East End Stage 2 Pty Ltd v TQM Design & Construct Pty Ltd & Ors

1. [1]

   This proceeding relates to an adjudication determination under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) which was made by the Second Defendant (Adjudicator) and was dated 11 March 2026 (Determination).

2. [2]

   By Summons filed 17 March 2026, the Plaintiff, East End Stage 2 Pty Ltd, seeks an interlocutory injunction restraining the First Defendant, TQM Design & Construct Pty Ltd, from:

   1. (1)

      requesting from the Third Defendant an adjudication certificate pursuant to s 24(1) of the SOP Act;

   2. (2)

      filing an adjudication certificate as a judgment pursuant to s 25 of the SOP Act; and

   3. (3)

      taking any step to enforce any judgment entered pursuant to s 25 of the SOP Act in respect of the Determination.

3. [3]

   TQM does not oppose East End’s application for an injunction in those terms, provided that the Court conditions such an injunction upon the Adjudicated Amount of around $6.1m (incl GST) being paid by East End into Court.

4. [4]

   It was common ground that it is the “usual practice” of the Court to impose such a condition on the grant of interlocutory relief of the type sought, but that this usual practice is not inflexible.

5. [5]

   The central issue which arises for determination on this application is whether the Court should follow its usual practice in the circumstances of this case, or should instead make the grant of interlocutory relief conditional upon the provision by East End of some other form of security for the Adjudicated Amount. In that regard, East End proffered a mortgage over its real property assets and a guarantee from a parent entity.

Factual Background

1. [6]

   East End and TQM are parties to a Contract dated 12 October 2020, pursuant to which TQM agreed to design and construct a mixed-use Development in Newcastle, New South Wales. The Contract Sum as at the date of entry into the Contract was $53,593,607 (excl GST).

2. [7]

   The Development includes two multi-storey strata Towers and five Terraces (each of which has one basement level and three above-ground levels).

3. [8]

   On 12 January 2026, TQM served on East End a Payment Claim, claiming an amount of $13,967,901.54 (incl GST). (There is a dispute as to whether this was validly served under s 13 of the SOP Act, and therefore as to whether the Adjudicator had jurisdiction to determine the Payment Claim.)

4. [9]

   The amount claimed in the Payment Claim was said to represent:

   1. (1)

      the total of the works completed in respect of the Development to 31 December 2025 ($57,999,492.28);

   2. (2)

      less the total amount paid to TQM to 30 November 2025 ($45,301,399.97);

   3. (3)

      plus GST.

5. [10]

   The Payment Claim set out a schedule of the works conducted, which indicated that part of those works related to the Terraces.

6. [11]

   On 27 January 2026, East End served a Payment Schedule on TQM, which claimed that TQM was obliged to pay some $2.234m to East End. The matters relied upon in support of this contention included, relevantly, that:

   1. (1)

      pursuant to s 8(2)(b) of the SOP Act, TQM had no entitlement to a progress payment, because the Contract involves construction works which require insurance under s 92 of the Home Building Act 1989 (NSW) (namely, the work in respect of the Terraces), and no such insurance has been obtained; and

   2. (2)

      whereas the Payment Claim stated that some $45.3m had been paid by East End to TQM, the amount that had in fact been paid to date was around $50.52m, after bringing to account payments which had been made to TQM by Clarence Developments Pty Ltd, on behalf of East End.

7. [12]

   On 9 February 2026, TQM lodged an Adjudication Application in respect of the Payment Claim, pursuant to s 17(1)(a) of the SOP Act.

8. [13]

   The Adjudication Application asserted that the amount received to date was $45.3m (excl GST), and submitted that there was no provision in the Contract for payments made by third parties to be taken into account in determining the amount due and payable under the Contract.

9. [14]

   On 18 February 2026, East End served an Adjudication Response, which maintained its position that the payments made to TQM by Clarence Developments on behalf of East End, pursuant to a Loan Agreement between Clarence Developments and East End, had to be taken into account.

10. [15]

    On 11 March 2026, the Adjudicator issued the Determination in the amount of $5,512,195.56 excluding GST (being $6,063,316.12 incl GST). The Adjudicator determined that the due date for payment of this amount was 27 January 2026, with interest accruing at a rate of 10% per annum from 5 days after that date, that is, from 2 February 2026. (As at the date of the hearing, the Adjudicated Amount was $6,168,174.34.)

11. [16]

    As regards the issue whether s 8(2)(b) of the SOP Act has the effect that TQM had no entitlement to a progress payment, the Adjudicator concluded as follows:

12. [17]

    East End contends that the Adjudicator’s determination of the jurisdictional issue regarding the application of s 8(2)(b) of the SOP Act involved jurisdictional error. I address this issue below, when dealing with the question as to whether there is a serious question to be tried.

13. [18]

    As regards the issue whether the payments made by Clarence Developments under the Loan Agreement should be brought to account, the Adjudicator concluded as follows:

14. [19]

    East End accepts that the Adjudicator’s determination of the issue relating to the payments made to TQM by Clarence Developments did not involve jurisdictional error, since it turned on her determination that the issue raised by East End in its Adjudication Response was beyond the scope of the matters raised in the Payment Schedule (and therefore fell within s 20(2B) of the SOP Act).

15. [20]

    TQM would have been able, in the absence of any restraint, to obtain an adjudication certificate and a judgment under s 25 of the SOP Act on 19 March 2026.

16. [21]

    On 17 March 2026, East End commenced this proceeding seeking, by way of final relief, orders quashing the Determination and, by way of interim relief, the injunction which is the subject of these reasons for judgment.

17. [22]

    On 18 March 2026, the proceeding came before the Duty Judge. Following that hearing, TQM undertook not to take steps to enforce until 5pm on 25 March 2026 (being the day that the application for interlocutory relief was listed for hearing before me).

18. [23]

    At the hearing of the application for interlocutory relief, TQM consented to an order restraining it from taking steps to enforce until 4pm on the date that this application was determined by the Court.

19. [24]

    On 20 March 2026, East End filed a notice of a constitutional matter. The relevant constitutional issue was whether s 25(4) of the SOP Act is invalid, in whole or in part, because it is inconsistent with the constitutionally guaranteed minimum supervisory jurisdiction of the Court. This notice was served on the Attorney-General for the Commonwealth and the respective Attorneys-General for each of the States and Territories. The Attorney-General for NSW appeared at the hearing of the application for interlocutory relief, and submitted that it was unnecessary for the Court to resolve the constitutional issue and therefore the Court should not do so. (For reasons outlined below, I accept this submission.)

Confidential material

1. [25]

   In support of its application, East End filed a number of affidavits sworn by Mr Rodney Hawkins, who is General Counsel of the Iris Capital Group (being the group of companies to which East End belongs). In one of those affidavits, Mr Hawkins provided confidential information regarding the financial position of East End and the Iris Capital Group, the commercial operations of the Group, and a number of proposed acquisitions by the Group.

2. [26]

   I granted East End’s application for an order pursuant to s 7(b) of the Court Suppression and Non-publication Orders Act 2010 (NSW) restricting publication of this material for a period of two years, on the ground in s 8(1)(a) of that Act, namely, that the order was necessary to prevent prejudice to the proper administration of justice. In particular, I was satisfied that, in circumstances where East End could not advance an argument on this interlocutory application regarding the commercial impact of being required to pay the Adjudicated Amount into Court, without adducing confidential evidence as to its financial position, it would be contrary to the interests of justice for East End and the Iris Capital Group to lose confidentiality in that material. Further, as East End submitted, this confidential material is not relevant to its application for final relief.

3. [27]

   Given that these reasons for judgment refer to this confidential material, I will make an interim non-publication order at the time of their delivery, and will give East End a short period in which to make an application for an order under the Court Suppression and Non-publication Orders Act in respect of specific parts of these reasons for judgment. Following the determination of that application, and the making of any such order, I will publish these reasons for judgment in a redacted form.

Relevant Principles

1. [28]

   It is common ground that the Court has power to grant an interlocutory injunction restraining enforcement of an adjudication determination pending the hearing and determination of a challenge to its validity by way of an application for judicial review.

2. [29]

   The relevant principles for determining an application for an interlocutory injunction of this type were conveniently summarised by Rees J in the following passage from Ceerose Pty Ltd v A-Civil Aust Pty Ltd [2022] NSWSC 1487 at [24]-[28], upon which East End relied:

3. [30]

   As her Honour noted in the passage quoted above, it is necessary, when considering the balance of convenience on such an application, to have regard to the policy underlying the SOP Act. In A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 at [21]-[22], the Court of Appeal (Payne JA, Simpson and Basten AJJA) made the following observations:

4. [31]

   Although the Court of Appeal referred in the above quotation to s 25(4) of the SOP Act, the policy of the Act, as described by the Court, does not depend upon the inclusion of that provision in the SOP Act, but is instead reflected in that provision. That is, whether s 25(4) was included in the SOP Act or not, it would remain the case that two important policies underpinning the SOP Act are to maintain the flow of money to the subcontractor and, as an interim measure, to place the risk of insolvency on the principal.

5. [32]

   The object of the SOP Act is to “ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services”: s 3(1).

6. [33]

   In Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [36], Kiefel CJ, Bell, Keane, Nettle and Gordon JJ observed that the objects of the SOP Act were to reform payment behaviour in the construction industry by seeking to ensure that a person who carries out construction work “is entitled to receive, and is able to recover, progress payments promptly in relation to the carrying out of that work”. Their Honours continued (at [39]) that:

7. [34]

   Underpinning the statutory entitlement to progress payments is an understanding that “cash flow is the lifeblood of the construction industry”, such that “any interruption of the cash flow to a person carrying out construction work is apt to create the risk of financial failure”: Probuild at [40] (emphasis added). Accordingly, the Act imposes “brutally fast” deadlines on the claimant, respondent and adjudicator in order to ensure the prompt resolution of payment disputes: ibid.

8. [35]

   In Probuild at [47], the High Court identified the “clear legislative intention” of the statutory regime as being “to ensure that the statutory entitlement can be determined and enforced with minimal delay” (emphasis added).

9. [36]

   It was common ground between the parties that a “usual practice” has developed in this Court to the effect that, ordinarily, the price of an interlocutory injunction in security of payment proceedings is payment of the adjudicated amount into Court: see, for example, In-Line Building and Construction Management Services Pty Ltd v Bluecarp Pty Ltd [2020] NSWSC 606 at [5] (Stevenson J). This requirement can also be satisfied by the provision of an unconditional bank guarantee, rather than cash: see, for example, CPB Contractors Pty Ltd v Heyday5 Pty Ltd [2020] NSWSC 1385 at [8]-[9] (Stevenson J).

10. [37]

    It was also common ground that this usual practice is not inflexible: see, in particular, Nazero Group Pty Ltd v Top Quality Construction Pty Ltd [2015] NSWSC 232 at [33] (Hammerschlag J (as his Honour then was)).

11. [38]

    TQM acknowledged, in particular, that a relevant factor which might result in the Court not following the usual practice would be if an insistence on that practice would stultify the proceedings.

Constitutional issue?

1. [39]

   Given those matters of agreement, it is unnecessary to decide the constitutional issue that was raised by East End regarding the validity of s 25(4)(b) of the SOP Act. This provision requires that, in circumstances where a claimant has obtained an adjudication certificate and has filed that certificate as a judgment for a debt, and the respondent has commenced proceedings to have that judgment set aside, the respondent “is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final determination of those proceedings”.

2. [40]

   East End submitted, in short, that s 25(4)(b) curtails or limits the right or ability of applicants to seek relief in the supervisory jurisdiction of this Court so as to be inconsistent with the place of the constitutional guarantee of that jurisdiction in the constitutional structure (see Kirk v Industrial Relations Commission of New South Wales (2010) 239 CLR 531; [2010] HCA 1 at [99]).

3. [41]

   Section 25(4) does not apply to the present proceedings, which do not involve an application to set aside a judgment obtained in reliance on an adjudication certificate. However, the policy underlying s 25(4) has been seen as a relevant factor in the development of the “usual practice” in the situation where an interlocutory injunction is sought in judicial review proceedings in respect of an adjudication determination. In particular, in Filadelfia Projects Pty Ltd v EntirITy Business Services Pty Ltd [2010] NSWSC 473 at [11], McDougall J observed as follows:

4. [42]

   Senior Counsel for East End did not contend that the “usual practice” was wrong, but instead put his client’s position as follows: “[t]o the extent the usual practice is informed by section 25(4), then your Honour would not have regard to section 25(4)”.

5. [43]

   Although McDougall J referred to the requirement for payment into Court arising “by analogy with s 25(4)”, I do not consider that the “usual practice” depends on the validity of s 25(4), such that if that provision were removed from the SOP Act, there would cease to be any basis for that practice. Instead, the practice depends on the “clear objects of the Act and its underlying policy” (Filadelfia at [11]) and, in particular, the “clear legislative intention” to ensure that the statutory entitlement to a progress payment can be determined and enforced with minimal delay (Probuild at [47]).

6. [44]

   East End submitted that, where s 25(4)(b) does not apply in terms, there is no inflexible requirement to pay the Adjudicated Amount into Court as a condition of interlocutory relief, and continued as follows:

7. [45]

   However, as noted above, it is common ground that the “usual practice” is not an inflexible rule.

8. [46]

   Given these matters, it is unnecessary to determine East End’s contention regarding the invalidity of s 25(4) of the SOP Act.

9. [47]

   In circumstances where it is unnecessary for me to resolve the issue of the validity of s 25(4) of the SOP Act, it follows that I should not do so: Knight v Victoria (2017) 261 CLR 306; [2017] HCA 29 at [32]-[33]; and Smith v Blanch (2025) 118 NSWLR 70; [2025] NSWCA 188 at [147].

Serious question to be tried?

1. [48]

   Section 8 of the SOP Act relevantly provides as follows:

2. [49]

   East End contended as follows:

   1. (1)

      section 92 of the Home Building Act 1989 (NSW) requires that a person must not do residential building work under a contract unless that person has a contract of insurance in respect of such work, and has provided evidence of such insurance to the other party to the contract;

   2. (2)

      a person who enters into a contract to do residential building work “relating to the construction of a multi-storey building” is exempt from this requirement to obtain insurance: see Home Building Regulation 2014 (NSW), reg 56(1);

   3. (3)

      however, the Terraces did not meet the definition of a “multi-storey building” and therefore insurance was required in respect of the residential building works relating to the Terraces, pursuant to s 92 of the Home Building Act;

   4. (4)

      TQM did not have such insurance in place in respect of the residential building works relating to the Terraces;

   5. (5)

      it follows that the Contract “involves construction work that is residential building work done in contravention of” s 92 of the Home Building Act, and therefore TQM was not entitled to a progress payment pursuant to s 8(2)(b) of the SOP Act;

   6. (6)

      pursuant to s 13(1) of the SOP Act, only a “person referred to in section 8” has an entitlement to serve a payment claim and, therefore, the person who serves a payment claim must be a person whom s 8(1) makes “entitled to a progress payment”: see Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 at [60];

   7. (7)

      if a person has no entitlement to serve a payment claim, then any subsequent adjudication is invalid: Southern Han at [44], [62]; and

   8. (8)

      by reason that TQM had, pursuant to s 8(2)(b), no entitlement to receive a progress payment, it had no entitlement to serve a payment claim pursuant to s 13(1), and therefore the subsequent Determination was invalid.

3. [50]

   TQM did not dispute that the matters set out above gave rise to a serious question to be tried. TQM did raise an issue regarding the strength of that argument, as a matter relevant to assessing the balance of convenience.

4. [51]

   However, TQM accepted that, provided the Adjudicated Amount was paid into Court, then the Court would grant the interlocutory injunction sought by East End. That is, TQM did not rely on the asserted weakness of East End’s argument as a basis for denying interlocutory relief in the event that such payment was made.

5. [52]

   The critical question therefore is whether there is a basis, when considering the balance for convenience, for departing from the usual practice requiring such payment into Court. If not, then it is unnecessary to address the submissions regarding the strength of East End’s case (and insofar as it is unnecessary to address that issue, it is undesirable to express any view on the strength of the arguments that will be advanced in support of the final relief sought in these proceedings).

Balance of Convenience

1. [53]

   In support of its contention that the Court should depart from its usual practice of requiring payment of the Adjudicated Amount into Court as the price of an interlocutory injunction, East End relied on the following matters, which are developed in more detail below:

   1. (1)

      first, “East End is not reasonably able to pay the Determination into Court”;

   2. (2)

      secondly, “East End proposes alternatives to payment in calculated to provide TQM with adequate security”;

   3. (3)

      thirdly, “this is not a case where TQM has not been paid for the work the subject of the payment claim”;

   4. (4)

      fourthly, East End is ready, willing and able to proceed to a final hearing at the earliest available date; and

   5. (5)

      fifthly, “East End will suffer substantial commercial harm if a judgment is registered against it”.

2. [54]

   [Redacted].

3. [55]

   [Redacted].

4. [56]

   East End acknowledged in oral address that this was not the end of the enquiry regarding the extent of liquid assets available to East End to comply with the “usual practice”, and that it was necessary to consider the following further questions: “Can it look to the group? Can it look to its owners?”

5. [57]

   As noted above, East End is part of a group of companies known as the Iris Capital Group.

6. [58]

   The Iris Capital Group owns and operates around 65 businesses in the hospitality industry. These include pubs, accommodation hotels, wineries and two casinos. The Iris Capital Group also undertakes property developments. In addition to the Development in Newcastle, the Group’s current developments include projects in Potts Point and Manly in New South Wales, and Broadbeach in Queensland.

7. [59]

   The nature of the Iris Capital Group’s business is such that it receives regular cash from food and beverage sales, gaming, accommodation, and rental income. [Redacted].

8. [60]

   The outputs in the cash flow are in respect of day-to-day expenses for the Group’s various venues (such as payments to suppliers), and also include payments for gaming tax and capital expenditure in respect of developments.

9. [61]

   [Redacted].

10. [62]

    Because the Iris Capital Group operates two casinos as well as a number of pubs and hotels which have gaming machines, it is required to pay gaming tax. The most significant quantum of such tax is payable in respect of its NSW venues under the Gaming Machine Tax Act 2001 (NSW). [Redacted].

11. [63]

    [Redacted].

12. [64]

    [Redacted]. It is readily apparent from the cash flow that, if the payment of [redacted] was not made, or was made in a reduced amount, or was deferred, the Iris Capital Group would have sufficient cash from its operations to pay the Adjudicated Amount into Court.

13. [65]

    [Redacted].

14. [66]

    East End did not provide evidence of the terms of the contract for the purchase of the St Ives Shopping Centre, or the terms of its financing arrangements in relation to that purchase. In particular, the evidence before the Court does not disclose the settlement date, or the purchase price, or the amount of debt finance for this acquisition.

15. [67]

    It is therefore not known, on the evidence, whether the settlement date could be deferred and, if so, on what terms. It is also not known whether [redacted] represents an amount which the Iris Capital Group is required to pay by reason of the terms of its financing (for example, by reason of some loan-to-value ratio (LVR) being applied to the St Ives Shopping Centre or to the assets of the Group), or whether it represents the amount that the Iris Capital Group would prefer to pay, in order to achieve a particular debt/equity mix in respect of this asset.

16. [68]

    These are matters which are exclusively within the knowledge of the Iris Capital Group, and matters in relation to which East End could have led, but chose not to lead, evidence on this application.

17. [69]

    [Redacted]. It is unclear, from the manner in which this evidence is phrased, whether there is some flexibility in relation to the date of settlement or some flexibility in relation to the amount of the cash equity component (particularly since it is not described as a “required” or “committed” amount, but a “currently anticipated” amount).

18. [70]

    For example, it would be consistent with Mr Hawkins’ evidence for there to be a scenario in which the Iris Capital Group was purchasing this asset for, say, $100m, and had the ability, pursuant to its debt finance, to draw down up to $70m (on a 70% LVR), such that it was only required to fund a cash equity component of $30m, but that the Group had determined, for commercial reasons, to make a cash equity contribution in a higher amount of [redacted]. In such a scenario, although there would be (as Mr Hawkins deposes) a “currently anticipated” payment of [redacted], it would be open for the amount of this equity contribution to be reduced by the Adjudicated Amount without prejudicing East End’s ability to complete the transaction.

19. [71]

    Significantly, Senior Counsel for East End did not advance any submission that a requirement that the Adjudicated Amount be paid into Court would stultify the litigation:

20. [72]

    However, on the state of the evidence before the Court, it is not clear that a requirement to pay the Adjudicated Amount into Court would lead to the Iris Capital Group facing a single decision, namely, whether to settle the St Ives Shopping Centre acquisition or not. For example, it may be (depending on the – unknown – terms of the contract of sale) that the settlement date could be deferred until after this proceeding is concluded. It may be (depending on the – unknown – terms of the financing arrangements for the acquisition) that the cash equity component could be reduced by the Adjudicated Amount and the debt finance component could be increased by the same amount, with the settlement otherwise going ahead as planned.

21. [73]

    Accordingly, I am unable to conclude, on the basis of the evidence before the Court, that the [redacted] – which is the primary matter relied upon by East End in support of its submission that it cannot “reasonably pay” the Adjudicated Amount into Court – represents a payment which East End is required to make, or a payment that it would prefer to make. In those circumstances, I do not consider that the cash flow evidence relied upon by East End provides a sufficient basis for departing from the usual practice of requiring payment of the Adjudicated Amount into Court as the price for obtaining an interlocutory injunction.

22. [74]

    [Redacted]. This is a commercial preference. If the Iris Capital Group would prefer, for commercial reasons, to prioritise the maintenance of such a cash buffer over the payment into Court of the Adjudicated Amount (and the obtaining of an interlocutory injunction), that is a matter for the Iris Capital Group. It is not a reason for departing from the usual practice.

23. [75]

    Further, although Senior Counsel for East End acknowledged that relevant questions for the Court included – “Can it look to the group? Can it look to its owners?” – there was no information at all regarding the financial position of the two ultimate beneficial owners of East End.

24. [76]

    East End is wholly owned by Iris Land Pty Ltd as trustee for the Iris Land Trust, which is in turn owned, as to 50% each, by the trustees of two family trusts, described as the “Radayla Family Trust” and the “Julaura Family Trust”.

25. [77]

    There was no evidence before the Court as to the financial position of either of those trusts. As Senior Counsel for TQM submitted, it may be that one or both of those trusts has tens of millions of dollars in liquid assets.

26. [78]

    [Redacted]. Mr Arnaout is also the sole director of East End. TQM tendered, without objection, a newspaper article from the Australian Financial Review which referred to Mr Arnaout as being the head of the Iris Capital Group and as having an estimated fortune of more than $3 billion.

27. [79]

    Senior Counsel for East End submitted that the Court could not, when considering the financial position of the trusts which are the ultimate owners of East End, have regard to the financial position of a discretionary beneficiary of such a trust. I accept that as a general proposition.

28. [80]

    However, the question for present purposes is whether East End has established that it cannot “reasonably pay” the Adjudicated Amount into Court. In circumstances where East End acknowledges that it is relevant to look at the financial position of East End’s owners, where there is no evidence as to the financial position of the two family trusts which own East End and which sit at the top of the Iris Capital Group, and where there is evidence that the family in control of the Group has wealth measured in the billions, I am not satisfied that this submission has been made out.

29. [81]

    East End submitted that the alternatives to payment into Court which it has proffered are “calculated to provide TQM with adequate security”.

30. [82]

    The first alternative form of security is a guarantee from the trustee of the Radayla Trust.

31. [83]

    However, as noted above, East End led no evidence regarding the financial position of the Radayla Trust.

32. [84]

    There are broadly two possibilities.

33. [85]

    The first possibility is that the Radayla Trust has sufficient liquid assets available to pay, on demand, the Adjudicated Amount. If this is the case, then there would not seem to be any good reason for departing from the usual practice of requiring East End to pay the Adjudicated Amount into Court as the price for the interlocutory injunction, since one of the two equal owners of East End would readily be able to meet this requirement from its presently available resources.

34. [86]

    The second possibility is that the Radayla Trust does not have sufficient liquid assets to pay the Adjudicated Amount. If this is the case, then it is difficult to see why the provision of a guarantee by the Radayla Trust to pay the Adjudicated Amount provides an “adequate” alternative form of security compared to a payment into Court.

35. [87]

    The second alternative form of security proffered by East End is a mortgage over the Terraces. However, Senior Counsel for East End acknowledged that there is a “question mark” regarding this security “because what the Home Building Act says is that if a dwelling is the fruit of uninsured work you can't sell it”, adding that: “my client's position is that the terraces were built pursuant to uninsured work and that means that there is currently, at least on my client's position, a statutory constraint on selling those terraces”.

36. [88]

    [Redacted].

37. [89]

    For those reasons, I am not satisfied that the alternative forms of security proffered by East End would provide TQM with adequate security, or that the proffering of those alternative forms of security provides a basis for departing from the usual practice. The clear legislative intention of the SOP Act is to maintain the flow of money to persons performing construction work, and to ensure that such persons are able to recover progress payments promptly and are able to enforce determinations with minimal delay. Any interlocutory injunction restraining the enforcement of an adjudication determination is apt to impinge on that policy. However, the adoption of the usual practice limits the extent of any such impingement because the builder’s right to receive and recover payment is protected by payment into Court, and the delay to the making of such a payment is likely to be limited to the relatively short period between the commencement and determination of an application for judicial review (with the Court ordinarily including in its final orders, in the event that the application is dismissed, an order that the funds be paid out to the builder). Having regard to the matters set out above, I am satisfied that the policy of the SOP Act is best served by the usual practice of requiring payment of the Adjudicated Amount into Court as a condition of granting interlocutory relief, rather than by accepting the alternative forms of security proffered by East End.

38. [90]

    East End submitted as follows:

39. [91]

    This is, in substance, a submission that the Adjudicator erred in determining that TQM had, to date, received around $45.301m, when TQM had in fact received $50.52m (once account is taken of the payments made to TQM by Clarence Developments on behalf of East End). If this submission were correct, the result would be that the amount paid to date would be almost the same, but still less than, the amount which the Adjudicator determined to be the sum owing in respect of the works completed to date (namely, $50.813m).

40. [92]

    East End acknowledged that the Adjudicator’s determination in respect of the amount paid to date did not involve any jurisdictional error.

41. [93]

    East End is, in effect, submitting that, on an application for an interlocutory injunction to restrain enforcement of an adjudication determination pending the determination of an application for judicial review, the Court can and should have regard to, and determine, allegations regarding the merits of the underlying contract claims which have been determined by the Adjudicator.

42. [94]

    East End put its contention as follows (emphasis added): “the evidence is that [TQM] has already been paid for its work. So, it is now seeking to be paid again twice for the same work”. It is implicit in East End’s submission that the Court should determine the “work” done by TQM on the basis of the Determination, but should determine the amount “paid” to TQM on a basis that was rejected in the Determination (in circumstances where there is acknowledged to have been no jurisdictional error). However, if East End’s submission were correct, it would equally be open to TQM to argue, on such an interlocutory application, that the “work” done by TQM should be determined on the basis that was advanced in its Payment Claim, but was rejected in the Determination.

43. [95]

    In particular, it would be open to TQM to contend, in accordance with its Payment Claim, that the value of the works completed by TQM is in fact around $58m (rather than the amount of around $50.8m determined by the Adjudicator), such that – even if East End has (as it contends) paid a total amount of around $50.5m to TQM – it would remain the case that an amount of almost $8m is outstanding for the works completed to date. (It should be noted, in that regard, that there was affidavit evidence that the Senior Contracts Manager at TQM maintains that TQM has a contractual entitlement to a further amount of almost $8m that was claimed in the Adjudication Application and was not awarded by the Adjudicator.)

44. [96]

    A judicial review application in respect of an adjudication determination on the grounds of jurisdictional error is not an occasion to determine the merits of the various contractual arguments advanced by the parties in the course of the adjudication. In particular, it is not an occasion to determine the substantive issue of the value of the works completed to date, or the amount (if any) that the principal owes to the contractor in respect of those works. That is a fortiori the case where there is an application for interim relief pending the determination of the judicial review application.

45. [97]

    The issue on the present application is not whether the true amount (if any) owing under the Contract is different from that determined by the Adjudicator. Instead, the issue is whether, in circumstances where an interlocutory injunction is sought to restrain the enforcement of the Determination, the Court should, in accordance with its usual practice, require the payment into Court of the Adjudicated Amount as a condition of obtaining such relief. The determination of this issue does not depend on the resolution of any of the substantive contractual issues which are in dispute as between the parties.

46. [98]

    East End submitted that an “unusual feature” of this case, which warranted departure from the usual practice, was that East End is “ready, willing and able to take a hearing with the utmost expedition”:

47. [99]

    As TQM submitted, this is not an unusual feature of such litigation. Mindful of the policy objectives of the SOP Act which have been outlined above, the Court requires a plaintiff who challenges an adjudication determination by way of judicial review to move with expedition. The evidence in a proceeding of this type is usually limited in scope, and the parties will generally be given, and expected to be ready for, a hearing at the earliest available opportunity.

48. [100]

    The requirement for expedition and the usual practice both reflect the “clear legislative intention” of the SOP Act, namely, “to ensure that the statutory entitlement [to a progress payment] can be determined and enforced with minimal delay” (Probuild at [47]). Given that is so, the fact that East End is ready, willing and able to move expeditiously to a final hearing is not a reason for departing from the usual practice.

49. [101]

    Finally, East End submitted that it would suffer substantial commercial harm if a judgment against it is filed by TQM pursuant to s 25 of the SOP Act. In particular, Mr Hawkins deposed that:

    1. (1)

       the filing of such a judgment may cause reputational harm to the Iris Capital Group;

    2. (2)

       [redacted]; and

    3. (3)

       if there is enforcement against East End’s real estate:

50. [102]

    TQM accepted that the harm which East End would or might suffer as a result of a judgment being filed by TQM pursuant to s 25 of the SOP Act is a matter that the Court may take into account in determining, on the present application, the balance of convenience.

51. [103]

    However, as TQM submitted (and as I have found above), the evidence before the Court does not establish that East End is unable, or not reasonably able, to pay the Adjudicated Amount into Court. Accordingly, I am not satisfied, on the current state of the evidence, that East End is unable to take steps to avoid the consequences of a judgment being entered, if it considers it to be in its commercial interests to do so.

52. [104]

    For the reasons given above, I am not satisfied that East End has established a sufficient basis to depart from the usual practice. Accordingly, I will grant East End an interlocutory injunction restraining TQM from requesting the provision of an adjudication certificate pursuant to s 24(1) of the SOP Act, from filing an adjudication certificate as a judgment pursuant to s 25 of the SOP Act, and from taking any steps to enforce any such judgment, on the condition that East End either pay into Court the Adjudicated Amount, or deliver to the Court an unconditional bank guarantee in the sum of the Adjudicated Amount.

Should a stay be ordered?

1. [105]

   TQM submitted that, in addition to granting interlocutory relief conditional upon payment into Court of the Adjudicated Amount, the Court should adjourn or stay this proceeding pending compliance with that condition.

2. [106]

   TQM acknowledged that, if interlocutory relief is granted conditional upon payment into Court of the Adjudicated Amount and East End does not comply with this condition, then TQM will be at liberty to exercise its rights under the SOP Act to obtain an adjudication certificate and to file it as a judgment, and to take steps by way of enforcement.

3. [107]

   Nonetheless, TQM submitted that, in such circumstances, “the court would adopt its usual practice of not granting a hearing date for [East End’s] proceedings unless and until the money is paid into court in any event”.

4. [108]

   In support of this submission, TQM referred to three authorities.

5. [109]

   The first was the decision of Bergin J in Tombleson v Dancorell [2007] NSWSC 1169. Her Honour’s reasons at [25] suggest that the primary motivation in her Honour’s decision to order a stay was her concern that the plaintiff in that case had sought by its pleadings to “avoid the triggering of s 25(4) of the Act”. There was no submission in the present case that East End was seeking, by bringing its judicial review application, to circumvent the operation of the SOP Act, such as to amount to an abuse of process.

6. [110]

   The second was the decision of Hammerschlag J in Nazero. In that case, his Honour observed (at [27]) that an order that the plaintiff pay the adjudicated amount into Court pending final determination of its judicial review application “is purely interlocutory and procedural”, and will not finally determine any party’s rights, and that the Court has power to make such orders as part of its inherent power to control its own processes. His Honour said (at [33]) that:

7. [111]

   Hammerschlag J addressed the factors relevant to the exercise of the discretion at [40]-[42], as follows:

8. [112]

   Although his Honour referred to s 25(4)(b) of the SOP Act in this passage, I do not consider that his Honour’s reasoning is critically dependent on that provision. In particular, his Honour identifies that the starting point of the exercise of the discretion whether or not to stay the proceeding pending payment into Court is “the general policy aims of the Act” (which I have addressed above), as well as the “specific aims of pertinent sections”. Although one of those pertinent sections is s 25(4)(b), the presence of that provision in the SOP Act does not give rise to any “implication that the discretion of the Court to make the kind of orders sought here is narrowed”. Instead, the fact that the discretion is removed only in the particular circumstances where s 25(4)(b) applies indicates that there is discretion, where s 25(4) does not apply in terms, whether or not to order a stay in the circumstances of the particular case.

9. [113]

   Further, as Hammerschlag J observed (at [44]), it is not apt to describe a requirement to pay into Court an amount the subject of a statutory obligation to pay, pending a challenge to that obligation, as amounting to “a fetter on the right to make the challenge”. His Honour accepted that it “may be a practical inhibition, depending on the specific financial circumstances of the challenger”, and that this “could be a factor relevant to the exercise of discretion”. However, his Honour noted that, in that case, Nazero led no evidence of hardship. His Honour accepted that Nazero’s application had reasonable prospects of success and noted that the proceeding would be disposed of expeditiously, but concluded (at [46]) that, in the circumstances of that case, “it would be a manifestly unfair use of the Court’s process to permit Nazero to mount its challenge without having to pay the money into Court”.

10. [114]

    The third case on which TQM relied was Smith v Impero Pacific Group Pty Ltd t/as Impero Constructions [2024] NSWSC 1234. In that case, the evidence before the Court was that the plaintiff, Ms Smith, who sought to set aside an adjudication determination in favour of the defendant, had “no present ability to pay any money into Court or to pay into Court the amount of the adjudication” (at [16]). Stevenson J noted (at [25]) that this distinguished the circumstances of that case from Nazero, in which “there was no question of an inability to pay funds into Court”, and stated that:

11. [115]

    Stevenson J (at [27]) described the circumstances of that case as “finely balanced”, observing that “hardship will be caused to one party or other no matter what decision is made”. His Honour concluded (at [28]-[29]) that:

12. [116]

    There was a subsequent decision in the same proceeding, in which this stay was lifted by Stevenson J: Smith v Impero Pacific Group Pty Ltd t/as Impero Constructions (No 2) [2024] NSWSC 1316. His Honour noted (at [5]) that an important factor in his previous decision was his conclusion that an order staying the proceeding pending payment into Court by Ms Smith would likely not stultify the proceeding (because there was evidence that Ms Smith would have funds to make this payment when certain properties were sold). However, there was subsequently a change of circumstances, in that the defendant had served a bankruptcy notice on Ms Smith.

13. [117]

    His Honour concluded (at [11]) that as the defendant had chosen to serve a bankruptcy notice, there was no reason to think it would hesitate to serve a petition if an act of bankruptcy were to occur, and that if Ms Smith became bankrupt, “it is likely that these proceedings for all practical purposes will be stultified, as the proceedings could only then be continued if the trustee elected to continue the proceedings”.

14. [118]

    In the present case, East End has not established that it is not reasonably able to pay the Adjudicated Amount into Court, and therefore has not established that a requirement to do so would cause it financial hardship or would stultify the proceeding.

15. [119]

    The circumstances of this case are similar to those of Goodwin Street Developments Pty Ltd as trustee for Jesmond Unit Trust v DSD Builders Pty Ltd [2018] NSWSC 984. The defendant in that case referred to Nazero and sought an order that the adjudicated amount be paid into Court by the plaintiff, pending the determination of its application for judicial review. The plaintiff resisted such an order, on the basis that it did not have sufficient cash available to make such a payment. However, Stevenson J noted that the plaintiff was the trustee of a unit trust, with the units being issued to six persons who were described as “six partners” in the relevant development venture, and that there was no evidence as to the financial position of those partners, or as to why one or more of those partners could not advance funds to the plaintiff “to enable it to comply with what would be its usual obligation to pay into Court, as security for the application it now makes under the Act, an amount equal to the adjudicated amount” (at [9]). His Honour concluded (at [10]) that:

16. [120]

    Likewise, in the absence of any evidence in the present case regarding the financial position of the two ultimate owners of East End (the Julaura Family Trust and the Radayla Family Trust), I am not satisfied that East End cannot pay, or cannot reasonably pay, the Adjudicated Amount into Court, or that any requirement to pay the Adjudicated Amount would stultify the present proceedings, and accordingly I do not see any reason not to follow the Court’s usual practice and require that the Adjudicated Amount be paid into Court.

17. [121]

    For those reasons, I will make orders substantially in accordance with the orders proposed by TQM for disposing of East End’s application for interlocutory relief, including an order that East End pay TQM’s costs of the application.

18. [122]

    TQM proposed that the proceeding be listed for directions on 17 April 2026. Given the imperative for the proceeding to be disposed of expeditiously, I will bring forward the date for the directions hearing to the next List day, namely, Thursday, 2 April 2026. This is with a view to ensuring that (so long as the Adjudicated Amount has been paid into Court by that time, in accordance with the orders set out below), the proceeding can be given a hearing at the earliest available date.

19. [123]

    As noted above, I will also make an interim non-publication order in respect of these reasons for judgment, and will give East End a short period in which to make an application for an order under s 7(b) of the Court Suppression and Non-publication Orders Act in respect of specific parts of these reasons which refer to confidential material that is the subject of the non-publication order which has been made in relation to certain information in Mr Hawkins’ second affidavit.

20. [124]

    For those reasons, I make the following orders:

    1. (1)

       Upon the Plaintiff giving to the Court the usual undertaking as to damages and upon the conditions that, by 5pm on 1 April 2026, the Plaintiff:

    2. (2)

       Order that, if the conditions referred to in subparagraphs (a) and (b) of Order 1 of these orders are not complied with, these proceedings are stayed until further order.

    3. (3)

       Order that these proceedings are listed for directions in the Technology and Construction List on 2 April 2026.

    4. (4)

       Order, pursuant to s 10 of the Court Suppression and Non-publication Orders Act 2010 (NSW), that these reasons for judgment not be published to any persons other than the parties and their respective solicitors, until 5pm on 1 April 2026.

    5. (5)

       Direct that the Plaintiff file any application for a non-publication order pursuant to s 7 of the Court Suppression and Non-publication Orders Act 2010 (NSW) in respect of any part of these reasons for judgment before 4pm on 1 April 2026, identifying the specific paragraphs (or parts thereof) in respect of which such an order is sought, together with any submissions in support, with the intent that any such application will be determined on the papers.

    6. (6)

       Order that the Plaintiff pay the First Defendant’s costs of the Plaintiff’s application for interlocutory relief (including the costs of and incidental to the hearing on 18 March 2026 before Hammerschlag CJ in Eq).