December 25, 2025
Is it a jurisdictional error if an adjudicator determines that the contracting out provisions under the SOP Act apply in a contract?
Short answer: No.
We take a look at the Queensland Court of Appeal case of York Property Holdings Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2025] QCA 251 where the Queensland Court of Appeal determined that it is within the adjudicator’s jurisdiction to conclude if the contracting-out provisions applied to a provision of the contract.
In general, the contracting-out provisions under the SOP Act provide that a clause in a contract is void if it purports to exclude, modify or restrict the operation of the SOP Act or reasonably be construed as an attempt to deter a person from taking action under the SOP Act.
In this case, the adjudicator received submissions from the parties relying on the cases Southern Han 1 and Parwood 2 to the effect that, under clause 39 of the contract, once works are taken out of a contractor’s hands, the contractor’s rights to make progress payments are suspended. The adjudicator determined that clause 39 had the effect of taking away the statutory right to payment and therefore fell foul of the contracting out provisions under the SOP Act.
An issue before the Queensland Court of Appeal was whether it was within the adjudicator’s jurisdiction to determine that the contracting out provisions under the SOP Act applied to clause 39 of the contract.
The Court of Appeal held that there was no jurisdictional error established. The contracting-out provisions of the SOP Act were considered by the adjudicator as part of the parties’ submissions. Therefore, it is within the adjudicator’s jurisdiction to interpret how the contracting-out provisions applied to a construction contract.
The Court of Appeal further commented that the contracting-out provisions of the SOP Act have a wide operation and affect parties’ ultimate rights (regardless of whether there is a payment claim made under the Act or an adjudication).
Developers and builders are therefore reminded that the contracting-out provisions under the SOP Act impact their substantive rights (not just in the adjudication process). If an adjudicator (correctly or wrongly) determines that a clause in the contract falls foul of the contracting out provisions of the SOP Act, it is not a jurisdictional error.