This decision confirms that the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOPA) “pay now, argue later” regime operates as an interim statutory scheme for progress payments that does not displace parties’ final rights under contract, common law or statute, including the Australian Consumer Law (ACL).

Background

In 1559 High Street Pty Ltd v Camillo Builders Pty Ltd [2025] VSC 244, Justice Stynes of the Supreme Court of Victoria considered whether provisions of the SOPA relating to the adjudication and enforcement of payment claims were inconsistent with the ACL, by excluding defences based on misleading and deceptive conduct.

The Plaintiff, 1559 High Street Pty Ltd (1559HS) entered into a construction contract with Camillo Builders Pty Ltd (Camillo) for the development of a mixed-use residential project in Glen Iris, Victoria. During the course of construction, Camillo submitted a payment claim under SOPA, which was subsequently adjudicated in Camillo’s favour. 1559HS participated in the adjudication process under an objection to jurisdiction on the basis of its constitutional challenge to the SOPA legislation. The Adjudicator did not consider the merits of the alleged ACL claim in making his determination.

Camillo subsequently entered judgment ex parte and 1559HS thereby became liable to make the interim payment of the adjudicated amount of approximately $1.8m. In the Supreme Court, 1559HS challenged the adjudication and judgment on the basis that it had been prevented by the SOPA provisions from raising a defence under the ACL, alleging that Camillo had engaged in misleading or deceptive conduct in relation to the replacement of the façade subcontractor.

1559HS contended that several provisions of SOPA were constitutionally invalid under section 109 of the Commonwealth of Australia Constitution Act, to the extent the SOPA provisions were inconsistent with the ACL and the rights conferred to seek relief for conduct contravening the ACL. These included provisions relating to adjudication determinations, enforcement of adjudicated amounts, and the exclusion of defences in proceedings to set aside judgment. The relevant SOPA provisions included sections 10B, 23, 28M, 28O and 28R(1)–(5), while the ACL provisions relied upon included sections 18, 232, 234, 236 and 237.

The Decision

Justice Stynes concluded that SOPA did not alter, impair or detract from the operation of the ACL and the legal rights conferred by its provisions. Specifically, her Honour held that:

• SOPA creates a separate, interim statutory entitlement to payment that does not affect the parties’ final rights under contract, common law or statute, including the ACL;
• The adjudication determines the right to timely payments of interim progress claims but preserves the parties’ legal rights under contract, common law or statute for final determination. Any rights arising under the ACL were not affected by the determination of the Adjudicator, accordingly there was no inconsistency between SOPA and the ACL; and
• The enforcement provisions of SOPA, including the ability to obtain ex parte judgment and the restrictions on raising defences or cross-claims, do not prevent a party from pursuing ACL remedies in separate proceedings.

The Court upheld the validity of the adjudication and judgment and dismissed 1559HS’s application. The decision confirms that SOPA’s “pay now, argue later” statutory regime operates independently of other rights of the parties under the contract, common law and statute. Further, constitutional inconsistency does not arise merely because a party is required to enforce rights under the ACL in separate proceedings.

The decision can be found here.