A-Civil v Ceerose: When the Adjudicator Goes Off-Script

Adjudication determinations are hard to disturb, by design. Courts cannot touch them for mere error of law, and judges repeat in case after case that challenges face a high bar. A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2024] NSWCA 7 is the instructive exception: a determination partially set aside because the adjudicator decided a head of claim on a basis that neither party had advanced. For everyone who writes adjudication submissions — or decides them — the case maps exactly where the line sits.

The facts

Ceerose, the head contractor on a project at McEvoy Street, Alexandria, engaged A-Civil under a $2.84 million subcontract (AS 4903-2000 conditions) for excavation works. The subcontract entitled Ceerose to hold retention of 10 per cent of each progress certificate; under clause 5.4, half was releasable at practical completion of the head contract and the balance 28 days after the head contract's final certificate. Clause 5.2 gave Ceerose recourse rights against the security.

Ceerose terminated the subcontract in July 2022. A-Civil's final payment claim included, among other things, release of its retention — $115,577.79 — as a bare line item with no articulated contractual basis. Ceerose's payment schedule said the clause 5.4 preconditions had not been met, and alternatively asserted recourse under clause 5.2 for A-Civil's alleged breaches, against which it claimed some $3.2 million including cost to complete.

In the adjudication, A-Civil argued the termination was wrongful and that this entitled it to the retention; Ceerose maintained the termination was valid and relied again on clauses 5.4 and 5.2. The adjudicator awarded A-Civil $167,970.87 — including the full retention — on reasoning neither side had put: he found clause 5.4 void for contracting out of the Act (its release triggers being tied to head-contract milestones), and held that because the subcontract had been terminated, A-Civil was entitled to release of its security.

Richmond J set aside the retention component of the determination for material denial of procedural fairness — the basis of decision was "not on the table" — and, as the parties accepted was appropriate under s 32A, confined the invalidity to that part alone (Ceerose Pty Ltd v A-Civil Aust Pty Ltd (No 2) [2023] NSWSC 345). A-Civil appealed.

The issues

Three questions structured the appeal: was the adjudicator's basis of decision actually within the issues the parties had joined; if not, should Ceerose nonetheless reasonably have anticipated it; and was the breach of procedural fairness material — that is, could the outcome realistically have been different?

What the Court of Appeal held

The Court — Leeming JA, White JA and Mitchelmore JA, with Mitchelmore JA writing the lead judgment — dismissed the appeal.

Her Honour held the adjudicator's reasoning "could only be premised on cl 5.4 and cl 5.2 having no operation upon termination" — a proposition neither party had advanced (at [32], [37], [43]), and one Ceerose could not reasonably have anticipated (at [47]). The breach was substantial and material: there was a realistic possibility the decision could have been different had Ceerose been given the chance to address the point (at [51]–[52]).

Leeming JA, agreeing, captured both the rarity and the principle (at [4]): the adjudicator's reasons for awarding the retention "were so far removed from the submissions advanced by both of them that this is a rare case where there has been a substantial breach of the obligation to accord procedural fairness."

The rest of the determination survived. Severance under s 32A did precisely its job: only the infected component fell.

What this means in practice

1. For adjudicators: decide the case the parties brought. The Act gives adjudicators the power to request further submissions; the safe course, on discovering an attractive analysis neither party has put, is to invite comment on it — not to deploy it cold. Determinations decided within the parties' contentions are, after Probuild, close to bulletproof; determinations decided outside them are not.
2. For claimants: give every line item a contractual basis. A-Civil's retention claim was a bare number. Had it articulated its theory of entitlement — termination consequences, clause analysis, the lot — the adjudicator could have decided on an argued footing and the award would likely have stood. The cheapest insurance in adjudication is pleading your best alternative bases yourself.
3. For respondents: map the reasoning path against the submissions. Most challenges fail because they dress up merits complaints as jurisdictional ones. The viable species is exactly this: a demonstrable gap between what was argued and what was decided, plus materiality. Reviewing a determination should start with a two-column exercise — what we and they put, versus what the adjudicator actually relied on.
4. Materiality is the gate. Not every off-script step invalidates a determination; the divergence must be substantial, and there must be a realistic possibility of a different outcome. Trivial or inevitable points will not clear it.
5. Severance reshapes the risk calculus on both sides. A successful challenge no longer necessarily kills the whole determination — here the balance of the award stood and was enforceable. Respondents should target the infected component precisely; claimants should structure claims so that heads of claim stand independently.

Key takeaways

• An adjudicator who decides on a basis neither party advanced, without inviting submissions, denies procedural fairness (A-Civil v Ceerose [2024] NSWCA 7).
• The breach must be material — a realistic possibility of a different outcome — and such cases are rare by design.
• Severance under s 32A confines invalidity to the affected part; the rest of the determination survives.
• Practical defence on both sides of the table: argue every basis you want decided, and check every decided basis was argued.

This article is general information only and is not legal advice. For advice on a specific contract or dispute, seek legal counsel or contact Sumit Consulting for commercial and claims advisory support.