LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2024] WADC 61

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 owed under a construction contract as a debt in court.
  
• An application for summary judgment under SOPA will be dismissed if a claimant does not make out a prima facie case that there was a construction contract under which it is entitled to payment.

Facts

On 15 January 2024, LHRE Group Pty Ltd (LHRE), a labour-hire company, commenced proceedings in the District Court of Western Australia for summary judgment under SOPA against Complete Hire & Sales Pty Ltd (Complete). LHRE’s payment claim related to the supply of goods and services relevant to construction works on the Spinifex Hotel in Derby.

In support of its application, LHRE filed two affidavits and written submissions. LHRE contended that the contract between LHRE and Complete was partly oral, partly in writing and partly by conduct but was a ‘construction contract’ within the meaning of SOPA. LHRE invoiced Complete $81,934 for works performed.

In opposition, Complete filed an affidavit and written submissions contending that:

• SOPA did not determine whether summary judgment ought to be given: this was to be determined in accordance with Rules of the Supreme Court 1971 (WA) Order 14 rule 1; and
• there was a real question to be tried regarding whether a construction contract existed between the parties, which was a ‘basic and essential requirement’ of SOPA, and therefore summary judgment should not be given for LHRE.

Legislative framework

Building and Construction Industry (Security of Payment) Act 2021 (WA)

SOPA commenced operation on 1 August 2022 and applies to construction contracts entered into on or after that date.

Section 27(2) of SOPA gives claimants the choice of either making an adjudication application or recovering unpaid amounts as a debt due in a court of competent jurisdiction (where the respondent has not paid a payment claim by the time for payment, or has not paid the amount certified in a payment schedule by the time for payment).

If the claimant commences proceedings (instead of an adjudication application), the court can only make a judgment in favour of the claimant if it is satisfied ‘relevant circumstances’ exist, being:

• the respondent:
  • did not respond to the payment claim by giving a payment schedule within the time allowed; or
  • did give a payment schedule within the time allowed, which indicates an amount owing to the claimant;
• the respondent has not paid the amount claimed (if no schedule was issued) or scheduled in full by the due date for payment; and
• if the amount claimed is dependent on the substitution of performance security, the requisite security bond has been issued.

The respondent is not entitled in the proceedings to bring any cross-claim or raise any defence in relation to matters arising under the construction contract. 

Rules of the Supreme Court (WA)

Order 14 rule 1 provides that where a statement of claim has been served on a defendant, and the defendant has entered an appearance, a plaintiff may apply for summary judgment on the ground the defendant has no defence to a claim. The Order applies to every action commenced by writ (other than a probate or admiralty action).

Decision

On 1 August 2024 Principal Registrar McGivern dismissed LHRE’s application.

The Registrar considered that the ordinary principles relating to summary judgments under the Rules of the Supreme Court 1971 (WA) applied, regardless that the application was made under SOPA.

As the affidavit evidence did not clearly establish there was a construction contract between the parties, and that Complete had shown sufficient cause against the application on the basis that there was an assignment of any entitlement to payment (which disentitled LHRE from making a SOPA payment claim), the application failed.

Parties applying to court for recovery of payment under SOPA must establish with certainty the SOPA provisions are engaged, and that there is no arguable defence to a SOPA summary judgment claim.