Key NSW Security Of Payment Decisions: Monthly Roundup For August 2026

Welcome to our August 2026 monthly roundup of decisions regarding the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPAct).

Key decisions

Abax Contracting Pty Ltd v SD Civil Engineering Pty Ltd [2026] NSWSC 938

Abax engaged SD Civil under a letter of intent for pre-construction works, which required written approval for costs before they were incurred. SD Civil issued a payment claim for works performed. Abax’s payment schedule argued that approval had not been given in writing. The adjudicator determined in favour of SD Civil, finding that Abax had waived or was estopped from insisting on strict compliance with the letter of intent due to its conduct and correspondence. Abax obtained interlocutory relief in the form of an order restraining SD Civil from taking steps to enforce the determination on terms requiring it to pay $164,563.28 into Court.

Abax then sought to set aside the adjudication determination, arguing a denial of procedural fairness arising from the adjudicator’s reliance on a specific email within a broader context of correspondence. The Supreme Court held there was no denial of procedural fairness, as both parties had the opportunity to address the substantive issues and the relevant correspondence in the adjudication.

Warrane – Design Construct Fit-Out Pty Ltd v Woonona-Bulli R S L Memorial Club Ltd (No 3) [2026] NSWSC 707

The Club engaged Warrane to design a masterplan for the refurbishment of the Club premises, including a carpark. The Club later engaged Warrane to construct the carpark under a cost-plus contract.

Warrane obtained an adjudication determination of just over $3 million and then registered it as a judgment. The Club sought a stay arguing that its enforcement would result in ‘catastrophic’ consequences for its ongoing operations.

The Court dismissed the motion, finding that the Club had not demonstrated the catastrophic consequences as it was in sound financial position and had an opportunity to raise funds to meet the judgment.

Reward Interiors Pty Ltd t/as Reward Group v Stream Line Joinery Pty Ltd; Stream Line Joinery Pty Ltd v Reward Interiors Pty Ltd t/as Reward Group [2026] NSWSC 940

Reward engaged Stream Line as a subcontractor to supply, manufacture and install joinery for a hotel refurbishment. Stream Line served a payment claim of $136,106.03 for the balance of the contract sum.

Reward argued that the payment claim was invalid as it was served outside the 12-month period provided in section 13(4)(b) of the SOP Act. Stream Line had last carried out work that was the subject of the payment claim more than a year before the payment claim was issued, and the payment claim did not seek payment for work carried out after that date. The adjudicator disagreed, accepting Stream Line’s evidence that final installation work, as well as remediation work, had occurred within the 12-month period prior to the issue of the payment claim. The adjudicator found:

“The test for the final date on which a payment claim can be made prescribed by s 13(4)(b) is not whether the work being claimed for payment was carried out within the preceding 12 months, but rather, if any ‘construction work to which the claim relates’ was carried out within the preceding 12 months. The statutory test of s 13(4) is therefore significantly broader than the reach of the Respondent’s evidence on the point.”

Reward sought a declaration that the adjudicator's determination was void for jurisdictional error, claiming a misapplication of section 13(4)(b) of the SOP Act. Reward contended that the adjudicator’s approach was contrary to EQ Constructions Pty Ltd v A-Civil Aust Pty Ltd [2021] NSWSC 1604 and Estate Property Holdings Pty Ltd v Barclay Mowlem Construction Pty Ltd (2004) 61 NSWLR 515.

The Court interpreted the adjudicator’s findings as a rejection of the proposition that all the work being claimed needed to be carried out within the preceding 12 months and dismissed the summons. In doing so, the Court noted that the findings in relation to rectification work were ‘somewhat troubling’ but did not amount to jurisdictional error.

Alliance Living Pty Ltd v Arch-System Fabrication Pty Ltd [2026] NSWCA 157

Alliance fell into dispute with its subcontractor, Arch‑System, about the adequacy of works it performed. Arch-System obtained an adjudication determination for $112,029.60. The adjudication certificate was subsequently registered as a judgment, but Alliance did not pay the judgment debt.

Alliance commenced substantive proceedings against Arch-System, which then applied for security for costs, relying in part on Alliance's failure to satisfy the judgment. The District Court ordered Alliance to provide $166,000 security for costs.

Alliance sought leave to appeal, contending that section 32(2) of the SOP Act prevented the Court below from taking its failure to pay the judgment debt into account and that its decision not to pay the judgment debt was irrelevant to whether those behind Alliance might organise their affairs in a way that could leave the company unable to meet any costs orders against it.

In dismissing the appeal, the Court stated that section 32(2) is directed to the substantive effect of the payment mechanisms under the SOP Act on the parties' rights, rather than the procedural conduct of subsequent civil proceedings. The creation and enforcement of a judgment debt following an adjudication did not affect the substantive civil proceedings for the purposes of section 32(2).

TQM Design & Construct Pty Ltd v East End Stage 2 Pty Ltd [2026] NSWSC 1032

TQM obtained judgment for more than $6 million, following an adjudication in its favour against East End.

East End previously sought a stay of the judgment, which was granted on the condition that money be paid into Court. As those funds were not paid, TQM was at liberty to enforce its judgment.

East End then brought further proceedings to challenge the enforcement certificate under section 32 of the SOP Act. Those substantive proceedings had not been heard.

East End sought a hearing of the Registrar’s refusal to make an instalment order that it pay the judgment by monthly instalments of $354,237.51 over 18 months. During that period, East End expected the substantive proceedings to be heard. An issue raised in those proceedings is whether the judgment had already been paid. 

In support of its instalment application, East End issued a notice to produce and a subpoena seeking financial records from TQM and a related third party. East End argued that these documents would demonstrate that the judgment debt had already been paid and that this was relevant to the discretion to make the instalment order (as well as the position in the substantive proceedings). TQM opposed the production of those documents on the basis that the materials were irrelevant to the instalment order application.

The Court found that the arguments in the substantive proceedings regarding the payments received were not relevant to the disputed instalment application. The Court was also not satisfied that East End was entitled, in the disputed instalment application, to seek to establish the case it pursues in the substantive proceedings. Further, doing so would give rise to the undesirable possibility of different conclusions being arrived at about the same issue in the two proceedings. Of contextual significance was the decision not to challenge the determination or pursue the stay. The Court was also not persuaded that the financial circumstances of East End justified an instalment order.

Practical takeaways

• A strict approach to relevance can be expected between different proceedings arising from a single adjudication.
• The approach to section 13(4)(b) remains as established in EQ Constructions and in Estate Property.
• An unpaid judgment debt arising under the SOP Act can be relevant to a subsequent application for security for costs in substantive proceedings.
• The philosophy underpinning the SOP Act continues to loom large in decisions.