Limiting Lengthy and Expensive Building Disputes

2 min read

Adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW) [here after referred to as the SOP Act or the Act]

The SOP Act is legislation that was brought about to limit delays with payments in the building and construction industry, in turn limiting cash flow restrictions, that are all well to known to construction companies. The Act has strict compliance requirements and timelines that are beneficial when construction projects are experiencing delays, variation and unforeseen disputes.
Under the Act, payment is required 15 days after a ‘payment claim’ is made (section 11 SOP Act). A ‘payment claim’ (like your invoice) is essentially a claim for payment under the contract such as a monthly progress claim or a milestone claim. A ‘payment claim’ must identify the construction work and amount due.
Once a ‘payment claim’ is served, the responded (or person assessing the claim) has business 10 days from the date the payment claim is served or as per the contract. Valid payment claims must be responded to within 10 business days or the respond will be required to make payment under the Act (section 14 SOP Act).

To utilise the Act, an applicant needs to file an adjudication application within 10 or 20 business days, depending on whether they were partly paid or if a payment schedule validates less than the payment claim (section 17 SOP Act). The requirements under the Act are stringent and need to be complied with primarily due to the consequences of non-payment or even payment. A progress claim can also have delay’s claimable, variations and prolongation claims however must be in accordance with the construction contract.

Am I entitled to make a payment claim under the Act?
Those who can make a payment claim under the Act include:

  • contractors against clients (e.g.. principals, developers, owner-builders);
  • subcontractors against contractors;
  • suppliers of building components against purchasers;
  • architects, engineers, and others (e.g.. consultants) providing advice against clients;
  • plant and equipment hirers against clients.

Construction work and services can be claimed under the Act even if the contract is not written and/or does not provide for progress payments with only a single payment to be made when work is completed.
Unless the construction contract provides for a longer period, the claimant has 12 months to serve a payment claim on the respondent from the time construction work to which the claim relates was last carried out or the related goods and services to which the claim relates were last supplied

What work is covered?
Construction work and the supply of related goods and services includes:

  • building work;
  • civil engineering;
  • demolition;
  • electrical;
  • hire of plant or equipment;
  • landscaping;
  • maintenance;
  • professional services such as architectural design, surveying and soil testing;
  • supply of building materials.

What can I claim for?
A claimant can make a payment claim on the respondent for:

  • Construction work done;
  • Construction materials or plant provided;
  • Consulting services provided;
  • Interest on overdue progress payments;
  • Losses and additional expenses due to work being deleted from contract while work is suspended under the protection of the Act;
  • Cash security and retention monies; and
  • At the end of contract, a claim can be made for the final payment.

Obtain specific legal advice from Priority Business Lawyers for your construction projects. All construction clients are able to directly log onto Priority Business Lawyers client portal and see their matter status, correspondence or assistance with claims processing.

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Picture of Authored By<br>Raea Khan

Authored By
Raea Khan

Director Lawyer, PBL Law Group

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PBL handled my late mothers estate, they were very obliging and patient with any and all questions that we had, thank you to David , Sharon and the other staff that we dealt with, everyone was so easy to talk to and friendly .David came to the home where my Mother was living and helped her to get her will in order, Sharon helped us through the process of executing her wishes when the time came even doing a house call which was so much easier, thank you all so much
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I have experienced an excellent service from PBL (especially from Anita) during the sale of my recent property on Central Coast, and during the purchase of our current property in Sydney. Throughout many challengers, especially with the sale, Anita presented her very professional and knowledgeable conveyancer, positively solving all obstacles. "Above and Beyond" Award going to Anita!!! :-)
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The five-star reviews are well-deserved. I needed a motion and a bylaw drawn up for urgent repairs of my strata unit and the AGM was in two weeks' time. My solicitor was friendly, efficient, knew what documents to ask for, and had all the paperwork prepared well within the timeframe. She also took the time to run through all the legalese and the different possible scenarios with me to make sure I understood. I am so glad to have found this firm and I will not hesitate to use their services again in future if the need arises.
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Ron Thomsen
Our Commercial Property conveyancing was handled very professionally. Anita’s experience and responsiveness was an asset in this transaction.
Trace M
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Tricia Wheatstone
For almost 18 months I have been a client of Alex Ilkin. Alex is very knowledgeable and professional and has consistently provided me with thorough, honest and well set out advice, including steering my case through appeal proceedings. He always worked for my best interests with integrity and compassion. I recommend Alex and his team at PBL.