What is it and how does it work?
It is a part of everyday life that individuals, companies and businesses will enter into contracts to carry out construction and building works, or to supply related goods and services. Occasionally, a dispute may arise in relation to payment of such goods and services.
The Building and Construction Industry Security of Payment Act 2002 (Vic) (‘the Act’) is designed to streamline procedures within the construction and building industry by ensuring that any person who carries out work under a contract receives payment. The process is an efficient and cost-effective one, without the need for time-consuming and costly litigation. It gives statutory rights for on-going payment for any person who carries out work under a construction industry contract.
Who is covered by the Act?
The Act is aimed at protecting the rights of contractors, consultants, manufacturers and suppliers working within the construction industry to receive and recover progress payments for carrying out work and supplying goods and services. The Act operates in conjunction with any rights to receive progress payment under a contract. The exception to this is construction contracts for carrying out domestic building work, which are covered in the Domestic Building Contracts Act 1995 (Vic).
What types of work are covered by the Act?
The following construction work and supply of related goods and services is covered under the Act:
- Building work
- Civil engineering
- Hire of plant or equipment
- Architectural design
- Soil testing
- Supply of building materials
How is a payment claim issued under the Act?
To make a payment claim under the Act, a claimant serves a payment claim on the party who is liable to pay for the construction work or related goods or services under the construction contract liable (‘the respondent’).
A payment claim must satisfy the following requirements:
- It must be served by or on behalf of a claimant
- It must contain the words “This is a payment claim made under the Building and Constructions Industry Security of Payment Act 2002 Victoria”
- It must identify the construction work performed (which must be covered by the Act) and identify the respondent, and
- It must stipulate the exact amount that is being claimed.
The respondent has 10 business days to respond to the claimant’s payment claim. This is done through a payment schedule. If the respondent does not respond within the required timeframe, or provides a payment scheduled within the 10 business days but the claimant does not accept the schedule, the claimant has the right to apply for adjudication.
Adjudication under the Act involves the determination of a payment claim dispute by a third party adjudicator, who is typically not a judge or lawyer. An adjudicator may seek further submissions from a party and will also give parties an opportunity to comment on submissions. The adjudicator will then review the evidence and the documentation that each party has submitted, and will then make a binding decision.
Is the Adjudicator’s decision final?
If the process has been carried out correctly as per the Act, there will be no grounds to challenge an adjudicator’s decision in court. However, if a party is able to demonstrate that natural justice or procedural fairness was denied or there was a jurisdictional error, a Court may set aside an adjudication determination. It is a good idea to speak with a lawyer to help ascertain whether you have reasonable prospects for success before challenging an Adjudicator’s decision.
How can Sharrock Pitman Legal help?
If you need to prepare a payment claim or draft a response to a payment claim, or if you require guidance on how to go through the process yourself, we can help you understand the requirements under the Act and can advise you on the process and your options. Please feel free to contact our Litigation team on 1300 205 506 or by email at email@example.com.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
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For further information contact
Lynda is a Senior Associate of Sharrock Pitman Legal. She is part of our Litgation team. For further information, contact Lynda Lim on her direct line (03) 8561 3330.