Does a Letter of Demand Classify as a Payment Claim?

In Total Construction Pty Ltd v Kennedy Civil Contracting Pty Ltd [2023] NSWCA 306 (Total Construction v Kennedy Civil Contracting), the New South Wales Supreme Court sought to determine whether a letter of demand can be classified as a ‘Payment Claim’. The Court considered whether a letter of demand which had attached invoices would satisfy the Building and Construction Industry Security of Payment Act 1999 (SOP act) payment claim requirements. A letter of demand with invoices was issued to Total Construction by Kennedy Civil Contracting (‘Kennedy’). Kennedy sought the amount classified in the letter stating it was a payment claim pursuant to s 13 of the SOP act.?

The Court considered multiple aspects of the claim to determine whether the letter of demand issued by Kennedy Civil Contracting would constitute a ‘Payment Claim.’ The Court looked at elements of the letter including the phrases ‘total outstanding amount’ and ‘indebted’ to understand how a reasonable person would view it. Whilst the Court stated that in some instances a letter of demand may satisfy the requirements of a ‘Payment Claim’, it was ultimately found that the letter of demand issued by Kennedy Civil Contracting was not a payment claim in accordance with s 13 of the SOP act.