Too little too late: Builder estopped from making payment claim

February 27, 2020

In the recent New South Wales Supreme Court decision of TWT Property Group Pty Ltd v Cenric Group Pty Ltd [2020] NSWSC 72, the Court confirmed that service of a payment claim pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) will amount to an abuse of process where the subject matter of the claim has been raised in previous proceedings.

 

We have previously prepared updates regarding various disputes and proceedings between TWT and Cenric. The most recent update (which can be found here) addressed proceedings in 2018 in which the Court reaffirmed the well accepted principle that contractual powers may be constrained by implied obligations of good faith.

 

Following the conclusion of the 2018 proceeding (Initial Proceeding), Cenric issued TWT a payment claim for $444,726.06 for work undertaken prior to the Initial Proceeding. The amount sought was not claimed by Cenric in the Initial Proceeding. Further, and contrary to the Act, the payment claim was served more than 12 months after the works the subject of the payment claim had been undertaken. On this basis the adjudicator held that no amount was payable by TWT to Cenric. Following the adjudicator’s determination, Cenric purported to withdraw its adjudication application and submitted a separate adjudication application based on the same claim.

 

TWT issued proceedings in the Court to restrict Cenric from continuing with its further adjudication application, arguing that:

 

  • it amounted to an abuse of process as Cenric had failed to submit the payment claim in the Initial Proceeding; and as such

  • Cenric was estopped from proceeding with its further adjudication application.

 

Stevenson J agreed with TWT, finding that:

 

  • a party will not be permitted to raise a payment claim that is so connected to the subject matter of a previous proceeding that it was unreasonable for that claim not to have been claimed in the first proceeding;

  • it was irrelevant that the failure to raise the claim was deliberate or as a result of negligence, inadvertence or accident; and

  • Cenric’s claim for payment for work done on site arose from the same facts as the claims it submitted in the Initial Proceeding. Therefore, it was estopped from raising the claim before the Court, as it should have done so in the Initial Proceeding.

 

This case highlights the importance of ensuring that all payment claims are issued strictly in accordance with the timeframes prescribed by the relevant Security of Payment legislation to avoid being barred from pursuing such claims.

 

The full decision of TWT Property Group Pty Ltd v Cenric Group Pty Ltd [2020] NSWSC 72 can be found here.

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