Adjudication Framework

In most statutory adjudications, determinations are binding even if an application for judicial review or other legal process is underway. This is one of the distinguishing features of adjudication, as it allows ongoing cashflow and continuation of service while a dispute is being resolved. In practice, many determinations become the de-facto final decision because they are not challenged by the parties.

For determinations relating to payment, a concern for some losing parties is that if they pay now, the money might not be recoverable later if the determination is overturned. To address this, we propose that a party may apply for interim relief to delay payment until the final outcome is decided. The basis and threshold for this would need to be determined.

A key feature of adjudication is that the decision is interim. Parties could take a new claim to the courts or follow any subsequent dispute resolution process set out in a contract, such as progressing to arbitration. If the court or arbitrator subsequently decided in favour of the party that lost in adjudication, any money paid under the original determination may then be recovered or the original determination requirements removed.

Because adjudicators would be exercising a statutory power, a party could also ask the court to review their decisions (a judicial review). If, for example, a party thought an adjudicator had made an error of law, or breached natural justice, they could apply to the court to review and set aside that decision. There have been examples of successful judicial review applications for decisions made under the Construction Contracts Act 2002, but they remain relatively rare.

An important feature of adjudication is the enforceability of the determination. The successful party should be able to apply to the District Court for a determination to be enforced if any conditions imposed by the adjudicator in their final determination have not been met. This is the approach taken under the Construction Contracts Act 2002.

The adjudicator will not be able to enforce a determination if a party refuses to comply. A determination can be enforced in court. The time it takes to enforce a determination is a critical factor for parties. However, once an application is made to the court, the process is largely determined by court rules. We are also interested in ways we can incentivise compliance with adjudicator decisions.

Options could include financial or other incentives for prompt payment or compliance e.g.:

• A ‘name and shame’ register could be created, similar to that in Victoria, Australia.
• There could be a requirement for security – for example, Queensland has a system which holds any money in dispute prior to the adjudication.
• The adjudicator could add interest or fees if an amount owing under a determination is not paid on time or a discount if paid on time (if the successful party agrees).
• The adjudicator’s determination could provide for a creditor to suspend contracted work or refuse further credit if the determination is not complied with.
• Confidentiality could be waived by the adjudicator if the determination is not complied with.

Once a determination is made, we think there should be limited circumstances where a party could oppose enforcement. For example, when the amount owed has been paid, or due to a change in circumstances not caused by one of the parties, which means it is not possible to comply.

Prescribed timeframes will also need to be set for opposing enforcement. For example, under the Construction Contracts Act 2002, an unsuccessful party has five working days to oppose enforcement once an application has been registered with the court. This short period reflects the limited grounds on which an opposing application can be made and helps to bring down the overall time it takes to enforce a determination.