The recent NSW Supreme Court case of Seabreeze Manly v
Toposu,1 (Seabreeze Case), is a useful reminder to
the building and construction industry as to what
'arrangements' will give rise to a 'construction
contract' under the Building and Construction Industry
Security of Payment Act 1999 (NSW) (SOPA).2
The Seabreeze Case provides useful guidance as to what an
adjudicator believes constitutes a 'construction contract',
when assessing an adjudication application.
A 'construction contract' under the SOPA need not be a
contract as understood under the general law.
The existence of a 'construction contract' between A
and B for B to carry out particular work for A will not necessarily
negate the parallel existence of an "arrangement", and
thereby a "construction contract", between A and C, or
between A, B and C, for C to carry out part of the construction
work for A.
An 'arrangement' for a Principal to pay a subcontractor
directly may give rise to a 'construction contract', under
which the subcontractor may seek adjudication of payment claims
against the Principal.
Facts of the Seabreeze Case
A land developer, Seabreeze, entered into a contract with a
builder, Castle Projects. The contract provided that Castle
Projects would only retain subcontractors with the prior consent of
Seabreeze, and where this was done, Seabreeze would pay
Castle Projects engaged a subcontractor, Toposu, for the supply
and installation of steel and aluminium.
The overall 'arrangement' included the following points
Toposu carried out construction work for Seabreeze's
projects under the supervision of Castle Projects.
Toposu completed the work on the basis that it invoiced Castle
Projects, but Seabreeze would pay the certified amount for that
work direct to Toposu.
Once the invoice was received, Castle Projects created a
payment schedule which was addressed from Seabreeze to Toposu and
submitted it to the superintendent for review.
Seabreeze paid the amount of the payment schedule, as certified
by the superintendent, direct to Toposu.
After work was done, Toposu adjudicated a payment claim against
Seabreeze under the SOPA, obtaining a favourable determination.
Seabreeze attempted to restrain the enforcement of the
adjudicator's determination on the basis that there was no
'construction contract' between Seabreeze and Toposu.
The Court found there was a 'construction contract'
between Seabreeze and Toposu.4 In particular, the court
made the following points.
For the purposes of the definition of a 'construction
contract', an 'arrangement' may be
It was apparent that the true nature of the contract between
Seabreeze and Castle Projects was, among other things, a conduit or
medium between Seabreeze, and the various subcontractors who did
the actual work building the project 6.
It was of particular relevance that Seabreeze had instructed
Castle Projects to put in place a system whereby subcontractors
would look to Seabreeze for payment. Castle Projects did this,
communicated that system to Toposu and Toposu took the job on that
What this means for you
Principals and contractors: Be aware that some
of your current arrangements with parties, other than the principal
contract on a project, may be considered a 'construction
contract'. If the arrangement is considered a 'construction
contract', you should respond in accordance with the
requirements set out in the SOPA.
Contractors and subcontractors: Ensure that you
have a sound basis for establishing a construction contract before
seeking to adjudicate a payment claim, so that the adjudicator has
jurisdiction to determine the claim.
1Seabreeze Manly v Toposu 
2 As defined in s 4 of the Building and
Construction Industry Security of Payment Act 1999 (NSW), a
"construction contract" is "a contract or other
arrangement under which one party undertakes to carry out
construction work, or to supply related goods and services, for
3Seabreeze Manly v Toposu 
NSWSC 1097, .
4Seabreeze Manly v Toposu 
NSWSC 1097, . McDougall J placed particular reliance on
Machkevitch v Andrew Building Constructions  NSWSC
546,  – ; Okaroo Pty Ltd v Vos Construction and
Joinery Pty Ltd  NSWSC 45,  – , 
(Nicholas J); Class Electrical Services v Go Electrical
 NSWSC 363, .
5Seabreeze Manly v Toposu 
NSWSC 1097, .
6Seabreeze Manly v Toposu 
NSWSC 1097, .
7Seabreeze Manly v Toposu 
NSWSC 1097, .
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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