SE Ware Street Dev Pty Ltd v Kwik Flo Pty Ltd [2025] NSWSC 1060
Under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act), an adjudicator’s determination that he has no jurisdiction to decide on a payment claim is still a determination made under the Act. The recent decision in SE Ware Street Dev Pty Ltd v Kwik Flo Pty Ltd [2025] NSWSC 1060 confirms that once an adjudicator has decided he has no jurisdiction to determine the payment claim, it is not open to a contractor to say that the adjudicator has not made any determination of the payment claim under the Act.
Background
The SE Ware Street Dev case concerns a joint venture agreement for the development of a residential and commercial project. The parties failed to complete the project and disagreed over the terms of the agreement. Kwik Flo claimed it had carried out construction work and submitted a payment claim, then an adjudication application under the Act to seek payment for the value of the construction work and loss of profits.
SE Ware Street, which owns the land to be developed, contended that under the agreement, Kwik Flo agreed to receive a share of the proceeds of sale as consideration for the construction work. This means that Kwik Flo’s payment claim would fall outside the operation of the Act, as according to section 7(2) of the Act, the Act does not apply to a construction contract the consideration of which is not calculated by reference to the value of construction work (e.g. the contractor would receive profits or ownership of the project).
The first adjudicator accepted SE Ware Street’s position and decided that he had no jurisdiction to determine the payment claim. Kwik Flo then purported to withdraw the first adjudication application and make a new application with another adjudicator nominating authority. A second adjudicator was appointed and this time Kwik Flo received a favourable outcome. The second adjudicator decided that Kwik Flo was entitled to payment of $1.2 million in connection with the construction work it carried out.
SE Ware Street then challenged the determination by the second adjudicator in Court, contending that it was void for abuse of process, and sought an order of certiorari to quash the determination.
Decision
The Court has no difficulty in finding that the no jurisdiction determination of the first adjudicator is still a valid determination under the Act. The first adjudicator considered the payment claim, the payment schedule, the adjudication application and the adjudication response and came to the conclusion that the Act did not apply to the contract.
This contrasts with the case where an adjudicator, as a preliminary issue and before receiving an adjudication response, indicated to the parties that the matter fell outside his jurisdiction. In such case, the adjudicator’s comment on a jurisdiction issue would not be construed as a determination under the Act.
Can an adjudication application be withdrawn
Another point confirmed by the Court is that a claimant cannot withdraw an adjudication application that has been validly determined. This is distinguished from the scenario where a determination is invalid and has been quashed, in which case the adjudication application could be withdrawn (subject to the provisions of the Act about the time for withdrawal).
Key takeaway
A contractor engaging in a joint venture or other non-typical construction arrangements must understand whether its agreement falls within the operation of the Act. Jurisdiction issues should be considered when issuing a payment claim because once a determination has been made indicating an adjudicator has no jurisdiction over the payment claim, the matter cannot be adjudicated again.
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