Security of Payment update | absence of supporting statement not fatal

Since supporting statements were introduced into the Building and Construction Industry Security of Payment Act 1999 NSW (Act) a question has been whether a payment claim served without one (or with deficiencies in one) is still valid.

The answer

The Court of Appeal in TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 93 has provided a definitive answer: the absence of (or deficiencies in) a supporting statement does not invalidate a payment claim.

The sanction for a failure to comply with subsection 13(7) of the Act is a penalty (only).

Subsection 13(7) of the Act provides as follows:

A head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim.

Maximum penalty: 200 penalty units.

Basten JA observed [at 71]:

…As explained by Ball J, the purpose of s 13(7) is to encourage the payment of subcontractors before a claim for a progress payment is made which will include work done by those subcontractors. It does not purport to interfere with the right of the head contractor to obtain a progress payment, nor does it reduce the progress payment to the extent that a particular subcontractor has not been paid. Its purpose is ancillary to the principal purpose of the legislation, namely to ensure a timely flow of money to head contractors…

Implications

Head contractors may be sitting on “live” payment claims that give rise to a statutory debt.

If a payment claim has been made without a supporting statement (and/or with a deficient supporting statement) and no payment schedule was given in response that payment claim could now support an application for judgment under section 15 of the Act.

The case can be found here.

For further information, contact Mark Irwin– Partner:

E  mark.irwin@vincentyoung.com.au

T  +61 2 9261 5900