Be creative – and be warned: Enforcing SOPA rulings

Case Note: Beattie (Administrator), in the matter of Sharvain Facades Pty Ltd (Administrator Appointed) (No 3) [2025] FCA 671 

The decision of Beattie (Administrator) [2025] FCA 671 is a reminder that, once you exit the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) process and enter the realm of judgement enforcement, it is open to you and your opposition to rely on legislation other than SOPA.   

Be creative – and be warned.  

Timeline

28 February 2025, Sharvain served a payment claim under SOPA on Roberts Co (NSW) Pty Ltd (Roberts).  Roberts failed to serve a payment schedule in time. 

4 March 2025, Sharvain entered into voluntary administration. 

31 March 2025: Sharvain sought judgement of the unpaid payment claim sum of $3,207,999.03 (the SOPA proceedings). 

12 June 2025: Sharvain received judgement in its favour in the SOPA proceedings, the payment claim sum of $3,207,999.03 became a judgement debt owed to Sharvain.  The orders were entered on 18 June 2025 

13 June 2025: Beattie (Administrator) made an application to the Federal Court seeking an extension of time to hold the second creditors meeting (Administration proceedings) until the determination of a stay application by Roberts in the SOPA proceedings, was made. 

Reasons for Beattie seeking an extension

Beattie made 2 submissions in favour of granting the extension of time to convene the second creditors meeting: 

1. Section 32B of the SOPA; and 
2. Section 553C of the Corporations Act. 

Section 32B of the SOPA 

Beattie was concerned that if Sharvain enters into liquidation, section 32B of the SOPA might block enforcement of the NSW Supreme Court judgment against Roberts if it were interpreted as meaning that a company in liquidation could not rely on judgement received on a SOPA, and the matter could not be pursued by the liquidated company.   

Section 32B provides: 

(1)  A corporation in liquidation cannot serve a payment claim on a person under this Part or take action under this Part to enforce a payment claim (including by making an application for adjudication of the claim) or an adjudication determination. 

(2)  If a corporation in liquidation has made an adjudication application that is not finally determined immediately before the day on which it commenced to be in liquidation, the application is taken to have been withdrawn on that day. 

If that happened, Beattie feared that Sharvain would need to sue Roberts for breach of contract, causing delay, costs, and uncertainty, potentially harming creditors.  This was a hypothetical risk as it was not based on a known legal barrier, but a precaution about how the law might be interpreted. 

Ultimately, this argument was ruled as not constituting a meaningful risk as the Court found that section 32B of the SOPA does not operate to prevent the enforcement of the judgement received into the SOPA proceedings, because the enforcement proceedings would be brought under the Civil Procedure Act 2005 (NSW).   

The Court also considered the competing interests of delayed payment of employee entitlements, and ultimately found this hypothetical SOPA risk was not plausible.  

Section 553C of the Corporations Act 

The second ground for seeking an extension was based on section 553C of the Corporations Act, which provides: 

(1)  Subject to subsection (2), where there have been mutual credits, mutual debts or other mutual dealings between an insolvent company that is being wound up and a person who wants to have a debt or claim admitted against the company: 

(a)  an account is to be taken of what is due from the one party to the other in respect of those mutual dealings; and 

(b)  the sum due from the one party is to be set off against any sum due from the other party; and 

(c)  only the balance of the account is admissible to proof against the company, or is payable to the company, as the case may be. 

(2)  A person is not entitled under this section to claim the benefit of a set – off if, at the time of giving credit to the company, or at the time of receiving credit from the company, the person had notice of the fact that the company was insolvent. 

Beattie was concerned that if Sharvain enters into liquidation before receiving the $3,207,999.03 judgment from Roberts, then section 553C of the Corporations Act might allow Roberts to set off any of its claims against Sharvain, potentially reducing or eliminating the amount Sharvain could collect.  Two issues could then arise from this scenario: 

1. If Roberts later became insolvent, and their counterclaim failed, Sharvain could only have then been able to recover a fraction of the SOPA judgment as a creditor in Roberts’ liquidation.  This argument was supported with evidence of Roberts’ related entities and parent companies having recently entered into liquidation.  
2. If a set-off was allowed, Sharvain might have been forced to fully litigate Roberts’ counterclaims in Court, ultimately further delaying payment to employees. But if Sharvain received payment and Roberts later filed a proof of debt, that process may have been resolved more efficiently by a liquidator without having to resort to ‘full litigation’. 

The Court found that: 

1. The first reason was speculative as it relied on Roberts entering liquidation. 
2. The second reason was “somewhat more concrete” and accepted that, if Sharvain entered into liquidation then it would be more difficult and expensive for it and its creditors to benefit from the $3,207,999.03 judgment. 

Decision  

The Court permitted the extension of time to convene the second meeting, and in doing so held that the section 533C argument “provide[d] (but only just) a sufficient basis for extending the date for the second meeting of creditors for a relatively short period” (at [19]). 

Takeaways  

Initially, Beattie was intent on relying solely on the section 32B SOPA argument to seek an extension.  It was counsel who thought that considerations outside of SOPA were feasible and that  an argument could be made relying on separate legislation – the Corporations Act. 

This decision is a reminder that, once you exit the SOPA process and go into the realm of judgement enforcement, you open avenues for new ways to enforce, argue, stay or defend the SOPA judgement.  Be creative and be warned.