Contractors and subcontractors are often tempted to have a second go at a payment claim if the first one is challenged or does not succeed. The recent decision of the New South Wales Supreme Court, Taylor Construction Group Pty Ltd v Adcon Structural Group Pty Ltd [2023] NSWSC 723, confirms that when it comes to payment claims made after the termination of a construction contract, there is no entitlement to serve multiple payment claims. Section 13(1C) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) permits only one payment claim after termination, and a party cannot rely on its own change of position or the other side’s change of position to get around that limitation.

Note: Section 13(1C) reflects Parliament’s intention that, once the contractual payment regime has come to an end through termination, a claimant has a single statutory opportunity to advance its entitlement. The provision is designed to prevent multiple concurrent post-termination payment claims while still allowing a claimant to withdraw and replace an earlier claim where appropriate. Please seek legal advice before doing so.

Background

Taylor Construction Group Pty Ltd (Taylor) engaged Adcon Structural Group Pty Ltd (Adcon) to supply structural steel under two contracts for projects at Banksmeadow and Ingleburn. Following a dispute over default notices issued in early 2023 and an exchange of correspondence in which each side asserted the contracts were on foot, repudiated, affirmed or terminated, Adcon wrote on 11 April 2023 accepting what it said was Taylor’s repudiation. Within hours it served a payment claim for Banksmeadow, followed the next day by one for Ingleburn (the First Payment Claims), which, for the purposes of the proceedings, were accepted to satisfy Section 13(2) of SOPA. On 25 April 2023, Taylor issued payment schedules asserting the First Payment Claims were invalid. Rather than withdrawing them, Adcon served further payment claims for both projects on 31 May 2023 (the Second Payment Claims). Taylor then sued for an injunction, this time arguing that the First Payment Claims were valid and had exhausted Adcon’s entitlement under Section 13(1C).

Could Taylor Change Its Position on the Validity of the First Payment Claims?

Adcon argued that Taylor should not be permitted to assert the First Payment Claims were valid, having told Adcon in its 25 April 2023 payment schedules that they were not. Adcon relied on The New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd [2015] NSWSC 1339. There, Probuild had argued before an adjudicator that the adjudicator had jurisdiction, then challenged that same jurisdiction in Court once the determination went against it. Stevenson J described that conduct as “opportunist”, an impermissible attempt to “approbate and reprobate”, or to blow hot and cold. His Honour treated it as a powerful factor against granting Probuild relief, drawing on Einstein J’s observation in Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309 that SOPA’s scheme leaves “no room for a claimant to approbate and reprobate”.

As Adcon itself accepted, Netball Association v Probuild was not squarely on point, and Rees J found that the distinction was decisive. That case concerned whether the Court should exercise its discretion to set aside an adjudicator’s determination, where opportunistic conduct is a legitimate factor against relief. Section 13(1C), by contrast, involves no discretion: it applies according to its terms once the contract has been terminated and one compliant claim served. Whether Taylor had earlier taken a different, self-serving position on validity had no bearing on whether the First Payment Claims in fact complied with Section 13(2), and the doctrine of approbation and reprobation could not be imported to override a statutory bar.

Her Honour also noted the more direct path Adcon had available and did not take: a payment claim can be withdrawn and replaced without falling foul of Section 13(1C), as recognised in NC Refractories Pty Ltd v Consultant Bricklaying Pty Ltd [2013] NSWSC 842 and Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602. Adcon left the First Payment Claims on foot and served the Second Payment Claims regardless, which was one payment claim too many. As such, Adcon was permanently restrained from adjudicating the Second Payment Claims.

Why This Matters

Three points matter most for anyone running a payment claim after termination:

1. Treat your post-termination payment claim as your only shot: Section 13(1C) permits a single payment claim once a contract is terminated. If a payment claim needs correcting, withdraw it before serving a replacement.
2. Don’t assume an earlier position on validity is final: A payment schedule disputing a claim’s validity isn’t the other side’s last word on the issue, as a party can change that position later if it suits their case, and the Court won’t stop them just because a statutory provision applies on its own terms.
3. Affirming a contract after one repudiation doesn’t exhaust your rights: If the other side repeats the conduct, or repudiates again on a later occasion, that fresh breach can found an independent right to terminate, even where you’ve already elected to affirm once.

Final Thoughts

Adcon had a straightforward way out of this problem by withdrawing the First Payment Claims, then serving replacement payment claims. Instead, it left them on foot, served a second round regardless, and only tried to justify that course after the fact by pointing to Taylor’s own change of position. The result was a permanent injunction against adjudicating claims worth close to $7.4 million combined. Section 13(1C) does not forgive that mistake, so it is vital to get the first claim right or withdraw it properly before trying again.

Daniel Tassone is a Senior Associate of legal firm Paradise Charnock Hing. The firm specialises in Security of Payment Act claims throughout Australia. With over 100 claims adjudicated Paradise Charnock Hing is one of the most experienced SOPA claim firms in the country.