Key Takeaways

In this case, BCFK Holdings Pty Ltd v Rork Projects Pty Ltd [2022] NSWSC 1706, the Court considered two questions under the SOP Act.

Firstly, the Court confirmed (consistent with the recent decision in Piety Constructions Pty Ltd v Hville FCP Pty Ltd [2022] NSWSC 1318 that a payment claim under the SOP Act is validly served when it comes to the attention of the authorised recipient under the construction contract, irrespective of any initial shortcoming as to service (Service Issue).

Secondly, the Court determined that the SOP Act allows claimants to serve only one payment claim after termination of a construction contract (Termination Issue).

The Service Issue

A key question in this case was whether a payment claim was effectively served when it came to the attention of the director of BCFK Holdings Pty Ltd (Principal) after being invalidly served on the project superintendent.

In May 2022, Rork Projects Pty Ltd (Builder) terminated its construction contract with the Principal.

On 12 July 2022, the Builder hand-delivered a payment claim to the superintendent (First Payment Claim), who was not authorised under the contract to receive payment claims.

On 18 July 2022, the superintendent forwarded the First Payment Claim to the sole director of the Principal.

On 26 July 2022, the Principal served a payment schedule on the Builder stating that the First Payment Claim did not enliven the SOP Act, as service on the superintendent was ineffective.

The Court found that even though service of the First Payment Claim on the superintendent was not effective, once the director of the Principal was forwarded a copy, service was effective on the date the director actually received the First Payment Claim.

In reaching that conclusion Stevenson J observed that, “A party that actually receives a payment claim should not be entitled to assert that service did not ever happen because of a shortcoming, perhaps technical, in the manner in which the claimant purported to effect service”.

The Termination Issue

Due to questions regarding the validity of service, the Builder decided not to take the First Payment Claim to adjudication.

Instead, on 20 August 2022, the Builder served a further payment claim (Second Payment Claim). The Principal served a payment schedule in response.

The Second Payment Claim proceeded to adjudication and a determination was made in favour of the Builder in the sum of $685,915.54.

The Court had to determine, in light of the validity of service of the First Payment Claim, whether the Second Payment Claim was valid.

Because the contract had been terminated, that question depended on whether section 13(1C) of the SOP Act grants an entitlement to submit just one, or multiple, payment claims after termination. That section provides:

“(1C) In the case of a construction contract that has been terminated, a payment claim may be served on and from the date of termination.”

The Court determined that section 13(1C) only allows a claimant to make one single claim after termination of a construction contract.

As a result, the First Payment Claim was valid, but the Second Payment Claim was not, and the adjudicator’s determination was declared void.

Further information / assistance regarding the issues raised in this article is available from the author, Sarah Hammond, Special Counsel, Emily Barnett, Paralegal, or your usual contact at Moray & Agnew.