Premature Statutory Payment Claims

MKA Bowen Investments Pty Ltd v Carelli Constructions Pty Ltd [2019] VSC 436


In MKA Bowen Investments Pty Ltd v Carelli Constructions Pty Ltd [2019] VSC 436, the Supreme Court of Victoria held that payment claims under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOPA) served before a “reference date” are invalid, notwithstanding a contractual deeming provision to the contrary.

The Facts

The subject contract provided for a reference date on the 25th of each month. It also contained a provision (cl 37) which deemed a premature payment claim to have been made on the date for making a payment claim.

The claimant contractor served a payment claim on 26 November 2018, the day after the reference date of 25 November 2018.

It then served a payment claim on 21 December 2018.

Judicial Review

In judicial review proceedings, the plaintiff / principal alleged that the payment claim was invalid and consequently the adjudication determination should be quashed because:

  1. the payment claim dated 21 December 2018 was a second payment claim with respect to the reference date of 25 November 2018 contrary to s 14(8) of the SOPA; or,
  2. it was served before and not on and from the reference date of 25 December 2018 contrary to s 9(1) of the SOPA.

The Court found that based upon a proper construction of ss 9(1) and 14(1) of the SOPA, a payment claim must be served on and from the relevant reference date and not before (at [33] – [43]). Further, clause 37 of the contract could not permissibly operate to render a progress payment claim served before the relevant reference date valid by deeming it to have been made on 25 December 2018 (at [68] – [74]).

The Court also found (at [44] – [52], [56] and [60]) that:

  1. it was bound by the decisions in Southern Han Breakfast Point Pty Ltd (in Liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340 (at [59] and [61]) and All Seasons Air Pty Ltd v Regal Consulting Services Pty Ltd [2017] NSWCA 289 which considered analogous provisions in the New South Wales legislation (ss 8 and 13); and,
  2. the effect of these decisions was that Metacorp Australia Pty Ltd v Andeco Construction Group Pty Ltd (2010) 30 VR 141 (in which Justice Vickery found that a premature payment claim was “effective” on and from the next reference date) had been overruled.
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