Obtaining an adjudication determination is one thing, enforcing it is another
The recent decision in Harlech Enterprises Pty Ltd v Beno Excavations Pty Ltd [2025] NSWCA 5 offers significant insights for parties navigating payment disputes under the Building and Construction Industry Security of Payment Act 1999 (ACT) (SOPA). This case is just one in a string of proceedings raised between Harlech Enterprises and Beno Excavations in the courts of both NSW and the ACT.
This case sets a precedent for restitution when adjudication determinations that are registered as a judgment are subsequently overturned.
Background
In this case, Harlech Enterprises Pty Ltd (Harlech) obtained an adjudication determination against Beno Excavations Pty Ltd (Beno) for unpaid construction work under the ACT version of the security of payment Act, the Construction Industry (Security of Payment) Act 2009 (ACT).
The determination was entered as a judgment in the District Court of NSW (Adjudication Judgment), leading to a garnishee order for funds in the amount of $196,428.79 (Garnished Funds) being garnished from Beno’s bank account.
In separate proceedings, Beno challenged the adjudication the Supreme Court of the ACT, alleging jurisdictional errors. The Supreme Court of the ACT agreed with Beno and found that the adjudication determination was indeed affected by jurisdictional error and ordered that Harlech pay Beno $196,428.79 by way of restitution (ACT Decision).
By a further application by Beno, the District Court of NSW set aside the Adjudication Judgment and garnishee order and ordered restitution of the Garnished Funds together with interest (Primary Decision) on the basis of the ACT Decision.
Issue
Harlech challenged the Primary Decision in the Court of Appeal of NSW and argued that the judge in the Primary Decision erred in finding that the Adjudication Judgment was void, and that Beno was entitled to restitution.
Held
The Court of Appeal held that Harlech had failed to demonstrate any error in the Primary Decision. Furthermore, it found the primary judge did not err in ordering restitution of moneys paid under the garnishee order as the Adjudication Judgment had been set aside.
Implications
For parties to the adjudication process under SOPA or the NSW equivalent, this case highlights that:
- adjudication determinations can be contested on grounds of jurisdictional error (this is not an easy hurdle to overcome); and
- if a judgment based on an adjudication determination is set aside due to jurisdictional error, respondents have a right to restitution of any funds paid under that judgment.
Key takeaway
This decision serves as a critical reminder to respondents to be diligent in reviewing determinations and challenging them if they are flawed.
If you would like to discuss this article with us, please contact Simon Mok, partner, or Rebecca Salib, associate on (02) 9261 5900.