In Asian Pacific Building Corporation Pty Ltd v Aircon Duct Fabrication Pty Ltd & Ors [2010] VSC 300 (1 July 2010), Justice Vickery (the Victorian Supreme Court Judge in Charge of the Technology and Construction List) was considering whether an adjudicator, in the absence of a response by the respondent, had adopted the claimant’s submissions as to value without making his own assessment, had erred. His Honour said:
12 I respectfully adopt the view tentatively expressed by Hodgson JA in relation to the New South Wales Act [1] in Coordinated Construction Co Pty Ltd v J M Hargreaves (NSW) Pty Ltd, [2] as re-stated by Brereton J in Pacific General Securities Ltd & Anor v Soliman & Sons Pty Ltd & Ors: [3]
[T]he adjudicator’s duty is to come to a view as to what is properly payable, on what the adjudicator considers to be the true construction of the contract and the Act and the true merits of the claim, and while the adjudicator may very readily find in favour of the claimant on the merits of the claim in the absence of a payment schedule or adjudication response, or if no relevant material is advanced by the respondent, the absence of such material does not entitle the adjudicator simply to award the amount of the claim without addressing its merits, which as a minimum will involve determining whether the construction work identified in the payment claim has been carried out, and what is its value.
13 The fundamental determination to be made by an adjudicator as to whether the construction work identified in the payment claim has been carried out, and what is its value, is derived from the provisions of the Act.
His Honour concluded that such a failure by the adjudicator would invalidate the determination:
21 A failure to conduct an adjudication of a payment claim, which requires as a minimum a determination as to whether the construction work the subject of the claim has been performed and its value (or whether the goods and services have been supplied and their value) is a failure to comply with a basic and essential requirement of the Act.
22 The absence of relevant material from the respondent, or the presentation of material in an incoherent fashion, does not entitle an adjudicator to simply award the amount of the claim without addressing its merits, namely, as a minimum, determining whether the construction work identified in the payment claim has been carried out, and what is its value.
23 Accordingly, there will not be a valid adjudication of a payment claim, within the meaning of the Act, if all the adjudicator does is reject the respondent’s contentions. As Brereton J said in Pacific General:[4]
… By allowing a claim in full just because a respondent’s submissions are rejected, without determining whether the construction work the subject of the has been performed and without valuing it – would bespeak of a misconception of what is required of an adjudicator. In traditional terms, it would be jurisdictional error resulting in invalidity.
24 In Plaza West Pty Ltd v Simon’s Earthworks (NSW) Pty Ltd [5] Hodgson JA, in explaining Firedam Civil Engineering Pty Ltd v KJP Constructions Pty Ltd [6] said:
Further, it appears that in Firedam the adjudicator, having decided the respondent’s submissions should be disregarded, simply adopted the amount specified by the claimant in the payment claim. If so, that would be a failure to perform the task required of determining the amount of the progress payment (if any) to be paid, having regard to the consideration[s] in s 22(2).[7]
25 Thus, putting the matter in terms of jurisdiction, the authority to validly adjudicate a payment claim is an authority which only may be exercised if the basic and essential functions required by the Act are undertaken by an adjudicator, namely and as a minimum, determining whether the construction work identified in the payment claim has been carried out, and what is its value (or determining whether the goods and services identified in the payment claim have been supplied and their value).
(emphasis added)