Apprehended bias in adjudication proceedings under security of payment legislation

01 July 2024

On 29 January 2024, Christopher Morrow, the Adjudicator (Morrow) determined that Bright Days Herston Pty Ltd (Bright Days) pay the claimant, ATG Project & Property Solutions Pty Ltd (ATG) the sum of $1,004,306.52 plus GST (the first adjudication).

Bright Days issued proceedings contesting the first adjudication decision seeking a declaration that it was void and should be set aside due to alleged jurisdictional errors.

ATG issued another adjudication application and Morrow was appointed as the Adjudicator (the second adjudication), Bright Days sought an injunction to prevent Morrow acting as Adjudicator on the basis that there was a reasonable apprehension of bias due to his position as the Adjudicator on the first adjudication. Bright Days requested that Morrow recuse himself, Morrow refused and did not provide reasons.

Morrow and his registrar did not seek to appear in Court and agreed to abide by the Court’s decision. ATG opposed the injunction arguing there was no reasonable apprehension of bias and that Bright Days waived its right to bring the application.

Reasonable apprehension of bias

The Court considered the well-established legal principles for the assessment of whether there is a reasonable apprehension of bias. The Court noted that the principles are primarily derived from the case of Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (Ebner).  According to Ebner, a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the case. This principle ensures that justice is not only done but also seen to be done, emphasising the importance of judicial independence and impartiality.

This concept is referred to as the ‘double might’ test, which emphasises that the concern is with the possibility of bias, rather than its probability. In QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs & Anor (2023) 409 ALR 65, it was reiterated that the test for apprehended bias involves three steps:

  1. Identifying the factor that could lead to a biased decision;
  2. Articulating the logical connection between that factor and the potential bias; and.
  3. Assessing the reasonableness of the apprehension from the perspective of a fair-minded lay observer.

The test must be firmly established and conclusions about bias should not be drawn lightly. A vague sense of unease is insufficient; the observer must have a well-grounded apprehension.

The fair-minded lay observer is assumed to know the nature and context of the decision, understand the judge’s role, recognise the professional capacity to disregard irrelevant information, have a broad knowledge of the material facts, but not detailed legal knowledge and be reasonable, neither complacent nor overly suspicious.

Statutory Framework – the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the BIF Act)

In the context of this adjudication, the Court considered what a ‘fair-minded lay observer’ would appreciate as the Adjudicator’s role. The Court considered that the role is similar to that of a judge. An adjudicator would understand the statutory framework governing their decisions even if not all statutory details were known.

To assess this the Court then considered the operation of the BIF Act, as both Bright Days and ATG made submissions which comprehensively set out its function. The Court considered the BIF Act to function as follows:

  1. The BIF Act mandates a system where an adjudicator resolves disputed payment claims within strict timeframes, with decisions having significant legal implications, such as enforceability like a court judgment and granting claimants rights like suspension of work and charges over land;
  2. Upon application, the adjudicator registrar assigns an adjudicator, who need not be legally trained but must be qualified and free of conflicts of interest. Adjudicators must adhere to statutory deadlines, consider party submissions, and follow a statutory code of conduct to ensure impartiality and procedural fairness; and.
  3. Adjudicators are immune from liability and their remuneration is secure if the adjudication is later invalidated, provided they act in good faith. Adjudicators are usually named in legal challenges to their decisions but typically do not actively participate in such proceedings.

Was there a reasonable apprehension of bias?

The Court determined that a fair-minded observer would understand that Morrow, though named in proceedings related to the first adjudication, faced no personal or cost claims against him. Therefore, a fair-minded observer would recognise that Morrow had submitted to the Court’s jurisdiction and would not actively participate in the proceedings personally, resulting in a reduction in any perceived threat of bias.

The Court emphasised that a fair-minded observer would also recognise that Morrow was performing a statutory role governed by legislation, which requires impartiality and provides immunity from liability. Even if the first adjudication decision was overturned, Morrow remained protected under the BIF Act, ensuring his remuneration and shielding him from personal liability.

The Court found that the decision in the first adjudication by Morrow, to allocate 100% of the costs to Bright Days and to not recuse himself from the second adjudication (upon request from Bright Days) was solely based on Bright Day’s lack of success in the adjudication, not any conduct of Bright Days that would warrant bias. Therefore, a fair-minded observer would be able to recognise and see this as a decision within Morrow’s discretion as an adjudicator under the BIF Act, not due to any other factors, and therefore the decision alone was not indicative of bias.

The Court also noted that a fair-minded observer would understand the tight timeframes and rough-and-ready nature of decisions under the BIF Act and therefore, would not view the lack of detailed reasons given by Morrow as to why he did not recuse himself when requested by Bright Days as indicative of bias.

While acknowledging that adjudicators are not as extensively trained as judges, the Court reasoned that a fair-minded observer would recognise that the Adjudicator is qualified and tasked with a quasi-judicial role, understanding the susceptibility of his decisions to review.

Therefore, the Court held that a fair-minded lay observer would not reasonably apprehend that Morrow, as adjudicator in the second adjudication, might be biased. The application to restrain Morrow from making a decision in the second adjudication was dismissed.

What does this mean for you?

The issue of apprehended bias is often raised in situations where there is a past association between a party and the decision maker, as was evident in this case. Time and time again, parties consider this to impact the decision maker’s impartiality. However, this case demonstrates the necessity for parties to understand that the factors that would lead a fair-minded lay observer to reasonably apprehend that an adjudicator might not bring an impartial mind to an adjudication are holistic.

This article was prepared by Paul Graham, Partner, Ariadne Paras, Solicitor and Amani Fatileh, Law Graduate.

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