Security of Payment Laws – 4 Steps to Recover Progress Claims Over $200k

The Building and Construction Industry Security of Payment Act 1999 (“the Act”) provides a fast and effective way for building industry participants to recover debts of any size, fast. In fact, if you’re a builder or subcontractor owed more than $200,000.00, it’s possible to utilise the Act to obtain a Court Judgment for the outstanding debt in less than 40 days.

There’s much written about the process that can be found on the internet, but sometimes the amount of information given is just overwhelming. Below is a simple, four step guide that spells out the process in an easily digestible form explaining how we can help to get that money in your pocket, fast.

Step 1 – Serve a valid Payment Claim

A valid Payment Claim must include;

• a description of the construction work claimed for;
• the amount claimed; and
• the words “This is a Payment Claim made in accordance with Building and Construction Industry Security of Payment Act 1999”.

The Payment Claim should be served;

• on or from the last day of the month in which the work was done or on an earlier date if the contract provides for one;
• on or from the last day of any subsequent month or an earlier date of that month if the contract provides for one; but
• not later than 12 months after the work was done.

If your contract has been terminated, you can still serve a payment claim following above rules.

If you’re not confident to prepare the Payment Claim yourself , then contact our specialist building and construction lawyers.

Step 2 – If a Payment Schedule is not received within 10 Business Days

If a Payment Schedule is not received within 10 Business Days of serving the Payment Claim, you will be entitled to claim the full amount of the Payment Claim as statutory debt.

Whilst Judgment for the full amount of the Payment Claim will need to be obtained through the Court, the debtor cannot raise contractual defences or cross claim. In a practical sense, that means the Court cannot take into account any claims by the debtor for backcharges or defect or delay damages. In most cases, Judgment for the full amount of the Payment Claim is also obtained without the need to appear in Court.

Step 3 – If an Unfavourable Payment Schedule is Received, Consider Adjudication

Adjudication under the Act is efficient and fast, so if you do receive a Payment Schedule which is unfavourable, making an application for adjudication makes sense, but don’t wait to act because strict time limits apply. Adjudication Applications must be made within 10 business days of receiving the unfavourable payment schedule.

A good adjudication application will properly engage with the unfavourable reasons given in the Payment Schedule and will often require calculated legal argument referring to the provisions of the contract, the applicable statutory schemes and the common law. So retaining a specialist building and construction lawyer to prepare the adjudication application for you is important.

In most cases, the debtor will also have an opportunity to make a submission to the adjudicator, and unless you otherwise agree otherwise, the adjudicator will reach a decision and inform the parties of the outcome in around 15 business days, with the adjudicated amount becoming due and payable within a further 5 business days.
Call us to speak to one of our specialist building and construction lawyers today to discuss applying for adjudication.

Step 4 – If you are not then paid

If payment of the adjudicated amount is not then paid within 5 business days of the adjudicator’s decision, then you can request a certificate detailing the adjudicated amount, and your solicitor can then file that certificate as a Judgment Debt in Court, becoming immediately enforceable against the debtor .