20 April 2026
14 min read
#Construction, Infrastructure & Projects
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Contested claims are determined by an adjudicator within that period, with power to determine the value of the claim on an interim basis. There is very little scope for appeal and an underlying philosophy of ‘pay now, argue later’, with the solvency risk sitting up the chain.
Each year brings further judicial consideration and legislative developments that shape how the SOP Act operates. This article reviews key developments from the past year and considers their implications for industry participants through 2026. It also includes insights from our recent webinar, which you can watch on-demand here.
The most recent quarterly data (July to September 2025) on adjudication activity and the most recent full year data (ending 30 June 2025) both show continued confidence in the adjudication system, with a steady volume of around 1,000 payment disputes being diverted away from the courts (at least in the first instance). Around half of these continue to be ‘second chance’ adjudications, where claimants elect to go to adjudication despite no payment schedule having been issued, rather than seeking summary judgment.
The average claim amount ($569,000) remains squarely in the medium project subcontractor space, but the outliers (largest $37 million, smallest claim $600) demonstrate that no claim is too big or too small for this process.
Adjudication continues to be primarily used by subcontractors against head contractors, and by head contractors against principals.
One startling observation from the Q1 2026 data is the proportion of claimants who were awarded 100% of their claim. Across all claim size bands, just under 50% of claimants received their full claim amount – an emboldening statistic for claimants, but a sobering statistic for respondents.
2025 was a very quiet year. In fact, to have anything at all to say on this topic, we must tell you about something that didn’t happen and something that is going to happen.
What didn’t happen – review mechanism
There had been proposed legislation to introduce a (WA style) review mechanism into the SOP Act, which can be found in the Building Legislation Amendment Bill 2022. However, when that Bill passed as the Building Legislation Amendment Act 2023, it did not include the changes to the SOP Act.
The possibility remained that the former Bill’s changes to the SOP Act would be picked up by other bills in the reform suite. Throughout the first half of 2025, indications were that the suite would progress through the NSW parliament later in the year. However, by late November 2025, the reform package was quietly abandoned altogether in favour of a different set of productivity reforms for the industry.
The review mechanism could yet resurface, particularly after the WA experience can be reviewed.
In early 2026, a very discrete change was proposed in the Fair Trading and Building Legislation Amendment Bill 2026, which at the time of writing, is still working its way through parliament.
The Bill proposes a change to just one word in the SOP Act – replacing ‘business’ in ‘business days’ to ‘working’, while leaving the underlying definition unchanged.
Across other states and territories, only the Northern Territory uses working day instead of business day in its security of payment legislation. NSW is not falling in line with the territory, rather, the justification is that the change is for consistency with the Interpretation Act (1987) NSW.
Those with standard documents that adopt the SOP Act’s terminology will want to update them once the change takes effect.
Although there were few groundbreaking decisions last year, they reinforce the philosophy underpinning the SOP Act.
CBEM Holdings Pty Ltd v Sunshine East Pty Ltd [2025] NSWCA 250
CBEM performed earthworks for a residential project under a trade contract. The principal contractor, Sunshine East, engaged ASY as the construction manager. ASY was appointed as Sunshine East’s agent to assess and approve payment claims.
CBEM issued four payment claims in which it asserted that 53% of the contracted works had been completed. Sunshine East made the payments in accordance with CBEM’s payment claims, but later argued that the work completed was closer to 25%. Sunshine East terminated the contract and brought proceedings in the District Court, where the Court awarded it $452,961.44, agreeing that only 25% of the work was complete.
CBEM appealed the decision, arguing that once the payment claims were assessed and approved by ASY, that approval was final and binding. The Court of Appeal dismissed the appeal and upheld the order requiring repayment to Sunshine East.
The Court of Appeal’s reasoning was that:
Key takeaway
This decision reinforces the SOP Act’s ‘pay now, argue later’ philosophy, in that payments made under the Act are not final and binding as to the parties’ rights. A party can claw back overpayments if it is determined that the other party has been paid money to which it was not entitled.
Roberts Co (NSW) Pty Ltd v Sharvain Facades Pty Ltd (Administrators Appointed) [2025] NSWCA 161
Sharvain (subcontractor) submitted a payment claim for about $3.2 million to Roberts (head contractor). The claim was sent electronically via Payapps at 7:18pm on Friday, 28 February 2025. The subcontract contained a clause deeming documents sent after 5pm as served at 9am on the next business day. Roberts relied on this clause and served its payment schedule on 17 March 2025, believing that it was within 10 business days from 3 March 2025 (being the next business day after 28 February 2025).
In the Supreme Court, the primary judge ruled that the payment claim was validly served on Friday, 28 February. Therefore, the payment schedule was served outside of the 10 business day requirement under the SOP Act and was out of time. The primary judge held that the deeming clause was void under section 34 of the Act, because it modified the meaning of a business day. If the clause was not void, the parties could theoretically postpone the effect of service by any number of days, which defeats the purpose of the Act.
The Court of Appeal dismissed an appeal, agreeing with the primary judge that the payment claim was served on Friday, 28 February 2025. The Court of Appeal held that the overall effect of section 14 of the SOP Act was that the time for service of payment schedules could be contractually shortened, but never lengthened.
Key takeaway
The decision puts parties on notice to carefully consider deeming clauses which may be held to be contracting out of the SOP Act. A cautious respondent should take the most conservative interpretation available, to avoid payment schedules being considered as served out of time.
Claire Rewais and Osama Rewais t/as McVitty Grove v BPB Earthmoving Pty Ltd [2025] NSWCA 103
The Rewais engaged BPB to perform earthworks under an oral contract. BPB issued a payment claim on 24 April 2024 under the SOP Act, and later a notice of intention to apply for adjudication. The Rewais claimed they never received the payment claim or the notice until their solicitors forwarded them on 11 June 2024. The Rewais then submitted a payment schedule on 18 June 2024 scheduling $0 dollars.
The adjudicator found in favour of BPB determining that the Rewais had been validly served with the payment claim on 24 April 2024.
The Rewais commenced proceedings in the Supreme Court which found that service of the payment claim did not occur until 11 June 2024. The Supreme Court was not satisfied that the 24 April email amounted to valid service under section 31 subsection (1)(d) because:
However, the Court held that this did not amount to a jurisdictional error, accordingly the adjudication determination could not be set aside.
The Rewais appealed. The Court of Appeal disagreed with the primary judge and held that the payment claim was indeed validly served on 24 April 2024.
The Court held that:
Key takeaway
Operating multiple email addresses can be convenient to quarantine communications by topic, but it presents a risk in terms of monitoring for time-critical communications, such as payment claims, and subsidiary addresses may be considered valid for service through conduct.
Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd [2025] NSWCA 135
Manariti carried out plumbing works on a construction project for Universal. Manariti served a payment claim for $221,901, which Universal did not pay and argued was invalid, because of defects in how the claim was described and the amount claimed. Because of those alleged defects, Universal did not submit a payment schedule.
Manariti commenced proceedings in the District Court and applied for summary judgment, arguing there was no real defence because the payment claim was valid and Universal failed to serve a payment schedule within time. The primary judge refused summary judgment, finding that there was a triable issue about whether the payment claim was valid.
Manariti was successful on appeal, the Court of Appeal holding:
Orders were made by the Court of Appeal for summary judgment.
Key takeaway
A payment claim does not need to be technically perfect, it just needs to sufficiently identify the work done and the amount claimed. Relying on imperfections to explain failure to serve a payment schedule is highly risky in the context of the aims of the SOP Act.
SE Ware Street Dev Pty Ltd v Kwik Flo Pty Ltd [2025] NSWSC 160
Kwik Flo carried out plumbing and construction works for SE Ware. Kwik Flo served a payment claim for about $3 million and applied for adjudication. The adjudicator determined that he had no jurisdiction and could not determine the claim, finding the agreement fell within the section 7(2)(c) exception (contracts where payment is not calculated by reference to the value of construction work).
Kwik Flo withdrew that adjudication application and lodged a second adjudication application. A different adjudicator made a determination in Kwik Flo’s favour of about $1.2 million.
SE Ware commenced proceedings seeking to prevent enforcement of the second determination, arguing the process was improper.
The Court decided that, on the facts (which included that an adjudication response had been lodged in the first adjudication), the first adjudication was a section 22 determination. There was no entitlement to withdraw after the determination had been made. In circumstances where the first determination was valid, it would be an abuse of process to enforce the second determination.
Orders were made restraining Kwik Flo from enforcing the second determination. This was recently upheld on appeal.
Key takeaway
The policy rationale of the SOP Act once again bears upon the decision. The regime seeks to present re-litigation of the same issues and promote cashflow. Not treating a ‘no jurisdiction’ determination as a determination would be inconsistent with that policy rationale.
Builtcom Constructions Pty Ltd v VSD Investments Pty Ltd [2025] NSWCA 93
Builtcom (builder) entered a construction contract with VSD (principal) for a 30‑storey mixed‑use development. An adjudication was commenced in relation to Builtcom’s final payment claim of around $30 million. An adjudicator determined that VSD owed Builtcom about $8.5 million. However, the adjudicator refused to value a number of claimed items on the basis they were not “duly made” because Builtcom’s supporting submissions contained material not included in the payment claim. Both parties sought judicial review of aspects of the adjudication.
The primary judge found an error of law, but held that it did not amount to a jurisdictional error. The judge also found that whether a submission was “duly made” was not a question which was subject to judicial review.
The Court of Appeal upheld the decision but did not agree entirely with the primary judge’s reasoning. The Court considered that whether a finding on whether a submission was duly made was amenable to judicial review depends on how that opinion was formed and whether it was a result of jurisdictional error. In this case, that error was merely an error of law.
Key takeaway
The decision leaves open the possibility, in different circumstances, of a duly made challenge being considered a jurisdictional error. This is significant in circumstances where appeal avenues from adjudication decisions have progressively shrunk.
DECC Credit Pty Ltd v Australia Wide Lining Pty Ltd [2025] NSWSC 826
A contractor argued the adjudicator made errors in determining a subcontractor’s claim and that payment should be restrained due to a risk the subcontractor might become insolvent. An injunction was granted on condition that the amount of the determination (being $1.7 million) be paid into Court.
Subsequently, the Court considered whether to continue the injunction preventing enforcement.
The Court agreed there were serious questions to be tried, but refused to maintain the injunction in whole, emphasising the SOP Act’s ‘pay now, argue later’ policy. Significantly, there was no evidence of actual insolvency.
Therefore, the injunction was lifted to the extent of $1.4 million. The restrained balance reflecting an ‘over-award’ amount.
Key takeaway
Courts will rarely restrain enforcement of an adjudication determination, strong evidence of insolvency risk or jurisdictional error is required.
Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114
The decision concerned enforcement of a judgment obtained after an adjudication determination under the SOP Act. The owner challenged the underlying contract and had commenced other proceedings alleging duress, undue influence and unconscionable conduct, relating to a deed of variation.
The Court granted a stay of execution of the judgment on the condition that the owner pay the amount of the judgment into Court.
The builder appealed, however the Court of Appeal dismissed the appeal and upheld the stay.
Key takeaway
Although the SOP Act promotes ‘pay now, argue later’, courts may grant a stay of a judgment in exceptional circumstances. Here, there was a strong prima facie case challenging the validity of the underlying contract.
Challenges are becoming more fact-driven, and although the arguments on each side have merit, decisions continue to land on the side of supporting the underlying policy of the SOP Act. We can see from Kwik Flo that this is not always with the adjudication claimant. The concept of keeping the policy paramount is a particular feature of the interpretation of the legislation, perhaps more than any other.
Looking forward, we are in some tricky economic times. Rising interest rates, rising prices and an oil shock, all putting cost pressure on project delivery. This is ripe territory for slow payments, contractors clawing projects back into the black by pushing variations and, arising from those factors, more disputes.
It is now time for everyone to be across the legislation that can help ease payment pressures. We expect to see an uptick in applications for solvency-based enforcement challenges and more granular guidance from the courts as to permissible circumstances.
Our national construction team provides practical support for clients navigating the SOP Act, from advising on preparing or responding to claims to drafting contracts to manage security of payment risks. If you have any questions regarding this article, please contact us here.
For those operating in Victoria, far-reaching changes to the Building and Construction Industry Security of Payment Act 2002 (VIC) are now in effect. See our summary of the important changes here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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