In Warrane Design Construct Fit-Out Pty Ltd v Woonona Bulli RSL Memorial Club Ltd [2025] NSWSC 123, the Supreme Court of New South Wales considered whether a principal was liable to pay the same debt under both the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) and the Contractors Debts Act 1997 (NSW) (Debts Act).

Many of our readers will already be familiar with SOPA. The Debts Act is another piece of legislation facilitating payment to unpaid subcontractors and suppliers, by allowing them to seek payment directly from the principal once they have obtained a debt certificate for money owed by the head contractor.

Woonona Bulli RSL Memorial Club (Principal) engaged Warrane Design Construct Fit-Out Pty Ltd (Contractor) to upgrade its car park. The Contractor subcontracted the works to All Civil Solutions Group Pty Ltd (Subcontractor). The Subcontractor obtained three debt certificates in relation to unpaid parts of the works, and served the certificates directly on the Principal under the Debts Act. The Principal paid the first certificate in full and made part-payment of the second. These are amounts that the Principal would otherwise have been required to pay directly to the Contractor under their contract.

The Contractor lodged payment claims under SOPA and ultimately obtained an adjudication determination under SOPA that the Principal owed it (approximately) $2 million. In that process neither party raised before the adjudicator the issue of the Principal’s part-payments to the Subcontractor. The Contractor filed the adjudication certificate in the Supreme Court and obtained judgment in its favour. In response, the Principal filed two proceedings, one to have the SOPA judgment quashed to the extent the Principal had already paid or was liable for monies payable to the Subcontractor under the Debts Act, and the second seeking an order to stay the judgment and have a garnishee order set aside pending final determination of the SOPA matter.

While its orders were interim in nature, the Supreme Court’s judgment provides useful insight on the interaction of SOPA with the Debts Act. The Court held that because the Subcontractor served debt certificates on the Principal in relation to the works, and the Principal made payments accordingly for the works, the SOPA judgment overstated the amount due to the Contractor.

This was despite the fact that the Contractor obtained the SOPA judgment in the standard way, following all proper processes. The Court emphasised that “…SOPA and the [Debts Act] should, if possible, be construed in a way that achieves their harmonious interaction, and the Court’s processes should also be used to achieve that result”. To refuse a stay of the SOPA judgment in the circumstances would be to ignore the operation of the Debts Act. It was relevant in this respect that the Debts Act operated to assign to the Subcontractor, the obligation of the Principal to pay money owed to the Contractor under their contract.

The decision can be found here.