As was widely anticipated, on 21 December 2016, the High Court
unanimously allowed the appeal in Southern Han Breakfast Point
Pty Ltd (in Liquidation) v Lewence Construction Pty Ltd 
HCA 52 and firmly re-established the previously accepted view that
a reference date is a precondition to the making of a valid payment
claim under the Building and Construction Industry Security of
Payment Act 1999 (NSW) (Act)1.
Brief history of the matter
Southern Han entered into a construction contract with Lewence.
The contract provided that payment claims were to be made on the
8th date of each month. The contract also allowed Southern Han to
take the work out of Lewence's hands in certain circumstances
of unremedied default. The same clause allowed Southern Han to
suspend payments in the event that it took the works out of
On 10 October 2014, Southern Han served a notice to show cause
and on 27 October 2014, Southern Han took the works out of
Lewence's hands. Lewence considered that conduct to be a
repudiation, which Lewence elected to accept and terminated the
Subsequently, Lewence purported to serve a payment claim under
the Act and to seek to have the payment adjudicated. The
Adjudicator determined that the payment claim was valid and that
Lewence was entitled to payment.
Southern Han sought relief in the New South Wales Supreme Court
on the basis that the payment claim was void as not being supported
by a valid reference date.
At first instance, Ball J made a declaration that the payment
claim was void because it was not supported by a valid reference
Ward, Emmett JJA and Sackville AJA then allowed the appeal,
holding that a valid reference date was not a precondition to a
valid payment claim.
Appeal to the High Court
The Court, in unanimously allowing the appeal, accepted
a valid reference date is a precondition of a valid payment
a payment claim without a valid reference date could not be the
subject of a valid adjudication application; and
Lewence's payment claim was not supported by a valid
reference date (on either view of the case) because:
the contract allowed Southern Han to suspend payments if it
took the works out of Lewence's hands and no further reference
dates accrued until that suspension was ended pursuant to the
if Southern Han had repudiated the contract, then the contract
had been terminated by Lewence and no further reference dates
accrued after the termination of the contract (nothing in the
contract suggesting that reference dates continued to accrue post
Take home points
First, in absence of a reference date, a payment claim is void
and it cannot (generally speaking) be the subject of a valid
adjudication application2. This restores what had been
accepted to be the case prior to the decision of the New South
Wales Court of Appeal in the present case.
Second, the Court seems to have tacitly accepted3 the
'Queensland' position (i.e. that, in general, no reference
dates accrue after a contract has been terminated) as against the
'New South Wales' position (where reference dates can
accrue post termination). It will be interesting to see what
approach the New South Wales Courts will take moving forward in
Third, contractors should give the matter serious thought before
they elect to accept a purported repudiation (based on a purported
taking of the works out of their hands); particularly if the next
payment claim is due to be made shortly after. An action for
damages/upon a quantum meruit basis will take far longer to
prosecute than a claim made under the Act. In a cash-flow driven
sector, this decision might be difference between keeping a
business alive and liquidation.
1 Given the similarity of the language used,
the High Court's decision is likely to be applied in
2 The author notes in the margin that only a
decision to deny jurisdiction will be valid in such circumstances;
although there is a good deal of authority to suggest that a
decision maker such as an Adjudicator cannot finally determine
their own jurisdiction
3 Albeit arguably in
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A lessee will need to demonstrate that the genuine interests of the lessor will be protected if relief is granted.
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