Declaration of interest: Colin Biggers & Paisley (CBP) acted for State Asphalt Services Pty Limited (SAS)
In brief - Claimant's right to summary judgment upheld
The NSW Supreme Court has upheld a claimant's right to summary judgment under the Security of Payment Act where no payment schedule was served in response to a payment claim, even though a payment schedule is provided to a subsequent, identical payment claim.
Leighton does not issue payment schedule in response to initial payment claim from SAS
In the case State Asphalt Services Pty Limited v Leighton Contractors Pty Limited  NSWSC 528, the claimant plaintiff (SAS) served a payment claim under the Security of Payment Act on Leighton, the defendant, in June 2012. Leighton did not issue a payment schedule in response to the claim.
In October 2012, SAS served a further payment claim under the Act on Leighton in identical terms to the June payment claim. Leighton responded to this payment claim with a payment schedule under the Act.
SAS thereafter commenced proceedings for summary judgment under section 15(2)(a)(i) of the Act for the amount of the June payment claim.
Leighton opposed this on a number of grounds, which came before Justice Stevenson of the Supreme Court of NSW for determination.
Supreme Court determines that SAS has accrued right to obtain judgment
In his judgment of 9 May 2013, his Honour held that:
- Leighton's failure to provide a payment schedule in response to the June payment claim gave SAS an accrued right to obtain judgment for the amount of that claim under the Act; and
- the making of the October payment claim in identical form did not affect that accrued right even though Leighton had an opportunity to (and did) serve a payment schedule in response to the October payment claim.
Plaintiff did not abuse the Security of Payment Act or court processes
Stevenson J also determined that because SAS's accrued right under the June payment claim was not extinguished by the Act, SAS' conduct did not constitute an abuse of the Act. Likewise, SAS was exercising a right conferred by the Act and its mere knowledge that Leighton disputed the claim was not sufficient to make the proceedings for summary judgment an abuse of the processes of the court.
This is a significant decision that clarifies an area not squarely addressed by existing authority.
Some ambiguity still remains for Security of Payment Act claims
The case involved separate payment claims (albeit for identical amounts) made on two separate reference dates under the contract. It is important to distinguish that situation with one in which:
- a payment claim is made under the Act;
- no payment schedule is served; and
- the claimant applies for adjudication of the payment claim pursuant to section 15(2)(a)(ii) of the Act instead of summary judgment under section 15(2)(a)(i).
If, as part of this process, the respondent then served a payment schedule in accordance with the further right afforded by section 17(2)(b) of the Act, it is arguable that the claimant could not then have gone back to pursue its initial right to summary judgment under section 15(a)(i).
Such a scenario was discussed but not determined by McDougall J in Rojo Building Pty Limited v Jillcris Pty Limited  NSWSC 880 (at  to ).
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