26-page part of the document which contained the body of the payment schedule (and this section met all the requirements for a payment schedule). Further, the payment schedule also contained a hyperlink to additional documents, putting it within the adjudicator’s cognition that there were further relevant documents which existed and were retrievable.
Final Remarks
Ultimately, this decision provides further colour to the concept of jurisdictional error in adjudication and demonstrates an obvious circumstance where it could be established that there was in fact a denial of procedural fairness and a failure to consider the relevant matters as required by statute. While the circumstances for entering a finding of jurisdictional error are narrow and require high thresholds to be met, the flaws seen within the relevant adjudication are unambiguous and significant enough that judicial intervention was warranted.
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