OSB Group Pty Ltd v Complete Hire & Sales Pty Ltd [2024] WASC 310

Tom French |  Penny Bond |  Alicia Harries

Key takeouts

• The Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOPA) contains a process to recover payments claimed under a construction contract, but not paid or scheduled, as a debt in court.

• SOPA does not allow a respondent to the summary judgment application to raise any defence in relation to matters arising out of the construction contract.

• The process requires a claimant to apply for summary judgment, which will be denied if it is determined there is a serious question to be tried.
  
  In refusing to grant summary judgment, the WASC held that there was a serious question to be tried in respect of the validity of the restraint in raising a defence under the SOPA, to the extent that restraint was inconsistent with the respondent’s rights under the Australian Consumer Law (ACL).

• The decision demonstrates that the SOPA summary judgment process is subject to the well established principles for summary judgment applications and requires the applicant to establish that there is no real question to be tried.  

Facts

OSB Group Pty (OSB) alleged it performed work under a ‘construction contract’ for Complete Hire & Sales Pty Ltd (Complete) within the meaning of SOPA. OSB issued a payment claim to Complete, which Complete failed to pay.

OSB commenced proceedings to recover the payment as a statutory debt under SOPA by making an application for summary judgment under Order 14 of the Rules of the Supreme Court 1971 (WA) (Rules).

The Rules provide that summary judgment will only be ordered when there is no real question to be tried.

Complete contended there were serious questions to be tried as to:

• whether a ‘construction contract’ existed;
• whether it was entitled to raise entitlement to relief for alleged misleading or deceptive conduct by OSB under the ACL as a defence to OSB’s claim;
• if it were entitled to raise such a defence, whether a ‘construction contract’ existed in circumstances where a positive finding of misleading or deceptive conduct may lead to a declaration the ‘construction contract’ was void; and
• if it were not entitled to raise such a defence under SOPA, whether section 27(3)(b) of SOPA was inconsistent with Complete’s rights under the ACL to render that section of SOPA invalid pursuant to section 109 of the Constitution.

Legislative framework

SOPA applies to every ‘construction contract’ entered into on or after 1 August 2022.

The legislation contains a broad definition of ‘construction contract’ and establishes a statutory regime for claimants to seek payment for work performed under such contracts.

Where a claimant has made a ‘payment claim’ within the meaning of SOPA, and the respondent fails to pay the claimed amount (where no payment schedule has been issued), or the amount certified in any payment schedule by the due date for payment, the claimant may:

• recover the unpaid amount as a debt due in a court of competent jurisdiction; or
• apply for adjudication. 

If the claimant applies to court, the court cannot give judgment in favour of the claimant unless the three ‘relevant circumstances’ set out in SOPA exist, namely:

1. The respondent did not give a payment schedule within the time required or did give a payment schedule within the time required, indicating an amount to be paid to the claimant.
2. The respondent did not pay the claimed amount (where no payment schedule was given) or the scheduled amount (where a payment schedule was given) by the date for payment.
3. If the amount owed is dependent on the substitution of security, the claimant has taken the required steps in respect of security.

Section 27(3)(b) of SOPA provides that, in such proceedings, the respondent is not entitled to raise any defence ‘in relation to matters arising under the construction contract’ or make any cross-claim.

As SOPA does not contain an independent entitlement to summary judgment, parties seeking summary judgment must make an application under Order 14 rule 1 of the Rules.

Decision

In deciding whether to make the order for summary judgment, Musikanth J noted that:

• The power to order summary judgment will be exercised with great care.
• Summary judgment should only be granted in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if the matter went to trial.
• Summary judgment should not be granted where the facts are in dispute.
• When there is conflict on affidavit evidence, the court should assume the affidavit(s) of the party resisting the application will be accepted.
• While the court may determine questions of law, usually it will be appropriate to leave such questions for trial.

As to whether there was a serious question to be tried, Musikanth J held:

• There was not a serious question to be tried as to whether there was a ‘construction contract’ between the parties. His Honour was satisfied on the evidence that there was an arrangement between the parties under which OSB would perform ‘construction work’ for Complete.
• However, because Complete was not permitted to raise a defence under the ACL due to section 27(3)(b) of the SOPA, there was a serious question to be tried in respect of the asserted constitutional inconsistency invaliding section 27(3)(b).

Take aways

Parties weighing up whether to commence court proceedings under SOPA must be aware that well-established principles apply to summary judgment applications.

A party applying for summary judgment must ensure there is no serious question to be tried as to the claimant’s right to payment.