Building and Construction Industry Security of Payment Act 2009 (the Act)
The object of the Act:
- to ensure that a person who supplies construction work (or supplies related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work or the supply of those goods and services
- a person is entitled to receive a progress payment regardless of whether the relevant construction contract makes provision for progress payments
- to establish a procedure for recovering progress payments.
Frequently Asked Questions
Those who can make a claim under the Act in relation to the construction work include:
- suppliers of materials for construction work
- suppliers of plant and equipment (whether supplied by sale, hire or otherwise) for use in connection with construction work
- service providers providing services related to construction work such as labour, architectural, design, surveying, engineering, interior or exterior decoration, landscaping, contract management, consultancy and project management.
Payments can be claimed under the Act, even if the contract:
- is not written
- does not provide for progress payments
- requires only a single payment to be made when the work is completed
- contains a 'pay when paid' clause.
You can make a claim from the respondent for:
- construction work you have done
- construction materials or plant you have provided
- services you have provided such as project management etc
- interest on overdue progress payments
- cash security and retention moneys
- at the end of the contract, a claim under the Act can be made for any final payment that is due.
Under section 13(2) of the Act, a payment claim must:
(a) identify the construction work or related goods and services to which the progress payment relates
(b) must indicate the amount of the progress payment claim that the claimant claims to be due
(c) must state that it is made under the Act. This section applies regardless of what the contract states.
Section 34 only provides to the way notices under the Act, including payment claims, may be served.
Details of how to make a payment claim with example can be found here.
The Act does not apply to domestic building work contracts with homeowners who live in, or intend to live in the premises where the work is being carried out. So if you have a construction contract for domestic building work of any kind and the person with whom you have the contract lives in or intends to live in the premises, you can't claim payments from that person under the Act.
No. Section 7 of the Act excludes employees. If you are working as an employee doing any kind of construction work, you can't claim payments under the Act.
The payment claim may be served in accordance with the contract or may be served as provided under the Act (refer to section 34) in any of the following manners:
- by delivering it to the person personally
- by lodging it during normal office hours at the person’s ordinary place of business
- by sending it by post or fax addressed to the person’s ordinary place of business
- in such other manner as may be provided under the construction contract concerned.
The payment claim is not valid until it is served on the respondent in the correct manner as detailed above. It is important that evidence of service is kept, for example, facsimile receipts or courier dockets.
A claimant is a business/person who has carried out construction work, or supplied related goods and services, and is or claims to be entitled to a payment claim under a construction contract.
The respondent is the business/person that contracted you to carry out construction work, or supplied related goods and services in a building and construction setting.
A reference date is either the date for making progress claims as stated in the contract, or if the construction contract does not say, it is the last day of each month.
Section 13(4) states that a payment claim may be served within period of 6 months after which work was last carried out/goods and services were last supplied. Also the sum claimed for work performed can only be for work performed up to the reference date.
The reference date may be determined by a term in the contract or if there is no express term then the Act defines it as the last day of the month in which work was performed and the last day of each subsequent month. e.g. The named month e.g. January i.e. not from 2 January to 2 February.
A respondent has 15 business days after receipt of a payment claim (or shorter if written in a contract) to prepare and serve you with a payment schedule or pay the amount in the claim in full.
A payment schedule is a timetable that a respondent proposes to make to the claimant.
A payment schedule must:
- identify the payment claim to which it relates
- must indicate the amount of the payment (if any) that the respondent proposes to make (the scheduled amount).
If the scheduled amount is less than the claimed amount, the schedule must indicate why the scheduled amount is less and (if it is less because the respondent is withholding payment for any reason) the respondent's reasons for withholding payment.
If you disagree with a payment schedule, under the Act you can apply for adjudication assistance within 15 business days of receiving the schedule(s).
A list of South Australian ANAs can be found here.
If you do not receive payment from the respondent or a payment schedule by the 15th business day after you have issued a payment claim, you then have the option of:
- taking action in court
- using the adjudication process to recover unpaid monies owed to you.
If you choose to use the adjudication process:
- You must notify the respondent of your intention to apply for adjudication in writing within 20 business days (i.e. within 35 business days of issuing the payment claim). The respondent has an opportunity to provide a payment schedule to you within 5 business days after receiving your notice.
- If no response is received, you may then make an application for adjudication (see list of ANAs here).
- You can also suspend the construction work or the supply of related goods and services, after serving at least 2 business days notice to the respondent.
A 'business day' under the Act is any day other than a Saturday, Sunday, public holiday or 27, 28, 29, 30 or 31 December or any other day on which there is a statewide shut-down of the operation of the building and construction industry.