Azure Project 19 Pty Ltd v 5 Point Projects Pty Ltd [2026] QSC 96

Supreme Court of Queensland

Kelly J

Case Analysis

A. OVERVIEW

Azure Project 19 Pty Ltd v 5 Point Projects Pty Ltd [2026] QSC 96 is a significant Queensland security of payment decision concerning the extent to which an adjudicator must consider and apply contractual provisions when assessing liquidated damages. The Supreme Court held that the adjudicator committed jurisdictional error by allowing a liquidated damages deduction based on an apparent concession without properly determining the contractual issues necessary to support that outcome, resulting in part of the adjudication decision being declared void.

B. THE FACTS

This case concerned a judicial review of an adjudication made under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (herein after, the Act). The dispute arose from the construction of the “One Earle Lane” luxury residential apartment development at Toowong, Queensland. The parties entered into a design and construct contract on 25 October 2022 based on an amended AS 4902-2000 form. Liquidated damages (LDs) were fixed at $10,000 per day.

The contractor, 5 Point Projects Pty Ltd, submitted a payment claim for approximately $4.02 million, while the principal, Azure Project 19 Pty Ltd, scheduled only about $48,500 and sought to set off $1.13 million in liquidated damages.

The central dispute concerned two critical contractual dates:

1. The date for practical completion (the contractual completion date after any extensions of time); and

2. The date of practical completion (when practical completion was actually achieved).

Azure contended that the date for practical completion was 25 February 2025 and that practical completion had not been achieved by the date of termination on 7 August 2025, resulting in LDs of $1.13 million. The contractor argued that the completion date should be extended to 16 June 2025, that a four-week LD-free period applied, and that practical completion was achieved on 25 July 2025, limiting LDs to $110,000. Alternatively, the contractor argued that time had been set at large, eliminating any entitlement to LDs.

C. THE ADJUDICATION

The adjudication proceeded under the Act and involved extensive submissions with material exceeding 21,000 pages.

The adjudicator ultimately determined an adjudicated amount of $1,731,973.75.

In addressing liquidated damages, the adjudicator stated that the actual date of practical completion was “immaterial” because both parties' proposed completion dates occurred after the relevant reference date for the payment claim. The adjudicator further stated that he was not satisfied that the contractual completion date was either 25 February 2025 or 16 June 2025 and therefore made no finding as to what the correct date was.

Despite declining to determine the relevant completion dates, the adjudicator applied a set-off of $110,000 for liquidated damages, treating that figure as having been effectively conceded by the contractor.

The adjudicator therefore rejected the principal's claim for $1.13 million in LDs but allowed a set-off of only $110,000.

D. THE APPEAL

The principal commenced judicial review proceedings in the Supreme Court of Queensland seeking to set aside the adjudication determination. Four principal grounds were advanced: 

1. Failure to consider the parties' submissions;

2. Failure to consider and apply the relevant contractual provisions;

3. Inadequate reasons amounting to jurisdictional error; and

4. Failure to properly calculate liquidated damages under the contract.

The Court rejected Grounds 1 and 4. Kelly J held that an adjudicator's duty is to consider submissions, not necessarily to answer them correctly. Further, the adjudicator was not obliged to identify a completion date different from those advanced by the parties. His lack of satisfaction regarding either proposed date was, of itself, a decision within jurisdiction.

However, Grounds 2 and 3 succeeded. The principal argued that the adjudicator failed to apply the liquidated damages provisions of the contract because he treated the date of practical completion as immaterial by reference to the statutory reference date, despite the contract itself making no such connection. The principal also argued that the adjudicator's reasoning was internally inconsistent and lacked a logical basis.

E. THE JUDGMENT

Kelly J found that the adjudicator committed a jurisdictional error. The key error was not a mere misinterpretation of the contract; rather, it was a failure to perform the statutory task required by s.88(2) of the Act, namely to consider and apply the relevant contractual provisions.

The Court observed that:

• Clause 34.7 of the contract dealt with liquidated damages and made no reference to the reference date of the payment claim;

• Neither party submitted that the reference date was relevant to the assessment of liquidated damages;

• Nevertheless, the adjudicator treated the practical completion date as immaterial because both competing dates occurred after the reference date.

Kelly J held that the adjudicator therefore decided the claim on a basis detached from the contract itself. This amounted to a failure to consider and apply a critical contractual provision and thus constituted jurisdictional error.

The Court also found the reasons inadequate. The adjudicator declared the actual completion date immaterial while simultaneously relying upon a post-reference-date completion date (25 July 2025) to support the $110,000 deduction. This internal contradiction demonstrated that there was “no intellectual justification or any foundation or logical basis for the decision”.

The Court further concluded that the error was material. Applying the High Court's decision in LPDT v Minister for Immigration, Kelly J held that the question was whether the outcome could, not necessarily would, have been different. Had the adjudicator properly considered the completion dates required by the contract, a different LD calculation was realistically possible.

Rather than quashing the entire adjudication determination, the Court exercised its power under s 101(4) of the BIF Act to sever the affected portion. The Court declared void only the part of the determination that allowed liquidated damages of $110,000. The adjudicated amount was reduced by $130,000, from $1,731,973.75 to $1,601,973.75, while the remainder of the determination remained intact.

F. CONCLUSION

Azure Project 19 is one of the most significant Queensland Security of Payment decisions in recent years because it clearly defines the boundary between an authorised error and a jurisdictional error in adjudication. The decision confirms that adjudicators may make mistakes within jurisdiction, and pointed out that Lord Reid in R v Governor of Brixton Prison; Ex parte Armah [1968] AC 192 at 234 observed of a Magistrate, “If he has jurisdiction to go right he has jurisdiction to go wrong”; but they must still identify and apply the relevant contractual provisions forming the basis of the parties' rights.

The case establishes several important principles:

• An adjudicator must determine claims by reference to the contract and cannot substitute an alternative basis for reasoning;

• A duty to "consider" submissions does not require acceptance of those submissions or the making of findings on every issue raised;

• Inadequate or internally inconsistent reasons can themselves expose jurisdictional error;

• The materiality threshold is relatively low: it is sufficient that the decision could realistically have been different;

• Courts may use the severance power in s.101(4) to preserve the valid portion of an adjudication rather than setting the entire determination aside.

G. KEY TAKEAWAYS

For adjudicators, principals, contractors, and practitioners, the decision is a reminder that contractual machinery remains central to adjudications. Even where a party appears to make a concession, the adjudicator must still ensure that the determination is grounded in the contract and supported by coherent reasoning.