30 September 2014 Take the money and run...

By Swaab Attorneys


Building, engineering and related contracts often include a pre-agreed dispute resolution mechanism to cater for those occasions when things aren't going too well. So, when the proverbial hits the fan and disputes are afoot, the question is whether a contractor, subcontractor or consultant can also pursue their statutory remedies under the Security of Payments Act.

In the recent case of Civil Mining & Construction Pty Ltd v Isaac Regional Council, the Queensland Supreme Court found that there was no impediment to the contractor pursuing its interim remedies under the Building and Construction Industry Payments Act (Qld) 2004 (the Act) alongside a dispute resolution process under the contract. 


Isaac Regional Council (Isaac) and Civil Mining & Construction (CMC) entered into a contract for the construction of substantial road works in North Queensland.
There had been an extensive history of disputes on the project and on 11 August 2014, CMC served its final payment claim for a substantial amount of money. Unsurprisingly, Isaac submitted a payment schedule for a lot less than the amount claimed and submitted that the use of adjudication, when the contractual dispute resolution process was underway, was an abuse of process. That is, the dispute process under the contract would deal with the same matters as adjudication, therefore, adjudication under the Act shouldn't be allowed.
CMC denied it was abusing its entitlements under the Act and said it would proceed to adjudication in respect of its final payment claim. Issac stated that a combination of two previous failed adjudications, Issac's dispute of CMC's claim and CMC's pursuit of the dispute through the contractual process made any adjudication under the Act an abuse of process.
The courts quickly disposed the first two issues in favour of CMC and went on to address the third issue. That is, Issac sought to rely on previous decisions which held that in certain circumstances where the contractual dispute process had been engaged, adjudication was considered oppressive.
The courts looked closely at the authorities Isaac cited and found that those determinations were made against very different factual backgrounds. In the case of Falgat v Equity Australia, the judge restrained a builder from pursuing its statutory remedies under the equivalent NSW Act where the builder had also sued for moneys owing. In J Hutchinson v Galform, the judge granted an injunction where the subcontractor had agreed that the legal proceedings should determine the subcontractor's right to be paid.  Neither of these were the same as the present matter so the courts distinguished them from the dispute at hand.

The decision

The court found that the purpose of the Act was for CMC to have the benefit of the expeditious nature of the statutory process in pursuit of a valid claim. In addition, there was no impediment to the concurrent pursuit of the process under the contract and under the Act.
The court also found that as an adjudicator's decision is an interim one and does not finally resolve the rights of the parties under the contract, the process under the Act may be pursued concurrently with the dispute mechanism under the contract.

The lesson

When faced with a long and arduous dispute, there could be circumstances in which that dispute, or part of that dispute, could be determined by adjudication on an interim basis, which could see some cash in the door in the interim.

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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