Reviewing Adjudication Determinations – what’s the risk?
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].