Australia: What should the supporting statement to a payment claim contain or does it matter anymore?

Last Updated: 5 May 2018
Article by Helena Golovanoff

Most Read Contributor in Australia, September 2018

In the recent decision of Central Projects v Davidson the Supreme Court has clarified the requirements for a Supporting Statement under section 13(7) of the Building and Construction Industry Security of Payment Act making observations about the consequences of a breach of section 13(8) that depart from established authority.

It didn't take long after the commencement of the amendments to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) inserting the requirement for a Supporting Statement in April 2014 for the operation of those provisions to be tested. In Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602 (5 November 2014, concerning events that took place in June 2014) McDougall J observed that section 13(7) is "prohibitory", going on to say that a payment claim not accompanied by a Supporting Statement is not properly served [36].

So for three and a half years most went about serving their payment claims accompanied by a Supporting Statement of some sort and getting most worked up when the Supporting Statement was wrongly omitted. In Central Projects Pty Ltd v Davidson [2018] NSWSC 523 Ball J has clarified the requirements for a valid Supporting Statement and made some observations contrary to the long accepted position set out by the court in Kitchen Xchange regarding the impact of the omission of a Supporting Statement.

The facts

Central Projects served a payment claim under the Act accompanied by a purported Supporting Statement. Davies failed to serve a payment schedule. Central Projects sought judgment under section 15 for $1,224,354.06. Davies, sought to resist judgment on the basis that a number of deficiencies in the Supporting Statement (including false information) meant that the payment claim had not been properly served under the Act.

Section 13(7) of the Act states: A head contractor must not serve a payment claim on the principal unless the claim is accompanied by a supporting statement that indicates that it relates to that payment claim.

Section 13(8) of the Act states: A head contractor must not serve a payment claim on the principal accompanied by a supporting statement knowing that the statement is false or misleading in a material particular in the particular circumstance.

Both sections prescribe a penalty for breach of the section.

The issues

The court was called upon to consider two issues:

  1. Whether the purported Supporting Statement met the requirements of the Act; and
  2. If it did not, whether the payment claim was validly served.

There was no dispute that the Supporting Statement in this case was broadly in the form prescribed by the Act and Regulation (albeit improperly completed in places). The criticism was that it omitted certain suppliers it should have contained. It was not determined however whether the omission was made knowingly.

The first issue

Davies contended that Section 80 of the Interpretation Act requires the Supporting Statement to contain all the required information (thereby the omission of the suppliers being fatal). The Court disagreed with this contention finding that section 80 was not concerned with the accuracy of the contents of a form. Going on to say "Forms are prescribed for a wide range of purposes and it would be unreasonable to expect those who rely on... forms to check the accuracy... before being entitled to proceed..." [32].

Ball J agreed with Central Projects' Counsel's submission that a Supporting Statement need only be in the prescribed form and contain the required declaration. Further, that 13(8) "assumes that a supporting statement may contain false or misleading information and provides a significant penalty where it is served knowing that it does so" [28]. In other words the fact that a Supporting Statement contains false information or omits required information does not diminish the Supporting Statement for the purposes of section 13(7), as the Act provides other consequences for the false statement.

The second issue

While the Court's decision on the first issue obviated the need for a determination of the second issue, Ball J went on to make observations contrary to McDougall J in Kitchen Xchange and Meagher JA in Kyle Bay Removals Pty Ltd v Dynabuild Project Services Pty Ltd [2016] NSWSC 334 and Duffy Kennedy Pty Ltd v Lainson Holdings Pty Ltd [2016] NSWSC 371.

In those cases the Court found that "to hold that s.13(7) did not intend to invalidate service of a payment claim unaccompanied by the requisite statement would set a nought the prohibition" McDougall J in Kitchen Xchange at [47]. Ball J disagreed with that conclusion on the basis that section 13(7) contained its own remedy for breach. Going on to conclude at [39] that the legislature did not intend other consequences, that is the invalidation of the service of the payment claim. Ball J cited three reasons for his conclusion:

  1. The language of section 13 (when considered in the context of the Act as whole and particularly section 31, concerning the requirements for services) does not "readily accommodate an additional consequence"
  2. Subsection (7) which has a prescribed consequence for breach (a penalty) should be contrasted with subsection (5) (the prohibition on service of more than one payment claim in respect of a reference date): subsection (5) not having any other consequence
  3. The reasons for insertion into the Act the requirement for the Supporting Statement, did not mandate the invalidation of the payment claim as a consequence of a deficient or false statement. Instead, the intention was to address inconsistencies in the provision of this sort of information to principals and the widespread practice of the provision of false information.

Ball J (possibly to his relief) did not have to decide whether he was required to follow the decisions of McDougall J and Meagher JA in light of his conclusions.

Where to from here?

On the one hand, it is clear that a Supporting Statement with false information or that omits required information may be sufficient for the purposes of section 13(7) (providing it is in the required form). However, Central Projects throws a potential life line to those having to defend a payment claim accompanied by a Supporting Statement that is not in the prescribed form or does not contain the required declaration.

The issue will likely be tested again. To avoid being the test subject those preparing Supporting Statements should take due care to ensure that they conform in every respect with the requirements of the Act and that the information provided is full and accurate.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions