Key Takeaways

In this case, Enermech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd [2024] NSWCA 162, the NSW Court of Appeal held that a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) does not need to claim payment only “for construction work” to be valid.

Instead, a payment claim can seek payment in accordance with an entitlement “under” a construction contract, as required by section 13(1) of the Act. Further, the soundness of such a claim denied in a payment schedule is a matter for an adjudicator, not the courts.

What Happened?

In June 2020, EnerMech Pty Ltd (EnerMech) contracted with Acciona Infrastructure Projects Australia Pty Ltd, Samsung C&T Corporation and Bouygues Construction Australia Pty Ltd (together, the Respondents) for electrical works for part of the WestConnex project in Sydney NSW (Contract).

On 8 June 2023, EnerMech served a payment claim under the Act which sought to recover an amount obtained by the Respondents in exercise of a contractual entitlement to have recourse to bank guarantees provided by EnerMech under the Contract. The Respondents served a payment schedule under the Act indicating that no amount was payable as there was no claim “for construction work”. The matter later went to adjudication where an adjudicator decided in favour of EnerMech (Determination).

The Respondents commenced proceedings in the Supreme Court of NSW to have the Determination set aside. At first instance, Justice Stevenson made orders in favour of the Respondents. This case arose out of EnerMech’s appeal of that decision to the NSW Court of Appeal.

The key issue on appeal was whether a payment claim may be made only “for construction work”.

What was the Outcome?

The Court found that the terms of the Act do not require that a payment claim be “for construction work”. Rather, a payment claim must be for an amount of money “under a construction contract”.

This is a key distinction because construction contracts commonly include an entitlement to claim payment for amounts that are not solely payment for performance of construction work. In this case, it was for repayment of security that was wrongfully converted.