Major Projects & Construction 5 Minute Fix 132: Queensland statutory trust accounts; retention moneys; adjudicated debt; arbitral awards against foreign States.

Queensland Government pauses rollout of statutory trust accounts

The Queensland Government has paused the commencement of the next phases rolling out the trust account framework under the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act). Phase 3 and 4, originally scheduled for 1 March 2025 and 1 October 2025, would have expanded the range of eligible construction contracts covered by the framework. Read more about what this means for you in our earlier Alert.

Retention moneys can be claimed under the SOP Act – Victoria aligns with its East Coast counterparts

Conflicting case law has meant that Victorian contractors have faced uncertainty about whether they can make a payment claim to release retention moneys under the Building and Construction Industry Security of Payment Act 2002 (Vic) (Victorian SOP Act). That can be contrasted with Queensland and New South Wales, where the SOP legislation in those states explicitly allows contractors to claim retention moneys as part of a payment claim.

In the recent decision of JG King Project Management Pty Ltd v Hunters Green Retirement Living Pty Ltd [2024] VSCA 310, the Victorian Court of Appeal concluded that a claim by the applicant builder for the release of retention moneys could be pursued under the Victorian SOP Act. Claims for the release of retention moneys were claims for "construction work", not claims for security, and so enlivened the Act.

Significant reforms to the SOP Act are in the pipeline, which, if enacted, will bring Victoria into greater alignment with other States on this issue. The Victorian Government has supported amending the SOP Act (section 14) to provide an express entitlement to claim retention money.

To stay or not to stay: balancing the BIF's policy objectives

Convincing a court to stay enforcement of an adjudicated debt is difficult, as it conflicts with the primary purpose of security of payment legislation: improving cash flow for contractors. In Taringa Property Group Pty Ltd v Kenik Pty Ltd [2024] QSC 327, Justice Hindman ordered a stay in the enforcement of an adjudication determination under the Queensland Building Industry Fairness (Security of Payment) Act 2017 (BIF Act). The judgment illustrates the factors to be taken into account in deciding to displace the presumption stemming from the "pay now and argue later" policy of the Act, that "in most cases no stay should be granted".

Justice Hindman weighed both parties' solvency risks from granting or not granting a stay. The table below summarises the balancing exercise between the risk of the principal's (TPG's) non-recovery of BIF payments and the cash flow consequences for the contractor (Kenik) if payment was not received promptly under the BIF Act.

Ultimately, her Honour stayed enforcement of the judgment debt due to the "very high risk" that TPG would be able to recover the interim payment of $4 million from Kenik if the court ultimately found that Kenik was not entitled to the adjudicated amount. Justice Hindman observed that while a high threshold is needed to displace the presumption against the grant of a stay, actual insolvency or being under external administration is not required.

Immunity rules – Federal Court finds no jurisdiction to enforce arbitral award

With tariffs and trade wars in the global spotlight, the Federal Court of Australia's judgment in Republic of India v CCDM Holdings, LLC [2025] FCAFC 2 provides a reminder of the complexities and challenges of enforcing commercial agreements and arbitral awards involving foreign States.

CCDM Holdings sought to have an arbitral award against India recognised and enforced by Australian courts. The award arose from a dispute as to India's alleged breaches of a bilateral investment treaty and its annulment of an agreement to lease the capacity of two Indian satellites.

The court's principal consideration was whether, by ratifying the New York Convention on the Recognition and Enforcement of foreign Arbitral Awards (1958), India had submitted to the jurisdiction of Australian courts under section 10(2) of the Immunities Act 1985 (Cth).

Ultimately, the court held that India had not waived its right to foreign state immunity, at least not in relation to these proceedings, because India had ratified the Convention subject to the reservation that it would only apply to "differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the Law of India". The court determined that the reservation was effective and, on that basis:

"Australia has no obligation to India to enforce awards that do not arise from differences arising from legal relationships which, in India, would not be considered as commercial, and India has no right to insist on Australia enforcing such awards."

The court found that the relevant commercial relationship was not established because the bilateral investment treaty was in the realm of public international law and the annulment of the agreement was decided by the Cabinet Committee on Security for reasons of public policy.