Security of Payment legislation





The Building and Construction Industry Security of Payment Act 2002 was created for members of the construction industry to help manage cash flow and resolve unpaid accounts. It is designed to be an inexpensive and straightforward way to manage payments, but there are important steps and timelines that you need to follow.

We have assisted many builders and sub-contractors to recover debts under the Security of Payment legislation. In fact, we prepared the very first adjudication application in Victoria resulting in a positive outcome for our client.

We have a lot of experience recovering debts under the Act and we will see the job through to the end, always advising you on the best way to recover the money that you are owed, including taking action under the Corporations Act, if required. Darren Noble has also acted as an adjudicator in many adjudication applications made under section 18 of the Building and Construction Industry Security of Payment Act.


How to make a Security of Payment claim

The first step is to provide a value payment claim. There are important details that need to be included in your claim. You need to:

  1. Identify the construction work or services that payment relates to.

  2. Indicate the amount of money you claim is due (the ‘claimed amount’).

  3. Include the ‘Security of Payment Statement’.

The Act does not apply to all contracts, such as most domestic building contracts. We can give you more advice about whether making a payment claim is appropriate for your contract.


Receiving a payment claim

When you receive a payment claim from a contractor, you need to either pay the contractor the claimed amount when it is due or provide a payment schedule within 10 days (or less if that was agreed in your contract).

It is important that your payment schedule explains any difference between what was claimed and what you are prepared to pay. If the contractor disagrees they can apply to an adjudicator to enforce payment.


What is adjudication?

If you have followed the process in the Building and Construction Industry Security of Payment Act and still have not received payment or you are not satisfied with the response provided to your payment claim, you can apply to have the claim reviewed by an independent adjudicator.

It is important to get expert legal advice at this point if you have not done so already. Once a decision is made by an adjudicator, it is binding on both parties unless you wish to undertake expensive court proceedings.


What happens if you don’t receive payment after adjudication?

If the contractor refuses to pay the amount determined by an adjudicator, you can now obtain a certificate for the adjudicated amount from the authority that nominated the adjudicator. This is called an adjudication certificate.

Once you have an adjudication certificate, you can commence a proceeding in the court and immediately make an application for judgement. Judgement can be made even in the absence of the person who is responding to your claim. This significantly simplifies and shortens the process.

As anyone in the industry knows, cash flow is the lifeblood of the building and construction industry, so it is important to manage your contracts and claims to take full advantage of the Building and Construction Industry Security of Payment Act.


How we can help

With over 20 years experience in the construction industry, we have intimate knowledge of the Security of Payment legislation and how it works in practice.

We provide advice and assistance in all areas of the process from making the payment claim, serving the payment schedule, referring the matter to adjudication and preparing the relevant documentation and submissions or representing you at court.

When you need a practical, common sense approach on payments, get in touch with us; please call +61 3 9029 5345 or email us.