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;
- hire of plant or equipment;
- 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.