Case Note: Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114
In the recent decision of Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114, the Court of Appeal considered whether to stay the enforcement of a judgment obtained under security of payment legislation.
Facts
McMenemy (the Owner) engaged Black Label Developments Pty Ltd (the Builder) to carry out renovations at the Owner’s property. The Owner informed the Builder that his family needed to move back into the home on a certain date.
On the moving in date, the Builder allegedly refused access to the home unless a Deed of Variation was executed by the Owner. This deed substantially increased the contract price. This deed was signed by the Owner.
The Builder then issued a payment claim pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) for the additional money that was owed under the deed.
Consequently, the Owner served a payment schedule noting issues of duress, undue influence and unconscionability.
The matter proceeded to adjudication and the adjudicator made a determination of just over $260,000 to be paid to the Builder.
The Builder then filed the adjudication certificate in the District Court.
Following this, the Owner commenced proceedings against the Builder for duress and undue influence. He also sought a stay of execution of the judgment.
The primary judge granted the stay and the Builder appealed this decision.
The Legal Issue: Whether the Stay of Judgment Should be Granted
The main issue on appeal was whether the stay of judgment should be granted despite previous case law principles such as those provided in A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144.
The Court dismissed the appeal for the following reasons:
- The principle from A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 in that the power to stay must be exercised in accordance with the policy of the Security of Payment Act becomes less certain when a homeowner is involved due to the demands of justice that arise.
- The Court may, on a case-by-case basis, determine whether it is in the interest of justice for a stay to be granted.
- There is a significant difference between commercial construction contracts and the risk profile of these contracts. and agreements where a homeowner is involved. This difference should be considered by the Court in deciding whether a stay should be granted. The Court stated at [103]:
For consumers of residential building services, the prospect that the contractor might take their money pursuant to an unfavourable adjudication of an excessive payment claim and then be unable to meet a s 32 judgment is not a mere commercial risk to be factored into the structure and conduct of a commercial relationship with another business. The fact that the subject-matter of the contract is their home may also complicate matters. Execution of a s 25 judgment may have catastrophic consequences. For example, where the principal is unable to meet a s 25 judgment debt, it might well be relevant to the dictates of justice and to the force to be given to the statutory policy of immediate cashflow that the Sheriff is threatening to sell the principal’s home.
To Consider
This case demonstrates that while it is rare for the Courts to stay the execution of a judgment under Security of Payment legislation, there is a level of allowance provided by the Courts in circumstances where a homeowner may be at a risk of injustice, particularly where the homeowner is raising issues of duress, undue influence and unconscionability.