Reviewing Adjudication Determinations – what’s the risk?

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What happened in this case?

Kuatro Build Pty Ltd (Kuatro), the Head Contractor engaged Elite Formwork Group Pty Ltd (Elite Formwork) to perform concrete formwork in relation to a residential development. Pursuant to Part 3 of the SOP Act, Elite served a payment claim in the sum of $1,649,252.99.[i] Kuatro then served a payment schedule contending that Elite in fact owed $965,129.40. Elite then lodged an adjudication application. The Adjudicator determined that Elite was entitled to a progress payment in the sum of $515,290.38.

Unsatisfied with the outcome of the Adjudication Determination, Kuatro challenged the determination in the Supreme Court of NSW, arguing that the Adjudicator had failed to consider key contractual provisions, including liquidated damages and variation clauses which amounted to a jurisdictional error.[ii] Kuatro effectively sought both interlocutory and final relief in respect of the Adjudicator’s determination. In doing so Kuatro argued that that the Adjudicator had based his determination on arguments neither party had raised and to which Kuatro was not given an opportunity to respond, amounting to a failure to provide procedural fairness and as a result, a jurisdictional error arose. [iii]

 

Kuatro also sought orders in the form of interlocutory relief to effectively prevent Elite Formwork from taking any further steps to enforce the determination which was granted by the Court.

What was the outcome?

Justice Hmelnitsky dismissed Kuatro’s application, finding no jurisdictional error was established in the Adjudication Determination. The Court held that the Adjudicator had considered the relevant materials and applied the statutory framework appropriately. The Court also emphasised that adjudication under the SOP Act is intended to be a swift and interim mechanism, and that judicial review is limited to cases of clear legal overreach or failure to address the dispute as framed by the parties.[iv]

The order for interlocutory relief via a stay of enforcement was also discontinued. Justice Hmelnitsky determined that if the stay of enforcement were to continue it would do so on the assumption that Elite Formwork was insolvent,[v] which differs greatly against the submissions Elite Formwork made in relation to its own beliefs as to its financial position, which was being solvent and possessing a ‘mere risk of insolvency’.

Secondly, Kuatro submitted that if Elite Formwork in its position were to use the funds kept in possession of the Court to pay debts, it would be formally considered a creditor of a company that is formally insolvent. [vi] These submissions were rejected on the basis that Elite Formwork’s financial position was a separate matter to the Subcontract that both parties had entered into initially. Overall, if Kuatro had succeeded in this dispute, the shaky financial position of Elite Formwork, when considered with its potential to remain liable to Kuatro, is a risk imposed on all parties that bring proceedings pursuant to the SOP Act.

What do you need to keep in mind?

The decision in Kuatro provides us with many key takeaways, including the following:

Finality: Adjudication determinations are difficult to overturn unless a clear jurisdictional error can be demonstrated (where the adjudicator has acted outside the adjudicator’s powers), the courts will not intervene and reassess the merits of an adjudicator’s determination.

 

Front-Load Arguments: The SOP Act affords little room for second chances. Contractors and sub-contractors must ensure their payment claims, payment schedules, adjudication applications and responses comprehensively address all relevant entitlements, defences, and contractual arguments in the first instance.

 

Prevention is better than litigation: Disputes like Kuatro underscore the value of early legal advice, clear contractual drafting, and proactive contract administration. Minor oversights in the early stages of a project can trigger major downstream consequences.

 

However, this is much easier said than done, so if you or anyone you know requires assistance with preparing contracts or an adjudication, Bradbury Legal is a specialist building and construction law firm. Contact us on (02) 9030 7400, or at info@bradburylegal.com.au

 

[i] Kuatro Build Pty Ltd v Elite Formwork Group Pty Ltd [2025] NSWSC 372 (‘Kuatro’) [3].

[ii] Ibid [23]-[27].

[iii] Ibid [16].

[iv] Kuatro[17]; Martinus Rail Pty Ltd v Qube RE Services (No.2) Pty Ltd [2025] NSWCA 49 [57].

[v] Corporations Act 2001 s 459C.

[vi] Kuatro [83].

HBA Contracts – to sign or not to sign?

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In the decision of the Supreme Court, Dyjecinska v Step-Up Renovations (NSW) Pty Ltd [2024] NSWSC 159 (Dyjencinska), the Court considered the impact of an absence of signatures within a contract related to the performance of renovation works (the Works).

Facts

Dyjencinska (the Owner) requested Step-Up Renovations (NSW) Pty Ltd (the Builder) to perform the Works on the Owner’s property. Both parties negotiated a written residential building contract valued at $145,120 (the Contract), however neither party signed nor dated the Contract, which meant it could not be considered to have been ‘in writing’. After initial completion, the Owner suspended the Works and refused to pay the Builder $107,662.50 in invoices.

Decision

The Court determined that the absence of signatures within the Contract can be considered a breach under section 7 of the Home Building Act 1989 (NSW) (HBA) which requires a contract to be in writing, dated and signed by the parties. However, considering that the purpose of the HBA is to promote transparency and outline licensing and workmanship standards, section 7 does not need to be strictly complied with when considered simultaneously with section 10 of the HBA.

As such, the Court had found the Builder was able to enforce the Contract if it was written down and contained a ‘sufficient description’ of the Works to be completed.

Take home tips

Dykecinska highlights the importance of a clear contract exchange and that any contract must specifically outline exactly what is required for performance. Moreover, the case indicates that section 10 of the HBA requires strict compliance with section 7 to ensure a contract is in writing and contains sufficient descriptions of the work but does not require strict compliance with the latter half of section 7 which specifies the need for a signature.

This means that in the event of any action being brought against a builder for non-compliance with section 7, section 10 cannot restrict a builder from making a quantum meruit claim to uphold their right to payment of invoices for completed works.

A quantum meruit claim allows a builder or contractor to be paid for work completed or materials supplied that goes beyond the requirements listed in the original contract. For builders, this claim may arise where there is a variation to the contract or when property owners request performance of activities that are not covered by the contract.

Although, these claims cannot be made involuntarily, and a builder must prove that:

  1. The request was outside the scope of performance specified under the contract.
  2. The owner was aware that the variations were being completed by the builder and were outside the scope of specified contractual performance.
  3. The owner knew the builder was expecting payment for the variations.
  4. The builder had provided evidence that the amount claimed was fair and comparable to the variations performed.

The builder must also prove that the owner accepted the benefit that arose from the completion of the variations.[1]

Clearly, Dykecinska remains a good example of how builders must give thought to the contracts they enter into and be aware of how they are drafted to reduce liability and ensure performance of written obligations.

Comparatively, the Court expressed that even if the relationship between sections 7 and 10 of the HBA has been misconstrued, homeowners must comply with the determined payment schedules listed within a written contract.

We recommend that all builders:

  • regularly review your contractual obligations;
  • ensure your contracts are written down and contain reasonable and sufficient descriptions of the work required for completion of the contract; and
  • not commence work until the contract has been signed

If you or anyone you know requires assistance with preparing contracts or determining enforceability of a contract, please contact Bradbury Legal on (02) 9030 7400, or at info@bradburylegal.com.au to see how we can assist you.

 

 

[1] Goodacre v Trinder Alpine Constructions Pty Ltd [2013] NSWCCT 124.