A payment claim needs a reference date, and termination can stop one arising

Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd(2016) 260 CLR 340; [2016] HCA 52 is a leading statement by the High Court on the machinery of the security of payment regime, and a case whose central scenario still plays out monthly in Australian adjudications: a contract ends mid-stream, a contractor races out a payment claim for everything done, and the question becomes whether the statute supports the claim at all. The High Court's answer changed how termination is approached in NSW, and although New South Wales has since amended its Act, the decision still governs older contracts, remains relevant in Queensland, which keeps reference dates, and still teaches the discipline that decides validity fights.

Southern Han, the principal, engaged Lewence under an AS 4000-1997 contract to construct an apartment building at Breakfast Point in Sydney. Clause 37 entitled Lewence to make a progress claim on the 8th of each month. The relationship failed in October 2014: Southern Han issued a show cause notice, then, on 27 October, purported to exercise its clause 39.4 right to take the whole of the remaining work out of Lewence's hands. Lewence treated that as repudiation and, the next day, purported to terminate.

On 4 December 2014, Lewence served a payment claim for work performed up to 27 October. It ticked the formal boxes; an adjudicator awarded over $1.2 million ($1,221,051.08 including GST). Southern Han attacked the determination on a structural ground: no reference date under the contract supported the claim. Ball J agreed and declared the determination void; the Court of Appeal reversed; the High Court took the case to settle a question on which the Act's whole architecture turned.

Under s 8 of the Building and Construction Industry Security of Payment Act 1999(NSW) (the Act) as it then stood, the statutory entitlement to a progress payment arose “on and from each reference date”. Section 13(1) let a person claim who “is or who claims to be entitled” to a progress payment. The question: is the existence of a reference date a precondition to a valid payment claim, or can a claimant simply assert entitlement and leave the merits to the adjudicator?

A unanimous bench (Kiefel, Bell, Gageler, Keane and Gordon JJ) held that the existence of a reference date under the construction contract is a precondition to the making of a valid payment claim (at [2], [61]). No reference date, no valid claim, no adjudication jurisdiction (at [44], [62]).

On the facts, neither of the parties' alternative analyses produced one. If the take-out under clause 39.4 was valid, payment was suspended until the clause 39.6 process was complete, and the suspension covered all of Lewence's clause 37 payment rights, including the right to claim for work already done, so no reference date accrued on 8 November (at [76] to [78]).

If instead Lewence had validly terminated for repudiation on 28 October, termination operated prospectively: only accrued rights survived, and the right to claim for October work would not have accrued until 8 November, after the contract had ended. Nothing in the contract preserved the progress-claim machinery post-termination (at [79] to [80]). Either way, the December claim was unsupported and invalid (at [2], [75]).

New South Wales has since amended the Act. For contracts entered into on or after 21 October 2019, the amended Act abolished the “reference date” concept: a claimant may serve a payment claim on and from the last day of each named month (or an earlier contractual date), and, reversing Southern Han's termination consequence, expressly permits a payment claim on and from the date of termination (s 13(1C)).

But the decision is far from a museum piece:

• Older NSW contracts: anything entered before 21 October 2019, a category that still includes long-running infrastructure and defects-phase engagements, remain governed by the reference date regime and by Southern Han directly.
• Queensland retains reference dates under the BIF Act (s 70). If the contract is terminated and does not provide for, or purports to prevent, a reference date surviving termination, the termination date is the final reference date (s 67(2)).
• The deeper principle survives everywhere: the statutory entitlement provisions are preconditions, not pleading formalities. The modern validity disputes (timing under the monthly regime, one-claim limits, supporting statements) are decided with the same method Southern Han prescribed: find the statutory anchor for the claim, or the claim fails.

One currency note. Schedule 1 of the Fair Trading and Building Legislation Amendment Act 2026 (NSW) amends the Act and had not commenced at 15 October 2026 (some other parts of that Act commenced on assent, 14 August 2026). Check the version of the Act in force on the day you claim.

1. 01

   Date the entitlement before you serve. Every payment claim should be supported by an identified statutory anchor: a reference date under an old-regime or Queensland contract, or the correct monthly or termination trigger under the amended NSW Act. Make it explicit in the claim file, because it is the first thing a well-advised respondent will test.

2. 02

   Know which regime your contract lives under. A 2018 head contract and its 2022 subcontract sit under different NSW rules. Cross-regime assumptions are a recurring source of invalid claims and missed entitlements.

3. 03

   Termination timing is payment strategy. Under the pre-2019 NSW regime, terminating one day before the next reference date can forfeit the statutory route for a month's work (Southern Hanat [79] to [81]). Queensland's BIF Act s 67(2) softens this, but check the contract's termination clauses. Before accepting a repudiation or exercising take-out rights, both sides should map what the move does to payment entitlements: Southern Han is the case study in getting that sequencing wrong.

4. 04

   Respondents: validity review comes before merits review. The cheapest complete answer to a payment claim is that no statutory entitlement supports it. The triage sequence for any incoming claim starts with the anchor date, the service rules and the one-claim limits, before a dollar of the valuation is engaged.

5. 05

   Suspension and take-out clauses carry hidden payment consequences. Clause 39.4-style regimes that suspend payment on take-out were decisive here. Read the consequences provisions of your contract's default machinery: they alter statutory rights in ways that surface only in a crisis.

• Building and Construction Industry Security of Payment Act 1999 (NSW) ss 8 (entitlement to progress payments), 13(1) (payment claims), 13(1A) to (1C) (when a claim may be served, including on termination).
• Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) (the 2019 amendments).
• Building Industry Fairness (Security of Payment) Act 2017 (Qld) ss 67 (reference dates, including on termination), 70.
• Southern Han Breakfast Point Pty Ltd v Lewence Construction Pty Ltd [2015] NSWSC 502 (Ball J, first instance).
• Lewence Construction Pty Ltd v Southern Han Breakfast Point Pty Ltd [2015] NSWCA 288 (Court of Appeal, reversed by the High Court).