Security for Payment: Part Two

In our last article we introduced the Security for Payment legislation through the Building and Construction Industry Security of Payment Act (NSW) 1999 (“SOPA”) whereby creditors can enforce progress payments in accordance with their contract.

In this article, we look at the SOPA process and what you need to know to successfully navigate it to recover the money owed to you for work carried out.

Have you issued a progress payment?

A progress payment is the issuing of an invoice for the first stage of a contract being complete, i.e. in building a house it may be the pouring of the slab and preparation of foundations.

1. If yes, has the progress payment been paid?
   • That’s great, the debt is paid, you can keep going with the contract terms.
2. If no, have you issued a payment claim to the debtor?
   • That being a document which notifies the recipient that it is a payment claim and details the work completed as per the contract. The payment claimed is served personally, at their office or by post or another method as required.
   • If yes, the debtor has 10 business days to respond in writing by way of a payment schedule. Ensure service is affected correctly.

What happens if they dispute the progress claim?

1. If a payment claim has been served but the debtor disputes the liability to pay the whole or part of an amount, they need to serve a payment schedule in response on you.
2. If the above has been undertaken and the debtor has failed to comply, the whole amount due becomes entire amount of the claim.
3. In the event the debtor fails to pay the full amount due then you can make an adjudication application.

There is an adjudication notice requirement to the debtor required under section 17 (2) of SOPA to commence the adjudication application process. The adjudication process allows you as the contractor to recover the disputed or unpaid progress payment.

1. 1. • The adjudicator is a not a judge but rather appointed by an independent nominating authority
      • Both parties present an adjudication application if they have been compliant.

Once the requisite time period has lapsed for the response to be made by the debtor, the adjudicator determines the application. Please note that neither party is required to appear at the adjudication, it is determined on the written documents. A determination is usually made within 10 days of the adjudication response required. Upon receipt of an adjudication determination, the debtor is required to pay the adjudicated amount. The SOPA process is then completed.

In the next article, we will look at your options if the SOPA process is not successful after an adjudication application has been made. Who pays what in SOPA? Is there an appeals process? What is the impact of an outcome of the SOPA process? Stay tuned for the next article!

If you have further questions, please contact us at frank@franklaw.com.au. 

This is not legal advice.