In Rogers Construction Group Pty Ltd v Mirage Interiors & Construction Pty Ltd [2024] NSWSC 1344 (25 October 2024), the Supreme Court dealt with an application to set aside an adjudication determination on the basis of denial of procedural fairness.
Rogers (Builder) engaged Mirage to supply and install walls, ceilings, and partitions under a written lump sum contract (Original Contract). In the adjudication, Mirage contended a further oral (cost-plus) contract for other work at the same project (Oral Contract). The Builder denied the Oral Contract.
Mirage served a payment claim under Security of Payment Act claiming payment under the Oral Contract. The Adjudicator determined Mirage was entitled to a progress payment of $108,451.13.
The Builder applied to quash the adjudication determination. The Builder asserted it was denied procedural fairness because the determination was made for reasons not advocated by either party. The Builder argued that it could not have reasonably contemplated those reasons. The “reasons” were:
- there was overlap in Original and Oral Agreements;
- the Oral Contract constituted a variation to the Original Agreement.
In the adjudication, the builder raised arguments that revealed it was aware of the “reasons”. The Court found that the Builder:
- was aware that Mirage contended the Oral Agreement work might overlap with Original Agreement work; and
- pre-empted a potential alternative interpretation of the Oral Agreement as a variation to the Original Agreement (even though Mirage did not advance that argument).
It was found that the Builder was not denied procedural fairness. The Builder’s application was dismissed.
Key takeaway
The Court will rarely set aside adjudication determinations for denial of procedural fairness. Applications to quash a determination for denial of procedural fairness must evidence both:
- a substantial denial of procedural fairness; and
- the relevant denial results in a “substantial practical injustice in all the circumstances”.