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New South Wales Court of Appeal · [2026] NSWCA 106

Hanna v Kore

A NSW Court of Appeal construction case about a lock-up stage payment claim, security of payment adjudication and contract termination.

New South Wales Court of Appeal5 June 2026

Plain-English explainers, not legal advice. Check the linked official source before you rely on a specific section, and get advice for your situation.

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Quick read

  • Construction payment claims need to match the contract stage and the evidence.
  • A NSW Court of Appeal construction case about a lock-up stage payment claim, security of payment adjudication and contract termination.

Use this to check

  • Progress claims should match the exact contract milestone.
  • Security of payment adjudication is fast, but it may not settle the final contractual account.
  • Expert evidence needs to be admissible and the expert may need to be called.

Decision snapshot

  1. 1

    What happened

    • Intelligent Building Pty Ltd and John Hanna appealed from District Court orders in a dispute about construction of a two-storey dwelling at Schofields.
    • The contract price was $314,000 including GST, with a 30 percent progress claim at lock-up stage described as brickwork and roofing complete.
    • Intelligent Building served Progress Claim 3 for $94,200 in March 2023, describing the claim as for brickwork, roofing, floor tiling and electrical rough-in.
    • It then suspended works, pursued adjudication under the NSW Security of Payment Act and registered an adjudication certificate as a Local Court judgment.
  2. 2

    What the court had to decide

    • The Court of Appeal had to consider challenges to the District Court's findings that the builder had not reached lock-up stage, was not entitled to the disputed progress claim, had not validly terminated the contract, and was liable with Mr Hanna for damages arising from completion costs, defects and consequential loss.
  3. 3

    What the court decided

    • The Court of Appeal dismissed the appeal with costs.
    • The primary findings stood: lock-up stage had not been reached for Progress Claim 3, the owners had validly terminated the contract, and the owners were entitled to damages.
    • The case also shows the limits of trying to rely on an adjudication certificate or informal evidence when the final court record points the other way.

Practical impact

Practical read

  • Construction payment claims need to match the contract stage and the evidence.
  • A builder may obtain an adjudication certificate, but later proceedings can still affect the final accounting between the parties if the work stage was not reached and the contract was validly terminated.

Useful next steps

  • Progress claims should match the exact contract milestone.
  • Security of payment adjudication is fast, but it may not settle the final contractual account.
  • Expert evidence needs to be admissible and the expert may need to be called.
  • Suspension and termination notices should be checked carefully before being served.
  • Builders and owners should keep a single project chronology for delay, payment and defects.

Practical read

This case is a hard lesson for builders, principals and project managers. Security of payment gives contractors a fast cash-flow pathway, but it does not erase the need to prove that the contractual milestone has actually been reached when the final dispute is fought out.

The appeal record showed a familiar construction dispute pattern: staged payments, alleged delay, suspension, competing breach notices, termination, an adjudication certificate and later court proceedings about defects and completion costs. The builder relied on a quantity surveyor report, but the primary judge had rejected it because the author was not called and the report did not comply with expert evidence rules. That left the owners' expert evidence as the evidence accepted on lock-up stage.

For small construction businesses, the lesson is evidence discipline. If a stage claim says brickwork and roofing are complete, the file should show that with site photos, inspection records, contract stage wording and admissible expert evidence if needed. Payment claims, breach notices and termination letters should be written as if a judge may later compare every word against the works actually done.

Checks to run

Key points

  • Map every progress claim to the contract milestone wording.
  • Keep dated site records showing the stage actually reached.
  • Use compliant expert evidence where construction status is contested.
  • Check payment, suspension and termination notices before issuing them.
  • Track security of payment steps separately from the final contract dispute.

Key takeaways

  • Progress claims should match the exact contract milestone.
  • Security of payment adjudication is fast, but it may not settle the final contractual account.
  • Expert evidence needs to be admissible and the expert may need to be called.
  • Suspension and termination notices should be checked carefully before being served.
  • Builders and owners should keep a single project chronology for delay, payment and defects.

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