Judicial Oversight: A Rare Stay Granted in a Residential Context

Reflections from an Adjudicator on Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114

Overview

The recent New South Wales Court of Appeal decision in Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114 provides a rare example of a successful stay of enforcement of a judgment entered under section 25 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA). The ruling underscores the importance of judicial discretion, particularly where the respondent is a consumer and the underlying contract is subject to serious challenge.

As an adjudicator, the decision prompts consideration of the boundaries of jurisdiction under SOPA and the interaction between statutory objectives and broader principles of justice. While SOPA mandates a "pay now, argue later" approach, the Court's reasoning demonstrates that enforcement outcomes are not immune from judicial intervention, particularly in exceptional factual circumstances.

Background

The case arose from a residential renovation project in which the builder issued a payment claim based on a Deed of Variation that increased the contract price. The homeowner alleged that the Deed was executed under duress and undue influence, with his family's access to the property allegedly contingent on signing the variation.

The matter proceeded through SOPA adjudication, and the adjudicator determined an entitlement in the builder's favour. An adjudication certificate was subsequently filed under section 25, and judgment was entered. The homeowner commenced District Court proceedings to set aside the Deed and applied for a stay of enforcement of the SOPA judgment, which was granted by the primary judge. The builder appealed that stay, and the Court of Appeal upheld the decision.

Observations from an Adjudicator's Perspective

1. Jurisdictional Boundaries Remain Clear

The adjudicator in this case correctly noted that issues such as duress or unconscionability fall outside the scope of adjudication. These matters require judicial determination and cannot be resolved under SOPA, as confirmed in previous decisions and consistent with adjudicators' limited remit.

This reinforces the adjudicative role: to determine payment disputes on a strictly interim basis, based on the claims and responses available under the Act, without addressing matters reserved for the courts.

2. The Role of the Court in Supervising Enforcement

The decision demonstrates that while adjudicators must apply SOPA's procedures as enacted, courts retain oversight of enforcement. As noted by the Court, SOPA determinations are interim in nature, and judicial relief may be appropriate where there is credible evidence of procedural impropriety or contractual invalidity.

This does not affect an adjudicator's decision-making process but is relevant in understanding the potential consequences of enforcement in certain factual scenarios.

3. Implications of Consumer Involvement

The case highlights that, although the owner-occupier exemption was removed from SOPA in NSW, judicial consideration of consumer vulnerability remains a live issue. As adjudicators, we are obliged to apply the Act as it stands. However, this case reminds us that SOPA operates in a broader legal and equitable framework, and courts may differentiate between commercial and residential disputes when enforcing judgments.

Key Takeaways for Adjudicators

Maintain a strict focus on SOPA jurisdiction: Allegations such as duress and undue influence are beyond the scope of adjudication and must be disregarded in the determination.

Recognise the limits of adjudication: The determination is an interim outcome. A court may subsequently stay enforcement if substantive contract issues are raised with evidential support.

Neutrality is paramount: Adjudicators must treat all parties equally, irrespective of whether the respondent is a consumer or commercial entity.

Reinforcement of SOPA's purpose: While the Court upheld a stay, it reaffirmed that SOPA's objectives remain highly material. The decision does not alter the adjudication framework but illustrates how enforcement can be paused in exceptional circumstances.

Conclusion

The McMenemy case does not signal a shift in SOPA adjudication practice but rather confirms the judiciary's role in ensuring fair outcomes where the statutory regime intersects with consumer rights and contract law principles. For adjudicators, the decision reinforces the need to remain within jurisdiction and to leave matters of equitable defences to the courts.

Credit Original: Seán McNally MRICS, FCIArb, FACICA – Anvelo Pty Ltd

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