No inconsistency between state-based SOP Act and Commonwealth's Australian Consumer Law

In the recent case of 1559 High Street Pty Ltd v Camillo Builders Pty Ltd & Ors [2025] VSC 244, the Principal to a construction contract for a residential development alleged that the Contractor made misleading or deceptive representations about the cost of the works prior to commencement and claimed that a Contractor's statutory right to progress payments for construction work was inconsistent with its rights under the ACL arising from those alleged representations. 

It was argued that the inconsistency resulted in the SOP Act being read down, pursuant to section 109 of the Australian Constitution.  The Court comprehensibly rejected those submissions by differentiating between procedural rights to interim relief and substantive rights to final relief.  It was held that the SOP Act provides an expedited enforcement procedure on an interim basis while the "full judicial armoury" remained available should the underlying dispute be resolved on a final basis, including claims under the ACL.

Key factual background

The Principal alleged that the Contractor made representations to it in respect of the cost to appoint an alternative subcontractor to carry out and complete façade works after the original façade subcontractor entered voluntary administration.  In reliance on those representations, the Principal directed the Contractor to terminate the original façade subcontract which was for a fixed price and appoint a new façade subcontractor on a "do and charge" basis.

The actual cost incurred by the new façade subcontractor was far in excess of the amount represented by the Contractor.  As a result, when the Contractor issued a payment claim for the actual costs incurred, the Principal rejected these additional costs in its payment schedule referring to the Contractor's alleged misleading and deceptive conduct.

The Contractor referred the matter to an adjudicator under the SOP Act.  The adjudicator determined that the Contractor was entitled to most of the costs claimed for the façade works and did not consider the Principal's ACL claims for misleading and deceptive conduct on the basis that compensation for such claims would be an Excluded Amount.  The Excluded Amounts regime was removed from the Victorian SOP Act by reforms that took effect in April 2026.

When the Principal refused to pay the adjudicated amount, the Contractor obtained a judgment debt in the County Court of Victoria pursuant to section 28R of the SOP Act.

No inconsistency between SOP Act and ACL

In an attempt to set aside the judgment debt obtained by the Contractor, the Principal argued in the Victorian Supreme Court that:

• the Contractor's statutory right to a progress payment, the adjudication process and ability to obtain a judgment debt (without right of defence or cross-claim) for an adjudicated amount under sections 10B, 23, 28M and 28R of the SOP Act was inconsistent with the Principal's rights under sections 18, 232, 234, 236 and 237 of the ACL in respect of harm suffered by it due to the misleading or deceptive conduct of the Contractor; and
  

• the SOP Act was invalid to the extent of the above inconsistency pursuant to section 109 of the Australian Constitution which provides that laws of the Commonwealth will prevail over inconsistent State laws.

Justice Stynes rejected the above arguments on the basis that the rights and processes under the SOP Act do not alter, impair or detract from the operation of the ACL.  Her Honour noted that the operation of the SOP Act merely altered the distribution of financial risk between parties to a construction contract ahead of the final determination of their rights under contract, common law and statute. 

On this basis, the SOP Act was without prejudice to the ultimate legal rights of parties to a construction contract including any statutory rights under the ACL, and there was no inconsistency for the purposes of the Australian Constitution.

Distinguished from inconsistencies regarding claimants in liquidation

This should be distinguished from the case of Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247 where the Victorian Supreme Court held that the SOP Act was invalid under section 109 of the Australian Constitution to the extent that prevented a principal exercising its set-off rights against a contractor in liquidation under section 553C of the Corporations Act 2001 (Cth). 

The distinction in that case is that payment to a company in liquidation would impact a principal's ultimate legal rights to the extent that it may not be entitled to initiate claims for the recovery of amounts paid (noting the prohibition on initiating legal proceedings against a company in liquidation).