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Are your payment claims really valid?

Construction Law News | September 2015

There has been a recent decision in the case of The New South Wales Netball Association Ltd [“NSW Netball”] v Probuild Construction (Aust) Pty Ltd [“Probuild”] [2015] NSWSC 1339 on whether or not a Payment Claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOP Act") is valid.

This case was an application by NSW Netball to the Supreme Court to stop Probuild from pursuing an Adjudication Application for a Payment Claim under the SOP Act, served by Probuild on NSW Netball for work done and materials supplied. NSW Netball sought an order from the Court that the Payment Claim was invalid and NSW did not wish to incur the costs of preparing an Adjudication Response, if the Court decided in their favour.

NSW Netball claimed that Probuild’s Payment Claim was invalid for two reasons:

  1. The Payment Claim was not served on NSW Netball pursuant to section 31 of the SOP Act. This claim was later abandoned; and
  2. The Payment Claim was served under cover of a document which referred to “our draft claim #23 for your review.”

The Court was satisfied that the Payment Claim was valid under the SOP Act and refused to grant the injunction sought by NSW Netball however the Court did grant an injunction to restrain Probuild from filing any Adjudication certificate in any Court as a judgment obtained as a result of the Adjudication process. The Court held that whilst Netball NSW’s claim may be valid, if the injunction were to be granted, the prejudice which Probuild would suffer far outweighed any detriment to be incurred by Netball NSW.

Netball NSW also made a claim for damages in respect of their legal costs incurred as a result of preparing their Adjudication Response. This claim depended on the proposition that, by serving the Payment Claim, Probuild had represented that they were entitled to issue a claim and, on the basis that the Payment Claim was invalid, caused Netball NSW to prepare their Adjudication Response. The Court held that Probuild did not make any representations obliging Netball NSW to prepare a Response and had only claimed to be entitled to payment.

The Court highlighted the importance of the statutory timetable’s impact when determining an Adjudication Application under the SOP Act. It was found that it would be improper for the Court to grant an injunction where it would interfere with the timetable or the processes set out in the SOP Act. 

It is important to understand that Courts will not interfere with or adjust the statutory timetable under the SOP Act for a determination of an Adjudication Application and as a result, interlocutory applications such as in this case are likely to fail.

Forum Law is uniquely qualified and experienced in all matters of building and construction law. Contact us through our online form or phone us on 02 9560 3388 to discuss any building matter including those concerning the Home Building Act [NSW].

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