Staying enforcement of an adjudication decision in Queensland

In Taringa Property Group Pty Ltd v Kenik Pty Ltd [2024] QSC 327, the Supreme Court of Queensland considered whether a principal could obtain a stay on the enforcement of an adjudication decision—despite owing $4.2M under the BIF Act.

The default position is that there will not be a stay

The Court confirmed that a stay should not be granted lightly, as it detracts from the primary purpose of the BIF Act: ensuring cash flow for contractors ([16]). The applicant bears a heavy burden in proving why a stay should be granted ([15]), and the default position is that stays are not granted ([17]).

When will a stay be granted?

Applying RJ Neller Building Pty Ltd v Ainsworth [2008] QCA 397, the Court reaffirmed that the mere risk of a contractor being unable to repay is not sufficient. However, examples where a stay may be appropriate include:

1. where the contractor has engaged in tactics designed to delay the ultimate determination of rights, unfairly increasing the principal’s exposure to insolvency risk ([18]);

   
   

2. where the contractor has restructured its financial affairs to increase the principal’s risk of non-repayment ([18]);

   
   

3. where the contractor is already in some form of external administration, as in Queensland Bulk Water Supply Authority v McDonald Keen Group Pty Ltd (in liquidation) (2009) 26 BCL 360 ([19]).

The Court considered whether a “certainty” or “real risk” test should be applied, ultimately concluding that neither was apt. It is the balance of convenience that is relevant ([21]-[22]).

The application of the rule to the circumstances of this case

The Court weighed the following factors:

1. the adjudicator had already ruled in favour of the contractor ([25]);

   
   

2. the merits of the parties' positions (although neutral in this case) ([26]);

   
   

3. the prima facie position is against granting a stay. Also the impact to the contractor of the stay ([27]);

   
   

4. the applicant’s role in causing the contractor's financial distress ([28]);

   
   

5. the likely length of any stay ([29]);

   
   

6. the effect of a stay on other creditors ([30]);

   
   

7. the applicant’s undertaking as to damages and related financial worth ([44] et seq).

The Court ultimately found a very high risk that, if the stay was not granted, and it was later determined that the contractor was not entitled to the adjudicated amount, the contractor would be unable to repay. As a result, what was intended by the BIF Act to be an interim payment would effectively become a final and unrecoverable payment ([31]). So in the end, a stay was ordered. 

The contractor has since been wound up in insolvency in a separate decision of the Court.

Insight

This decision reinforces that while stays remain the exception rather than the rule, they can be granted where there is a significant risk of non-repayment. The case provides useful guidance for principals considering whether to seek a stay and highlights the heavy evidentiary burden they face.