East End Stage 2 Pty Ltd v TQM Design & Construct Pty Ltd & Ors [2026] NSWSC 299

Andrew Hales |  Michael Sywak

Key takeouts

The NSW Supreme Court has clarified the circumstances in which it might depart from the ‘usual practice’ of requiring payment of the adjudicated amount into court if it is requested to grant an interlocutory injunction restraining a successful claimant from enforcing an adjudicator’s determination pending judicial review.

Applicants seeking such an injunction must clearly evidence an inability to pay the adjudicated amount. Commercial decisions requiring the prioritisation of funds do not render an applicant unable to pay. Where an applicant proffers alternative security, it must adduce evidence as to the adequacy of that security.

Facts

These proceedings relate to a contract for the construction of a mixed-use development in Newcastle between East End Stage 2 Pty Ltd (developer) and TQM Design & Construct Pty Ltd (builder).

In January 2026, the builder served a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) for $13,967,901. The developer served a payment schedule stating that the builder was obliged to pay the developer $2,234,000. A subsequent adjudicator’s determination required the developer to pay $6,063,316.

The developer sought orders quashing the determination and, by way of interim relief, an interlocutory injunction to restrain enforcement of the determination.

The builder did not oppose the injunction provided that the court required payment of the adjudicated amount into court.

It was common ground that it is the ‘usual practice’ of the court to impose such a condition on the grant of interlocutory relief of the type sought, but that this usual practice is not inflexible. The builder acknowledged that a relevant factor that might result in the court not following the usual practice would be if an insistence on that practice would stultify the proceedings.

Instead of paying money into court, the developer offered to provide a mortgage over its real property assets and a guarantee from a parent entity.

Decision

The court held that the developer failed to establish a sufficient basis to depart from the ‘usual practice’. Accordingly, the court granted the developer an interlocutory injunction restraining the builder from requesting and filing an adjudication certificate or taking any steps to enforce any judgment under s 25 of the SOP Act, conditional upon the developer paying the adjudicated amount into court.

The central question was whether the balance of convenience justified a departure from the ‘usual practice’. The developer relied on 5 matters to support its assertion that the balance of convenience favoured such a departure. The court addressed each of these matters separately.

1. The developer contended that it was not reasonably able to pay the adjudicated amount due to cash flow limitations arising from the concurrent acquisition of another property. The court found that there was insufficient evidence to support this assertion. Specifically, the developer led no evidence of any contract terms or financing arrangements that illustrated it could not reasonably pay the amount. The court found this constraint to be a commercial preference, and not a reason to depart from the usual practice. This finding was further supported by the absence of any evidence as to the financial position of the holding trust of the developer.
2. The developer proffered alternative security in the form of a guarantee from a holding trust and a mortgage over the terraces built for the project. As the developer led no evidence regarding the financial position of the holding trust, and there was a serious question as to whether the sale of the terraces was prohibited at law due to the works being uninsured, the court was not satisfied that the policy of the SOP Act was best served by accepting these forms of alternative security.
3. The developer argued that the builder had already been paid for the work the subject of the payment claim, by reason of payments made by a third party to the builder on the developer’s behalf. .The court noted that the issue on the application was solely whether the court should require payment of the adjudicated amount into court as a condition of interlocutory relief, and not the true amount owing under the contract. Because this second question was a substantive contractual question, the court did not consider it relevant to whether it should depart from the ‘usual practice’.
4. The developer submitted that it was ready to proceed to hearing with ‘the utmost expedition’. The court did not find this persuasive, noting that expedition is necessarily contemplated by the SOP Act.
5. The developer submitted that it would suffer substantial commercial harm if an injunction was not granted. The court, upon consideration of its previous findings, held that the developer had not evidenced an inability to avoid the consequences of a judgment being entered under s 25 of the SOP Act, and was not persuaded by this point.

The court also considered whether a stay of the proceedings until payment was made would be appropriate. Because the developer had not demonstrated an inability to pay the adjudicated amount, there was no evidence that making such an order would stultify the proceedings. Accordingly, the court ordered that, in the event of failure to comply with the condition of payment into court, the proceedings be stayed until further order.