10 September 2026
5 min read
#Construction, Infrastructure & Projects, #Dispute Resolution & Litigation
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The Victorian Court of Appeal has confirmed that parties cannot rely on allegations of misleading or deceptive conduct under the Australian Consumer Law (ACL) to prevent the enforcement of an adjudication determination under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act).
In 1559 High Street Pty Ltd v Camillo Builders Pty Ltd [2026] VSCA 129, the Court reinforced the long-standing principle that security of payment legislation creates a separate and interim right to payment that operates independently of the parties' ultimate contractual and legal rights.
The decision reinforces the 'pay now, argue later' nature of the SOP Act. A principal may have a genuine ACL, contractual or other civil claim arising from the circumstances in which work was authorised or costs were incurred.
However, that claim will generally not provide an immediate answer to an adjudicated payment obligation. The practical effect is that, unless the principal can set aside the adjudication decision on jurisdictional grounds, the principal will almost always need to pay first and pursue recovery later, while the contractor obtains the cash-flow benefit intended by the SOP Act.
In June 2021, 1559 High Street Pty Ltd (1559HS) engaged Camillo Builders Pty Ltd (Camillo) under a $38 million design and construct contract for a residential development in Victoria (Project). Camillo subcontracted the façade works to Colab Façade Pty Ltd (Colab Façade). Following Colab Façade's insolvency in June 2022, a related entity, Colab Building Tech Pty Ltd (Colab BT), was engaged to complete the façade works.
A key issue in the dispute was a series of representations allegedly made by Camillo regarding the completion of the outstanding façade works. 1559HS alleged that Camillo represented, during a meeting in September 2022, that:
1559HS claimed that it relied on those representations when authorising Camillo to engage Profix to complete the façade works, while Camillo denied making them in the manner alleged.
The Project did not proceed as anticipated, as the costs associated with completing the façade works increased substantially beyond the original estimates and completion was delayed. Between October 2022 and July 2023, Camillo claimed more than $3.7 million for the remaining façade works. It later served a payment claim for approximately $2.2 million, in respect of which the superintendent scheduled $171,384.38 for payment.
During adjudication proceedings commenced by Camillo under the SOP Act, 1559HS argued that the September 2022 representations constituted misleading or deceptive conduct in breach of section 18 of the ACL. Among other things, 1559HS contended that, had the representations not been made, it would not have instructed Camillo to proceed with the engagement of Profix for the relevant works and, accordingly, would not have incurred the costs claimed in the payment claim.
The adjudicator did not consider the merits of the developer's ACL claim and determined that Camillo was entitled to approximately $1.88 million.
Following the adjudicator's determination, Camillo obtained judgment in the Victorian County Court based on the adjudication certificate.
1559HS sought to have the judgment set aside in the Victorian Supreme Court, arguing that the SOP Act prevented it from relying on its ACL claims and was, therefore, inconsistent with Commonwealth law. The Supreme Court rejected those arguments, finding that the SOP Act did not impair, alter or detract from rights available under the ACL.
1559HS's appeal was dismissed by the Victorian Court of Appeal. The Court held that the SOP Act creates a distinct statutory entitlement to provisional payment that operates independently of the parties' contractual rights and any ACL claims.
In coming to its decision, the Court distinguished Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238 (Bitannia), a case in which the NSW Court of Appeal held that an ACL defence was not prohibited from being raised under the SOP Act. What was different about the ACL defence in Bitannia was that the misleading conduct related to the service of the payment claim and therefore concerned the engagement of the process underpinning the statutory entitlement to payment under the SOP Act, rather than the final entitlement of the parties.
This decision was one of six significant security of payment decisions from the first half of 2026 that we discussed in our mid-year wrap-up webinar. To learn about the other five decisions and their practical implications, watch our recording here.
If you have any questions about security of payment claims, please get in touch with 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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