Clear as mud? The consequences of an ‘incomprehensible’ payment schedule

The recent decision of Martinus Rail Pty Ltd v Qube RE Services (No.2) Pty Ltd [2025] NSWCA 49 (Martinus v Qube) highlights the importance of providing a clear and comprehensive payment schedule. This case serves as a useful reminder of the “pay now, fight later” policy of the security of payment legislation, and reinforces that establishing jurisdictional error by an adjudicator under the security of payment legislation is challenging.

Key Takeaways

• Preparation of a clear payment schedule that can be readily understood, and contains all reasons for non-payment is critical for a respondent. An adjudication response is limited to the reasons for non-payment set out in the payment schedule.
• A court will not readily find jurisdictional error in respect of an adjudicator’s decision. An adjudicator’s findings with respect to matters of fact, which are within jurisdiction, are unreviewable.
• The risk that:
  • the adjudicator makes a factually or legally incorrect decision; and
  • the claimant (the contractor) might not be able to refund monies that are ultimately found to be due to the principal after a final determination of the claim,

both lie with the respondent (principal or head contractor) to the adjudication. 

Martinus v Qube

Martinus v Qube considers a notice of appeal in relation to two adjudications under the Building and Construction Industry Security of Payment Act 1999 (NSW) (NSW SOPA) in respect of two separate contracts between Qube RE Services (No.2) Pty Ltd (Qube) and its subcontractor, Martinus Rail Pty Ltd (Martinus). 

Contracts

Qube and Martinus entered into two contracts for the Moorebank Intermodal Terminal Project, being the Interstate Terminal Works Contract (INTS Contract) and the Interstate Rail Access Works Contract (ISRA Contract). In February 2024, after the termination of both contracts, Martinus submitted a payment claim under both the INTS Contract and the ISRA Contract. Qube issued a payment schedule and assessed that Martinus owed Qube $1.4 million in respect of each contract ($2.8 million in total). 

The Adjudication

Qube made adjudication applications seeking payment of the combined sum of approximately $135 million under the contracts. Martinus’ payment claims were set out in a conventional way, being on a spreadsheet which identified separate elements of the claim and provided references to relevant supporting material. Qube’s payment schedule adopted its own methodology and format which did not correspond with the items in Martinus’ payment claims, and which made it difficult to understand Qube’s position on many issues. 

The adjudicator determined that: 

• “the payment schedule was difficult to comprehend, and that Qube had not explained its reasons for rejecting each of Martinus’ claims”;[1]
• Qube should pay Martinus $63.1 million under the INTS Contract and $7.1 million under the ISRA Contract; and
• Qube should pay the costs of the adjudications in the total sum of $543,000.

Shortly after the adjudicator’s determinations were issued, Qube served notices of arbitration in respect of the INTS Contract and the ISRA Contract. Qube did not make payment of the adjudicated amounts by the due date, and Martinus commenced proceedings to enforce payment under the NSW SOPA. 

The Enforcement Proceedings

On 31 July 2024, judgments were entered, pursuant to section 25 of the NSW SOPA in the sum of $66.087 million under the INTS Contract and $7.595 million under the ISRA Contract. 

The Set Aside Proceedings

On 5 August 2024, Qube filed proceeding seeking to set aside the determinations on the grounds of alleged jurisdictional errors.

The Decision at First Instance

The enforcement proceedings and the set aside proceedings were heard together.  It was held that each of the adjudication determinations was, in part, affected by jurisdictional error. The affected parts of those determination were set aside. Martinus appealed the decision. Qube filed a notice of contention and a cross-appeal. 

The Appeal

The issues facing the NSW Court of Appeal (Court) included whether the adjudicator’s determinations were affected by jurisdictional error because of a failure to consider submissions, a breach of procedural fairness or legal unreasonableness. 

The Court confirmed that the High Court has made it clear that in cases under the NSW SOPA, the risk of non-jurisdictional errors of law is a risk which sits with the principal i.e. Qube. The scheme of the NSW SOPA provides that an adjudicator’s findings with respect to matters of fact are within jurisdiction and are unreviewable.

The Court held that the adjudicator did not fall into jurisdictional error. The adjudicator considered and dealt with every reason in the payment schedule that Qube advanced to reject the payment claims. The adjudicator was correct to focus on the content of Qube’s payment schedule and Qube could not, by pointing to the detail of a submission made in its adjudication response, elevate that submission above the identified reason for non-payment given in its payment schedule. Even if the adjudicator had not expressly identified or referred to a submission in its determination, it did not demonstrate that the adjudicator failed to consider it or had fallen into jurisdictional error. 

There was no denial of procedural fairness or legal unreasonableness in the adjudicator’s interpretation of Qube’s payment schedule, and the adjudicator’s conclusion that the payment schedule did not relevantly set out reasons on the relevant matters required under NSW SOPA. 

In relation to Qube’s payment schedule, Payne JA stated:

Qube’s approach was to respond to a Payment Claim made about an aspect of the INTS Contract by assessing it partly under the INTS Contract and partly under the ISRA Contract. Qube’s choice to address both contracts in this way made the Payment Schedule difficult, if not impossible, to understand properly”.[2]

Further, Qube’s payment schedule cross‑referenced a lengthy spreadsheet, which did not contain any “discernable or intelligible means of reconciling anything in the spreadsheet directly against Martinus’s claim…”.[3] The Court held that there was no denial of procedural fairness in the adjudicator’s finding that the payment schedules were “difficult to understand and misleading”.[4] 

The Importance of the Payment Schedule

The Court’s decision highlights the importance of a respondent preparing a clear and understandable payment schedule that: 

• responds to claims made in the payment claim; and
• sets out all reasons for non-payment. 

Reasons for withholding payment should be clearly articulated. In order for those reasons to be considered by the adjudicator, those reasons need to be directed to the correct component of the payment claim.

A payment schedule should be carefully reviewed for errors, as an adjudicator is not required to correct “obvious typographical errors” in the payment schedule.  An adjudicator is entitled to read the payment schedule on the terms in which it is expressed. 

The Martinus v Qube decision also reminds us that a claimant should carefully review and consider a respondent’s submissions and the adjudicator’s determination – especially if there is a concern that the respondent has sought to introduce “new reasons” for non-payment in its adjudication response. 

This article was written by Lauren Cook Partner Construction and Matthew Endo Solicitor.

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[1] Martinus Rail Pty Ltd v Qube RE Services (No.2) Pty Ltd [2025] NSWCA 49 at [21].

[2] Martinus Rail Pty Ltd v Qube RE Services (No.2) Pty Ltd [2025] NSWCA 49 at [252]-[253].

[3] Martinus Rail Pty Ltd v Qube RE Services (No.2) Pty Ltd [2025] NSWCA 49 at [254].

[4] Martinus Rail Pty Ltd v Qube RE Services (No.2) Pty Ltd [2025] NSWCA 49 at [262].