Misleading and deceptive conduct trumps claimant's entitlement to payment

The recent decision of Marques Group Pty Ltd v Parkview Constructions Pty Ltd [2023] NSWSC 625 confirms that misleading and deceptive conduct can be successfully advanced as a defence to an application for summary judgment made pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (BCISP Act), notwithstanding that the availability of such a defence appears to run contrary to the heart of the BCISPA Act.

Background

Marques Group Pty Ltd (Marques) was engaged by Parkview Constructions Pty Ltd (Parkview), to provide formwork on projects in Woolooware and Parramatta for $22.7 million and $14.665 million respectively.  A dispute arose out of two payment claims issued by Marques on 26 October 2022 totalling $2,257,260.68.

In reliance on a statutory declaration, which accompanied Marques' payment claim, that falsely declared that all of its subcontractors had been paid in full and that it was paying its debts as and when they fell due, Parkview served payment schedules proposing to pay a total of $1,785,492.84, which Parkview subsequently did not pay. To recover the scheduled amount, Marques sought an order for summary judgment pursuant to section 16(2)(a)(i) of the BCISP Act.

Parkview's defence was that, but for Marques' misleading representation that it had paid its subcontractors and was paying its debts as and when they fell due, Parkview would not have scheduled as payable such a large portion of the payment claims, and would have instead scheduled $Nil.  Marques contended that Parkview's defence was so clearly untenable that it could not possibly succeed, on the basis that:

1. to rely on section 18 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL) as a defence to a claim under the BCISPA Act, Parkview needed to articulate an application for an order for compensation under sections 237 or 243 of the ACL; and
2. Parkview was otherwise precluded from advancing any defence by virtue of s 16(4)(b) of the BCISP Act.

The NSW Supreme Court's decision

Although Rees J of the NSW Supreme Court agreed with Marques that Parkview's defence was inherently unattractive as it appeared to strike at the heart of the security of payment scheme, Her Honour considered that it did not meet the threshold of being so clearly untenable that it could not possibly succeed.

Accordingly, Her Honour dismissed Marques' application for summary judgment.

What does this mean for you?

This decision is a reminder that the contents of statutory declarations should not be taken lightly.

A claimant seeking to ensure cash flow under any of the security of payment regimes can have its claim defeated should a respondent to a payment claim assert that the claimant has engaged in misleading and deceptive conduct in respect of the payment claim.

For more information, please contact a member of our Construction and Infrastructure Team.

Authors

Andrew Kelly | Partner | +61 7 3338 7550 | akelly@tglaw.com.au

Samuel Speechly | Senior Associate | +61 7 3338 7529 | sspeechly@tglaw.com.au

Karen Le | Law Graduate

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