Black Label Developments Pty Ltd v McMenemy [2025] NSWCA 114

• Background: The case concerns a dispute arising from a residential building contract between Black Label Developments Pty Ltd (the builder) and McMenemy (the owner). The builder obtained a judgment under s 26 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) for payment of a progress claim. The owner sought to set aside a deed of variation to the contract, alleging duress, undue influence, unconscionable conduct, misleading or deceptive conduct, and/or relief under the Contracts Review Act 1980 (NSW).

  
  

• Key Issues:

  • Whether the deed of variation was enforceable or should be set aside on equitable or statutory grounds.

  • Whether enforcement of the SOPA judgment should be stayed pending the resolution of the owner's claims.

  • The interaction between the SOPA regime (which provides for rapid interim payment) and the owner's rights to challenge the underlying contract or deed.

  
  

• Decision (District Court):

  • The Court granted a stay of enforcement of the SOPA judgment under s 135 of the Civil Procedure Act 2005 (NSW), on the condition that the disputed amount be paid into court.

  • The stay was considered appropriate given the serious allegations raised by the owner and the potential for the deed of variation to be set aside.

  • The case highlights the court's willingness to balance the builder's statutory right to prompt payment under SOPA with the owner's right to seek equitable or statutory relief in relation to the contract.

Practical Implications - Residential Building Contract:

• This case demonstrates that while SOPA judgments are designed to ensure prompt payment to builders, courts retain discretion to stay enforcement where there are credible claims that the underlying contract or deed may be invalid.

• Owners seeking to challenge SOPA judgments must provide sufficient evidence of duress, unconscionability, or other grounds to justify a stay.

• Builders should be aware that SOPA judgments may not be final if the underlying contract is subject to challenge.