In Romeciti Macquarie Pavillion Pty Ltd v Watpac Construction Pty Ltd [2026] NSWSC 404, the Supreme Court of New South Wales has confirmed that a payment claim does not have to advance a claim under the construction contract to be a valid claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act).

Romeciti engaged Watpac to design and construct a 21-storey residential development in Macquarie Park, New South Wales. Various disputes arose during construction, which the parties resolved pursuant to a deed of settlement and release (Settlement Deed). Relevantly, the Settlement Deed:

• acknowledged that Romeciti had converted Watpac’s security to cash;
• provided that the security held by Romeciti remained subject to the mechanisms and operation of the contract;
• confirmed that practical completion of the last separable portion was achieved on 9 March 2022; and
• required Romeciti to ensure that the Superintendent issues a certificate of practical completion for the last separable portion within 10 business days of the Settlement Deed being executed.

In addition, clause 5.4 of the contract stated that Romeciti would release:

• 50% of the security within 14 days of the last separable portion achieving practical completion; and
• the balance of the security on date of the final certificate or expiry of the defect liability period.

Watpac issued Romeciti a final payment claim for the return of its security plus interest. Watpac claimed that practical completion was achieved on 9 March 2022, as recorded in the Settlement Deed and therefore, pursuant to clause 5.4 of the Contract, Romeciti’s entitlement to hold 50% of the security had ceased on 9 March 2022 and that amount was due to be returned to Watpac within 14 days. Watpac also claimed the balance of the security be returned in circumstances where the defect liability period had expired.

Romeciti issued a payment schedule assessing the scheduled amount owing to Watpac as “nil”, asserting that:

• the payment claim was “solely based on the application of the Settlement Deed”; and
• the Settlement Deed was “unenforceable, void or subject to rectification”.

Watpac referred the matter to adjudication. The adjudicator found that the Settlement Deed was not the source of Watpac’s claim, but rather, was relied upon as the trigger for practical completion and final certificates that should have been issued. Accordingly, the adjudicator found that Watpac was entitled to the full amount of security held by Romeciti.

Romeciti commenced proceedings, seeking to set aside the adjudication determination. Romeciti contended (amongst other things) that the adjudicator lacked jurisdiction because, on the proper construction of the payment claim, Watpac did not assert a claimed entitlement to a progress payment “under the construction contract concerned” as required by sections 8 and 13 of the Act. Rather, the claim asserted a deed-conditioned entitlement concerning security, and consequences of Romeciti’s alleged non-performance of the Settlement Deed, the result being that there was no valid payment claim under the Act.

The Court rejected this contention, finding that Watpac’s payment claim was in accordance with the Act. In reaching this finding, the Court held that:

• Sections 8 and 13 of the Act grant a statutory entitlement to a progress payment that is separate from rights arising under the construction contract.
• Security of payment laws do not require a person issuing a payment claim to assert a claimed entitlement to a progress payment under “the construction contract concerned”; rather, those words in section 13(1) of the Act refer to the person on whom the payment claim must be served, namely “the person who, under the construction contract concerned, is or may be liable to make the payment”.
• Section 13(1) of the Act does not require a claimant to:
  • positively assert in the payment claim that it has an entitlement to a progress payment pursuant to the terms of the construction contract; or
  • in fact have such entitlement.

it is sufficient that the claimant is a person referred to in section 8(1) of the Act who claims to be entitled to a progress payment.

The decision can be found here.