Building and Construction Part 5: Interaction between the Building and Construction Industry Security of Payment Act 1999 (NSW) and the Contractors Debts Act 1997 (NSW)

In Warrane Design Construct Fit-Out Pty Ltd v Woonona Bulli RSL Memorial Club Ltd [2025] NSWSC 123, Stevenson J considered the interaction between the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) and the Contractors Debts Act 1997 (NSW). His Honour opined that the SOP Act and the Contractors Debts Act 1997 (NSW) should, if possible, be construed in a way that achieves their harmonious interaction.

The Woonona Bulli RSL Memorial Club Ltd (Club) brought an application to stay a judgment entered in favour of the builder after a successful adjudication determination. The Club also sought to set aside a garnishee order based on the judgment.

The Club entered into a head contract with the builder in relation to carpark upgrade works. The builder and subcontractor entered into a subcontract for those works.

A number of debt certificates were served on the Club by the subcontractor. By 13 February 2025, there remained an outstanding amount of approximately $1,200,000 still owing to the subcontractor by the Club under the debt certificates.

On 25 January 2025, the builder obtained an adjudication determination against the Club for approximately $2,000,000 (Determination). On 3 February 2025, the adjudication certificate was filed in the Supreme Court of NSW and judgment was entered in favour of the builder against the Club (Judgment).

On 20 February 2025, the builder obtained a garnishee order. On the same day, the Club filed proceedings in the Supreme Court of NSW seeking to have part of the Determination quashed.

On 25 February 2025, the Club sought an order staying the Judgment and setting aside the garnishee order.

Stevenson J held:

[17] 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.

[18] 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.

[19] 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, and the Court’s processes should also be used to achieve that result.

His Honour set aside the garnishee order and ordered that Club pay the balance of the Judgment, an amount of approximately $940,000, into Court, pending the determination of the Club’s application to have the Determination quashed.  

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Copyright declaration: the text to this article is extracted from the Security of Payment (NSW) chapter in the Thomson Reuters for the loose-leaf subscription service, Commercial Arbitration Law & Practice, contributed by Vikram Misra.

Vikram Misra

Vikram Misra was admitted as a solicitor in 2012 and called to the NSW Bar in 2015. He maintains a broad commercial practice and is regularly briefed in matters relating to property law and construction law. Vikram has completed a Graduate Diploma in Taxation Law at the University of Sydney in 2015 and a Master of Laws majoring in construction law and contract law at the University of Melbourne in 2016. Vikram is the author of “Security of Payment in the NSW Building & Construction Industry (7th Ed)” (Thomson Reuters). He is also the sole contributing author to “Jacobs, Commercial Damages” (Thomson Reuters) and “Jacobs, McCarthy & Neggo, Injunctions: Law and Practice” (Thomson Reuters). Vikram is also a contributing author to Commercial Arbitration Law and Practice (Thomson Reuters) in the following sections: Domestic Arbitration, International Arbitration, Security of Payment (NSW) and Security of Payment (SA). Vikram is currently a casual academic at Western Sydney University in the subject "Building Law".