Why the SOP Act is so significant

The Building and Construction Industry Security of Payment Act 1999 (NSW) is significant because it provides for the following consequences…

The Building and Construction Industry Security of Payment Act 1999 (NSW) is significant because it provides for the following consequences:

  • Where a Subcontractor serves a Payment Claim (similar to a tax invoice) on a party and that other party does not provide a Payment Schedule (a response) within the relevant time, the other party becomes liable to pay the claimed amount to the Subcontractor on the due date for the progress payment to which the Payment Claim relates regardless of whether a genuine dispute exists.
  • Where a Head Contractor or Principal has become liable to pay Payment Claim but has failed to do so, the Subcontractor may:
    • Obtain a Summary Judgment in the Courts for the amount of the Payment Claim and then recover payment by legal enforcement action, or
    • Apply to have the amount claimed in the Payment Claim assessed by an Adjudicator within 10 business days. Strict time limits apply in relation to Adjudication Applications.
  • Where a Subcontractor elects to commence Court proceedings to recover a Payment Claim that has become payable then:
    • Provided that the Subcontractor has complied with the Act, the Court will enter Summary Judgement against the other party, and
    • The other party is not entitled to bring any Cross-Claim or raise any Defence in relation to matters arising under the construction contract in the Court proceedings.

A Court will enter Summary Judgment when it is satisfied that there can be no Defence to a claim. This means that Judgment can be obtained relatively quickly and without the need for a hearing on the facts.

Significant costs and delays can, therefore, be avoided if Subcontractors can rely on the Act to enforce unpaid Payment Claims or seek Adjudication of issues raised in a Payment Schedule.

For more information download our complimentary Security of Payment Guide.

Security of Payment Guide

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Building and Construction Lawyers for Sydney and Newcastle

Ned Mortensen is a Principal lawyer with dual qualifications in both law and construction and an adjudicator appointed by Adjudicate Today and ABC Dispute Resolution Service for adjudication applications made pursuant to the Building and Construction Industry Security of Payment Act 1999.

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The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.

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Accredited Specialist (Commercial Litigation)