Last Updated on 02/03/2026 by Damin Murdock
In the fast-paced world of the Building and Construction Industry Security of Payment Act 1999 (the Act), adjudication is designed to provide “interim” payment relief. However, speed does not override the fundamental right to natural justice. If an adjudicator determines a dispute on a basis that neither party raised, they risk having their entire decision declared void by the Supreme Court.
Case Analysis: Lahey Constructions v Newbold Build Haulage [2013] NSWSC 215
The dispute in Lahey Constructions Pty Ltd v Newbold Build Haulage Pty Ltd centered on a classic construction problem: adverse site conditions.
The Background: Lahey engaged Newbold for construction works under a contract where Newbold accepted all liability for extra costs if adverse site conditions were discovered. During excavation, Newbold found remains of a previous building, requiring extra work. Despite the contract terms, Newbold issued a quotation for a “Variation,” which Lahey accepted. However, when it came time to pay, Lahey relied on the original contract terms and refused.
The Adjudication “New Argument”: Newbold applied for adjudication. During the process, the adjudicator independently advanced a “New Argument”, a legal theory that neither Lahey nor Newbold had raised in their submissions. After asking the parties to respond to this new theory, the adjudicator found in favor of Newbold. Lahey appealed to the Supreme Court.
The Judicial Decision: The Court held that the adjudication determination was void. It established that an adjudicator is not a judge and breaches the requirements of natural justice when a material issue is determined on a basis not advanced by either party. Even if the adjudicator asks for submissions on their “new” theory, the act of stepping outside the arguments presented by the parties can be a jurisdictional error.
The “Natural Justice” Test for Adjudication
For an adjudication determination to be valid, the adjudicator must:
-
Consider the arguments put forward: They cannot simply ignore a primary defense or submission.
-
Stick to the parties’ playing field: They cannot “descend into the arena” and invent a new legal path to a decision that neither side contemplated.
Practical Lessons for the Commercial Building Industry
If you are navigating the Security of Payment Act, the Lahey decision offers two critical lessons for your strategy:
-
Front-Load Your Arguments: Ensure that your adjudication application or payment schedule response contains every relevant legal and factual argument. Do not rely on an adjudicator to “find” the right legal path for you.
-
Identify Adjudicator Overreach: If you receive an unfavorable determination, review it carefully. Did the adjudicator ignore your key evidence? Or did they make their decision based on a logic that wasn’t in the paperwork? If so, the determination may be set aside by the Court.
How Leo Lawyers Can Help
Security of Payment disputes are won or lost on the precision of the submissions and the conduct of the adjudicator. At Leo Lawyers, we provide the applied legal judgment to manage adjudication applications and challenge determinations that deny our clients natural justice.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube, LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article, and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
