Articles

SOPA Update on Supporting Statements

It has been conventional wisdom that a head contractor’s payment claim in NSW is invalid unless it is accompanied by a supporting statement. Those statements list all subcontractors on the project and confirms that each has been paid. However, some of NSW’s most senior judges, in a case called TFM Epping Land Pty Ltd v Decon Australia Pty Ltd, have recently said that a head contractor’s payment claim is valid without a supporting statement.

In this case, Decon contracted to construct a multi-unit residential building at Epping in Sydney. It issued a progress claim for $6.4m for variations under the contract. No supporting statement was attached. As TFM Epping did not respond with a payment schedule within 10 business days, Decon was entitled to the full amount of the payment claim.

The legislation says that “A head contractor must not serve a payment claim on the principal unless the claim is by a supporting statement that indicates that it relates to that payment claim. Maximum penalty: 200 penalty units”.

First, according to the judges, the legislation identifies its own consequence. Contravention attracts a penalty. The legislation does not explicitly say that a contravention invalidates a progress claim. Nor does it say that a payment claim is not properly served if it is not accompanied by a supporting statement.

Second, there is nothing to show that Parliament intended that noncompliance should invalidate a payment claim or service of an otherwise valid claim. A statute may impose a substantial penalty on contraventions without making the thing done a nullity.

Contact us

If you would like assistance or further information regarding security of payment claims, please do not hesitate to contact Kreisson on (02) 8239 6500 or at excellence@kreisson.com.au.

[ Download this Article ]

This communication is sent by Kreisson Legal Pty Limited (ACN 113 986 824). This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.