14 August 2026
4 min read
#Construction, Infrastructure & Projects
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Welcome to our July 2026 monthly roundup of decisions regarding the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).
A quiet month on the SOP Act front, with an enforcement theme to the decisions handed down. We expect more in this style as economic conditions tighten.
Binah Constructions Pty Ltd v Sunnice Pty Ltd [2026] NSWSC 789
The plaintiff obtained a judgment against the defendant under section 25(1) of the SOP Act and secured an ex parte freezing order. Shortly before judgment, the defendant had been appointed co-trustee of the Tsai Family Trust and entered into a Deed of Settlement and Release that transferred a number of apartments to it as trustee, potentially placing assets beyond the plaintiff’s reach. The Court found that the plaintiff bore the onus of demonstrating that the freezing order should be continued where it had been first granted ex parte. The Court continued the freezing order against the defendant’s beneficially owned assets. The decision reflects the court’s willingness to protect judgment creditors.
The NSW District Court stayed enforcement of a judgment in favour of a builder, arising from a SOP Act determination in a residential building dispute. The owner alleged defective work, delays and overpayment. The builder had ceased trading and was in a weakened financial position. The Court found there was a prima facie case against the builder and a real risk that if the judgment was enforced, it could not be recovered if the owner later succeeded. The Court therefore granted a stay of enforcement, subject to the owner providing security for the judgment amount and ordered the builder to provide $210,000 as security for costs. The decision indicates that the policy objectives of the SOP Act carry less weight where the builder is no longer trading and have less significance in a residential dispute than if the case involved an adjudication in a commercial context. The Court emphasised the interests of justice where there is a real risk that an owner would suffer irreparable loss if required to pay a judgment that may ultimately not be recovered.
Alta Vale Residential Pty Ltd (In Liq) (Rec Apptd) v STM123 Pty Ltd [2026] NSWSC 882
The NSW Supreme Court considered, among other issues, whether the plaintiffs had validly pursued claims under the SOP Act. The Court ultimately dismissed the SOP Act claims after finding that the plaintiffs had failed to establish that valid payment claims and statutory notices had been issued, and that the correct contracting entity had not brought the claims.
The decision demonstrates that notwithstanding that there may be underlying contractual entitlements, non-compliance with the SOP Act's statutory requirements will defeat a SOP Act claim.
Kim v JM World AU Pty Ltd (in liq); Bak v JM World AU Pty Ltd (in liq) [2026] NSWCA 146
This decision demonstrates how a payment claim under the SOP Act can extend beyond a construction dispute. Following a successful adjudication, the builder obtained a judgment debt of approximately $520,000 against JM World Au Pty Ltd, which became the foundation for a statutory demand, ultimately leading to the company’s liquidation. The two company directors were found liable for breaching their fiduciary duties by dissipating funds when the company was insolvent. While the appeal primarily concerned whether the company or its directors were the true contracting parties, the decision is a cautionary tale for implications under corporate and insolvency law.
For 20 years, our national Construction and Infrastructure team has been a leading adviser in security of payment disputes, acting for some of the largest security of payment disputes across the country. Security of payment legislation (in its various and evolving forms Australia wide) has transformed the way in which disputes in relation to time and money are initially dealt with in the construction industry. Success in this forum requires experts who know the ‘ins and outs’ and the ‘tips, tricks and traps’ which exist in the legislation. If you have any questions regarding this article or SOP, please contact us here.
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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