This application invites consideration of the interplay between the Building and Construction Industry Security of Payment Act 1989 (NSW) (the "SOPA") and the Contractors Debts Act 1989 (NSW) (the "CDA"). The statutes share a field of operation and, it appears, were intended by Parliament to operate side by side; there being reference in the latter to the former, [1] albeit in a manner not relevant here.
On 7 December 2023, the defendant, Woonona Bulli RSL Memorial Club Limited (the "Club") entered a contract (the "Contract") with the plaintiff, Warrane Design Construct Fit-Out Pty Ltd (the "Builder") in relation to "Carpark Upgrade Works" at the Club's premises in Woonona. The works involved conversion of an existing bowling green to car parking and an upgrade of the then existing car park (the "Works").
Four days later, on 11 December 2023, the Builder entered a sub-contract with All Civil Solutions Group Pty Ltd (the "Sub-Contractor") for, in effect, all of the Works.
On 16 August 2024, 13 December 2024, and 13 February 2025, the Sub-Contractor served on the Club pursuant to s 6 of the CDA "debt certificates" issued by the District Court of New South Wales pursuant to s 7 of the CDA (the "Debt Certificates").
The work the subject of the Debt Certificates was, or was part of, the Works. [2]
The effect of the service by the Sub-Contractor on the Club of the Debt Certificates was to assign to the Sub-Contractor the obligation of the Club to pay money owed to the Builder under the Contract; to the amount in the Debt Certificates. [3]
On 12 September 2024, 20 December 2024, and 31 January 2025, in response to the Debt Certificates, the Club paid to the Sub-Contractor amounts that it would otherwise have paid the Builder for the Works.
A table setting out the dates of the Debt Certificates, the amounts of those Debt Certificates, the amounts paid by the Club, and the running balance from time to time follows:
Date Debt Certificate Payment to Sub-Contractor Balance Outstanding
16 August 2024 $989,183.55 $989,183.55
12 September 2024 $989,183.55 $0.00
13 December 2024 $1,102,958.87 $1,102,958.87
20 December 2024 $81,978.47 $1,020,980.40
31 January 2025 $284,318.94 $736,661.46
13 February 2025 $464,008.78 $1,200,670.24
[3]
The balance, $1,200,670.24, is now owing under the Contract by the Club to the Sub-Contractor; and not to the Builder.
In the meantime, on 25 January 2025, the Builder obtained an adjudication determination in respect of the Works under s 22 SOPA against the Club for $2,094,018.14 (the "Determination").
I was informed during argument that the effect of service of the Debt Certificates on the Builder's entitlements under the Contract was not an issue agitated before the adjudicator.
However that may be, on 3 February 2025 an adjudication certificate in respect of the Determination was filed in this Court under s 25 of the SOPA and judgment was entered in favour of the Builder against the Club for $2,141,780.73 (the "Judgment").
On 13 February 2025, the Builder applied for a garnishee order directed to the Commonwealth Bank of Australia ("CBA").
On 20 February 2025, the Court:
1. made an order attaching any credit balance in the Club's account with the CBA until the judgment debt of $2,141,780.73 was paid; and
2. issued a garnishee order accordingly.
Also on 20 February 2025, in separate proceedings (the "SOPA Proceedings"), the Club filed a Technology and Construction List Summons and List Statement seeking to have the Determination quashed to the extent of $1,030,281.79.
In those circumstances, by Notice of Motion filed in Court before me as Duty Judge on 25 February 2025, the Club sought an order staying the Judgment and setting aside the attachment and garnishee order.
The effect of the service by the Sub-Contractor of the Debt Certificates on the Club and of the payments subsequently made by the Club to the Sub-Contractor is that the Judgment, albeit obtained regularly under the procedures set out in the SOPA, overstates the amount due by the Club to the Builder under the Contract by $1,200,670.24. In the events that have happened, that $1,200,670.24 is due by the Club to the Sub-Contractor, not the Builder.
Under those circumstances, and as a matter of discretion, the Judgment must be stayed to that extent, and the attachment and garnishee order set aside.
To hold otherwise would be to ignore the operation of the CDA. The SOPA and the CDA should, if possible, be construed in a way that achieves their harmonious interaction, [4] and the Court's processes should also be used to achieve that result.
The balance of $941,110.49 under the Judgment remains owing by the Club to the Builder. The Builder contends that sum should be paid to it.
However, as it is now agreed that the SOPA Proceedings should be fixed for final hearing next Thursday, 6 March 2025, the appropriate course is to order the Club to pay that amount into Court in those proceedings pending their final determination.
The amount of $1,200,674.24 remains owing by the Club to the Sub-Contractor, which will presumably take such action as it considers to be in its interests to recover that sum.
For these reasons, earlier today I made the following orders in these proceedings:
1. The judgment entered in favour of the plaintiff/judgment creditor against the defendant/judgment debtor on 3 February 2025 be stayed to the extent of $1,200,670.24;
2. The orders made and entered on 20 February 2025:
1. attaching all debts due and accruing from the Commonwealth Bank of Australia ("CBA") to the defendant/judgment debtor to the extent of $2,141,780.13 (the "Attached Money"); and
2. that the CBA garnishee all debts due from it to the defendant/judgment debtor for the payment of the Attached Money,
be set aside;
1. The defendant/judgment debtor pay into Court in the SOPA Proceedings $941,110.49 to abide the outcome of those proceedings;
2. The costs of these proceedings be costs in the cause of the SOPA Proceedings;
3. These proceedings be consolidated with the SOPA Proceedings and continue and be heard as part of those proceedings.
In the SOPA Proceedings, I made the following directions:
1. Note that Proceedings No. 2025/44205 is consolidated into these proceedings.
2. The matter be fixed for hearing before Rees J on 6 March 2025.
3. The plaintiff is to serve all further evidence and final submissions by 5pm on 3 March 2025.
4. The defendant is to serve any evidence and final submissions by midday on 5 March 2025.
5. The parties are to email to the Associate to Rees J their submissions as and when served.
6. The parties are to provide to the Associate to Rees J two copies of a Court Book by 5pm on 5 March 2025.
[4]
Endnotes
Contractors Debts Act 1997 (NSW) ("CDA"), s 7(1A).
Ibid, s 5(2).
Ibid, s 8(1)-(2).
See Commissioner of Police (NSW) v Cottle (2022) 276 CLR 62 at 73; [2022] HCA 7 at [23] (Kiefel CJ, Keane, Gordon and Steward JJ) citing Commissioner of Police (NSW) v Eaton (2013) 252 CLR 1 at 28; [2013] HCA 2 at [78] (Crennan, Kiefel and Bell JJ); see also P Herzfeld and T Prince, Interpretation (3rd ed, Law Book Co, 2024), [11.120]-[11.130].
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Decision last updated: 27 February 2025
Parties
Applicant/Plaintiff:
Warrane Design Construct Fit-Out Pty Ltd
Respondent/Defendant:
Woonona Bulli RSL Memorial Club Ltd
Legislation Cited (5)
Building and Construction Industry Security of Payments Act 1999(NSW)
Building and Construction Industry Security of Payment Act 1989(NSW)