Hynash Constructions Pty Ltd v BRP Industries Pty Ltd [2025] NSWCA 14
This case concerns whether Hynash Constructions Pty Ltd (Hynash) is entitled to apply a set-off against a “statutory debt” under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) when it failed to provide a payment schedule.
Relevant facts
On 22 December 2022, Hynash engaged BRP under a subcontract (Subcontract) where it made an upfront payment to BRP as required under the subcontract (Deposit).
BRP performed works in accordance with the Subcontract.
On 13 March 2024, the Subcontract was terminated and BRP issued a payment claim to Hynash in the amount of $234,286.80 pursuant to section 13 of the Act (Claimed Amount). Hynash failed to provide a payment schedule in response to the payment claim.
On 1 May 2024, BRP commenced proceedings in the District Court seeking judgment of the Claimed Amount as a “statutory debt” under the Act.
Issue
The issue in this case was whether Hynash was entitled to set-off the Deposit against the Claimed Amount as partial payment under section 15(2)(a)(i) rather than a defence prohibited under section 15(4)(b)(ii) of the Act.
Legislation
Section 15(2)(a)(i) of the Act provides:
(2) In those circumstances, the claimant—
(a) may—
(i) recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction, or
Section 15(4)(b)(ii) of the Act provides:
(4) If the claimant commences proceedings under subsection (2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt—
(b) the respondent is not, in those proceedings, entitled—
(ii) to raise any defence in relation to matters arising under the construction contract.
Decision
The Court held that the attempt by Hynash to set off the Deposit is a matter arising under the Subcontract and that Hynash is not entitled to do so under section 15(4)(b)(ii) of the Act. The Deposit was paid well before the payment claim was made and, accordingly could not on any view be said to have been made as payment of the payment claim. If Hynash’s defence was allowed, it would undermine the purpose of the Act i.e. the timely payment of persons performing construction works.
Key takeaway
This case serves as a reminder that if you are served with a payment claim, whether you have a cross-claim or defence, always serve a payment schedule. Only issues raised in a payment schedule will be considered by the Courts/adjudicators in accordance with the Act. Importantly, the Courts are not going to consider any issue raised outside of the payment schedule notwithstanding they may be issues arising from a construction contract. The Courts have clarified that previous payments or overpayments are not a defence if not stated in a payment schedule.
If you would like to discuss this article with us, please contact Brett Vincent, Partner, or Ibrahim Khalil, Paralegal on (02) 9261 5900.