The Supreme Court of New South Wales has clarified how the contractual litigation threshold operates under the NSW Government GC21 (Edition 2) General Conditions of Contract. The amount is stated in the Contract Information for the particular contract and is commonly $500,000; GC21 does not itself fix that amount.
GC21 is widely used on NSW Government construction projects and contains a structured dispute resolution regime. Under that regime, a disputed claim may become an “Issue”, which must pass through the contractual Issue resolution process before it can proceed to litigation. “Expert Determination” is defined in clause 79 as the process of determining an Issue. Subject to limited exceptions, the parties must treat each determination by the Expert as final and binding.
Clause 71.8 contains two exceptions to that restriction. Litigation may be commenced if the determination does not involve paying a sum of money, or if it requires one party to pay the other an amount in excess of the amount stated in the Contract Information. That amount is calculated without having regard to interest that may be payable or to any amount that has been paid pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (SoP Act). Clause 71.9 requires any permitted litigation to be commenced within 56 days after the party receives the determination.
In Built Pty Ltd v State of New South Wales [2026] NSWSC 1147, Rees J held that where an Expert determines multiple Issues, the contractual threshold applies separately to each Issue, rather than to the cumulative outcome of all Issues determined by the Expert.
Background
The NSW Department of Education engaged Built Pty Ltd to construct a new high school at Wee Waa under a contract incorporating GC21 Edition 2, as amended by special conditions.
Under the contract, a rejected or unresolved claim could be notified as an “Issue”. The parties were then required to follow the Issue resolution procedure before commencing litigation. An Issue could be referred to Expert Determination only after the contractual steps had been followed.
Clause 71.7 required the parties, subject to clauses 71.8 and 71.9, to treat “each determination” of the Expert as final and binding. Clause 71.8 then restricted litigation unless the relevant exception was satisfied, and clause 71.9 imposed a 56-day time limit for commencing litigation after receipt of the determination.
During the project, eight Issues were referred to the same Expert and dealt with together. The Expert nevertheless considered each Issue separately and issued a certificate for each.
Built later commenced Supreme Court proceedings seeking to pursue three of those Issues. They concerned extensions of time, delay and storage costs, and FF&E supply. For those Issues, the Expert had determined that no relevant monetary amount was payable to Built.
The State sought a permanent stay of those parts of the proceedings, contending that the expert determinations were final and binding.
How did the Court construe clause 71.8?
The central question was whether the contractual threshold, stated as $500,000 in the Contract Information for the contract in issue, should be applied to each Issue individually or to the combined result of all Issues determined by the Expert.
Built argued that the Expert Determination process should be considered as a whole. On that approach, the overall amount payable across the Issues exceeded $500,000.
The State argued that each Issue gave rise to a separate determination and that the threshold therefore had to be tested against each Issue individually.
Rees J accepted the State’s construction.
The Court began with the contractual language and structure. “Expert Determination” was defined as the process of determining an Issue. Although the contract contemplated that one Expert could determine several Issues, Schedule 5 required the Expert to determine the relevant questions “for each Issue”. Clause 71.7 likewise referred to “each determination” being final and binding.
Read together, those provisions indicated that each Issue gives rise to its own determination for the purpose of clause 71.8.
The Court then considered whether that construction was consistent with the commercial purpose of the clause. If multiple Issues could be aggregated, whether a particular Issue could later be litigated would depend on whether it happened to be determined alongside other Issues. Smaller claims could potentially be bundled together to exceed the threshold, undermining the function of clause 71.8 as a filter between Expert Determination and litigation.
Rees J therefore held that the contractual threshold applies to each Issue and not to the cumulative result of all Issues determined by an Expert.
Importantly, the conclusion did not depend simply on the expert having issued separate certificates. It followed from the text, structure and purpose of the GC21 dispute resolution regime.
Why Lahey Constructions did not determine the aggregation question
Built relied on Lahey Constructions Pty Ltd v Department of Education [2020] NSWSC 1158 and on the Court of Appeal decision in Lahey Constructions Pty Ltd v State of New South Wales [2021] NSWCA 69.
In Lahey, the parties had proceeded on the basis that amounts arising from multiple Issues could be considered in aggregate. However, Rees J held that the aggregation question had not been argued and was therefore not actually decided. The earlier decisions were consequently not authority for the proposition that separate Issues must be aggregated.
The Court also distinguished earlier cases concerning GC21 Edition 1. That version expressly referred to an “aggregated amount”, whereas clause 71.8 of Edition 2 contains no equivalent wording.
The decision therefore turns closely on the wording of GC21 Edition 2 and highlights the importance of checking the particular contractual terms in use.
Does a determination of $0 still involve paying money?
Built also argued that a determination rejecting a monetary claim fell within clause 71.8.1 because it did not “involve paying a sum of money”.
The Court rejected that argument, relying on CPB Contractors Pty Ltd v Transport for NSW [2021] NSWSC 537.
In CPB Contractors, Stevenson J held that “involve” means “concern” or “have to do with” paying money. On that construction, a determination dismissing a monetary claim still involves paying a sum of money because the determination concerns a claim which, if successful, would have resulted in payment.
The result is commercially significant. The amount originally claimed does not itself determine whether litigation remains available. A monetary claim exceeding the Contract Information threshold may still become final and binding if the Expert determines that nothing, or no more than the threshold amount, is payable.
What about extension of time claims?
Built also sought to distinguish two of the Issues on the basis that they involved extensions of time rather than money.
The Court looked to the substance of the Issues rather than their labels. EOT 4 involved claims for delay and storage costs, while EOT 5 involved an extension of time together with associated delay costs exceeding $1 million. In those circumstances, the Court held that the Issues involved monetary claims and could not be treated as purely non-monetary disputes.
The decision therefore demonstrates that whether an Issue “involves” money will depend on the relief actually sought and the substance of the dispute.
Practical significance
Built confirms that the GC21 Expert Determination regime can finally dispose of substantial disputes. Where multiple Issues are determined together, the Contract Information threshold is applied to each Issue separately. The value of the original claim is not determinative, and a dismissed monetary claim may still be final and binding.
For principals and contractors, the case underscores the importance of considering the contractual dispute resolution regime before referring an Issue to Expert Determination. The wording of the particular contract, the way the Issue is framed and the relief sought may directly affect whether the dispute can later proceed to court.
The Court permanently stayed the relevant parts of the proceedings and ordered Built to pay the State’s costs of the application forthwith.