Built Pty Ltd v Victorian Correctional Infrastructure Partnership Pty Ltd [2026] VSC 76

Chris Hey  |  Michael Lo  |  Joan Wu

Key takeouts

In Built Pty Ltd v Victorian Correctional Infrastructure Partnership Pty Ltd [2026] VSC 76, the Victorian Supreme Court upheld a “Linked Claims” clause in a subcontract such that related upstream claims or decisions could be resolved first under the head contract.  This form of “pass through” provision is common in PPP’s used to deliver public infrastructure projects.

The court held that once a dispute is characterised as a Linked Dispute, that characterisation cannot be undone by withdrawing the Linked Claim against the head contractor or purporting to do so.  The court also gave guidance on the nature of Linked Disputes.

The subcontractor also sought declaratory relief that the linked disputes regime was void under section 48 or inoperative under section 13 of the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act).  However, the court declined to grant declaratory relief given that section 48 (no contracting out) and section 13 (pay-when-paid restrictions) concern payments for construction work – as there was no payment claim that was the subject of the linked dispute.  The question of whether a linked disputes regime could be struck down by section 13 or 48 of the SOP Act remains open.

Facts

The head contractor, Victorian Correctional Infrastructure Partnership Pty Ltd, engaged the subcontractor, Built Pty Ltd, to carry out design and construction works at the Metropolitan Remand Centre in Victoria.  The head contractor had been engaged by the State of Victoria to deliver the project.

The subcontractor was to install modular cells that the State had procured from a third-party manufacturer.

In 2023, a dispute arose regarding alleged defects in the modular cells, and on 7 March 2025, the State issued a notice of dispute to the head contractor in respect of those defects.  Consequently, the head contractor issued a notice of dispute to the subcontractor under the subcontract, raising substantially the same allegations including the subcontractor’s alleged failure to comply with directions to rectify the defects and its liability to pay damages to the contractor.

Clause 48A of the subcontract contained a regime for “Linked Claims” and “Linked Disputes”.  Broadly, Linked Claims were claims by the subcontractor against the head contractor that related to upstream claims or decisions.  Such claims were to be pursued upstream by the head contractor, with the subcontractor obliged to assist and bound by the outcome.  A Linked Dispute was one “relat[ing] to any dispute arising out of or in connection with a Linked Claim” to which the subcontractor was a party or which it had initiated.

The head contractor’s notice of dispute to the subcontractor stated that the matters raised concerned Linked Claims giving rise to Linked Disputes, and pursuant to clause 48A.4(b) of the subcontract, those disputes would not be progressed under the subcontract while the upstream dispute between the State and the head contractor was being resolved, and the running of time and the parties’ relevant obligations would be suspended.

The subcontractor commenced proceedings seeking declaratory relief that (inter alia):

• the claims described in the head contractor’s notice of dispute were not Linked Claims or Linked Disputes within the meaning of the subcontract, and clause 48A was of no effect in relation to those claims; and
• further, and in the alternative, clause 48A was of no effect by reason of section 13 of the SOP Act, or was void by reason of section 48 of the SOP Act.

Decision

The court refused the subcontractor’s application for declaratory relief.

Linked Claims and Linked Disputes

The subcontract defined a Linked Dispute as a dispute to which the subcontractor is a party and which “relates to any disputes arising out of, or in connection with, any Linked Claims“.  The court construed “relates to” broadly and considered that the relationship between a Linked Dispute and a Linked Claim need not be causal or temporal, requiring no more than a direct or indirect connection between the two subject matters.

The court held that once a dispute is properly characterised as a Linked Dispute, it does not lose that characterisation upon the subcontractor withdrawing its Linked Claim against the head contractor or purporting to do so.  A Linked Dispute may have other dimensions beyond the compass of the subcontractor’s claim which nevertheless concern the subcontractor as a party to the dispute.  A Linked Dispute need not be coextensive with a Linked Claim.

The subcontractor’s claim for an extension of time and delay costs was a claim by it against the head contractor for a remedy under the subcontract.  It arose out of, or in connection with, an upstream decision by the State to direct the head contractor to correct the modular cell defects.  Those facts were sufficient for the subcontractor’s claim to constitute a Linked Claim.  It followed that the dispute between the subcontractor and the head contractor concerning that claim was a Linked Dispute within the meaning of clause 48A.

Pay when paid – Section 13 of the SOP Act

The subcontractor contended that clauses 48A.5(a), 48A.5(b) and 48A.6(a) of the subcontract made its entitlement to payment, and the quantum of that entitlement, contingent on the head contractor’s entitlement under the head contract, and were therefore of no effect pursuant to section 13 of the SOP Act.

However, there was no payment claim on foot and the subcontractor had not established that the head contractor’s notice of dispute concerned any payment for construction work.  The court held that, even assuming clause 48A could operate as a pay-when-paid provision in some circumstances, the argument was purely hypothetical.  The court declined to grant declaratory relief on this basis.

No contracting out – Section 48 of the SOP Act

The subcontractor contended that clause 48A of the subcontract was void by reason of section 48 of the SOP Act.  The court refused to grant declaratory relief on this basis, as no payment claim was on foot and the subcontractor had not established that the head contractor’s notice of dispute concerned any payment for construction work. The court further observed that declaring clause 48A void under section 48 would not be a proper exercise of discretion in circumstances where there was no live payment claim to engage the statutory provisions and the interaction between the contractual and statutory regimes was not in issue.