DECC Credit Pty Ltd v Australia Wide Lining Pty Ltd

Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW) ss 3, 24, 25, 32A

Cases Cited: A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144
Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd [2016] NSWSC 1120
Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2018] NSWCA 339
Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49
MTR Corp (Sydney) NRT Pty Ltd v Thales Australia Ltd [2020] NSWCA 226
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1
TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118
Veolia Water Solutions & Technologies (Australia) Pty Ltd v Kruger Engineering Australia Pty Ltd (No 3) [2007] NSWSC 459

Category: Procedural rulings

Parties: DECC Credit Pty Ltd (Plaintiff)
Australia Wide Lining Pty Ltd (First Defendant)
Johnathan Sive (Second Defendant)

Representation: Counsel:
M Keene (Plaintiff)
J Dooley (First Defendant)
Solicitors:
McCullough Robertson (Plaintiff)
Enterprise Legal (First Defendant)

File Number(s): 2025/00275526

Publication restriction: Nil

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JUDGMENT

1. On 18 July 2025, the plaintiff, DECC Credit Pty Ltd (DECC), sought an interlocutory injunction on an ex parte basis which enjoined the first defendant, Australia Wide Lining Pty Ltd (AWL), from requesting and filing an adjudication certificate pursuant to ss 24(1)(a) and 25(1) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act). DECC also sought to enjoin AWL from taking any step to enforce any judgment resulting from the filing of any such certificate.

2. DECC made, as a condition of this relief being granted, payment into Court of $1,733,741.97, representing the sum payable by it to AWL under an adjudication determination dated 4 July 2025.

3. The proceedings were listed on 22 July 2025 to enable the first defendant to be heard on the maintenance of the injunction, pending the conclusion of the proceedings. At the hearing, orders were made. The injunction imposed on 18 July 2025 was lifted to the extent of $1,394,161.08. At DECC’s request, the sum of $1,394,161.08 was ordered to be paid out of Court to it. Therefore, AWL intends to file an adjudication certificate for that sum.

4. At the time, the parties indicated expressly that they did not require further reasons beyond those given orally. However, several hours after the Court had adjourned, AWL’s lawyers contacted Chambers and sought written reasons. These are those reasons.

Legal Principles

5. In essence, it was DECC’s contention at the hearing of the motion that, in light of alleged serious defects in the adjudication determination, and on the balance of convenience, the interlocutory injunction ought to remain in force. The principles governing the exercise of the Court’s discretion to order the maintenance of such an injunction in proceedings of the present kind were recently outlined in A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 at [21]-[22] (Payne JA, Simpson and Basten AJJA):

Where money is paid into Court under s 25(4) [of the SOP Act] … the court has power to stay the payment out of money to the claimant under the determination pending resolution of the respondent’s judicial review proceedings. There is also power to grant an injunction or stay pending final resolution of contractual proceedings contemplated by s 32. However, in both cases the power must be exercised in accordance with the policy of the [SOP] Act. In both cases a stay or interlocutory injunction will impinge on the two statutory policies, namely, (i) to maintain the flow of money to the subcontractor, and (ii) as an interim measure, to place the risk of insolvency on the principal.

The application of the general principles governing the grant of interlocutory relief, including determining whether there is a serious question to be tried and where the balance of convenience lies, will be constrained by the need to give effect to these statutory policies. Further, the principles will require separate application in each case.

(See also MTR Corp (Sydney) NRT Pty Ltd v Thales Australia Ltd [2020] NSWCA 226 at [6]-[8] (Basten JA)).

6. It has therefore been observed that “there is a heavy burden on a party who seeks injunctive relief or a stay pending the outcome of proceedings … on the basis that”, as is contended for here by DECC, “a payment may become unrecoverable due to the possible or even likely insolvency of the payee at a later date”: Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49 at [297] (Payne JA, with whom Gleeson JA and Griffiths AJA agreed). That accords with the SOP Act’s policy that subcontractors and suppliers should be paid promptly for completed work: see, eg, Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1 at 15 (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).

7. However, the Court’s ability to maintain an interlocutory injunction, or order a stay, remains a discretionary. The exercise of that discretion is, in large part, informed by the policies underpinning the SOP Act and the likelihood of irreparable prejudice to the payer, whether because of the payee’s anticipated insolvency or otherwise: Veolia Water Solutions & Technologies (Australia) Pty Ltd v Kruger Engineering Australia Pty Ltd (No 3) [2007] NSWSC 459 at [72] (McDougall J), approved in TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118 at [72] (Bell P, Macfarlan and Leeming JJA).

Serious question to be tried?

8. DECC submitted it had a strong arguable case, having identified what it considered to be six errors by the adjudicator that would lead to the quashing of the determination. I consider at least two of those grounds give rise to a serious issue to be tried.

Over-award in the determination

9. AWL accepted that there was a serious question to be tried in relation to this ground, because, while it had sought an award of only $1,267,425.16, instead an award of $1,576,129.06 was made by the adjudicator. In arriving at that sum, AWL submitted that the adjudicator appeared to have relied on the payment claim, rather than the adjudication application, when some items were not pressed in the latter.

10. However, I also accept AWL’s submission that this alleged error would not necessarily be jurisdictional in nature, so as to affect the whole adjudication for the purposes of s 32A of the SOP Act: see, eg, Icon Co (NSW) Pty Ltd v Australia Avenue Developments Pty Ltd [2018] NSWCA 339 at [19], [32] (Basten JA, with whom Meagher and Leeming JJA agreed).

11. AWL appropriately accepted that a stay was appropriate in relation to the over-award in the sum of $339,580.89.

Failure to consider evidence

12. DECC submitted that the adjudicator failed to consider a TSS Survey that appeared to be annexed to its statutory declaration. The determination states that “the TSS Survey does not appear among the annexures… I cannot consider what has not been duly made”.

13. I consider that there is a serious issue to be tried as to whether the adjudicator in fact considered the TSS Survey and the effect of that failure.

Other alleged errors

14. I do not consider it appropriate here to determine the exact strength of each other alleged error on the part of the adjudicator. They are suitably matters for trial, and cannot easily be determined on an interlocutory basis.

15. DECC contended that, insofar as the adjudicator had purported to incorporate notions of “reasonableness” and “good faith” in the adjudication application – said to be justified by the objects of s 3 of the SOP Act – the adjudicator’s reasoning process was afflicted by a number of irrelevant considerations, so as to give rise to jurisdictional error. It is far from clear to me that the Court can, and should, decide whether such matters are prohibited from consideration on an interlocutory hearing. I have similar reservations about another alleged error, that the adjudicator failed to discharge the duty imposed by s 22(1)(a) of the SOP Act to value the amount of the claim actively and independently.

16. DECC’s contentions that the adjudicator constructively failed to exercise jurisdiction by asking the wrong question, and that the adjudicator fell into jurisdictional error by purporting to deal with a “patently invalid” payment claim need not be addressed further in light of the conclusions that I have ultimately reached about the balance of convenience.

Policy considerations and balance of convenience

17. Applying the “pay now, fight later” policy that underpins the SOP Act, AWL should, upon filing an adjudication certificate, receive the adjudicated sum. That is, unless DECC could establish that there is a real risk of AWL becoming insolvent, that might deprive DECC of the amount if paid over to AWL, should DECC succeed in its challenge to the determination. As the Court of Appeal observed in A-Civil Aust Pty Ltd v Ceerose Pty Ltd at [31], there is a heavy burden on a party in DECC’s position who seeks injunctive relief or a stay due to the risk of the payee becoming insolvent at a later date.

18. DECC has not brought forward any cogent evidence of a real risk of AWL becoming insolvent in the near future. The only admissible evidence it relied upon was an ASIC search of AWL, which revealed that it is a proprietary company with limited publicly disclosed information or paid up capital. However, AWL tendered its recent balance sheet dated 21 July 2025, which demonstrated that its financial position has improved over the last two years. AWL’s current net assets are $2,638,051.68, compared with net assets of $1,677,703.70 as at 30 June 2024.

19. DECC further submitted that AWL had “dire cash flow issues” because it made representations during the adjudication process that it was experiencing “ongoing cash flow pressures and project delays, which have materially affected … [its] financial viability.” I do not accept that this expression rises any higher than an indication from AWL that it had faced financial stress, because it had not received payment for works completed; such a complaint evidences the policy of the SOP Act.

20. I note that DECC relied upon Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd [2016] NSWSC 1120, where Ball J granted a stay of a judgment based on an adjudication certificate. I do not consider the facts of that case similar to the present. In that case, each party’s expert accountants agreed that the respondent was not merely at the risk of insolvency, but was then actually insolvent, with a “substantial deficit of net current assets”: see at [34]-[35]. That, obviously, is not similar to the facts presently before the Court.

Orders

21. The appropriate orders are:

22. Order 4 made on 18 July 2025 is varied from the value of $1,733,741.97 to $339,580.89.

23. The sum of $1,394,161.08 is to be paid out of Court to the plaintiff.

24. Plaintiff to pay the first defendant’s costs of the application and hearing, as agreed or assessed.

25. The matter is listed for directions on 1 August 2025.

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