Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd

Case •

[2025] NSWCA 135

•

19 June 2025

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd [2025] NSWCA 135
Hearing dates: 16 May 2025
Date of orders: 19 June 2025
Decision date: 19 June 2025
Before: McHugh JA at [1];
Ball JA at [2];
Free JA at [3].
Decision:

(1)   Leave to appeal granted.

(2)   The applicant is to file a notice of appeal in the form of the draft notice dated 7 April 2025.

(3)   Appeal allowed.

(4)   The orders of the District Court be set aside and in their place:

(a)   an order for summary judgment in favour of the plaintiff in the amount of $221,901 plus interest in an amount to be determined by the parties or, failing agreement, the District Court;

(b)   the defendant is to pay the plaintiff’s costs.

(5)   The respondent is to pay the appellant’s costs.

Catchwords:

BUILDING AND CONSTRUCTION – progress payments – Building and Construction Industry Security of Payment Act 1999 (NSW) – validity of payment claim – identification of work to which progress claim relates – payment claim operating by reference to contents of earlier invoices – identification, in a reasonable way, of the work to which claim relates – no express or implied requirement in the Act that purported payment claim have the objective character of being a claim “for” construction work or for related goods or services

CIVIL PROCEDURE – summary disposal – judgment for plaintiff – requisite material and necessary assistance from parties to enable Court to reach definite and certain conclusion – only defence identified is one bound to fail – final hearing would be otiose

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999 (NSW), ss 8, 13, 14, 15, 20, 32

District Court Act 1973 (NSW), s 127

Cases Cited:

Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41

Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394

Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1

Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229; (2005) 21 BCL 364

Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1

EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd (2024) 115 NSWLR 56; [2024] NSWCA 162

General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69

HNOE Limited v Angus & Julia Stone Pty Ltd [2024] NSWCA 271

Itek Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207; [2002] NSWCA 104

Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49

Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462; [2005] NSWCA 409

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 220

64 CLR 1; [2018] HCA 4

Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52

Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28

Style Timber Floor Pty Ltd v Krivosudsky (2019) 100 NSWLR 133; [2019] NSWCA 171

TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118

Category:Principal judgment
Parties: Manariti Plumbing Pty Ltd (Applicant/Appellant)
Universal Property Group Pty Ltd (Respondent)
Representation:

Counsel:
D K Smith (Applicant/Appellant)
T T Bors (Respondent)

Solicitors:
MRM Lawyers (Applicant/Appellant)
Colin Biggers Paisley (Respondent)
File Number(s): 2025/2528
Publication restriction: None
 Decision under appeal 
Court or tribunal:
District Court of New South Wales
Jurisdiction:
Civil
Citation:

Not available

Date of Decision:
6 December 2024
Before:
Cole DCJ
File Number(s):
2024/374500

HEADNOTE

[This headnote is not to be read as part of the judgment]

Manariti Plumbing Pty Ltd (“Manariti Plumbing”) entered into a construction contract with Universal Property Group Pty Ltd (“Universal”). The contract involved the supply by Manariti Plumbing of plumbing works as part of a multi-dwelling housing development being constructed by Universal in Lochinvar.

On 31 March 2024, Manariti Plumbing served a purported payment claim on Universal by way of an email to which were attached an invoice (invoice no. 284), a subcontractor’s statement and a spreadsheet. The claim sought payment of $221,901 and was expressly described as a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOP Act”).

Universal did not pay the amount claimed or serve a payment schedule within the time allowed. Manariti Plumbing commenced proceedings in the District Court alleging that the claim was a payment claim under s 13 of the SOP Act, that Universal was liable to pay the claimed amount of $221,901 under s 14(4) and that Manariti Plumbing was entitled to recover that amount as a debt due to it, pursuant to s 15(2). Universal in its defence denied that the purported claim was a valid one for the purposes of the SOP Act. Two grounds of challenge were pleaded. Universal contended that the purported payment claim failed to identify the construction work or related goods or services to which it related and that the claimed amount was not for a progress payment for construction work carried out or for related goods and services supplied.

Manariti Plumbing sought summary judgment in the District Court. The primary judge refused the application on the basis that there was a real issue to be tried as to the validity of the payment claim.

Following a concurrent hearing, the Court held (Free JA, McHugh and Ball JJA agreeing), granting leave to appeal and allowing the appeal with costs:

  1. Service of a valid payment claim is a necessary precondition to Manariti Plumbing establishing the statutory liability that it asserts: [36].

Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394; EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd (2024) 115 NSWLR 56; [2024] NSWCA 162, applied.

  1. In terms of the challenge to validity based on an alleged failure to identify the work to which the progress payment claim relates, it was common ground that any such failure to identify must be patent on the face of the claim, which will not be the case if the claim purports in a reasonable way to identify the work. It was also common ground that given the form of the spreadsheet served as part of the purported claim, which contained references to previous invoices (copies of which had already been provided), the claim can reasonably be read as operating by reference to the contents of those invoices: [41]-[45], [49].

Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462; [2005] NSWCA 409 applied.

Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229; (2005) 21 BCL 364; Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52; Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49; TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118; Style Timber Floor Pty Ltd v Krivosudsky (2019) 100 NSWLR 133; [2019] NSWCA 171; Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1, considered.

  1. It is plain from the face of invoice 284 that a payment claim for the purposes of the SOP Act was being purportedly made on Universal under the contract. The spreadsheet can and should be treated as a source of identification of the work to which the claim related. The past invoices referenced in the spreadsheet were an additional source of identification of that work. While there was a period (1 January 2024 to 24 January 2024) in respect of which no previous invoices were referenced, in the context of this claim that is not such a deficiency as to mean that there was a failure to identify, in a reasonable way, the work to which the claim related. Universal’s challenge to the validity of the payment claim based on alleged non-compliance with s 13(2)(a), if tried, would be bound to fail: [51], [52], [54].

  2. As to Universal’s second ground for challenging the validity of the claim, there is no express requirement under the SOP Act that a claim, in order to have the character of a payment claim under the Act, must have the objective character of being a claim “for” construction work or for related goods or services. If a payment schedule had been served disputing the claim on this basis, it would be a matter for the adjudicator to adjudicate as to whether there was a proper basis for the claim under the contract. As stated in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 (“Southern Han”) at [66], the SOP Act does not provide security for payment of an amount claimed by way of damages or restitution. However, to accept the submission of Universal in the present matter would be to imply an essential precondition to the validity of a payment claim that is not recognised in Southern Han and that is not consistent with the text, context or purpose of the SOP Act: [56]-[65].

EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd (2024) 115 NSWLR 56; [2024] NSWCA 162, applied.

Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52; Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4, considered.

  1. The only defence raised by Universal in response to Manariti Plumbing’s claim was a defence that must fail. This is a case in which the Court has the requisite material and necessary assistance from the parties to enable it to reach definite and certain conclusion as to the fate of Universal’s defence. It is appropriate in such circumstances for the Court to grant leave, allow the appeal and award summary judgment: [50], [66]

General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69; Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41; Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28; Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1; HNOE Limited v Angus & Julia Stone Pty Ltd [2024] NSWCA 271; Itek Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207; [2002] NSWCA 104 applied.

JUDGMENT

  1. MCHUGH JA: I agree with Free JA.

  2. BALL JA: I agree with Free JA.

  3. FREE JA: This matter concerns a purported claim for a progress payment, pursuant to s 13(1) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOP Act”) relating to a construction contract between the applicant, Manariti Plumbing Pty Ltd (“Manariti Plumbing”), and the respondent, Universal Property Group Pty Ltd (“Universal”). The contract involves the supply by Manariti Plumbing of plumbing works as part of a multi-dwelling housing development being constructed by Universal in Lochinvar.

  4. The purported payment claim was served by Manariti Plumbing on Universal by email on 31 March 2024. Attached to the covering email were an invoice, a subcontractor’s statement (regarding worker’s compensation, payroll tax and remuneration) and a spreadsheet. The claim sought payment of $221,901 and was expressly described as a payment claim made under the SOP Act.

  5. Universal did not pay the amount claimed. Nor did it serve a payment schedule pursuant to s 14 of the SOP Act.

  6. Manariti Plumbing proceeded to file a statement of claim in the District Court on 10 April 2024 alleging, among other things, that the claim was a payment claim under s 13 of the SOP Act, that Universal was liable to pay the claimed amount of $221,901 under s 14(4) and that Manariti Plumbing was entitled to recover that amount as a debt due to it pursuant to s 15(2). Manariti Plumbing also sought interest on the outstanding payment.

  7. Universal filed a defence in which it relevantly admitted receipt of the purported payment claim but denied that it was a valid payment claim for the purposes of the SOP Act. Universal contended in its defence that the purported payment claim failed to identify the construction work or related goods or services to which it related and that the claimed amount was not for a progress payment for construction work carried out or for related goods and services supplied. Universal did not otherwise plead any grounds for resisting the statutory liability alleged by Manariti Plumbing.

  8. Manariti Plumbing sought summary judgment in the District Court (by a notice of motion filed on the same day as the statement of claim). The primary judge refused the application, on the basis that there was a real issue to be tried as to the validity of the payment claim. Manariti Plumbing, accepting that this was an interlocutory decision in respect of which leave to appeal is required (s 127(2)(a) of the District Court Act 1973 (NSW)), seeks leave to appeal from that decision. That application was heard concurrently with argument on the appeal.

  9. For the reasons which follow, leave to appeal should be granted and the appeal should be allowed.

The purported payment claim

  1. The decisive issue for the primary judge was whether or not there was a real question, inapt to be determined on a summary basis adversely to Universal, about the validity of the purported payment claim. The primary judge concluded that there was and, on that basis, dismissed the application for summary judgment. My reasons for reaching a different conclusion turn on the content of the purported payment claim, having regard to the relevant requirements of the SOP Act.

  2. The parties properly approached the argument on the basis that the purported payment claim comprised the covering email of 31 March 2024 and the attachments to that email, being invoice 284, the subcontractor’s statement and the spreadsheet described in the email as “spreadsheet breakdown of INV-0284” and entitled “Spreadsheet showing losses.xlsx”. Invoice 284 included a description as follows:

As agreed under the subcontract agreement,

In accordance with Clause 15 of the subcontract agreement. This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999.

From the 21/06/2023, to the 12/01/2024.

  1. The invoice gave a due date for payment of 14 April 2024.

  2. It is necessary to describe the spreadsheet in some detail given that, according to the submissions of Manariti Plumbing, it serves to articulate the basis for the payment claim including, importantly, the identification of the work to which the claim relates. Each row in the spreadsheet corresponds to an identified week before and during the construction period (save that, as explained below, under certain columns the rows are consolidated into cells which span a longer time period).

  3. The spreadsheet contains 13 columns. Columns 1-3 are entitled “Week”, “Date from” and “Date to” respectively.

  4. Columns 4-6, coloured in blue, are entitled “TOTAL”, “LESS OUTGOING (Without Profit of 15%)S” and “CASH at BANK”. The entries in these columns did not assume particular significance in the submissions of either party, although they could be said to exacerbate the overall obscurity of the document.

  5. Columns 7-10 are grouped under the heading “Manariti ACTUAL costs (inc GST) but no profit”. Under this heading are four columns entitled “Labor” [sic], “Labour Oncosts”, “Materials” and “Total”. The rows underneath these four columns are grouped into consolidated time periods of longer than a week. For example, there is a single cell under columns 7-10 which spans the period from 4 September 2023 to 13 October 2023. The “Total” figure for that period is 106,381.75. The figures for the same period for “Labor” [sic] (80,095), “Labour Oncosts” (7,424) and “Materials” (18,863), when added together, total 106,382. It is apparent that those figures have been rounded to whole dollars. Subject to that immaterial qualification, the amount stated in the “Total” column can be seen to be the total of the amounts for that period described as labour, labour oncosts and materials.

  6. The bottom row beneath columns 7-10 records the total of the entries in each column. Under “Total” in column 10, the amount (highlighted in salmon pink) is 360,457.23. It is evident from the context that this is the amount put forward as the total of Manariti Plumbing’s actual “costs” for the period 21 August 2023 to 12 January 2024.

  7. Columns 11 and 12 are grouped under the heading “Bathla Payments (incl GST and Profit)”. Bathla is the trading name of Universal Property. Column 11 is headed “Invoice No” and column 12 is headed “Invoiced”. The entries in column 11 record the numbers of invoices submitted, and the entries in column 12 record amounts. The rows beneath these columns have the same consolidated format as beneath columns 7-10. For example, for the period from 4 September 2023 to 13 October 2023, the entry under column 11 is “Inv 234/35/38/40/41 submitted” and the entry in column 12 is 52,308.88. In the same fashion there are invoice numbers given for each time period in which costs are recorded up to 29 December 2023. For the period 1 Jan 2024 to 12 Jan 2024, total costs of 23,643.85 are recorded without any corresponding invoice number or invoiced amount.

  8. It was common ground that Universal had previously received, and paid, the invoices identified in column 11. Each of those invoices described work which had been performed, with corresponding quantities, unit prices and claimed amounts.

  9. The bottom row of the spreadsheet beneath column 12 (headed “Invoiced”) records the total of the entries in that column. The total invoiced amount for the period 21 August 2023 to 12 January 2024 (highlighted in blue) is 192,625.

  10. The final column, column 13, is headed “PROFIT/LOSS FOR MANARITI”, which appears above the subheading “Difference”. The entries in rows in column 13 correspond to the same consolidated time periods as used for the entries for columns 7-12. For example, for the period from 4 September 2023 to 13 October 2023, the entry under column 13 (written in red numbers) is – 54,072.87. The amount set out in the same row for total actual costs during this period is 106,381.75 and the amount set out for Bathla payments is 52,308.88. The difference between those two amounts is 54,072.87. It is apparent from the context that this figure is expressed as a negative amount in column 13 because it is put forward as Manariti Plumbing’s “loss” in respect of that period of time. Thus, the difference between the costs that Manariti Plumbing says it has incurred during this period and the amount it has received from Universal pursuant to particular past invoices is identified as the loss incurred by Manariti Plumbing in respect of that period.

  11. Beneath columns 12 and 13 three entries are recorded as follows:

Total (less profit)

167,832.00

Lost profit

54,068.60

Total owed

221,901.00

  1. The amount described as “Total owed” in this cell of the spreadsheet is the amount claimed in invoice 284, and the amount said to be the subject of the statutory payment claim.

  2. Another set of calculations appears further down the spreadsheet in the following form:

Costs without Profit

360,457.23

Profit is average 15%

54,068.60

Total costs to date with profit

414,525.81

Less Back with profit

192,625.00

  1. It can be seen that the amount described in this part of the spreadsheet as “Costs without Profit”, being 360,457.23, is the same amount that appears as the total under column 10, showing the total actual costs across the specified time periods. The figure beneath that amount, 54068.60, is 15% of 360,456.23 (rounded up to the nearest ten cents). This is the same amount described in the final rows beneath columns 12 and 13 as “Lost profit”.

  2. Mr Smith, who appeared for Manariti Plumbing, submitted that the spreadsheet showed that the payment claim was made on the basis of what is ordinarily described as a “cost-plus” arrangement. That is, the spreadsheet referred to the work performed by Manariti Plumbing, expressed as a “cost” incurred by Manariti Plumbing ($360,457.23), and then incorporated an uplift on that amount, in this case calculated as a 15% uplift for “profit” ($54,068.60). The spreadsheet then recorded a deduction for payments already made by Universal in respect of those periods, by way of payment of the various specified invoices ($192,625). The net effect of the spreadsheet was thus to claim a payment for work performed in specified periods of time, calculated on the basis of the cost of that work, with a 15% uplift for “profit” and a deduction to allow for payments already received in respect of work in those periods. This exercise produces the claimed amount of $221,901.

  1. As Mr Smith properly conceded, it is apparent from the previous invoices that they had been issued on a different foundation, namely on the basis that Manariti Plumbing was entitled to payment for work performed on a fixed price basis. This much is apparent from the way those invoices refer to unit prices and quantities of such units. The purported payment claim thus involved an ostensibly curious shift from claiming on a fixed price basis to claiming on a cost-plus basis, including in respect of work that had already been the subject of paid invoices calculated on the former basis.

  2. Nothing in the purported payment claim itself sought to explain this change in approach. Mr Smith submitted that any debate about whether or not there was a sound basis under the contract for Manariti Plumbing to take this approach and now assert a right to payment on a cost-plus basis was not something relevant to the validity of the payment claim. In the event of an adjudicated dispute under the SOP Act, that would be a matter to be adjudicated by an adjudicator, but the key point for present purposes is that this is not a matter going to validity of the payment claim itself. For the reasons developed below, that submission is accepted.

The scheme of the SOP Act and principles governing challenges to the validity of payment claims

  1. Section 8(1) of the SOP Act provides that a person who, under a construction contract, has undertaken to carry out construction work or to supply related goods and services is entitled to receive a progress payment. Part 3 of the SOP Act provides a means of enlivening that entitlement through service of a payment claim. A person referred to in s 8 of the SOP Act who is or who claims to be entitled to a progress payment may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment: s 13(1).

  2. It can be seen that s 13(1) is expressed in such a way as to cover assertions of entitlements which may or may not prove to be well founded. Thus, a person may serve a payment claim pursuant to s 13(1) if they are a person who “claims to be” entitled to a progress payment and such a claim is to be served on the person who is or “may be” liable to make the payment. In Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 (Southern Han) Kiefel, Bell, Gageler, Keane and Gordon JJ explained at [60] that the reference in s 13(1) to a person who “claims to be” entitled to a progress payment:

rather recognises, consistently with s 9, that the amount of the progress payment to which that person is entitled might ultimately be ascertained, according to the procedure set out in Pt 3, to be less than the amount that the person claims to be due and might even be ascertained according to that procedure to be nothing.

  1. As to what is required for a demand for payment to constitute a payment claim for the purposes of the SOP Act, s 13(2) provides that a payment claim:

(a)   must identify the construction work (or related goods and services) to which the progress payment relates, and

(b)   must indicate the amount of the progress payment that the claimant claims to be due (the claimed amount), and

(c)   must state that it is made under this Act.

  1. A person on whom a payment claim is served may reply to it by providing a payment schedule under s 14 of the SOP Act. A payment schedule must indicate the amount that the respondent proposes to pay (s 14(2)(b)) and indicate reasons why any amount is being withheld (s 14(3)). As noted above, in the present matter Universal did not provide a payment schedule to Manariti Plumbing after being served with the purported payment claim.

  2. Section 14(4) of the SOP Act has the consequence that in circumstances where a claimant serves a payment claim on a respondent and the respondent does not provide a payment schedule within the time allowed by that section the respondent “becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates”.

  3. Section 15 of the SOP Act applies in circumstances where the respondent becomes liable to pay the claimed amount to the claimant under s 14(4) and fails to pay the whole or any part of the claimed amount on or before the relevant due date for the progress payment: s 15(1). In such circumstances the claimant may, relevantly, recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction: s 15(2)(a)(i). Section 15(4) imposes two conditions if the claimant commences proceedings under s 15(2)(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt. The first is that judgment in favour of the claimant is not to be given “unless the court is satisfied of the existence of the circumstances referred to in [s 15(1)]”: s 15(4)(a). The second is that the respondent is not, in those proceedings, entitled to bring any cross-claim against the claimant or to raise any defence in relation to matters arising under the construction contract: s 15(4)(b).

  4. It follows from s 15(4)(a) that summary judgment in favour of Manariti Plumbing could not be awarded unless the Court is satisfied that there is no triable issue, of the kind inapt to be determined on a summary basis, about the existence of the circumstances referred to in s 15(1). On the pleadings in the District Court, there is no issue about Universal having failed to provide a payment schedule within the time allowed by s 14(4) and no issue about Universal having failed to pay the claimed amount on or before the due date for the progress payment to which the payment claim relates. The only remaining element arising from s 15(1) (read together with s 14(4)) is service of a payment claim.

  5. If there has not been service of a valid payment claim, then Manariti Plumbing would have no proper basis to establish the statutory liability that it asserts: see Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394 (Brodyn) at 441, [52]-[54] (Hodgson JA, with whom Mason P and Giles JA agreed); EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd (2024) 115 NSWLR 56; [2024] NSWCA 162 (EnerMech) at [9] (Basten AJA, Meagher JA and Griffiths AJA agreeing).

  6. In the hearing of the summary judgment application before the primary judge, Universal advanced two arguments as to why there is a triable issue about whether or not the documents served by Manariti Plumbing constituted a valid payment claim for the purposes of the SOP Act. It relied on the same arguments in this Court to resist the appeal.

  7. The first is that the purported payment claim did not satisfy the requirement in s 13(2)(a) because it did not “identify the construction work (or related goods and services) to which the progress payment relates”.

  8. The second is that the claim described in the purported payment claim was not for a progress payment for construction work carried out or for related goods and services supplied.

Challenge based on the failure to identify work as required by s 13(2)(a)

  1. As to the first point, an equivalent argument attacking the validity of a purported payment claim was advanced in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liq) (2005) 64 NSWLR 462; [2005] NSWCA 409 (Nepean Engineering). Hodgson JA (with whom Ipp JA agreed) considered the quality of identification that was required to satisfy s 13(2)(a). The critical analysis appears at [34]-[36]:

[34]   In my opinion, a document which purports to be a payment claim does not fail to be a payment claim, within the meaning of the Act, merely because it can be seen, after a full investigation of all the facts and circumstances, not to successfully identify all the construction work for which payment is claimed. This could be the case, for example, if there is some typographical omission or other error in relation to one of a large number of items included in the claim; and the question whether or not the other party, by reason of its knowledge of the project, would have been able to fill in or correct that error could be one depending on a great deal of evidence concerning the circumstances of the case. In my opinion, it is inconceivable that it was the intention of the legislature that the existence of a payment claim under the Act should depend on that kind of consideration.

[35]   It is true that, if a payment claim does not identify the work in a way comprehensible to the respondent to the claim, the respondent will be in difficulty in formulating a payment schedule, and this may give rise to further difficulty in any adjudication proceedings, inter alia because of the provisions to which I referred in par.[18] above. But in my opinion, if a respondent is unable to identify some of the work in respect of which a payment claim is made, it can in the payment schedule say it does not propose to make any payment in respect of that work because it cannot identify the work, and because for that reason it disputes that the work was done or done to a standard justifying payment, or was within the contract or within any variation of it, and that any pre-condition to payment was satisfied. If an adjudicator then determined that the work was not identified in the payment claim, presumably he or she would not award any payment in respect of that work; and if the adjudicator determined that it was identified, the adjudicator could address matters put in issue in that general way by the respondent.

[36] That is, I do not think a payment claim can be treated as a nullity for failure to comply with s.13(2)(a) of the Act, unless the failure is patent on its face; and this will not be the case if the claim purports in a reasonable way to identify the particular work in respect of which the claim is made.

  1. Hodgson JA proceeded to observe at [39] that in the case of a payment claim that purports in a reasonable way to identify the work to which the progress payment relates, if the respondent to such a claim cannot identify all the work in question, the respondent’s remedy is not to ignore the payment claim but to serve a payment schedule.

  2. Such analysis of the requirements of s 13(2) must be understood in the broader context of an Act that has the purpose, as described by Basten JA in Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229; (2005) 21 BCL 364 at 381 [45], of providing “a speedy and effective means of ensuring that progress payments are made during the course of the administration of a construction contract, without undue formality or resort to the law”. A related contextual consideration is that progress payments are payments on account: see Southern Han at [4], quoting the second reading speech for the Bill for the original SOP Act. The statutory entitlement of a party to a progress payment does not affect the substantive rights of the parties under the construction contract: see s 32, SOP Act. Hence the description of the statutory scheme as “pay now, fight later”: Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd [2025] NSWCA 49 at [8] (per Payne JA, with whom Gleeson JA and Griffiths AJA agreed).

  3. In TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118, the Court (Bell P, Macfarlan and Leeming JJA) said this about the SOP Act at [25]:

Thus the Act provides for a speedy but interim determination and enforcement of disputes arising out of construction contracts through the service of payment claims and payment schedules and adjudications, leading to an entitlement to payment, enforcement of the parties’ entitlements by way of judgment, and ultimately if necessary by way of execution, but without affecting the parties’ contractual rights as determined in the ordinary way in litigation.

  1. To similar effect, in Style Timber Floor Pty Ltd v Krivosudsky (2019) 100 NSWLR 133; [2019] NSWCA 171 (Style Timber Floor), Bell P (with whom Simpson AJA agreed) explained the scheme of Part 3 in the following terms:

[25] Part 3 specifies how the legislative purpose of achieving a prompt pro tem resolution of disputes and payment of monies, all without prejudice to the parties’ rights at law, is to be effected. This reflects what Hodgson JA said (with the agreement of Mason P and Giles JA) in Brodyn Pty Ltd t/as Time Cost and Quality v Davenport (2004) 61 NSWLR 421; [2004] NSWCA 394 at [51]:

The Act discloses a legislative intention to give an entitlement to progress payments, and to provide a mechanism to ensure that disputes concerning the amount of such payments are resolved with the minimum of delay. The payments themselves are only payments on account of a liability that will be finally determined otherwise: ss 3(4), 32.

  1. In argument in this Court, both parties proceeded on the basis that a challenge to the validity of a payment claim based on alleged non-compliance with s 13(2)(a) fell to be determined using the approach articulated by Hodgson JA in Nepean Engineering at [36]. That is, non-compliance must be patent on the face of the payment claim, and if the claim purports “in a reasonable way to identify the particular work in respect of which the claim is made” there will be no patent failure to identify.

  2. Manariti Plumbing also relied on the summary of principles by Palmer J in Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 at [41(v)] to the effect that in the case of a payment claim which purports reasonably on its face to comply with s 13(2), if the respondent wishes to object that it does not in fact comply so that it does not enliven the statutory consequences, the respondent must serve a payment schedule under s 14(4) and an adjudication response under s 20, in which that objection is taken. Although Palmer J in the passage in question referred to a respondent contending that a payment claim is a “nullity” for the purposes of the SOP Act, it is apparent from the context that his Honour was not using the word “nullity” in the same sense in which Hodgson JA used the word in Nepean Engineering at [36]. Palmer J was referring to a payment claim, while being legally valid, not being accepted by an adjudicator as sufficient for the purposes of the substantive claim. Read in that way, the passage in Brookhollow at [41(v)] may be accepted as an accurate description of the practical consequences of the approach adopted in Nepean Engineering.

  3. In Nepean Engineering at [27], Hodgson JA quoted (with apparent approval) the following passage from the judgment of Basten JA in Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd at 380, [42]:

… the claim must “identify” the work, goods or services to which the payment sought relates. The term “identify” should be given a purposive construction: what must be done must be sufficient to draw the attention of the principal to the fact that an entitlement to a payment is asserted, arising under the contract to which both the contractor and the principal are parties. In that sense, the claim, to be valid, must be reasonably comprehensible to the other party. If the entitlement does not arise absent the supply of supporting documentation, then the claim must be accompanied by that documentation, unless it has already been provided.

  1. A similar conclusion has been reached regarding payment schedules. A respondent to a payment claim may satisfy the requirements of s 14(3) of the SOP Act by incorporating other documents by reference: see Style Timber Floor at [76] per Leeming JA (with whom Bell P agreed, with additional observations at [3]; Simpson AJA agreeing with both).

  2. Manariti Plumbing called these principles in aid in submitting that its purported payment claim could reasonably be read as operating by reference to the contents of the earlier invoices, copies of which had already been provided. Mr Bors, who appeared for Universal, properly accepted the correctness of that approach.

  3. Given the nature of the test articulated in Nepean Engineering, the validity of the payment claim in the present case is a matter that is apt to be resolved on a summary basis. As Mr Bors also properly accepted, this is a case where the substance of evidence at trial would be the same as that which is before the Court on the application for leave to appeal. There is no scope for the application of the test to be affected by the evidence of witnesses, including under cross-examination. This is not a situation where the Court in considering the correctness of the primary judge’s determination of the summary judgment application must refrain from determining the issue because it is a matter best left to trial.

  4. It was plain from the face of invoice 284 that a payment claim was being purportedly made on Universal under the contract and that it was being made as a payment claim for the purposes of the SOP Act. Invoice 284 indicated that the claim related to the period from 21 June 2023 to 12 January 2024. The covering email specified that the accompanying spreadsheet was a “spreadsheet breakdown of INV-0284”. In the circumstances the spreadsheet can and should be treated as a source of identification of the work to which the claim related. That spreadsheet in turn identified, by both date ranges and invoice numbers (in column 11), a series of 10 earlier invoices which Universal had already received. In the context of the spreadsheet read as a whole, those references ought be understood as relating to the same labour and materials for the same periods of time as referred to in columns 7-10. The earlier invoices can therefore be understood as a further source of identification of the work to which the claim related.

  5. To the extent that the claim relates to the period 1 January 2024 to 12 January 2024, the position is different. In respect of that period of time, no prior invoices are referenced in column 11. The identification of the work to which that part of the claim relates is therefore confined to identification of the period when the work was performed (ie, 1 January 2024 to 12 January 2024) and the description of the costs in question as relating to labour, “labour oncosts” and materials. While there is a less detailed identification of the work for this period, I do not consider it to be such a deficiency as to mean that there was a failure to identify, in a reasonable way, the work to which that part of the claim related. That conclusion is reinforced by the particular context in which the payment claim was provided, namely a claim by a subcontracted plumber for a further period of work following a succession of ten invoices covering work on the same project in the preceding months. An additional consideration in favour of this conclusion is that this is not a deficiency to which Universal drew particular attention in its submissions.

  6. Universal’s arguments directed to showing that the payment claim failed to identify the work to which it related were somewhat undermined by Universal’s alternative contention that the payment claim was invalid because it could be seen to be a claim for damages or restitution in respect of work that had already been performed, and already been the subject of payment (save for the final 12-day period). The latter argument proceeded from a submission that the payment claim was intelligible and sufficiently clear to enable the Court to conclude that the work in respect of which payment was claimed had already been the subject of invoices on a fixed price basis, which in turn revealed (according to Universal’s submission) that the claim was not one for payment for construction pursuant to a contractual entitlement. The substance of that argument is addressed below. The present point is that the argument involved an implicit concession about the payment claim being sufficiently clear to enable the respondent to understand both the work to which it related and the apparent basis of the claim.

  1. For these reasons, the claim purports in a reasonable way to identify the particular work in respect of which the claim is made and there is no failure to identify work that is patent on the face of the document. Universal’s challenge to the validity of the payment claim based on alleged non-compliance with s 13(2)(a), if tried, would be bound to fail.

Challenge based on the lack of a proper basis to claim payment

  1. As to the second basis of challenge to the validity of the purported payment claim, Universal contended that the amount claimed was not payable under the SOP Act, because it was properly characterised as a claim for damages or restitution rather than a claim for payment in discharge of a contractual obligation to pay for work. If the claim was of this character, Universal argued, it was not a valid payment claim for the purposes of the SOP Act.

  2. Universal relies in this regard on the following passage in the judgment of Kiefel, Bell, Gageler, Keane and Gordon JJ in Southern Han at [66]:

The repeated references in  s 8, and in the extended definition of progress payment, to payment “for” work carried out or to be carried out (or goods and services supplied or to be supplied) "under" a construction contract nevertheless point to an important limitation that is implicit in the overall design of the Act, and that has been so from the time of its original enactment. That limitation is that the Act is concerned to provide a statutory mechanism for securing payment of an amount claimed to be payable in partial or total discharge of an obligation to pay for work (or for goods and services supplied) imposed by the contractual force of a construction contract. The Act is not concerned to provide security for payment of an amount claimed by way of damages for breach of a construction contract. Nor is the Act concerned to provide security for payment of an amount which, according to prevailing authority, might be claimed as an alternative to damages by way of restitution for work carried out (or goods and services supplied) in the event of the construction contract terminating on acceptance of repudiation. (Footnotes omitted.)

  1. In EnerMech, Basten JA (with whom Meagher JA and Griffiths AJA agreed) considered Southern Han and said, at [64], that “[i]t is uncontroversial that a progress payment cannot claim amounts which might be recoverable under the general law by way of damages, restitution, or by way of account”.

  2. Importantly, however, Basten JA also explained at [63] that Southern Han “did not purport to create an implied condition of the validity of a payment claim”. The purported payment claim considered in EnerMech was said to be invalid because it was not a claim for payment on account “for” construction work or for related goods or services. That argument was found by this Court to be flawed on the basis that it is not a condition of the validity of a payment claim that it be demonstrably a claim “for” construction work or for related goods or services.

  3. It can be seen that the unsuccessful argument in EnerMech was very similar to the argument that Universal seeks to rely on in the present matter. For the reasons set out below, it is ultimately indistinguishable and must fail in light of EnerMech.

  4. In EnerMech, Basten JA said at [62]:

Whether an amount is in fact payable will depend on the proper construction of the contract, identification of the work which has been carried out and a determination as to whether that work has already been paid for. These are matters to be determined by an adjudicator in the case of a dispute; they are not preconditions to the validity of a claim. If the entitlement is claimed to arise “under” a construction contract, as required by s 13(1) of the Act, the soundness of a claim denied in the payment schedule is for the adjudicator. Use of the word “for” to describe the required relationship between the amount and the basis of liability to pay is not a reason to substitute that word for the language of the statute, let alone to create a novel precondition to engagement.

  1. Basten JA noted that there is no express requirement under the SOP Act that a claim, in order to have the character of a payment claim under the Act, must have the objective character of being a claim “for” construction work or for related goods or services. The relevant requirement in s 13(2)(a) is instead expressed as a requirement to “identify the construction work (or related goods and services) to which the progress payment relates”. The challenge to validity in EnerMech therefore involved a suggested implication in the SOP Act. Such an argument is necessarily in tension with the scheme of the SOP Act, as Basten JA observed at [74]:

Understanding the objects of the Security of Payment Act, its structure and its spare language, there is little scope for implying unstated conditions as essential to the validity of a payment claim or a payment schedule. The “important limitation that is implicit in the overall design of the Act” identified in Southern Han is not engaged with respect to the proposed criterion of the validity of a payment claim.

  1. To similar effect, his Honour reasoned at [46] that the statutory scheme which was accepted by the High Court in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 as being confined to review for jurisdictional error (in the case of a determination by an adjudicator) is “also consistent with a restrained approach to the construction of the Act in identifying matters which may constitute essential preconditions to the exercise of the adjudicator’s function”. The same restraint, driven by the underlying character and purpose of the statutory scheme, governs the identification of any essential preconditions to the making of a valid payment claim.

  2. To accept the submission of Universal in the present matter would be to imply an essential precondition that is not consistent with the text, context or purpose of the SOP Act. There is no proper basis to distinguish EnerMech and to find an implied precondition where none was found in that case.

  3. That conclusion is reinforced by s 15(4)(b)(ii) of the SOP Act which provides that a respondent in the position of Universal, when faced with proceedings to recover the unpaid portion of a claimed amount as a debt, is not entitled to raise any defence in those proceedings in relation to matters arising under the construction contract. It is not apparent from the face of the purported payment claim that Manariti Plumbing is seeking payment by way of damages or restitution. On its face the purported payment claim asserts that it is a claim for payment under the contract pursuant to an obligation to pay for work performed and in the form of a claim for a progress payment under the SOP Act (which carries with an implicit assertion of a contractual entitlement). In those circumstances, recourse to the contract would be necessary to show that the claim was in substance a claim for damages or restitution.

  4. It would be inconsistent with the scheme of which s 15(4)(b)(ii) forms part to allow a respondent in that position to challenge the validity of the payment claim by invoking the construction contract with a view to demonstrating that the payment claim was not one made for payment for construction work under the contract. Where there is a dispute of that kind, it is a matter to be ventilated by service of a payment schedule and, if necessary, an adjudication response. The responsibility then falls to an adjudicator to determine whether there is a proper basis under the contract and the Act for the asserted entitlement. Where the respondent neglects to serve a payment schedule within the permitted time, and the claimant seeks to enforce the unpaid amount as a debt, the respondent effectively forfeits the right to resist a payment claim on this basis.

Leave and the correct outcome of the summary judgment application

  1. This is a case in which the Court can be satisfied that it has the requisite material and has received the necessary assistance from the parties to enable it to reach a definite and certain conclusion: General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69 at 129; Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at [57]; Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 at [54]. That conclusion is that the only defence raised to the claim of Manariti Plumbing is a defence that must fail. In such circumstances it is proper and in the interests of all parties that the proceedings be dealt with summarily: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 84-85; [1949] HCA 1. It is appropriate to award summary judgment where the only identified defence is bound to fail, even if argument of an extensive kind may be necessary to demonstrate that this is so: HNOE Limited v Angus & Julia Stone Pty Ltd [2024] NSWCA 271 at [58] per Bell CJ (with whom Leeming and Payne JJA agreed). A final hearing in respect of these matters would be otiose and in the circumstances where the correct outcome is clear a grant of leave is appropriate and the Court should bring finality to the matter: see Itek Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207; [2002] NSWCA 104 at [159]-[161].

  2. For these reasons, the trial judge erred in refusing the appellant’s application for summary judgment. I would grant leave to appeal and allow the appeal with costs.

Orders

  1. The orders of the Court that I would propose are:

  1. Leave to appeal granted.

  2. The applicant is to file a notice of appeal in the form of the draft notice dated 7 April 2025.

  3. Appeal allowed.

  4. The orders of the District Court be set aside and in their place:

  1. an order for summary judgment in favour of the plaintiff in the amount of $221,901 plus interest in an amount to be determined by the parties or, failing agreement, the District Court;

  2. the defendant is to pay the plaintiff’s costs.

  1. The respondent is to pay the appellant’s costs.

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Decision last updated: 19 June 2025

Cases Citing This Decision

0

Cases Cited

17

Statutory Material Cited

2

Agar v Hyde [2000] HCA 41
Agar v Hyde [2000] HCA 41
Agar v Hyde [2000] HCA 41