Silence may be a virtue but SOP Act says “Speak up” or you may have to “pay up' - LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd

The recent decision of LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 (LHRE v Complete) highlights the importance of a respondent “speaking up” on receipt of a statutory payment claim, especially if the status of the claimant or the contract is in question. The case serves as a reminder that a respondent who does not “speak up” may have to “pay up” under security of payment legislation, the Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOP Act).

Whilst Complete was initially successful in avoiding an application for summary judgment by LHRE for a statutory debt (see LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2024] WADC 61),[1] the Court in LHRE v Complete found that a construction contract existed, the SOP Act applied, and Complete became liable to pay the full amount claimed.

Key takeaways

• When issued with a statutory payment claim, a sensible respondent will consider it and respond, regardless of whether the respondent considers that the claimant (who claims to be entitled to a progress payment) is the correct party to give a payment claim.
• A respondent that does not give a payment schedule to a claimant by the due date or at all may become liable to pay the claimed amount.
• Where possible, the Court will use the traditional approach of identifying offer and acceptance to determine whether a contact exists between parties. However, where the traditional approach is not capable of identifying if a contract existed, the Court will conduct an objective assessment of all relevant facts and circumstances – including the parties’ post-contractual conduct – to determine whether the parties had reached a binding agreement.

LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81

LHRE v Complete considered a situation where the recipient of a payment claim made pursuant to the SOP Act did not give a payment schedule in response to the payment claim because it believed that: 

1. it had contracted with a separate entity related to the claimant; and
2. no construction contract existed between the claimant and the respondent. 

Background

LHRE Group Pty Ltd (LHRE) is a labour hire company for discrete works on construction projects. LHRE’s sister company, OSB Group Pty Ltd (OSB), is a contractor that performs construction works on mining projects.[2] Complete Hire & Sales Pty Ltd (Complete) provides building services to a variety of clients, including its related entities such as Spinifex Holdings (WA) Pty Ltd (Spinifex Holdings) which operates the Spinifex Hotel in Derby, WA.[3]

Kevin O’Shea (Kevin) is the sole director of both LHRE and OSB, and Michael O’Shea (Michael) is the general manager of both LHRE and OSB.[4] Emanuel Dillon (Dillon) is the sole director of Complete, and the sole director of Spinifex Holdings.[5]

In May 2023, Complete had discussions with Kevin and Michael in relation to the construction of a 200-person camp in Onslow and, separately, for labour hire for rectification and refurbishment works at the Spinifex Hotel.[6] Labour arrived at the Spinifex Hotel and undertook rectification and refurbishment works from 1 to 18 June 2023.[7] After the project concluded, Complete received:

1. an email from an OSB email address;
2. a tax invoice on LHRE letterhead, which was attached to the email; and
3. day worksheets (also attached to the email) indicating OSB was the entity that performed the works by way of a tick box and accompanied by a corresponding typed version of each worksheet on which no box was ticked.[8]

Dillon requested numerous changes to the invoice and it was re-issued several times as a result. However, amidst his requests, Dillon did not raise concerns about the invoice having been issued by LHRE rather than OSB.[9]

On 2 October 2023, LHRE issued a statutory payment claim under the SOP Act for $81,934.64, including GST. Complete did not give any payment schedule in response to the statutory payment claim, nor did Complete pay the claimed amount by 6 November 2023, (which was the due date for payment under s 20(1)(b) of the SOP Act).[10]

Issues for determination

The primary issue for determination before the Court was the identity of the entity with whom Complete entered the construction contract, agreement or other arrangement. At trial, Complete contended that it had entered into a contract with OSB, not LHRE.[11]

A secondary issue was whether LHRE had assigned its interest to Scottish Pacific (BFS) Pty Ltd (ScotPac) (noting the statement on the invoice that amounts payable had been transferred to ScotPac).[12] 

First issue: contract entity

During the trial, Kevin and Michael of LHRE and OSB were found to be “credible witnesses, doing their best to provide the court with their honest recollection”,[13] while Dillon of Complete was “an unimpressive witness and most of his evidence could not be confidently relied upon by the court unless corroborated by contemporaneous documents”.[14]

The Court could not use the traditional approach of offer and acceptance to identify whether a contract existed (whether between LHRE and Complete, or between OSB and Complete) because the contractual negotiations proceeded “organically, informally, and relatively quickly over a matter of days” and the parties “appeared to struggle to ensure formal matters were properly addressed”.[15] Instead, the Court undertook a “more complex and involved analysis”,[16] objectively assessing the intent conveyed by the parties’ words and actions in the context of the surrounding circumstances, with reference to the purpose and object of the transaction.[17]

Significantly, the Court found that Complete’s argument that it had assumed it was contracting with OSB because emails it received were sent using OSB email addresses and OSB signature footers was not supported by the evidence before the Court as to the parties' words, conduct and knowledge.[18] Relevantly: 

1. LHRE had sent Complete a document entitled ‘LHRE labour hire client terms and conditions’ which communicated in “unequivocal terms” that LHRE was the offeror and the manner in which Complete could accept the offer.[19]
2. Analysis of Complete’s post-contractual conduct established that Complete’s silence in relation to the proper identity of the party entitled to issue the invoice undermined its argument that it had refused to pay because the invoice had been issued by the wrong party, because Complete:
   1. had scrutinised the invoice and requested changes on multiple occasions, so it would have been “abundantly obvious” that the invoice had been issued by LHRE,[20] and in fact Complete had in the same period refused to sign an LHRE credit application provided for the Onslow Project on the basis that the Onslow contract was with OSB;[21] and
   2. was again silent and failed to object to LHRE serving the statutory payment claim on Complete, despite the evidence from Dillon stating that he understood the serious nature of the claim and Complete’s statutory obligation to respond.[22]
3. Complete’s silence was significant because it went “to the very heart of the issue in contention between the parties” and as Complete’s sole director and shareholder and controlling mind and will, Dillon’s “silence in all the circumstances and the multitude of occasions during which his silence extended [was] an admission made with sufficient clarity and deliberation that the defendant was in a contract with the plaintiff”.[23]
4. The day worksheets with tick boxes indicating that OSB was the entity that performed the work were not relevant to the Court’s objective determination of the contracting party’s identity because there was no direct evidence as to who had in fact ticked the boxes on the worksheets. In any event, the likely author of the ticks was an employee who had no authority to bind either company, and the worksheet records attached to the tax invoice and the statutory claim were typed copies of the handwritten records that had clearly been issued by LHRE and made no mention of OSB.

The Court held that mobilisation of personnel onsite evidenced that there was mutual assent to all essential terms of an agreement between LHRE and Complete and in all of the circumstances, a reasonable person would consider LHRE and Compete had entered into a contract by 1 June 2023.[24]

Second issue: assignment to ScotPac

The Court concluded there was no assignment of the debt from LHRE to ScotPac.[25] 

The automated generic invoice containing a statement requiring payment to be made to ScotPac was not, without further evidence, sufficient to establish an assignment of the debt. Further, a letter from ScotPac confirmed that no assignment was made to ScotPac because the credit application process was never executed by Complete. 

Conclusion

The Court held that LHRE and Complete entered into a construction contract and the statutory scheme of the SOP Act applied. LHRE served a statutory payment claim on Complete, but Complete did not respond with a payment schedule (or at all). Consequently, Complete became liable to pay the claim as it were admitted in full pursuant to s 26 of the SOP Act.[26]

Complete was awarded $81,934.64 plus interest at a rate of 6% per annum from the payment due date of 6 November 2023 as well as costs.

This article was written by Julia Millar Special Counsel,  Briony Whyte Senior Associate and Matthew Endo Solicitor at Jackson McDonald.

If you need assistance understanding the provisions of the SOP Act or the terms of your contract, reach out to our Projects, Infrastructure + Construction team.

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[1]https://www.jacmac.com.au/insights/dont-get-caught-out-what-you-need-to-know-before-applying-for-summary-judgment-for-a-sop-act-statutory-debt/

[2] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [1] and [61].

[3] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [2].

[4] No disrespect is intended in referring to Kevin O’Shea and Michael O’Shea by their first names.

[5] No disrespect is intended in referring to Emanual Dillion by his last name.

[6] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [5]–[7].

[7] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [10].

[8] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [11].

[9] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [13], [214].

[10] Being 25 business days after the payment claim was made. 

[11] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [27].

[12] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [30].

[13] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [129].

[14] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [130].

[15] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [187].

[16] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [27]

[17] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [189].

[18] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [190].

[19] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [203].

[20] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [214]-[215]

[21] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [216].

[22] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [221].

[23] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [223].

[24] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [238]–[239].

[25] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [244].

[26] LHRE Group Pty Ltd v Complete Hire & Sales Pty Ltd [2025] WADC 81 at [250]–[252].