BSA Advanced Property Solutions (Fire) Pty Ltd v Ventia Australia Pty Ltd [2022] NSWCA 82
Under the New South Wales Building and Construction Industry Security of Payment Act 1999, as it stood before amendments in 2019, any requirement that a payment claim relate to only one construction contract is for the adjudicator, not a precondition to validity; on the facts, the work orders in issue did not each create a separate contract, at least for the subcontract's Category B works.
What the court decided
Ventia Australia Pty Ltd, then known as Broadspectrum, subcontracted building essential services work at social housing properties to BSA Advanced Property Solutions (Fire) Pty Ltd [8], [9]. The subcontract commenced on 3 May 2016 [26]. An annexure to it stated that "A separate Agreement will come into existence each time" Ventia issued a work order [13].
On 8 February 2021 BSA served a payment claim for $2,979,262.34 [14]. The claim covered 25 invoices under five work orders [3], [15]. Ventia's payment schedule said the claim was invalid because, among other things, each work order was a separate construction contract [17]. The adjudicator rejected that argument, finding the separate agreement provision inconsistent with the general structure of the subcontract [19].
Rees J held that each work order was a separate agreement and that the Act, at least by implication, prevented a payment claim for work under more than one contract [5]. Her Honour quashed the determination, declining to follow the reasoning of the Queensland Court of Appeal in Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd [4], [5].
The Court of Appeal (Ward P, Leeming JA, White JA, Brereton JA and Basten AJA) allowed the appeal and dismissed Ventia's proceedings, with costs in both courts [99]. All five judges gave the reasons jointly, as the Court [1]. The Court had regard to the Act as it stood before amendments to key provisions in 2019 [26].
The Court held that, if a payment claim must relate to one construction contract with one reference date, compliance is for the adjudicator to address and is not a precondition to serving a valid payment claim [52]. The statutory entitlement attaches to work carried out under a contract, and the wide definition of construction contract focuses on the doing of the work, not the legal nature of the obligation to do it [36]. A valid payment claim need not identify where that obligation, or the right to be paid, comes from [37].
The Court said that the approach in Ausipile, which in an appropriate case leaves reliance on several contracts, if not apparent on the face of the claim, to the payment schedule and the adjudicator, was in broad terms consistent with its own authority and could be accepted [48]. Its holding on compliance was enough to uphold the first two grounds of appeal, so the Court did not decide whether, as it thought "strongly arguable", no such rule exists at all and a claim may cover entitlements under several contracts if referable to one reference date [52].
On the single contract issue, the parties' label for their relationship cannot finally settle whether a claim is under a construction contract [80]. The subcontract's payment clause expressly contemplated a payment claim covering several work orders [68], [82]. To classify the subcontract for the purposes of the Act, the Court read its substantive provisions as a whole, and held that a statement of intention could not resolve any inconsistency [94]. The work orders did not create a new contract each time one issued, at least for the Category B works, a class that included building essential services [64], [94]. Even if the one contract requirement were jurisdictional, Ventia had not shown that the claim was not issued under the subcontract it identified by number [95].
Why it matters
On this reasoning, under the Act as it stood before the 2019 amendments, a respondent that says a New South Wales payment claim improperly spans several contracts should raise that point in its payment schedule, for the adjudicator, rather than expect a court to treat it as a precondition to validity. A clause declaring each work order a separate agreement was not decisive here, at least for the Category B works.
As to the wider point, the Court said only that it is "strongly arguable" that there is no one contract rule, and did not decide that question.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.