Regular cash flow is the lifeblood of any business. This is particularly so for those in the construction industry, which has led to the Building and Construction Industry Security of Payment Act 1999 (NSW). Similar legislation exists in most Australian jurisdictions:
- Building and Construction Industry Payments Act 2004 (QLD)
- Building and Construction Industry Security of Payment Act 2002 (VIC)
- Building and Construction Industry Payments Act 2004 (WA)
- Building and Construction Industry Security of Payment Act 2009 (TAS)
- Building and Construction Industry Security of Payment Act 2009 (SA)
- Building and Construction Industry (Security of Payment) Act 2009 (ACT)
- Construction Contracts (Security of Payments) Act (NT)
The main purpose of these Acts is to ensure that progress payments on construction projects don’t get held up by disputes, which can easily lead to contractors going under. Litigation can quickly become a war of attrition, and meanwhile people have businesses to run and bills to pay.
The graphic below provides a general outline of the process of enforcing progress payments. The process is comparable in most jurisdictions, and the courts generally seek to interpret these Acts consistently with each other.
Due to the very limited scope for challenging an adjudicator’s determination, it is strongly recommended that you have the assistance of a lawyer throughout this process – as the saying goes ‘measure twice, cut once’ prevention is always less expensive than cure.
It is also good practice to seek legal advice on how to comply with the procedural requirements of the Security of Payment process for your particular project. This advice will be a very valuable addition to your contract management plan.
- ‘Construction Work’ includes the supply of goods or services related to the completion of construction work.
- ‘Reference Dates’ are the dates or events (or milestones) in the contract that trigger progress payments. If the contract does not specify these triggers then the reference date is the last day of each month, starting with the last date of the month in which the construction work was first carried out.
- ‘Respondent’ is the party to the contract with the Claimant who has undertaken to pay for the Construction Work.
- ‘Payment Claim’ is a claim for payment for Construction Work carried out on or before the Reference Date. (Note: there can only be one Payment Claim served per Reference Date, but you can claim for work that was included in a previous Payment Claim that the Respondent has not yet paid for).
- ‘Payment Schedule’ sets out the amount that the Respondent considers is due and owing to the Claimant, and the reasons for withholding payment for work claimed by the Claimant in the Payment Claim.
AustraLaw can assist with all payment claim issues, including:
- Advice on complying with the procedural requirements to enforce or respond to payment claims;
- Preparation of Payment Claims and Payment Schedules;
- Preparation of Adjudication Applications and Adjudication Responses;
- Enforcement or challenging of Adjudicator Determinations.