When Your Payment Depends on Someone Else’s Contract
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Published: 11 November 2025 | Reviewed: 5 December 2025
(3-minute read)
How one clause tied a subcontractor’s money to a project he didn’t control, and why the High Court struck it down.
A subcontractor finished his work, invoiced for payment, and was told he had to wait, not because of anything he did, but because a completely different contract on the same project wasn’t finished yet.
The Structural Risk Exposed in the Judgment
This case is about power through dependency. Not misconduct. Not delay tactics. But a structural clause that linked one person’s payment to someone else’s progress.
Michael Vadasz completed piling works for a building project managed by Maxcon Constructions Pty Ltd. Under the subcontract, Maxcon withheld retention money equal to five per cent of the contract sum. Half of that retention was to be released 90 days after the Certificate of Occupancy was achieved. The other half, after 365 days.
The problem was simple but profound: the Certificate of Occupancy depended on the completion of the entire building under Maxcon’s head contract with the owner, not on the subcontractor’s own work.
When Mr Vadasz sought payment through adjudication, the adjudicator found these retention terms to be an unlawful “pay when paid” provision under the Building and Construction Industry Security of Payment Act 2009 (South Australia). Maxcon challenged the determination.
The High Court rejected Maxcon’s arguments.
The Court held that because the subcontract tied payment to an event that depended on the operation of another contract, the head contract, the clause breached section 12 of the Act. Payment must not hinge on external contracts the subcontractor cannot influence.
The retention clause was invalid. The adjudicator’s determination stood.
The law protected the subcontractor by removing the structural leverage that had been built into the contract.
Why This Still Matters Today
Maxcon is one of the most important Security of Payment decisions of the last decade. It teaches three structural truths that remain vital across Australian construction and commercial contracts.
Payment cannot be linked to head contract events.
If a clause makes a subcontractor’s entitlement depend on certificates, milestones, or approvals under another agreement, the clause is likely void.
Dependency creates vulnerability.
Retention that relies on external events makes subcontractors carry risks they do not control.
Adjudication is final unless jurisdictional error exists.
Courts cannot revisit the merits of an adjudicator’s determination. This finality is central to the Security of Payment scheme and gives subcontractors real confidence that determinations lead to payment.
For builders, subcontractors, developers, and commercial teams, Maxcon is a reminder that fairness in cash flow is not philosophical. It is structural.
What Went Wrong Structurally
The retention clause looked reasonable on its face. But its timing mechanism depended on a certificate that only the head contractor could obtain, and only after the whole project was complete.
That meant:
the subcontractor’s money was tied to work he did not perform
the release date depended on how the head contract ran
delays in the broader project shifted risk entirely onto the subcontractor
This was the exact scenario the Act was designed to prevent.
The structural flaw was not behaviour. It was design.
The Universal Lesson
Power shifts whenever payment becomes dependent on a process you cannot see or influence.
Maxcon shows that the law steps in when contracts create cascading dependencies that quietly shift risk down the chain. It also shows that fairness must be built into the payment structure itself, not retrofitted after a dispute.
The Structural Fix: Cost Safety through One-Path Funding
The same pattern that harmed Mr Vadasz, dependency on someone else’s process, is one of the main ways legal costs drift out of a client’s control.
Clean Law’s One-Path Funding model removes that risk entirely.
Under One-Path Funding:
clients fund only the path their matter is actually taking
no hidden dependencies allow timing or costs to move without authority
escrow ensures no money is held back or released based on external events
each step is authorised separately, keeping power with the client
two independent lanes prevent blended roles from creating invisible delays or duplicated work
Where Maxcon prevented subcontractors from being trapped by another party’s contract, One-Path Funding prevents clients from being trapped by another party’s decisions.
Payment should never depend on someone else’s unseen process.
Reflection: Payment as a Test of Power
The High Court’s message was structural: fairness stops the moment payment depends on an event outside your control.
For subcontractors, it means writing lawful, clean contracts.
For decision-makers, it means designing processes that do not shift risk downward.
For clients navigating legal matters, it means choosing a model where timing and authority stay visible and under their control.
Fairness is not a feeling. It is a structure.
See how One-Path Funding keeps every step transparent, authorised, and structurally safe.
If you want to avoid hidden dependencies in your legal matter:
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Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5,
By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.
Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.
