Written by In Sunshine East Pty Ltd v CBEM Holdings Pty Ltd [2023] NSWSC 744, the Supreme Court of NSW confirmed that a residential builder may still be entitled to payment under the Security of Payment Act 1999 (NSW) (‘SOP Act’) even without it possessing the required licence or homeowners warranty insurance.
In this case, Sunshine East Pty Ltd engaged ASY Construction Pty Ltd to oversee a residential development. The owner and construction manager then contracted CBEM Holdings Pty Ltd to complete civil and stormwater works under a standard trade agreement. The contractor entered the contract without holding the required builder’s licence under the Home Building Act 1989 (NSW) (‘HBA’).
After carrying out the work, the contractor issued a payment claim under the SOP Act. The owner did not provide a payment schedule and did not make payment. The contractor commenced proceedings in the District Court to recover the amount claimed as a debt. The Court entered summary judgment for the contractor, finding the owner had no arguable defence, including on the licensing and insurance issues raised.
The owner appealed the decision to the Supreme Court of NSW. The appeal was dismissed, and the summary judgment in favour of the contractor was upheld. The Court found the contractor was still entitled to be paid under the SOP Act despite failing to meet licensing and insurance requirements, as this legislation confers a separate right to payment that is not removed by restrictions under the HBA.
Ultimately, this case reinforces that while the HBA may restrict contractual enforcement rights, it does not displace the operation of the SOP Act. However, issues arising from unlicensed work or lack of insurance may still be relevant to claims in separate proceedings.