Director of contractor held to be personally liable for false statutory declaration as to payment of employees and subcontractors

Most standard contracts require payment claims to be supported by a statutory declaration in which the director of the claimant declares that all relevant subcontractors, workers and suppliers have been paid in full.

In 470 St Kilda Road Pty Ltd v Robinson [2017] FCA 597, the Federal Court of Australia held the Chief Operating Officer of a contractor personally liable for the loss suffered by a developer caused by making false statements in a statutory declaration accompanying a payment claim made under the Building and Construction Industry Security of Payment Act 2002 (VIC).

Facts of the case

  1. The parties had entered into a contract for the redevelopment of what was then an office building located at 470 St Kilda Road, Melbourne (the Contract) and the contractor served payment claim 15 on the developer in the sum of $1,426,641.70.
  2. In accordance with the Contract, the COO of the contractor swore a statutory declaration in respect of the Payment Claim declaring that “to the best of my knowledge and belief having made all reasonable enquires at this date… all subcontractors or suppliers… engaged on the work under the Contract have been paid in full all monies which have become payable to the sub-contractor under terms of the sub-contractor to the supplier of materials under the terms of agreement for supply.

Liquidation and loss

The developer paid the payment claim and the contractor subsequently went into liquidation. The developer as a creditor received no monies in the winding up.

As at the date of the statutory declaration, there were substantial monies owing to subcontractors and employees.

The developer alleged that but for the misleading and deceptive conduct of the COO in swearing the false statutory declaration, it would not have paid the payment claim and therefore suffered a loss.

Misleading or deceptive conduct

In holding the COO liable, O’Callaghan J held that a statutory declaration is not merely a statement of the declarant’s state of mind, rather “it is a solemn promise containing, as the legislation requires, an acknowledgement that it is true and correct and is made in the belief that making a false declaration will render the maker liable to the penalties of perjury.

As to the requirement of ‘loss and damage’, O’Callaghan J held that the developer had suffered a sufficient degree of loss and damage by reason of the statutory declaration, because the evidence established that if the true position had been disclosed by the COO, the developer would not have paid the payment claim.

Accordingly, O’Callaghan J ordered that there be judgment for the developer against the COO, in his personal capacity, in the sum of $1,426,641.70 plus interest.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader’s specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

Key contacts:

Stephen Pyman – Director | Principal
Christopher Rowden – Principal



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