York Property Holdings Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2025] QCA 39

David Pearce  |  Sarah Cahill  |  Jack Gibney

Key takeouts

A contractor may continue to be held out of funds even after receiving a successful adjudication decision and successfully defending a jurisdictional challenge to the decision, if the principal can demonstrate:

• there is a serious question to be tried; and
• the balance of convenience favours the granting of an injunction.

Contract terms and escrow arrangements that provide for the payment of adjudicated amounts will not necessarily prevent an injunction restraining payment. 

Facts

In August 2021, York Property Holdings Pty Ltd (York) engaged Tomkins Commercial & Industrial Builders Pty Ltd (Tomkins) to construct a multi-storey residential building at Main Beach, Queensland. The parties also entered into an Escrow Deed for an escrow amount of $25M. Following disputes over progress payments, Tomkins lodged an adjudication application under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act). The adjudicator determined that York was liable to pay $16.8M to Tomkins (adjudication decision).   

Primary decision in the Supreme Court

York challenged the adjudication decision in the Supreme Court alleging jurisdictional error, and sought an injunction to prevent its enforcement. On 18 February 2025, interim orders were granted restraining disbursement of funds from escrow. These were extended to 25 March 2025, when the interlocutory application was heard.

York’s challenge resulted in an adjusted adjudication amount of $12.7M being payable to York.

We summarised the primary decision in: Severance – not just a cult TV show – Construction Law Made Easy.

Appeal, interlocutory hearing and injunction

York appealed the primary decision and sought an injunction to prevent Tomkins from accessing escrow funds pending the determination of the appeal. 

York advanced two grounds of appeal:

1. whether the adjudicator correctly refused to give effect to contract clauses that York argued merely suspended payment rights, rather than extinguishing them; and
2. whether the adjudicator misapprehended the scope of their powers by failing to consider certain items under section 88(2) of the BIF Act.

This decision however, concerned Tomkins’s application for an injunction with respect to the escrow funds. The Escrow Deed permitted Tomkins to request the release of funds in circumstances where an adjudication decision was made in Tomkins favour.  

Whether an injunction will be granted pending an appeal, is informed by the general principles governing the granting of interlocutory injunctions including the demonstration of a serious question to be tried and the balance of convenience.

York contended that there was a serious question to be tried and the balance of convenience favoured granting the injunction it sought.  Specifically, York argued that there was no evidence that Tomkins would suffer harm from being held out of the adjusted adjudicated amount, other than the loss of the use of the money. York also indicated that it was willing to pay the adjusted adjudicated amount into court and provide an undertaking as to damages.

Tomkins opposed the application.  While Tomkins conceded that York’s appeal was arguable, it submitted that the balance of convenience weighed against granting an injunction as the Escrow Deed contained a provision that specifically entitled Tompkins to be paid from the escrow funds on the presentation of an adjudication decision, notwithstanding any application to overturn the adjudicated amount.  Under the Escrow Deed, York accepted the risk of not receiving payment while any dispute over an adjudication decision was being resolved, including any legal proceedings challenging the decision’s validity.  Tomkins also argued that the policy reason behind the BIF Act, which seeks to preserve the cash flow to a builder even if there is a risk that the builder may ultimately be required to refund the monies, was relevant to the question of convenience.

Decision

The Court determined that although Tomkins was prima facie entitled to the adjusted adjudicated amount, its interests were adequately protected by the escrow arrangement and York’s undertakings.  York’s application for an injunction was granted on the basis that York’s appeal was arguable, meaning there was a serious question to be tried and the balance of convenience favoured York.

The key factors that tipped the balance of convenience in York’s favour included:

1. the Court’s ability to hear the appeal within eight weeks, which was estimated to take two to three hours.
2. the fact that the adjusted adjudicated amount was secured in an escrow account, which was earning interest; and
3. York’s willingness to pay the adjudicated amount into Court and provide undertakings as to damages.

We will provide a further update following the publication of the Court of Appeal’s decision.