30 August 2026
14 min read
#Construction, Infrastructure & Projects
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From March 2021, the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) fully inhabited the residential construction sector in NSW. Although it formerly applied to claims by residential subcontractors against head contractors and (to paraphrase) to claims against non-owner occupiers, owner occupiers had previously been exempt from its exacting provisions.
A mandatory (4 page) fact sheet was introduced to plug the knowledge gap for owner occupiers new to the SOP Act.
Inevitably, the Courts had to confront the uncomfortable scenario where a residential owner occupier had not served a payment schedule and the contractor was unlicensed and uninsured and sought to enjoy the benefit of section 15 of the SOP Act. The equally uncomfortable result (in a 2023 decision of the NSW Supreme Court) was that the non-compliances with section 4 and section 92 of the Home Building Act 1989 (NSW) were no bar to the unlicensed and uninsured contractor availing itself of the payment mechanisms under the SOP Act. Our previous article refers.
A timely change to the legislation followed in 2024, providing that residential owners would not be in that position again, the SOP Act restricting the right to make a progress claim (and therefore a payment claim) where the works under the construction contract were carried out by unlicensed contractors, or without a policy of insurance under the Home Building Compensation Fund. Another previous article refers.
An example, perhaps, of the law changing to accommodate and avoid an unintended outcome.
Recently, a line of decisions is emerging which draw another protective line, benefiting residential owners.
For more than 20 years, in decisions under the SOP Act, we have been told that cash flow is king. That the counterparty risk, after interim payment under the SOP Act, is held up the chain and that this is the philosophy on which the SOP Act is founded.
To be sure, there have been exceptions but they haven’t been directed at a particular asset owning class, which the Court has pointed out was not in the contemplation of the original drafters as being subject to the legislation, when it was introduced in 1999, or in the contemplation of the Courts during early decisions as to the statutory context. As noted above, the expansion of the SOP Act into the residential owner occupier space is a relatively recent development.
The decision is Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114 which has been more recently followed in Brennan Constructions (NSW) Pty Limited v Kemourtzis; Kemourtzis v Brennan Constructions (NSW) Pty Limited [2026 NSWDC 222].
Each decision concerned a stay application.
In Black Label, a stay application was sought by an owner in relation to the enforcement of a section 25 judgment arising from an adjudication certificate issued under the SOP Act. The stay was sought until the determination of separate proceedings brought by the owner in relation to a deed of variation which was alleged to have been executed under duress and undue influence and by reason of the builder’s misleading or deceptive and unconscionable conduct. The relief sought included that the deed be declared void or unenforceable under the ACL and the Contracts Review Act 1980 (NSW). The stay was granted by the District Court on the condition that the section 25 judgment amount was paid into Court. The builder appealed.
In Brennan, a stay application was sought by an owner in relation to the enforcement of an adjudication certificate issued under the SOP Act. The context included a separate proceeding brought by the owner, featuring claims of breach of contract, allegations of delay, defects and breaches of statutory warranties. The contract had been terminated following the unpaid adjudication determination. The builder had ceased trading by the time of the stay application.
With reference to the Court of Appeal’s decision in Black Label, Habib SC DCJ in Brennan stated:
"…..As the Court of Appeal noted in Black Label, statements in authorities concerning the significance of the statutory policy, and in particular, the policy of assigning the risk of insolvency to the principal, to applications for a stay were made in the context where the payment regime excluded residential construction contracts (the observation applies equally where a real risk that money cannot be repaid exists short of insolvency). As noted by the Court, in that context “the regime was directed to contracts between, for example, developers and their builders, or between head contractors and their sub-contractors. That was a commercial context ...”
The Court of Appeal noted that when the SOPA operated in that commercial context, the risk of a counter-party’s insolvency was a commercial risk. Finally, the Court of Appeal said on this point:
The interests engaged where the principal is a consumer are also broader and different in kind from those involving commercial parties, such that the significance of the statutory policies may be different when considering the demands of justice in a particular case. For consumers of residential building services, the prospect that the contractor might take their money pursuant to an unfavourable adjudication and then be unable to meet a s 32 judgment is not a mere commercial risk to be factored into the structure and conduct of a commercial relationship with another business.
In my view, the policies underpinning the SOPA, while still relevant to the exercise of the discretion to grant a stay and must be brought to account in that regard, have less significance in the present case than if the case involved an adjudication in a commercial context as explained in Black Label.
It has to be said that a stay and its terms are both a balancing exercise and an exercise of judicial discretion. A decision whether to grant a stay and on what terms doesn’t fundamentally alter the application of the SOP Act per se, however, the decisions do appear to cushion the impact of the SOP Act for residential owners. In the face of the deliberate application of the SOP Act in this space, and the licensing and insurance prerequisite restriction introduced since then, it is difficult to see what more can be done to soften its impact for this asset owning class.
Author: Christine Jones
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Feat Active Pty Ltd t/a AW Design Build v Tellett [2026] NSWCATAP 247
APPEALS – no question of principle
Civil and Administrative Tribunal Act 2014 (NSW), ss 4, 78, 80; cl 12 of Sch 4; Civil and Administrative Tribunal Rules 2014 (NSW), r 29(b); Home Building Act 1989 (NSW), s 48O
Romanov v Secretary, Department of Customer Service [2026] NSWCATOD 110
ADMINISTRATIVE LAW — application for review of decision to refuse contractor licence following company liquidation — whether there is evident risk to the public — whether all reasonable steps taken to avoid liquidation — whether sufficient risk mitigation measures to avoid future liquidation — whether fit and proper person — application of s 33B and s 33C(3) of the Home Building Act 1989
Administrative Decisions Review Act 1997 (NSW); Corporations Act 2001 (Cth); Home Building Act 1989 (NSW)
Craft v Khaled trading as Wollongong Fencing and Gates [2026] NSWCATAP 248
APPEAL - Home Building Act (NSW) 1989 - time limit for breach of statutory warranty – date of completion – extension of warranty period – whether decision against the weight of evidence and not fair and equitable – new evidence
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Home Building Act (NSW) 1989
Achiy Homes Pty Ltd v Secretary, Department of Customer Service [2026] NSWCATOD 109
OCCUPATIONS — Builders — Licences and registration – whether the natural person applicant is a fit and proper person to hold building contractor licences
Administrative Decisions Review Act, ss 9, 63; Civil and Administrative Tribunal Act 2013 (NSW), 36; Home Building Act 1989, ss 12, 33C(6), 56, 59, 62(1)(f), 62(1)(g)(i), 62(1)(g)(ii), 64, 83
FINAO Pty Ltd v Rosebery 2021 Pty Ltd [2025] NSWSC 1567
COSTS — Security for costs — Relevant factors — Other factors — Impecuniosity conceded — Application by second defendant — Where second defendant separately represented from first defendant — Where there is significant overlap in the cases of the defendants — Whether second defendant’s choice to obtain separate legal representation disentitles it from obtaining security for costs — Consideration of the effect of separate legal representation on whether security for costs should be ordered — Where the sum of money in dispute in these proceedings is “modest” for proceedings in the Supreme Court — Where security is sought for approximately $180,000 — Whether quantum of security for costs sought is proportionate to the importance and complexity of the subject matter in dispute
Civil Procedure Act 2005 (NSW), s 60; Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, ss 18, 236, 237; Corporations Act 2001 (Cth), s 1335(1); Home Building Act 1989 (NSW), s 4
Atab v The Owners – Strata Plan No 8108 [2026] NSWCATAP 256
APPEALS – costs - discretionary decision – whether errors of law – whether errors of fact and law
Civil and Administrative Tribunal Act, 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Strata Schemes Management Act 2015 (NSW)
Mearbany v Secretary, Department of Customer Service [2026] NSWCATOD 112
ADMINISTRATIVE LAW – administrative review – refusal of home builder licence – liquidation of company – bankruptcy of sole director – chapter 5 body corporate - s 33C(3)(a) - (c) of the Home Building Act 1989 (NSW) has the applicant provided the Tribunal sufficient information to allow the applicant to be issued a builder licence
Olympia Homes Pty Ltd v Tian [2026] NSWCATAP 257
BUILDING AND CONSTRUCTION – no insurance taken out as required by s 92 of the Home Building Act 1989 (NSW) – whether a homeowner has a right to recover money paid under a contract where works uninsured – consideration of Field v Dettman [2013] NSWCA 147 – no such right of action - whether the defence of a claim for the return of a deposit received by an uninsured builder is the enforcement of a right of action by the builder to recover money contrary to s 94(1) of the HBA – defence not enforcement.
LAND LAW – strata title – duty of owners corporation to maintain and repair common property – lot owner suing for breach of duty - whether duty excluded by common property rights by-law – commercial lots – termination of lease during fixed term – damages – economic loss - whether reasonably foreseeable – whether caused by failure of lot owners to take reasonable measures to avoid loss– principles applicable to assessment of damages – uncertainty of future events - Strata Schemes Management Act 2015 (NSW) ss 106, 108, 142, 232
Waterhouse v Rothner [2026] NSWSC 937
CONTRACTS — construction — contract for sale of residential property — Spanish style Rose Bay mansion – Villa Biscaya — purchaser granted pre-completion access and exclusive occupation — purchaser permitted to carry out works on property — trees removed from adjoining property — purchaser authorised removal — whether removal breached special condition prohibiting damage, nuisance or inconvenience to adjoining property — clause confined to damage caused by works carried out on subject property
Bills introduced by Government
Commonwealth Land (Affordable Housing) Bill 2026
Regulations and other Miscellaneous Documents
Environmental Planning and Assessment (Housing Targets) Order 2026 (2026-397) LW 7 August 2026
Environmental Planning and Assessment (Regions) Amendment Order 2026 (2026-398) LW 7 August 2026
Government Sector Audit Regulation 2026 (2026-400) LW 7 August 2026
Environmental Planning Instruments
Dungog Local Environmental Plan 2014 (Map Amendment No 2) (2026-406) LW 7 August 2026
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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