Procedure - interlocutory application – Contractors Debts Act 1997 (NSW) – attachment order
This case illustrates how a court may exercise its discretion to grant an attachment order against a principal under the Contractors Debts Act 1997 (NSW) (Debts Act) in the circumstance where a head contractor has not issued a payment schedule to a subcontractor in accordance with the Building and Construction Industry Security of Payment Act (NSW) (SOP Act).
National Plant and Equipment (plaintiff) entered into a contract with Subzero Services (defendant) for the hire of plant and equipment to the defendant (contract) to enable the defendant to meet its obligations under a head contract with Tarrawonga Coal (principal).
The plaintiff submitted two payment claims under the SOP Act. The defendant did not serve any payment schedules and instead served a notice of dispute under the contract. The plaintiff argued that by failing to issue a payment schedule, the defendant was liable under section 14(4) of the SOP Act to pay the claimed amount, and as the defendant failed to pay, the plaintiff was entitled under section 15(2)(a)(i) of the SOP Act to recover the amount in court as a debt due.
The defendant invoked the dispute resolution procedure under the contract. The plaintiff commenced proceedings seeking to recover an amount of $598,797.10 from the defendant, and seeking an attachment order against the principal under section 14 of the Debts Act. The issue was whether the attachment order could be made.
Schmidt J granted the attachment order and ordered that the principal retain in its hands, from monies otherwise due to the defendant, the amount claimed by the plaintiff until final judgment (notwithstanding the existence of a contractual dispute).
His Honour reiterated that, while the court's decision to make an attachment order is ultimately discretionary under section 14(3) of the Debts Act, the order can only be made if the court is satisfied that, in this case, the defendant owed the plaintiff money for materials supplied that were, or were part of, or incidental to, work or materials for which the defendant was to be paid under the head contract.