In Marques Group Pty Ltd v Parkview Constructions Pty Ltd [2023] NSWSC 625, Rees J refused to grant summary judgment for a statutory debt claim under the NSW Building and Construction Industry Security of Payment Act 1999 (NSW)(SOP Act) because there was an arguable defence of misleading or deceptive conduct that was not a defence arising “under the construction contract”.

The plaintiff contractor issued two payment claims under the SOP Act, and the defendant provided payment schedules in response, with a scheduled amount payable of circa $1.8M.  However, the defendant did not pay the $1.8M as required, and the plaintiff sought summary judgment for the debt in the NSW Supreme Court.

The defendant alleged that it had a defence to the summary judgment application because the plaintiff had engaged in misleading or deceptive conduct. The contract required the plaintiff to provide the usual statutory declaration in support of payment claims, including to the effect that all subcontractors had been paid and such a statutory declaration was provided.

However, the defendant alleged that the statutory declaration was incorrect in that all subcontractors had not been paid, and this showed that the plaintiff was not paying all its debts when due.  The defendant submitted that had it known of this, it would have scheduled an amount payable of zero or an amount less than scheduled, and so it had an arguable defence.

The defendant relied on the NSW Court of Appeal decision in Bitannia v Parkline Constructions (2006) 67 NSWLR 9; [2006] NSWCA 238 (“Bitannia”) in resisting summary judgment.   Bitannia is authority for the proposition that breaches of the ACL can be pleaded by way of defence to a claim for summary judgment under s 15 of the NSW SOP Act (equivalent to s 16 of the Victorian SOP Act), where summary judgment is sought when a respondent to a payment claim fails to provide a payment schedule.  In other words, while the SOP Act allows for summary judgment on a failure to provide, or non-payment of, a payment schedule for work carried out under a construction contract, a defendant can raise an ACL defence in response, and if such a defence is raised, (provided the defence is non-colourable), then summary judgment for non-payment will not be ordered (because the defendant should have the opportunity to ventilate the ACL defence).  Bitannia has been followed in Victoria by Judge Shelton in Winslow Constructors Pty Ltd v John Holland Rail Pty Ltd [2008] VCC 1491 (Winslow).  

In Marques Group,  Rees J said Winslow was “indistinguishable to the case at hand”.  In following both Bitannia and Winslow, Rees J refused the SOP Act summary judgment application.  Her Honour noted that the defendant’s defence “based on alleged misleading and deceptive conduct in respect of the subcontractor’s solvency appears to run contrary to the SOPA scheme.”.  Nevertheless, her Honour held that the ACL defence was not “so clearly untenable that it cannot possibly succeed” and so summary judgment was denied.

Ian Percy and Adam Rollnik

Liability limited by a scheme approved under professional standards legislation