In April 2026, the NSW Supreme Court dismissed an appeal of an adjudication determination in Romeciti Macquarie Pavillion Pty Ltd v Watpac Construction Pty Ltd [2026] NSWSC 404. The Court confirmed that a valid payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) does not need to positively assert a contractual entitlement to a progress payment, provided the claim is made by a person who claims to be entitled to a progress payment under the Act.
On 13 May 2019, Romeciti Macquarie Pavillion Pty Ltd (Romeciti) and Watpac Construction Pty Ltd (Watpac) entered into a contract for the design and construction of the “Natura” residential development in Macquarie Park, New South Wales (Construction Contract).
Under the Construction Contract, Watpac was required to provide security in the form of two conditional undertakings. Watpac duly provided the following security to Romeciti:
• a BNP Paribas Undertaking for $3,750,147; and
• an Asset Insure Bond for $3,750,147.
The first piece of security was to be returned 14 days after Watpac provided certain documents following the last separable portion to achieve practical completion. The second piece of security was to be returned upon the later of either the issue of the final certificate or the expiry of the defects liability period.
On 10 October 2022, Watpac served a payment claim on Romeciti in the amount of $13,298,959 (excl GST). On 24 October 2022, Romeciti served its payment schedule, which scheduled the amount owing to Watpac as $Nil and claimed that Watpac owed Romeciti the amount of $5,657,158. Watpac issued an adjudication application in respect of this payment claim.
The adjudicator determined that Watpac was owed $5,717,413.59, plus interest and the adjudicator’s fees. This amount was subsequently paid by Romeciti to Watpac. On the same day, Romeciti cashed in the Undertaking and Bond provided by Watpac.
On 11 July 2025, Romeciti and Watpac entered into a Deed of Settlement and Release, in which it was agreed, inter alia, that the Undertaking and Bond are held by Romeciti, subject to the mechanisms and operation of the Construction Contract.
On 22 January 2026, Watpac served a final payment claim on Romeciti, seeking payment of the amount of the Undertaking and Bond, plus interest. On 5 February 2026, Romeciti served its payment schedule, which scheduled the amount owing to Watpac as $Nil. Watpac issued a further adjudication in respect of this payment claim, with the adjudicator finding that Watpac was entitled to the return of the encashed security plus interest. Romeciti subsequently commenced proceedings in the NSW Supreme Court, seeking orders that the adjudication determination be set aside.
Appeal proceedings
In the NSW Supreme Court proceedings, Romeciti advanced three grounds of appeal. The key ground of appeal was that the adjudicator lacked jurisdiction because Watpac did not “assert a claimed entitlement to a progress payment under the ‘construction contract concerned’ within ss 8 and 13(1) of the [Building and Construction Industry Security of Payment] Act [1999 (NSW)]… Rather, the claim asserted, or necessarily depended upon, a deed-conditioned entitlement concerning encashed Security and the consequences of Romeciti’s alleged non-performance of the Deed …”.1
The Court rejected this contention. It held that 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 under the terms of the construction contract, nor does it require the claimant to in fact have that entitlement. The phrase “the construction contract concerned” in section 13(1) identifies the person on whom the payment claim must be served – being the person who, under that contract, is or may be liable to make the payment. It is therefore sufficient that the claimant is a person within section 8(1) who claims to be entitled to a progress payment.
The Court also rejected the characterisation of Watpac’s claim as one for amounts recoverable only under the general law, such as damages or restitution. The Court found that Watpac’s claim was sufficiently referable to the security release mechanism in the Construction Contract. Although the Deed of Settlement and Release was relevant to matters such as practical completion and the status of the security, it did not operate as the sole source of Watpac’s entitlement.
All three grounds of appeal were dismissed.
For further information about this decision and its implications, please contact a member of Addisons’ Construction & Infrastructure team.
1 Romeciti Macquarie Pavillion Pty Ltd v Watpac Construction Pty Ltd [2026] NSWSC 404, paragraph 110.