What is the Building and Construction Industry Security of Payment … – Chamberlains Law Firm

28.02.23
By Chamberlains Admin
The security of payment legislation in Australia is used help parties who has carried out construction works or supplied related goods and services to assist in the recovery of outhandling payments for what work or supplies they have provided.  Each state and territory has their own slightly different legislation, but all are based on the New South Wales Act.
The New South Wales Act is the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) and it applies to anyone who has agreed to perform construction works or provide related goods and services.  The Act applies to construction contracts that are formal written documents but also even informal arrangements (such as by text message or telephone call) where one party agrees to perform works for the other.
The Act creates a statutory entitlement to a monthly progress payment.  This is a right that is separate to any right you have in your contract.  It also creates the forum, known as Adjudication, where disputes over that statutory entitlement are heard.
In comparison to litigating a matter in court, the process under the Act is a far a quicker method to obtain an outcome (which can be enforced) if there is a dispute over a progress payment.  Using the Act takes approximately 6 – 10 weeks start to finish.  Typical building and construction disputes in Court will take 12 months or longer before you achieve an outcome.
Parties that are able to claim under the Act, known as Claimants are generally compromised of the following:
Adjudication allows a Claimant who believes that they are owed money under a construction contract, to promptly obtain payment from the respondent, based on an assessment of their claim to be decided by a qualified and independent adjudicator. Claimants use the Act securing payment without the need for extensive (and expensive) court hearings.
To commence a claim under the Act and proceed with the adjudication process, there must be a written valid payment claim made against a party to a construction contract for outstanding monies due.
If receiving a claim from a subcontractor, the “Respondent” must issue a valid payment schedule within 10 business days (unless the Contract provides for a shorter period) explaining why they are not paying the claimed amount.  The consequences of not issuing a payment schedule can be significant.
If the Claimant is dissatisfied with the Respondent’s response, they can then file for Adjudication.
When using the Act, strict timelines apply and parties should consider obtaining legal advice to ensure they complying with the technicalities of the process under the Act as failure to comply may have serious financial consequences.
If you have any questions about your rights under the Building and Construction Industry Security of Payment Act and how it might be able to help you, please contact Michael Terry-Whitall of our Building & Construction Team on 02 9264 9111
Contact Michael Terry-Whitall.
Director.
Since becoming a lawyer, Michael carved an impressive career predominantly in construction litigation at large commercial law firms.  Recognised as a leader in the field of Building and Construction Law, Michael founded the Chamberlains Law Firm Sydney office, and heads our Building and Construction Division nationally.
As an accredited adjudicator under the Building and Construction Industry Security of Payment Act 1999 (NSW), Michael regularly determines disputes under the legislation (as well as advising clients) and is responsible for annotating the Australian Capital Territory SOP Act on behalf of Thomson Reuters. Michael acts for all sectors of industry, including residential construction, developments, commercial projects and civil infrastructure projects. Michael acts on behalf of a range of clients across industry, from small residential builders to national Tier 1 construction businesses.
Michael is also a member of the Society of Construction Law Australia, and clients rave about his ability to deliver plain English advice and his tenacity in pursuing or defending claims. Michael’s experience as an advocate and as an adjudicator assists him to consistently deliver exceptional results to his clients.
When not practicing law, Michael maintains an avid interest in sport (particularly the NRL and his beloved Wests Tigers) and can usually be found playing sport, watching sport or thinking about sport.
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