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Applying the Security of Payment Act

September 28, 2020
Resource Centre
Applying the Security of Payment Act
building contractors discussing construction plans on site
Debt collection
minute read

How to use the Security of Payment Act to recover debts

Security of Payment is a legal concept that ensures contractors in the building industry are fairly remunerated for work completed. If you haven't received a payment, or want to dispute a payment, then you have rights under the law of states and territories.

The Security of Payment Act process differs from state to state. This article will outline the process in a general sense, and advise you of the considerations you need to make as you progress with your claim.

AANDI Lawyers has years of experience successfully navigating disputes in the construction and building industry. For qualified expertise in applying Security of Payment, get in touch with our team today.

[content_aside]This article will cover the basic steps to using the Security of Payment Act as it applies in NSW, Queensland, and Victoria. For specific information pertaining to your state, contact AANDI Lawyers.[/content_aside]

1. Obtain and understand the Act

The first step to applying the Security of Payment Act is to determine if the claim for payment is actionable under the act. Each state and territory has slightly different requirements and procedures. You can get started by reading our guides to Security of Payment for NSW, Queensland, and Victoria.

After obtaining your copy of the Act and understanding it, you can determine if your claim meets the following conditions:

  • That, according to the act, there was a construction contract in place
  • That the work/services/goods were charged at standard industry rates
  • That a valid payment claim or tax invoice has been served to the respondent
  • That the work completed was defect-free, and completed in its entirety

2. Payment claim

Once the validity of the contract has been confirmed, the person who carried out work under the contract (the claimant) can carry out a payment claim to the contractor (the respondent).

A payment claim is a detailed list of all work, goods, and services provided by the claimant to the respondent, and an amount for said work. The payment claim will also state that the claim is being made under the requisite Act. For example, the Act in question would be the Building and Construction Industry Security of Payment Act 2002.

3. Payment schedule

building contractors discussing blueprints

The respondent must respond to the claim by providing the claimant with a payment schedule. The payment schedule details how much the respondent is willing to pay, when they will pay the amount, and if the amount differs from the contract, reasons why the full amount will not be paid.

The payment schedule must be provided within 10 business days of receiving the payment claim, or an agreed timeframe as the contract demands. If the respondent fails to provide the payment schedule within the timeframe, then they are liable to pay the full amount stipulated in the contract.

4. Adjudication

If the claimant disputes the payment schedule, they can apply for adjudication conducted by a third-party adjudicator nominated by an Authorized Nominating Authority (ANA). The ANA will appoint an adjudicator with the requisite skills and knowledge to oversee the process.

The claimant will pay adjudicating fees upfront before the adjudication process begins. If the adjudicator finds in the claimant's favour, the fees will be factored into the settlement.

The adjudicator has another 10 business days to determine whether or not the payment schedule is accurate, and how much the respondent has to pay.

5. Court

If the claimant wishes to skip adjudication, they can choose to have the payment schedule resolved in the courts. Depending on the value of the claim in question, the matter can be resolved in the Magistrate's Court, the County Court, or the Supreme Court.

The claimant can also seek assistance from the courts to enforce the payment of an adjudicated amount. If the respondent fails to pay, the claimant will need to submit the adjudication certificate and an affidavit attesting to the failure. The court can then choose to issue a warrant or similar order to enforce payment.

Why you need professional assistance

Applying the Security of Payment in any state or territory in Australia is a lengthy and potentially costly process. You are entitled to payment for the work you have completed, but is it really worth going through the minefield of legalese, adjudication, and courts, all on your own?

This is where AANDI Lawyers can help. Our team of building and construction lawyers has years of expertise in finding successful outcomes for our clients. We can help you navigate the Security of Payment process from start to finish, and help you get what you're entitled to, without the stress.

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