The District Court recently considered whether a defendant was able to claim works the subject of a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) were performed under more than one contract, despite this reason not being included in any payment schedule issued by the defendant.
In Cosmo Cranes & Rigging Pty Ltd v EQ Constructions Pty Ltd  NSWDC 6, the plaintiff issued two payment claims which included amounts for works completed the subject of variations which had been previously rejected by the defendant. The defendant did not issue a payment schedule in response to either payment claim.
In seeking summary judgment, the plaintiff submitted that the defendant was unable to dispute the amount payable in respect of these variations as no payment schedule had been issued (see section 15(4) of the Act). However, the court preferred the submission of the defendant that because it was arguable that the variations were in fact different contracts, there was a question as to whether a valid payment claim under the Act had been served. The court relevantly stated:
Although section 15(4)(b) of the Act places a limitation upon matters which a respondent may raise in opposition to a proceeding to recover a debt sourced in the Act, in order to obtain a judgment, it still remains necessary for a claimant to establish that the respondent was liable to pay the debt (ss 15(4)(a) and 15(1)). Such liability in the respondent will only arise if, in fact, a valid payment claim has been issued (under s 14(4)(a)). A payment claim cannot be valid if it claims for work performed under two or more contracts.
The defendant also argued a set-off applied in respect of late and defective works, which had the effect of reducing the plaintiff’s claim. However, on this point the court decided the set-off should have been properly raised in a payment schedule as a defence arising under the construction contract (see section 15(4)(b)(ii) of the Act).
The court ultimately decided not to order summary judgment. This decision is a timely reminder that when considering applying for summary judgment, a payment claim must comply with the requirements of the Act. If a jurisdictional issue is raised by the defendant which submits that the payment claim does not comply with the Act, even when this reason is not included in a payment schedule, courts are generally reluctant to award summary judgment. The matter will proceed to hearing whether these jurisdictional issues can be properly considered by the court.
This is undoubtedly frustrating to plaintiffs who may not be aware that their payment claim does not comply, particularly if the plaintiff properly considered the works to be variation works and not pursuant to another construction contract. Given the nuances of the Act, if a project seems to be becoming contentious, it may be valuable to engage a lawyer to minimise the risk of jurisdictional issues associated with payment claims and enforcement options under the Act.