Why a Written Contract Matters: Lessons from Kumar v Frankies Cranes

The Supreme Court of NSW decision in Kumar v Frankies Cranes Pty Ltd [2025] NSWSC 1264 underscores two critical points for anyone operating under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA):

1. The need for a clear, written construction contract; and
2. The need to serve payments claims correctly.

The Dispute

Frankies Cranes claimed that an oral agreement existed with Mr Kumar for crane hire at $1,700 per week. On that basis, it served a payment claim and a notice under section 17(2) of SOPA by email and proceeded to adjudication, obtaining a determination for $142,120.

The Court set aside the determination, finding it void for jurisdictional error.

Why the Determination Failed

First, there was no construction contract. The Court held that the alleged oral agreement was not proven. Commercial realities weighed heavily: if such an agreement existed, it would almost certainly have been documented, invoiced promptly and supported by internal records. Instead:

• the first invoice was sent nearly two years after the alleged contract date; and
• no contemporaneous documentation existed.

Second, service was defective. SOPA requires strict compliance with service provisions. Section 31 permits service by email only if the email address is “specified” for that purpose. Handing over a business card was not enough. Nor was there evidence of a course of conduct using that email for SOPA-related communications.

Ultimately, the Court accepted Mr Kumar’s evidence that he never received the payment claim before adjudication commenced. Without proper service, the SOPA timing regime could not operate, rendering the adjudication application invalid.

The Practical Lessons

This case illustrates how easily disputes can arise when communications are informal. A written contract would have removed any doubt about whether a construction contract existed and clarified the parties’ obligations. It also would have provided a clear mechanism for service, avoiding arguments about whether an email address was “specified” under SOPA.

Documenting agreements and confirming service details in writing (or better yet, in the contract itself) are not mere formalities, they are essential safeguards against expensive and avoidable litigation.

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