Marques Group Pty Ltd v Parkview Constructions Pty Ltd [2023] NSWSC 625

Andrew Hales  |  Karen Hanigan  |  Brigida Johns

Key takeout

A misleading and deceptive conduct defence can be successfully raised in response to an application for summary judgment made in respect of a claim for a debt due under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).  

This is despite such a defence arguably being contrary to the legislative intent of the SOP Act.

Facts

Marques Group Pty Ltd (subcontractor) entered into two subcontracts with Parkview Constructions Pty Ltd (head contractor) to provide formwork on projects in Woolooware and Parramatta for approximately $23 million and $15 million respectively.

The subcontractor submitted payment claims under each contract. The payment claims attached subcontractor’s statements and statutory declarations. The subcontractor’s representative declared in a subcontractor’s statement that all amounts payable to employees and subcontractors for work done in the relevant period under each of the contracts had been paid in full.

The head contractor issued payment schedules setting out the amounts it agreed to pay in respect of each payment claim. The head contractor failed to make any payments for either payment claim on the due date. To recover the amounts it said are due, the subcontractor commenced proceedings and sought summary judgment for the scheduled amounts as a statutory debt under section 16(2)(a)(i) of the SOP Act.

The head contractor raised a defence alleging that the subcontractor had engaged in misleading and deceptive conduct in contravention of the Australian Consumer Law by representing that:  

• all employees and subcontractors had been paid for work done in the period covered by the payment claims; and
• the subcontractor was paying its debts as and when they fell due.

This was in circumstances where the subcontractor had actually not paid all of its workers’ superannuation contributions or some of its subcontractors.

The head contractor also contended that, in reliance of these representations, the payment schedules were issued, accepting a large portion of the payment claims. The head contractor stated that without such conduct, it would have served a payment schedule for $0, or at least an amount less than scheduled. The head contractor therefore contended that the payment claims were not valid payment claims capable of giving rise to an entitlement under the SOP Act.

Decision

The court dismissed the subcontractor’s application for summary judgment.

The court applied the principle from Bitannia v Parkline Constructions (2006) 67 NSWLR 9, that breaches of the Australian Consumer Law can be pleaded by way of defence to a claim for judgment under section 15 of the SOP Act, without bringing a cross-claim or substantive proceeding.

The court held that:

• there was a real question to be tried as to whether the subcontractor’s alleged misrepresentations regarding payment of its employees and subcontractors tainted the payment claims; and
• despite agreeing with the subcontractor that the defence based on alleged misleading and deceptive conduct regarding solvency appeared to be contrary to the intention of SOP Act to ensure subcontractors can obtain cash flow and was therefore ‘inherently unattractive’, it was not so ‘clearly untenable’ that it could not have possibly succeeded.

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