A payment claim served by a head contractor without a supporting statement will not be validly served under section 14(4) of the Building and Construction Security of Payment Act 1999 (NSW) (Act), and the respondent will therefore not be liable to pay the claimed amount even if the respondent does not provide a payment schedule.
Read on for the rest of the analysis by Imogen Bailey.
Duffy Kennedy Pty Ltd (Builder) applied for summary judgment against Lainson Holdings Pty Ltd (Owner), in respect of unpaid amounts of two progress payments alleged to be due under the Act (Payment Claim 1 and Payment Claim 2 respectively). The Builder claimed $760,943.41 (the amount of Payment Claim 2), or $411,942.85 (the amount of Payment Claim 1) in the alternative.
Payment Claim 1 was issued by the Builder on 1 September 2015 without a supporting statement. An earlier iteration of Payment Claim 1 dated 17 August 2015 (17 August Claim) included a statutory declaration stating that the Builder had paid all subcontractors engaged in works under the contract. Payment Claim 2 was issued by the Builder on 15 September 2015 without a supporting statement and also included the full amount claimed in Payment Claim 1.
At the time the Builder sought leave to apply for summary judgment, the Owner admitted that the circumstances in section 15(1) of the Act (including that the Owner was 'liable to pay the claimed amount') existed in relation to the Builder's claim for $760,943.41 (Admission).
The Builder was unsuccessful in its application for summary judgment.
Meagher JA pointed out at hearing that the Admission did not accord with the evidence that no supporting statement had accompanied Payment Claim 1 or Payment Claim 2. Unsurprisingly, the Owner sought to withdraw the Admission.
The Builder submitted that:
- Payment Claim 1 was a revision of the 17 August Claim, which was accompanied by a statutory declaration that satisfied the requirements for a supporting statement; and
- failure by a head contractor to serve a supporting statement with a payment claim in accordance with section 13(7) of the Act did not have the consequence that the payment claim had not been served for the purposes of
section 14(4) of the Act.
Meagher JA allowed the Owner to withdraw the Admission and rejected the Builder's submissions, finding that neither Payment Claim had been validly served under the Act, on the following bases:
- the statutory declaration that accompanied the 17 August Claim was not in the form required by the Building and Construction Industry Security of Payment Regulation 2008 (NSW). Further, the 17 August Claim was served earlier than Payment Claim 1 and was for a different amount; and
- case authorities have established that service contrary to section 13(7) of the Act is not service for the purposes of the Act.