Crowley Australia Pty Ltd v Latitude 63 LLC

1. [1]

   HER HONOUR: This is an application to quash an adjudication determination made under the Construction Contracts (Security of Payments) Act 2004 (NT) (the Act). The principal had called on bank guarantees provided by the contractor as security for its performance of a construction contract. The adjudicator determined that the principal was obliged to refund the proceeds of the bank guarantees to the contractor.

2. [2]

   This Court has jurisdiction to deal with the matter under s 9(a) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) and s 4(3) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NT). There are three grounds: apprehended bias, lack of jurisdiction and failure to accord procedural fairness.

The contract

1. [3]

   The plaintiff principal, Crowley Australia Pty Ltd, is the Australian subsidiary of Florida company Crowley Government Services, Inc. The defendant contractor, Latitude 63 LLC is an Alaskan company. In 2023, the principal and contractor entered into an Engineering, Procurement and Construction Management and Remaining Works Contract. The contractor was to provide services in respect of the design, construction and commissioning of 11 fuel tanks for US military jets, together with a pipeline connecting the tanks to Darwin Port.

2. [4]

   The contractor was obliged to provide Security in the form of two bank guarantees: cl 2.5; Item 9, Sch 1. The contractor provided the principal with two bank guarantees totalling $6.1 million. The principal was obliged to release the security in two stages: half on the Date of Practical Completion and the balance on expiry of the Warranty Period: cl 2.6. Clause 2.7 of the contract provided:

3. [5]

   As to progress claims, the contract provided that the contractor was to make a payment claim each month: cl 9.2(a). Within five days of receipt of the payment claim, the principal was to assess the claim and issue a payment statement, certifying the amount payable to the contractor: cl 9.2(d). The contractor was then to render an invoice for the amount in the payment statement: cl 9.2(e). The principal was then to pay the contractor within seven days of the later of the date of the payment statement or the invoice: cl 9.2(f)(i).

4. [6]

   The contract could be terminated for convenience or in the event of default by either the contractor or principal: cl 20.

5. [7]

   In October 2024, the principal terminated the contract. There is a dispute as to the precise date when the contract was terminated and whether the termination was for convenience or cause.

Prior payment claim

1. [8]

   On 30 November 2024, the contractor submitted a payment claim, seeking AUD$13,389,945.67 and USD$5,923,784.91 for unpaid invoices together with “DEMOB COSTS TO DATE”. To these sums, AUD$6.1 million for “securities release amount” was added. That is, the contractor sought the return of the bank guarantees.

2. [9]

   On 18 March 2025, the principal called on the bank guarantees.

3. [10]

   On 21 March 2025, the contractor submitted an adjudication application in respect of the payment claim to The Australian Institute of Quantity Surveyors Ltd, being a “prescribed appointer” under the Act (and the third defendant). The institute used Australian Building and Construction Dispute Resolution Service Pty Ltd (ABC Dispute Resolution Service) as its authorised agent in relation to its obligations as a prescribed appointer under the Act. The institute appointed the second defendant, Chris Thompson, as adjudicator.

4. [11]

   The principal issued an adjudication response. Apparently, the parties accepted that the fact that the principal had called on the bank guarantees meant that the adjudicator had no jurisdiction in respect of that part of the dispute. On 14 May 2025, the adjudicator issued a determination: the principal was required to pay the contractor AUD$11,594,210.89 and USD$5,871,835.41. The adjudication determination is not in evidence.

5. [12]

   On 19 May 2025, the principal commenced proceedings in the Supreme Court of the Northern Territory, seeking judicial review of the determination (Supreme Court proceedings). The adjudicator was named as the second defendant in those proceedings.

This payment claim

1. [13]

   On 21 May 2025, the contractor issued a further payment claim for AUD$6.1 million, being “RETURN value of ANZ Bank Guarantees …”. The payment claim sought these monies on the basis that the principal had no entitlement to have recourse to the bank guarantees. The value of the proceeds of the bank guarantees was claimed “as monies due and payable for breach of the Contract and/or pursuant to the [sic] including clause 2.7(b)” of the contract. The principal did not issue a payment statement.

2. [14]

   On 3 June 2025, the principal filed an Amended Summons in the Supreme Court proceedings, adding grounds for why the prior determination should be quashed:

3. [15]

   On 4 June 2025, the adjudicator filed a submitting appearance save as to costs. The adjudicator noted that he relied upon the protection from liability conferred by s 56(2) of the Act. He provided an address for service, being that of a solicitor.

4. [16]

   On 11 August 2025, the principal filed an outline of submissions in the Supreme Court proceedings. The principal noted that the adjudication determination was a lengthy document, running for 77 pages. However, the vast bulk of the determination was said to summarise the parties’ submissions, identify contractual terms and set out the adjudicator’s methodology. The adjudicator’s reasoning was said to be confined to a discrete number of paragraphs. Further, the principal submitted that it was clear from the determination that the adjudicator had allocated the task of reviewing the voluminous documents provided to what was vaguely described as ‘automated data processing’. How that system worked was said to be a mystery, including as to whether it deployed some algorithmic sieve or generative AI.

5. [17]

   The adjudicator was said to have incorrectly considered that he did not have jurisdiction to determine the principal’s set-off claim, and that “Whether this is because the adjudicator was confused by the ‘labelling’ of these set-off claims as ‘apparent fraud’ … or because he was led into error by subsequent submissions … does not matter”. The adjudicator was said to have had a positive obligation to consider the set-off claims but wrongly thought that he did not.

6. [18]

   The principal submitted that the adjudicator did not intellectually engage with the parties’ submissions but repeated a generic response to some of the arguments, which was said to be inapposite. The adjudicator’s determination of a particular issue was said to be a “nonsensical response to the issues raised by the parties and demonstrate[d] a complete absence of intellectual engagement”. The only available inference was said to be that the adjudicator did not consider the parties’ submissions on that issue. The principal clarified that it did not submit that there had been a complete absence of engagement on all issues but on enough to establish that the adjudicator’s failure to consider the parties’ submissions “reached a critical mass which infects the whole of the Determination with jurisdictional error”.

7. [19]

   The principal noted that the adjudicator had been provided with some 1,400 pages of hard-copy documents accompanied by a USB drive containing a further 16,000 files. While the adjudicator rejected the suggestion that the claim was too complex for him to address in the time available, the principal submitted that the adjudicator was proceeding on the basis that it was the principal’s job to analyse the voluminous documents rather than his own, and that he (incorrectly) did not consider that he had to address the set-off claim.

8. [20]

   These submissions were served, although I note that the submissions were not sent to the adjudicator’s address for service but to ABC Dispute Resolution Service.

Adjudication application

1. [21]

   On 27 August 2025, the contractor made an adjudication application in respect of the further payment claim, seeking $6.1 million. (I will return to the detail of this at [82].) On 28 August 2025, ABC Dispute Resolution Service acknowledged receipt of the application on behalf of the institute and advised that the institute would proceed to appoint an adjudicator under s 30(1)(a) of the Act.

2. [22]

   On 29 August 2025, the principal filed reply submissions in the Supreme Court proceedings. These submissions did not relevantly add to what had been earlier submitted in relation to the adjudicator. The submissions were served on the parties. Again, I note that the submissions were not sent to the adjudicator’s address for service but to ABC Dispute Resolution Service.

3. [23]

   On 2 September 2025, ABC Dispute Resolution Service advised the parties by email that it had been appointed by Mr Thompson, who was the nominated adjudicator for the further adjudication application, to assist with administrative functions. All further communications to Mr Thompson were to be made via ABC Dispute Resolution Service.

4. [24]

   On 4 September 2025, the principal’s solicitor called and then emailed ABC Dispute Resolution Service as follows:

5. [25]

   ABC Dispute Resolution Service replied, advising that the email had been forwarded to the adjudicator. The principal’s application for judicial review was heard by Kelly J that day. Her Honour reserved judgment.

6. [26]

   On 15 September 2025, ABC Dispute Resolution Service emailed the parties, forwarding the adjudicator’s response as follows:

7. [27]

   On 17 September 2025, the principal filed its adjudication response. No mention was made of the request that another adjudicator be assigned. The principal submitted inter alia that the adjudicator lacked jurisdiction to determine a claim for the return of security given the terms of the Act. On 22 September 2025, the adjudicator sought further submissions on the issue of jurisdiction. The parties provided submissions. Again, no mention was made of the request that another adjudicator be assigned.

8. [28]

   The contractor’s solicitor noted that the principal and its solicitor did not object to the adjudicator proceeding to hear and determine the adjudication application, nor raise any further concerns about the adjudicator’s impartiality, either with the contractor or the adjudicator, until it delivered submissions in these proceedings.

9. [29]

   On 8 October 2025, Mr Thompson completed his determination: the principal was obliged to pay the contractor $6.1 million plus interest and the adjudicator’s fees.

Apprehended bias

1. [30]

   The principal sought to quash the adjudication determination on the basis of apprehended bias, where the test for determining whether an adjudicator should recuse themselves was the same as for a judge. The adjudicator was already a defendant to judicial review proceedings in respect of the prior payment claim. But the “prescribed appointer” failed to appoint another adjudicator and the adjudicator declined to recuse himself. Mr Thompson was appointed as the adjudicator a day before the hearing of a challenge to his prior determination. While naming Mr Thompson as a defendant was insufficient to give rise to an apprehension of bias, the existing proceedings involved detailed criticism of him in written submissions such that he should have recused himself as adjudicator in a matter involving the same parties and project: Bright Days Herston Pty Ltd v ATG Project & Property Solutions Pty Ltd [2024] QSC 94 at [47] (Brown J); Quickway Constructions Pty Ltd v Hick [2017] NSWSC 830 at [38] (Hammerschlag J).

2. [31]

   The contractor submitted that the complaints made about the prior adjudication were not particularly unusual. There was no evidence that those submissions were brought to the adjudicator’s attention. Further, the principal was said to have waived its rights in respect of apprehended bias by failing to act promptly on their concerns: Rouvinetis v Knoll [2013] NSWCA 24 at [32]-[38] (Basten JA, Barrett and Ward JJA agreeing).

3. [32]

   It is convenient to first address the suggestion of waiver. An objection upon the ground of bias can be waived: Vakauta v Kelly (1989) 167 CLR 568 at 577 (Dawson J); [1989] HCA 44. Brennan, Deane and Gaudron JJ explained why this was so at 572:

4. [33]

   For example, in Carbotech-Australia Pty Ltd v Yates [2008] NSWSC 540, a party waived their right to disqualify a referee where their solicitor was aware of the facts sufficient to apply for recusal but, rather than ask the referee to withdraw from the reference on the basis of ostensible bias, made further submissions and engaged in debate with the referee on the substance of his findings: at [72]. Brereton J (as his Honour then was) held that the party had waived their right to seek recusal; they were aware of their right to object on the ground of bias “and with that knowledge, adopted the inconsistent course of arguing the merits … with a view to persuading the Referee to a different view; only when they failed in that course did they indicate … that they would oppose adoption of the report. …”: at [74].

5. [34]

   In Reiby Street Pty Ltd v Winterton Constructions Pty Ltd [2005] NSWSC 545, the plaintiff objected to the nomination of the adjudicator, where there was a dispute between the plaintiff and that adjudicator in respect of his fees rendered on a prior adjudication. The adjudicator declined to recuse himself. The plaintiff participated in the adjudication and did not approach the Court for appropriate orders. The plaintiff then sought to challenge the determination in Court on the basis of apprehended bias. Master Macready concluded that there was no waiver: at [57]. The Master followed Bilgin v Minister for Immigration and Multicultural Affairs (1997) 149 ALR 281, where Finkelstein J held at 294:

6. [35]

   The suggestion of waiver usually arises where a party has not asked the decision-maker to recuse themselves. That is not the case here. The principal did ask the adjudicator to recuse himself but, when he declined to do so, continued to participate in the adjudication process. The acts of providing an adjudication response and further submissions in respect of jurisdiction are not, without more, conduct amounting to acquiescence: Bilgin at 294 (followed in Hutchinson v Roads and Traffic Authority [2000] NSWCA 332 at [28] (Powell and Giles JJA, Meagher JA agreeing)). The principal did not waive its right to challenge the adjudicator’s determination on the basis of apprehended bias.

7. [36]

   Turning to whether the adjudicator’s determination may be challenged on the basis of apprehended bias, the question of apprehended bias turns on whether a fair-minded lay observer – properly informed as to the nature of the proceedings, the matters in issue and the conduct which is said to give rise to an apprehension of bias – might reasonably apprehend that the decision-maker might not bring an impartial and unprejudiced mind to the resolution of the question that they are required to decide: Re Refugee Tribunal; Ex parte H [2001] HCA 28; (2001) 75 ALJR 982 at [28] (Gleeson CJ, Gaudron and Gummow JJ); Michael Wilson & Partners Pty Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [31] (Gummow ACJ, Hayne, Crennan and Bell JJ). The principle gives effect to the requirement that justice should both be done and be seen to be done: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 at [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ).

8. [37]

   As Gleeson JA (with whom Hulme and Button JJ agreed) explained in Chamoun v District Court of New South Wales [2018] NSWCA 187 at [37]:

9. [38]

   Only once these two steps have been completed can the reasonableness of the asserted apprehension of bias be assessed: Ebner v Official Trustee in Bankruptcy at [8]. Further, in British American Tobacco Australia Ltd v Gordon [2007] NSWSC 109, Brereton J observed at [62]-[63]:

10. [39]

    In Quickway Constructions, the plaintiff challenged an adjudicator’s determination and, when the same adjudicator was appointed in respect of a subsequent adjudication application, asked the adjudicator to recuse himself. The adjudicator sought submissions from the parties but indicated that he was not minded to recuse himself, noting that “Irrespective of the threatened proceedings and the potential threat of seeking costs against me”, he did not consider it appropriate to withdraw simply because one party objected “and threaten[ed] proceedings against me”: at [17]. Hammerschlag J considered that the adjudicator ought to have recused himself where, in the prior determination, the adjudicator had made findings adverse to the plaintiff. The adjudicator had observed that the plaintiff’s submissions were “practically all jurisdictional challenges that failed and many had little merit”: at [40]. His request for further submissions referred to the potential threat of a costs order being sought against him, and “Manifestly, he had a personal, if indirect, interest in the outcome of the challenge proceedings, adverse to that of Quickway”: at [42].

11. [40]

    The same sequence of events occurred in Bright Days Herston, absent any reference by the adjudicator in his correspondence to perceived threats. Brown J considered that Quickway Constructions turned on its own facts: at [45]. Quickway Constructions was not authority that, when an adjudicator was a named respondent in review proceedings, that would necessarily lead to an apprehension of bias in relation to subsequent adjudications: at [47]. Further, at [48]:

12. [41]

    As to the first step identified in Chamoun, what is it that is said might have led the adjudicator to decide the second adjudication determination other than on its legal and factual merits? There are two matters:

13. [42]

    As to the second step, what is the logical connection between those matters and the feared deviation from the course of deciding the second adjudication determination on its merits?

14. [43]

    The first matter can be readily put to one side. The fact that the adjudicator’s prior determination was being challenged was just part of the process. The adjudicator filed a submitting appearance save as to costs and noted that he had a statutory immunity. Section 56(2) of the Act provides that an adjudicator is not civilly or criminally liable for an act done or omitted to be done by them in good faith in the exercise or purported exercise of a power under the Act. The Amended Summons did not suggest that this statutory immunity would not apply. On the face of it, the adjudicator intended to take no part in the Supreme Court proceedings and, if found to be responsible in some way, considered that he was not personally exposed.

15. [44]

    As to the second matter, whether the principal’s submissions in the Supreme Court proceedings actually came to the adjudicator’s notice is not certain but likely. What did come to the adjudicator’s attention was the email from the principal’s solicitor of 4 September 2025, which was suitably diplomatic. Unlike Quickway Constructions, the principal did not suggest that the adjudicator made any remark in his prior determination which would support an application for apprehended bias.

16. [45]

    In sum, it is not suggested that the adjudicator has done anything which would support his recusal. As I observed in Seven Network (Operations) Ltd v Dowling [2018] NSWSC 1890 at [58]–[62], ordinarily, an application that a judge recuse themselves for bias is based upon something that the judge has said or done. In that case, the defendant did not point to anything said by a judicial officer but, rather, to what he had said about judicial officers as somehow preventing other judges of this Court fairly deciding proceedings in which he is a party. Similar applications failed in Attorney-General (NSW) v Markisic [2011] NSWSC 1436 and Prothonotary of the Supreme Court of New South Wales v Dowling [2017] NSWSC 392.

17. [46]

    Of course, those cases are a more extreme example than this case. But the point is the same. Here, a party to the proceedings has done something, that is, made criticisms of the adjudicator’s performance of his task in reaching the prior determination. To the extent that those submissions were intemperate or offensive, that says nothing about the adjudicator’s ability to bring a fair, impartial and unprejudiced mind to the resolution of another adjudication determination between the same parties. There is nothing in the adjudicator’s subsequent conduct to indicate that he thought otherwise. Where there must be a “substantial basis” for the conclusion of apprehended bias, and the apprehension must be “firmly established”, I do not think that the second matter is sufficient either. This challenge fails.

Lack of jurisdiction

1. [47]

   The principal sought to quash the adjudication determination on the basis of want of jurisdiction. Resolution of this issue requires a working knowledge of the Act, which has been described as “closely equivalent” to the Building and Construction Industry Security of Payment Act 1999 (NSW): JKC Australia LNG Pty Ltd v Inpex Operations Australia Pty Ltd (2018) 41 NTLR 149; [2018] NTCA 6 at [24] (Grant CJ, Southwood J and Mildren AJ). But it is not the same.

2. [48]

   The Act was “closely modelled” on, but is not identical to, the Construction Contracts Act 2004 (WA): Northern Territory Legislative Assembly, Construction Contracts (Security of Payments) Bill 2004, Second Reading Speech, 14 October 2004; JKC at [35]. The Western Australian legislation has since been repealed.

3. [49]

   Part 1 of the Act concerns preliminary matters, including statutory purpose and defined terms. The objects of the Act (s 3) are familiar: to promote security of payments under construction contracts by facilitating timely payments, rapidly resolving payment disputes and providing mechanisms for the rapid recovery of payments. As the Second Reading Speech records, the legislation was intended to help speed up the movement of funds through the contracting chain in the building and construction industry, including by providing a rapid and cost-effective adjudication process for payment disputes. The Attorney-General then observed, “The building and construction industry is vital to the Territory’s economy. The failure to pay at any stage in the contracting chain can have disastrous effects for those further down the chain awaiting payment”: Second Reading Speech.

4. [50]

   It is necessary to dwell on some defined terms. First, it is accepted that the contract between the parties was a “construction contract” within the meaning of s 5. Further, s 5(1A) provides:

5. [51]

   This sub-section was added by Construction Contracts (Security of Payments) Legislation Amendment Act 2019 (NT). The Explanatory Statement notes that amendment to the definition of “construction contract” was to clarify that the Act may be used to resolve disputes arising from performance (or non-performance) of obligations under a contract after the contract has ended: Explanatory Statement, Construction Contracts (Security of Payments) Bill 2019 at 2. It had no equivalent in Construction Contracts Act 2004 (WA).

6. [52]

   Second, “payment claim” is defined in s 7A as follows:

7. [53]

   Sub-sections 7A(1)(a) and (c) are potentially relevant here, where the adjudication determination concerned a payment claim by a contractor to the principal. Section 4 defines “Obligations, of a contractor under a construction contract” to mean “the obligations mentioned in s 5(1) the contractor has under the contract”. Section 5(1) refers to the contractor’s obligations to carry out construction work and supply goods and provide services related to the construction work.

8. [54]

   The definition of “payment claim” became a ‘stand-alone’ section after amendments effected by the Construction Contract (Security of Payments) Legislation Amendment Act 2019 (NT). Section 7A(1)(c) and (d) were then added. These additional sub-sections had no comparator in the Construction Contracts Act 2004 (WA).

9. [55]

   What is “an accrued right for the contract” is not defined and must, therefore, depend on the law of contract. One need go no further than the classic statement of Dixon J in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-477; [1933] HCA 25:

10. [56]

    Consistently with this, the Explanatory Statement to the Construction Contract (Security of Payments) Legislation Amendment Act 2019 (NT), which added these provisions, noted (at 3):

11. [57]

    As Dixon and Evatt JJ further explained in Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (in liq) (1936) 54 CLR 361 at 380; [1936] HCA 6:

12. [58]

    One looks to the contractual terms to determine whether a right to payment in the future is contingent upon an event which does not involve further performance of the contract (being an accrued right) and one which does involve further performance: FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340 at [192] (Basten JA, Beazley JA agreeing).

13. [59]

    Given the nature of the adjudication process, it will also fall to the adjudicator to determine whether there is an accrued right for the contract. By that I mean that the legislation does not envisage that a claimant will come to the Court to determine whether they, in fact, have an accrued right before making an adjudication application. That would undermine the legislative scheme.

14. [60]

    Third, s 8 defines “payment dispute” as follows:

15. [61]

    Section 8 is modelled on s 6 of the Construction Contracts Act 2004 (WA). Section 8(a) was amended in 2014 but remained, in substance, the same as its WA counterpart.

16. [62]

    As Martin CJ noted in Samsung C&T Corporation v Duro Felguera Australia Pty Ltd (2018) 52 WAR 281; [2018] WASCA 27 in respect of the comparable WA provision, of the three categories of “payment dispute” only the first is conditioned upon the existence of a “payment claim”: at [21]. Buss P and Murphy JA there construed the comparable provision (albeit sub-section (a) was then in slightly different terms in WA) at [159]:

17. [63]

    Part 2 of the Act concerns prohibited and implied provisions of construction contracts. Unlike in New South Wales – where there is a statutory right to a progress payment – the contractor’s entitlement to progress payments in the Northern Territory is subject to contract. Section 18 provides that the provisions in Sch 1, Div 3 are implied in a construction contract which does not otherwise address this subject. It was accepted before the adjudicator that the contract did otherwise provide: cl 9; Determination at [130].

18. [64]

    Part 3 of the Act concerns the adjudication of disputes. Section 26 provides:

19. [65]

    Critically, s 27 of the Act provides:

20. [66]

    Finally, s 33 of the Act sets out the adjudicator’s functions:

21. [67]

    When considering whether an adjudicator lacks jurisdiction, Burns J’s comment in Canstruct Pty Ltd v Floreani KC [2024] NTSC 104 is apposite. His Honour noted, “It may well be thought that determining whether an adjudicator was acting within the authority vested in them by the Act would be a relatively simple exercise, but this has not proven to be the case historically”: at [94].

22. [68]

    In Samsung C&T Corporation v Duro Felguera Australia, Buss P and Murphy JA noted that a ‘jurisdictional fact’ describes a criterion of fact that must be satisfied in order to enliven the statutory power: at [141], citing Gedeon v Commissioner of NSW Crime Commission (2008) 236 CLR 120; [2008] HCA 43 at [43] (the Court). Whether a criterion is a ‘jurisdictional fact’ is a matter of statutory construction: at [144]; see likewise Laing O’Rourke Australia Construction Pty Ltd v Samsung C&T Corporation (2016) 50 WAR 399; [2016] WASCA 130 at [95] (Martin CJ, Newnes JA agreeing).

23. [69]

    When considering the comparable New South Wales legislation, Basten JA observed at [9] of EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd (2024) 115 NSWLR 56; [2024] NSWCA 162 that “for some 20 years … this court has been restrained in implying essential preconditions to the engagement of statutory powers, which would invite judicial intervention”, as the purpose of the legislative scheme is best served by restricting the scope of intervention by the courts (citing Hodgson JA in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394). Given the common statutory purpose of the Act, I consider that similar restraint is appropriate.

24. [70]

    In Samsung C&T Corporation v Duro Felguera Australia, Buss P and Murphy JA noted that the comparable WA provision to s 27 of the Act “provides that if a ‘payment dispute arises under a construction contract’ then any party may apply to have the dispute adjudicated … The language is clear. There must exist a ‘payment dispute’ as a ‘precondition’ to an applicant having a dispute adjudicated…”: at [161]. Their Honours considered that the question of whether there is a ‘payment dispute’ is amenable to only one correct answer and is a ‘narrow’ jurisdictional fact: at [175]. However, at [177]:

25. [71]

    Whilst Martin CJ was in dissent in Samsung C&T Corporation v Duro Felguera Australia, he reached the same conclusion in Laing O’Rourke having regard to the comparable WA provision to s 33(1)(b) of the Act. The Chief Justice noted that the section conferred jurisdiction to “determine on the balance of probabilities whether any party to the payment dispute is liable to make a payment or to return any security”: at [96]. Further, at [97]:

26. [72]

    The Chief Justice further noted in Laing O’Rourke that the provisions of the Act were to be read in the context of the Act as a whole and the evident purpose or object of the Act, including to determine payment disputes fairly and quickly, informally and inexpensively, including by adjudicators who need not be legally qualified: at [98]-[100]. Further, at [101]:

27. [73]

    See likewise SC Projects Australia Pty Ltd v Field Deployment Solutions Pty Ltd [2015] WASC 339 at [78]-[79] (Mitchell J). Applying the same approach to the New South Wales legislation in EnerMech, Basten AJA concluded at [62]:

28. [74]

    The principal submitted that there was no “payment dispute” under s 8(a) as there was no “payment claim” within the meaning of s 7A. The adjudicator relied on s 7A(1)(c), but the contractor had no “accrued right” to the proceeds of the bank guarantees prior to termination of the contract. The contract was terminated in October 2024 but the principal did not encash the bank guarantees until March 2025. While the payment claim referred to damages for breach of contract, that was not a claim within the meaning of s 7A(1)(c): Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 at [66] (Kiefel, Bell, Gageler, Keane and Gordon JJ); EnerMech.

29. [75]

    The principal further submitted that cl 2.7(b) required that it be “subsequently found that the amounts drawn down were not payable by the Contractor”. This required a final determination by a Court or arbitrator: Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443; [1979] HCA 21; Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA 283 at [39]-[40] (MacFarlan JA, Campbell and Young JJA relevantly agreeing). Thus the contractor did not have an accrued right to the return of the security under cl 2.7(b) as its right was dependent upon a subsequent finding that the principal was not entitled to the monies.

30. [76]

    Finally, the principal submitted that the adjudicator asserted at various points that there was a “payment dispute” under ss 8(b) or (c) (see Determination at [84]-[85] and [102]), but he made no finding that the contractor was entitled to the return of the security or retained amount on either termination of the contract or receipt of the prior payment claim. These were not matters for the adjudicator but matters of jurisdictional fact to be objectively determined: Department of Construction and Infrastructure v Urban and Rural Contracting Pty Ltd (2012) 31 NTLR 139; [2012] NTSC 22 at [20]-[21] (Barr J). (This case considered an earlier version of s 8(a) and his Honour’s observations have no ready application to the issue at hand.) Nor had there been any finding by the Court, arbitrator or adjudicator, that the amounts drawn down were not payable by the contractor, such that there was an entitlement under cl 2.7(b). As such, there was no “payment dispute” and no jurisdiction.

31. [77]

    The contractor submitted that a payment dispute arose under s 8 because the principal failed to pay the amount which the contractor claimed in its payment claim: s 8(a). There was a payment claim under s 7A(1)(a). The contractor’s right under cl 2.7(b) was, on the adjudicator’s construction, one which survived termination: Determination at [239]-[241]. The payment claim was not solely based on cl 2.7(b) of the contract but, in any event, the adjudicator accepted that the contractor’s rights under cl 2.7(b) were accrued rights. Whether the contractor’s rights under cl 2.7(b), were accrued or dependent upon some anterior finding that the amounts were not payable by the contractor, was a question as to the proper construction of the contract. This was quintessentially a matter for the adjudicator to decide.

32. [78]

    The contractor submitted that any error in resolving that question was an error within jurisdiction: SC Projects at [77]-[79] (Mitchell J); Laing O’Rourke at [101] (Martin CJ, Newnes JA agreeing). Where the contractor asserted an accrued right, it was for the adjudicator to determine the soundness of that claim: by analogy, EnerMech at [62] (Basten JA, Meagher and Griffiths JJA agreeing). The jurisdictional fact was whether there was a payment claim in relation to an accrued right, or a dispute in respect of the return of security. The validity of the payment claim did not turn on whether the contractor, in fact, had an accrued right; that was the subject of the adjudication. To submit otherwise was to turn the legislation on its head.

33. [79]

    In any event, the contractor submitted that the adjudicator was right. The fact that the right under cl 2.7(b) may only have accrued after the termination of the contract did not mean that it ceased to be a right which, for the purposes of s 7A(1)(c), was an “accrued right for the contract”. There was nothing in the text of the legislation which suggested that the right was one that had to accrue before termination of the contract. The legislation was intended to operate in respect of construction contracts even after they terminated: s 5(1A). There was no good reason to read s 7A(1)(c) narrowly. (I do not agree with this proffered construction of the legislation; the question is whether the contractor’s right to repayment of the proceeds of the bank guarantees on termination of the contract is contingent upon the principal’s further performance of the contract or not.)

34. [80]

    The contractor further submitted that there was a payment dispute under s 8(c). A payment dispute was in existence from the moment that the contract was terminated in October 2024, because the contractor asserted that the security was due to be returned when the contract was terminated for convenience. The adjudicator accepted that: Determination at [232] and [235]. A payment dispute under s 8(c) was in existence from the time of the termination of the contract because the security which had been due to be returned was not returned. The adjudicator accepted that there was a payment dispute under s 8(c) after the principal wrongly converted the funds: Determination at [66(a)] and [102], accepting EGL Management Services Pty Ltd v Northern SEQ Distributor-Retailer Authority t/as UnityWater [2011] NSWSC 1234 at [39] (McDougall J).

35. [81]

    The adjudicator’s jurisdiction depended upon the existence of a ‘payment dispute’ within the meaning of the Act. The place to start is the payment claim. By its payment claim, the contractor contended that the principal was not entitled to call on the Security and was obliged to repay the proceeds of so doing. The basis of the entitlement to recover the proceeds of the bank guarantees was not entirely clear but involved, at least, cl 2.7(b) of the contract.

36. [82]

    In its adjudication application, the contractor characterised the ‘payment dispute’ as arising under s 8(a) of the Act, that is, a payment claim had been made, which had been rejected or not been paid. As to the ‘payment claim’, the contractor relied on s 7A(1)(c) of the Act in respect of a terminated construction contract, being a claim by the contractor for payment of an amount in relation to an accrued right for the contract.

37. [83]

    Although the contractor contended that a payment dispute arose under s 8(a), the principal contended in its adjudication response that no payment dispute could arise under ss 8(b) or 8(c) of the Act. This was said to be because no security was “held” by the principal (as the bank guarantees had been encashed) and nor was the security “due to be returned” under the contract.

38. [84]

    As to the payment dispute under s 8(a), the principal said that this did not entitle the contractor to make a claim for “repayment” of the proceeds of the Security under cl 2.7 of the contract, “and it is impossible to say that any right to do so could have accrued when the Security was not converted at the time of termination anyway”.

39. [85]

    The principal’s submissions rather blurred the distinction between the jurisdictional fact and the merits of the contractor’s claim, as well as the different attributes of a payment dispute under s 8(a), on the one hand, and ss 8(b) or 8(c) on the other hand. These submissions were essentially repeated in the principal’s further submissions on jurisdiction.

40. [86]

    In its further submissions on jurisdiction, the contractor argued that the fact that the bank guarantees had been called upon did not change their character as security: EGL Management Services at [39]-[40] (McDougall J). It was said that the proceeds of the bank guarantees could be the subject of a payment dispute of the kind referred to in ss 8(b) and 8(c). The proceeds could be the subject of a payment claim under ss 7A(1)(a) and (c) and, thus, the subject of a payment dispute as described in s 8(a). The contractor maintained that it had an “accrued right” to the return of the security, which arose on termination for convenience. The adjudicator was said to be obliged to determine whether there were such “accrued rights” on the balance of probabilities under s 33(1)(b) of the Act. That is, the contractor now relied on both s 8(a) (and within it, s 7A(1)(c)) and ss 8(b) and (c) as the basis for its asserted payment dispute.

41. [87]

    Turning to the adjudication determination, the adjudicator considered that the contractor’s claim for repayment of the encashed bank guarantees was a payment claim within the meaning of s 7A(1)(c), where the “accrued right” was to payment of the value of the encashed bank guarantees on or after termination, or under cl 2.7(b) of the contract: Determination at [75]-[77]. At [80]-[81] of the Determination:

42. [88]

    The adjudicator concluded that there was a payment dispute under s 8(a): Determination at [84] and [87]. In addition, he was satisfied that there was a payment dispute under s 8(b) of the Act: Determination at [85]. As to s 8(c) of the Act, the adjudicator considered that the principal’s argument that the security was not “due to be returned” was a core element in the principal’s substantive defence but not a jurisdictional bar, as “The existence of such a dispute is precisely what the adjudication process is designed to resolve”: Determination at [96]. Further, at [97] and following:

43. [89]

    The adjudicator considered that the value of the encashed bank guarantees was also security. Clause 2.7(a) of the contract provided a right to receive the proceeds of the bank guarantees, while cl 2.7(b) provided a mechanism to repay that amount, and “This effectively means that the proceeds of the Bank Guarantees function as security held by the [principal] subject to a subsequent finding of the liability of the parties”: Determination at [102]. As the proceeds of the bank guarantees were another form of security held by the principal and claimed to be due to be returned under the contract, the adjudicator considered that the payment dispute arose under s 8(c) of the Act.

44. [90]

    There can be no doubt that there was a payment dispute, essentially, for the reasons given by the adjudicator. A payment dispute arose under s 8(a) as the contractor had made a payment claim – seeking repayment of the proceeds of the bank guarantees – which the principal wholly disputed: s 8(a)(i). This was a “payment claim” made under a construction contract which had been terminated, by which the contractor sought payment of an amount in relation to an accrued right for the contract: s 7A(1)(c). Whether the contractor, in fact, had an accrued right for the contract was the issue to be determined by the adjudicator. Whether the adjudicator got that right or wrong was within his jurisdiction. This Court does not have jurisdiction to quash an adjudicator’s determination for non-jurisdictional error of law on the face of the record (in other words, the adjudicator is conferred with decision-making authority to err in law): Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [83] (Gageler J).

45. [91]

    There was also a payment dispute under s 8(c). Section 8(b) of the Act is concerned with retention monies whilst s 8(c) is concerned with security. The controversy between these parties involved the latter. As I read s 8 as a whole, s 8(c) identifies the subject matter of the payment dispute but does not require, before such a payment dispute arises, that each element within s 8(c) is established and uncontroversial. That is, it is not necessary for it to be established or uncontroversial that the security is “due to be returned under the contract”. That is, most likely, what is in dispute. Nor need it be established or uncontroversial that any security is held by a party under the contract. That may also be in dispute where, for example, the security holder has encashed the security. It is payment disputes meeting the description in s 8(c) which the adjudicator has jurisdiction to determine. And there was such a dispute here. This challenge fails.

Procedural fairness

1. [92]

   Finally, the adjudicator is said to have failed to accord procedural fairness, determining the application on a basis for which neither party contended and without giving the parties an opportunity to make submissions on the point.

2. [93]

   To understand this contention, it is necessary to traverse more of the adjudication determination. Having satisfied himself that he had jurisdiction, the adjudicator proceeded to consider the substantive dispute, in particular, whether the contractor had an “accrued right”. The adjudicator focussed on the terms of the construction contract and how it applied to the events which had unfolded. He was satisfied, on the balance of probabilities, that the contract had been terminated for convenience.

3. [94]

   Having done so, the adjudicator then turned to whether the principal’s rights to hold the security came to an end, having regard to the contractual provisions: clls 1.3(e), 2.5–2.7. The adjudicator accepted as a matter of principle that, when a contract is terminated, accrued rights before termination are preserved: Determination at [229]. He concluded that cl 2.6 survived termination but did not apply, where the release of security in that sub-clause was tied to the Date of Practical Completion and the expiry of the Warranty Period. Where determination for convenience prevented the contractor from reaching Practical Completion or the Warranty Period expiring, it became impossible to meet the conditions for release of the security: Determination at [230]-[232]. Where the principal terminated the contract for convenience, cl 2.6(c) did not apply either: Determination at [234].

4. [95]

   The adjudicator considered that cl 2.7 also survived termination and rejected the principal’s submission that the contractor was not entitled to claim repayment of the proceeds of security where it was impossible to say that it had an “accrued right” to do so. The adjudicator concluded that cl 2.7(b) provided such a mechanism: Determination at [242].

5. [96]

   The adjudicator then turned to address a submission made by the principal in its supplementary submissions on jurisdiction. The principal there argued that, given the terms of cll 2.6 and 2.7, the contractor could not be said to have an “accrued right” for the return of the security. The principal argued at para 16(e) of its further submissions:

6. [97]

   The adjudicator addressed this submission at [243]-[244] of the Determination:

7. [98]

   On this application, the principal submitted that the adjudicator recorded the principal’s submission but asserted that the issue of the payment claim “effectively” required that the principal make its own “finding” pursuant to cl 2.7(b) as to whether the amounts drawn down were not payable. The adjudicator decided that he was entitled to “step into the shoes” of the principal and make a finding as to whether the amounts drawn down were not payable, and thereby that he had jurisdiction to determine whether the amounts received by the principal upon recourse to the Security ought to be repaid to the contractor under cl 2.7(b) of the contract. It was said that no party had asserted that, under the terms of cl 2.7(b), the ‘subsequent finding’ was to be made by the principal itself upon receipt and consideration of a payment claim under the Act. No party asserted that this ‘finding’ was one which was capable of being made by the adjudicator. The adjudicator did not inform the parties that he considered that he could acquire or exercise jurisdiction in this way.

8. [99]

   The contractor submitted that the adjudicator’s conclusion was a direct response to, and rejection of, the principal’s submission. There was no denial of natural justice, noting how those principles operate in the context of adjudications: Demex Pty Ltd v McNab Building Services Pty Ltd (2023) 113 NSWLR 282; [2023] NSWCA 261 at [12]-[32] (Kirk JA, Mitchelmore and Adamson JJA agreeing); JKC at [33]-[56]. The adjudicator was ruling on one of the issues which the parties asked him to resolve.

9. [100]

   The adjudicator’s obligations to afford procedural fairness were extensively considered by Kirk JA in Demex, whose analysis I gratefully adopt. In short, the features of the dispute resolution process prescribed by the Act has the consequence that a substantial departure from the general requirements of procedural fairness is required before jurisdictional error will be made out. Those features include tight timeframes, the interim nature of an adjudication determination, and that adjudicators may not be lawyers but have practical building experience. Kirk JA observed at [32]:

10. [101]

    A similar approach has been taken by the Northern Territory Court of Appeal in JKC. Given the features of the legislative scheme, the Court considered at [39] (citing Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd (2017) 95 NSWLR 82; [2017] NSWCA 151at [99] (McColl JA, Beazley ACJ and Macfarlan JA agreeing) at [144]):

11. [102]

    The suggestion that the reasoning at [244] of the Determination proceeded on a basis for which neither party contended, or was made in circumstances where the parties were not given the opportunity to make submissions on the issue, is without merit. The adjudicator was squarely engaging with a submission made by the principal. Further, as the contractor submitted, it was obvious from the payment claim, adjudication application, adjudication response and the contractor’s further submissions on jurisdiction that the adjudicator was being asked to construe cl 2.7(b) and determine whether any amount was payable under that clause. This challenge also fails.

Stay in favour of arbitration

1. [103]

   In the alternative, the principal sought to stay the execution of judgment obtained by the registration of the adjudication under s 45 of the Act, pending the outcome of an arbitration between the principal and the contractor.

2. [104]

   The contract included an arbitration clause. The principal has submitted a request for arbitration to the Secretariat of the Internal Court of Arbitration of the International Chamber of Commerce.

3. [105]

   The principal submitted that the contractor was an American company, did not own real property in Australia and had no ongoing projects in Australia. A freezing order was made on similar grounds in Owners – Strata Plan No 102081 v Aqualand Construction Pty Ltd [2025] NSWSC 31 at [15]-[16] (Stevenson J). The principal would otherwise suffer irreparable prejudice and judgment should be stayed: Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114 at [45]-[55], [73] and [104]-[122] (McHugh JA, Bell CJ and Griffiths AJA agreeing); TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118 at [89] (Bell P, Macfarlan and Leeming JJA); A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 at [26] (Payne JA, Simpson and Basten AJJA). The burden of obtaining a stay has been described as ‘heavy’ and considerable caution is to be exercised with respect to an application for a stay in respect of an adjudication: A-Civil at [31]. But the Northern Territory legislation was not the same and caution should be taken in applying New South Wales authorities which relied s 32B, which has no analogue in the Northern Territory legislation.

4. [106]

   The contractor submitted that a party seeking a stay of an adjudication determination on the basis of “irreparable prejudice” faces a very heavy burden: A-Civil at [31]. The same principles should apply in respect of the Northern Territory legislation, where the statutory purpose was the same. It was common ground that the arbitral award would be enforceable in the United States, the suggested difficulties in enforcing any arbitral award against the contractor were illusory. There was no evidence that there was a risk that the contractor would dissipate its assets, was insolvent or in financial difficulty. Nor had the principal shown that it has a prima facie case to the relief sought in the arbitration, beyond asserting that its claims had an estimated value of USD$20 million. This was said to be fatal to an application for a stay: Black Label Developments at [110]-[112].

5. [107]

   Section 45 of the Act provides:

6. [108]

   Section 45(2) is in the same terms as s 25(1) of the New South Wales legislation. As McHugh JA recently explained in Black Label Developments, while the Act does not make specific provision for a stay of execution of the judgment that arises by reason of filing an adjudication certificate, the section provides that the resulting judgment is “enforceable accordingly” as a judgment of the court; “Those words make clear that the judgment is subject to the court’s ordinary powers with respect to the enforcement of judgments … including the general power to stay execution.”: at [56]. His Honour also noted that the statutory context in which such a judgment comes into existence is highly material to assessing the dictates of justice in the exercise of the power to grant a stay, and is often dispositive in the exercise of that discretion: at [57].

7. [109]

   The implications of the statutory context for granting a stay were canvassed in A-Civil at [20]-[22]:

8. [110]

   In A-Civil, the Court of Appeal referred to “the extraordinary nature” of a stay given the policy of the legislation, against which background the Court’s power to grant a stay is exercised: at [23]. Even where a principal established a significant risk that the contractor might not be able to refund an adjudicated amount, this may not be enough to grant a stay: at [27], citing Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33 at [36] (Payne JA). The Court concluded in A-Civil at [31]:

9. [111]

   Where the policy and structure of the Act is relevantly the same as in other states, I see no reason to disregard the principles governing the grant of a stay pending conclusion of the arbitration. True, the Act does not have an equivalent provision to s 32B of the New South Wales legislation, which prevents companies in liquidation from availing themselves of the security of payments regime. Section 32B underlines the fact that the legislature has placed the risk of insolvency on the principal: A-Civil at [29]. That the Act does not contain this provision does not render these principles inapt.

10. [112]

    As matters presently stand, the contractor has registered the adjudication determination in this Court. The contractor has undertaken not to enforce the determination as a judgment until these proceedings are finalised. In turn, the principal has provided security in the sum of some $6.6 million (either by payment into Court or bank guarantee).

11. [113]

    I note the statutory context in which this stay is sought, which places the risk of insolvency on the principal. I attach less weight to this consideration than I would ordinarily do, where the adjudication determination concerns the return of a deposit as opposed to a progress payment for work done or goods supplied. The importance of maintaining cashflow in the construction industry is greater, I think, for payment of a progress payment during the course of construction, where a contractor has need of the funds to pay its employees for their work, subcontractors for their efforts and suppliers for their materials. As the Attorney-General noted when the Act was passed, “The failure to pay at any stage in the contracting chain can have disastrous effects for those further down the chain awaiting payment”: Second Reading Speech. Those pressures are not the same when one is considering the return of retention monies or security once the works are complete or, as in this case, where the construction contract has been terminated.

12. [114]

    But beyond this, I have little information on the strength of the principal's case advanced in the arbitration. According to the principal’s notice of dispute, it complained that the contractor had already issued invoices more than double the Provisional Guaranteed Maximum Price under the contract (although I understand this ‘cap’ was removed in a later Heads of Agreement). The principal referred to “Apparent theft and “irregular” invoicing practices”, as well as defective works. The principal has put an estimated value on its claims of some USD$20 million, albeit in a ‘one-line’ email. On the other hand, some of the principal's complaints have been voiced to the adjudicator, who was not convinced. I will assume for the purposes of this exercise that the principal has a prima facie case and that there is a serious question to be tried by the arbitral tribunal.

13. [115]

    So far as the balance of convenience is concerned, the contractor accepts that it is an American company which does not own real property in Australia. Further, following termination of the contract, it has no ongoing projects in Australia. Both attributes may be considered unremarkable. Beyond this, the principal relied on a number of credit reports, the import of which was unclear and did not add significantly to information about the company’s capacity to pay: Brocklands Pty Ltd v Tasmanian Networks Pty Ltd (No 2) [2019] TASSC 37 at [24] (Blow CJ).

14. [116]

    Against this, the parties agree that an arbitral award made in the principal’s favour will be subject to the provisions of Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), to which the United States of America is a party, and thus enforceable in Alaska. Balancing these competing considerations, I am not satisfied that the dictates of justice require the exercise of the Court’s discretion in favour of a stay. The application for a stay is refused.

Orders

1. [117]

   For these reasons, I make the following orders:

   1. (1)

      Dismiss the Amended Summons filed on 6 November 2025, with costs.