Insolvency to Become a Bar to the Application of SOPA in NSW – But Not Yet

    View Authors March 2019

    In New South Wales (NSW), unlike in Victoria, claimants in liquidation have been able to make claims under Security of Payments Acts (SOPA). This has been recently reaffirmed in the case of Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In Liquidation) [2019] NSWCA 11 (Seymour), where the court doubled-down on this position and further explained why the NSW position differs from the position taken by the Victorian Court of Appeal in the infamous Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247 (Façade).

    However, Seymour is soon to become somewhat academic. The position in NSW will be altered upon commencement of the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) (Amendment Act). Section 32B of the Amendment Act explicitly prohibits a corporation in liquidation from serving, or taking action to enforce, a payment claim or an adjudication determination.

    The Amendment Act was passed on 21 November 2018, however, it has not yet commenced. This date is still awaiting proclamation and, given the state election happening this weekend, it may be some time before a new or returning government gets around to arranging this.

    This legislation will mark a sharp change in the right of insolvent claimants. This client update sets out the position on insolvent claimant’s SOPA rights currently, and once the Amendment Act commences.