Sierra Property Qld Pty Ltd v National Construction Management Pty Ltd & Ors [2016] QSC 108 confirms that an adjudicator's failure to include adequate reasons for his or her decision will amount to jurisdictional error and that part of the decision will be invalid. 

The applicant (developer) and first respondent (builder) were parties to a construction contract.

A dispute arose regarding a progress payment for work under the original contract, together with variation claims.

The dispute proceeded to adjudication. The adjudicator allowed 95% of the builder's progress claim relating to the original contract without referring to, or making findings in relation to, the nine relevant contract categories of work identified in the adjudication submissions. The adjudicator also made allowances for variations, setting out reasons for those determinations.

The developer challenged the decision on the basis that the adjudicator failed to provide adequate reasons as required by section 26(3)(b) of the Building and Construction Industry Payments Act 2004 (Qld) (Act). The developer contended that the failure to give reasons in relation to the work under the contract amounted to jurisdictional error and that part of the adjudication was invalid and should not be binding on the parties.

The court held that the portion of the adjudication decision relating to the original contract for which the adjudicator did not provide reasons was affected by jurisdictional error.

Jackson J considered that the statutory requirement under section 26 of the Act to provide reasons is a condition of the power of an adjudicator to decide the adjudication application and a failure to include reasons invalidates the decision.

His Honour went on to conclude that non-compliance with the requirement to provide reasons amounts to jurisdictional error. Therefore, the adjudicator's decision relating to works under the contract was affected by jurisdictional error, was invalid, and was not binding on the parties.

However, his Honour found that the adjudicator's decision relating to variation claims, for which reasons were given, was not invalid because regardless of whether or not the adjudicator's reasons were legally correct, they were provided in accordance with section 26 of the Act.