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Construction Law, Contracts

Progress Payments and Failing to Provide Supporting Statements

Supporting Statement under the SOP Act

In news for our clients in the construction industry, recent case law has highlighted the importance of providing a Supporting Statement with claims made under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).

Whilst section 13(9) of the SOP Act is already quite clear on the definition of a Supporting Statement, that being it must require a statement that all subcontractors under the applicant have been listed and note whether paid or unpaid, the recent case of Central Projects Pty Ltd v Davidson [2018] NSWSC 523 now drives home the importance above requirement.

In that case, the respondent resisted that claim on the basis that the payment claim served by Central Projects (the applicant) was not accompanied by a supporting statement, which is considered mandatory, that met the requirements of s 13(7), (8) and (9) and, therefore, was not validly and effectively served on him.

Ultimately, Justice Ball still ordered in favour of the applicant, but only did so on the basis that the subcontractors unpaid invoices formed part of the payment claim as a whole and their identities were at least addressed in the payment claim. In Justice Ball’s ruling however, the point was reiterated that a supporting statement will be false or misleading in a material particular if it omits one or more subcontractors from the list of subcontractors and that omission is material.

It will also be false or misleading in a material particular if, contrary to the declaration, not all subcontractors have been paid (apart from those in respect of whom a dispute exists) and the amount owed to an unpaid subcontractor is material. In either case, if a head contractor knows that the supporting statement is false or misleading, the head contractor will commit an offence by serving the statement.

In summary, the SOP Act has many pitfalls, requirements and tight time frames to be mindful of. You must also be wary of section 13 of the SOP Act when making an adjudication application, and be sure to list and highlight your subcontractors, whether paid or unpaid, to avoid being in breach of the Act and committing an offence.

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