03 August 2026
6 min read
#Construction, Infrastructure & Projects
Published by:
Welcome to our inaugural monthly roundup of decisions regarding the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) aimed at bringing you the latest developments in the interpretation of this key piece of legislation which drives cash flow in the NSW building industry.
This month’s SOP Act decisions contain few surprises, by and large reinforcing the pay now argue later philosophy of the SOP Act.
East End Stage 2 Pty Ltd v TQM Design & Construct Pty Ltd & Ors [2026] NSWSC 299
The Supreme Court granted an interlocutory injunction restraining enforcement of a $6.1 million adjudication determination under the SOP Act, conditional upon the plaintiff paying that amount into Court or providing a bank guarantee. The Court rejected the plaintiff’s argument that it was unreasonable to pay this amount into Court given the plaintiff’s financial position. The Court affirmed that the usual practice of requiring payment into Court is not an inflexible rule, but is one that will not be lightly departed from.
Made Development Group Pty Limited v Kara Halliday [2026] NSWDC 159
The District Court granted a conditional stay of approximately $120,000 of a section 25 judgment obtained under the SOP Act. This decision held that the Court’s power to stay a section 25 judgment does not require a finding of ‘exceptional circumstances.’ Instead, the Court’s discretion is fettered by reference to all relevant factors, including especially the legislative purpose of the SOP Act, being to promote a ‘pay now, argue later’ policy.
The Court of Appeal dismissed an application for leave to appeal from a summary judgment obtained by a builder who claimed payment under the SOP Act. The Court confirmed that a payment claim under section 13 of the SOP Act does not require objective proof that construction work was actually performed. Instead, the statutory debt arises from the claimant's assertion and the respondent's failure to serve a payment. This decision reinforces the legislative purpose of the SOP Act, namely, to provide quick cash flow.
Slade v Kongstruction Pty Ltd [2026] NSWSC 606
This decision concerned a judicial review of an adjudication determination under the SOP Act. The Court found that the adjudicator had erred in their interpretation of section 22(2)(d) of the SOP Act by excluding certain material submitted with the adjudication response because it post-dated the payment schedule. The adjudicator’s erroneous determination and the failure to invite submissions from the parties was claimed to amount to a denial of procedural fairness. The Court distinguished between reasons for refusing a payment claim and the material that might be advanced in support of those reasons. As the adjudicator had wholly failed to consider the relevant question, it was an ‘unreasonable determination’. The Court applied section 32A to partially set aside the determination affected by the denial of procedural fairness.
T.J. & R.F. Fordham Pty Ltd v Duke Developments Australia 5 Pty Ltd [2026] NSWDC 161
The NSW District Court dismissed a summary judgment application brought by a builder seeking payment of $983,774.32 under the SOP Act. The defendant argued that the disputed payment claim was invalid under the Act because it was served before the date on which the plaintiff was entitled to serve the claim for the purposes of section 13(1B), and that it provided a payment schedule within the meaning of section 14 of the SOP Act, despite the document identifying as a progress certificate. This decision reinforces the need for strict compliance with statutory timing requirements and recognises that payment schedules may be construed by their substance rather than form.
The Court of Appeal dismissed an appeal from a District Court judgment requiring a builder and its director to pay approximately $360,000 in damages. Part of the District Court’s decision was a finding that the builder was not entitled to payment for works under the contact which it claimed under the SOP Act. In dealing with the grounds which dealt with the SOP Act aspect of the decision below, the Court of Appeal confirmed that adjudication determinations under the Act are interim in nature and do not affect the final determination of parties' contractual right. Applying section 32(3) of the SOP Act, the Court held that courts must allow for amounts paid under adjudication determinations when making final orders and may order restitution where the final determination differs from the adjudication outcome.
The District Court addressed the interrelationship between an adjudication determination under the SOP Act and the final resolution of building disputes. The builder previously obtained an adjudication determination in its favour and registered it as a judgment of the Court. The owners subsequently brought proceedings comprising a delay claim, a defects claim and an overpayment claim. Enforcement of the SOP Act judgment was stayed until the owners’ claim was resolved, which may reduce the SOP Act judgment to nothing. Although recognising the ‘pay now, argue later’ system, the Court adopted an approach that “what happens to the judgment will abide and be consistent with the outcome of the principal proceedings.”
Jonishan Pty Ltd v Linx Constructions Pty Ltd [2026] NSWDC 219
The District Court considered an application for a stay of judgment in the aftermath of an adjudication determination. Jonishan obtained judgment against Linx for $937,268.65 following an adjudication determination on a payment claim. Linx subsequently commenced Supreme Court proceedings seeking substantial damages arising from breaches of contract, defective works, delay and costs of completion. Linx also sought an interim stay of enforcement of the judgment in favour of Jonishan. Linx’s application was on the basis that there were set-off debts to third parties and defective work under the contract. The Court considered that allowing Linx to obtain a stay on these grounds would “indirectly facilitate a result for Linx that was contrary to what Parliament prohibited it from obtaining directly” taking into account the prohibitions in s 16(4)(b) of the SOP Act. Accordingly, the Court dismissed Linx’s application. Contrast this with Bond Mayhew, above.
How we can help
For 20 years, our national Construction and Infrastructure team has been a leading adviser in security of payment disputes, acting for some of the largest security of payment disputes across the country. Security of payment legislation (in its various and evolving forms Australia wide) has transformed the way in which disputes in relation to time and money are initially dealt with in the construction industry. Success in this forum requires experts who know the ‘ins and outs’ and the ‘tips, tricks and traps’ which exist in the legislation. If you have any questions regarding this article or SOP, please contact us here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
Published by:
