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Security of Payment Laws in SA

October 27, 2019

Frequently Asked Questions: 

When did the Act commence and does it apply to contracts entered into before the commencement date?
The Act commenced operations on 10 December 2011. If you entered into a contract or other arrangement before 10 December 2011, the Act does not apply. 

What type of contracts are covered by the Act?
The Act applies to a construction contract under which one party undertakes to carry out construction work. Construction work is broadly defined under the Act and includes but is not limited to the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings, structures or works forming, or to form, part of land. For more information please refer to our February 2019 Building News Edition.

Who can make a claim under the Act?
A claimant is a 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. e.g. any sub-contractor who renders a progress claim for payment is a claimant. Those who can make a payment claim include contractors against clients (e.g. principals, developers, owner-builders, government), subcontractors against contractors; suppliers of building components against purchasers; architects, engineers, and others (e.g. consultants) providing advice against clients; plant and equipment hirers against clients.

What is a payment claim?
A payment claim is a progress claim (invoice) which allows recovery of money owed using the Act. It must-:

  • be served by or on behalf of a claimant; and
  • contain the words: “This is a payment claim made under the Building and Construction Industry Security of Payment Act 2009 S.A.” or words to that effect;
  • identify the respondent and the construction work performed or related goods and services; and
  • indicate the amount.  A claim for $5,000 + GST should be described as $5,500 including GST; and
  • relate to work performed on or prior to a reference date.

When is a progress payment claim due and payable?
Generally, payment claims are due and payable on the date that is provided in the contract. If there is no such date, then the date occurs 15 business days after a payment claim is made.

How frequently can I make a claim under the Act?
For each reference date, you can only make one claim under the Act. The reference date is either the date stated in your contract or if there is no such date, it is the last day of each month.

Can the Act be used to secure payment from home owners?
You cannot issue a payment claim under the Act against a home owner if they reside or intend to reside at the property where the work is being carried out. However, it may apply where the building is for rental purposes.

Can a respondent commence adjudication?
The claimant can commence adjudication. The person responding (respondent) to a payment claim cannot commence adjudication.

What if I disagree with a payment claim?
If you receive a payment claim and you disagree with some or all of the amount claimed then you must within 15 business days provide to the claim a written payment schedule indicating the amount that you are willing to pay and the reasons for withholding any part of the claim. 

How much does adjudication cost and who is responsible for the adjudicator’s fees?
An adjudicator is entitled to fees and costs as agreed to between the adjudicator and the parties. If there is no agreement, then the fees will be such an amount as is reasonable having regard to the work done and expenses incurred by the adjudicator. The parties are joint and severally liable to pay the adjudicator’s fees but the adjudicator can determine and order the amount that each party may contribute towards the fees.

For more information, contact Workplace Services on 1300 650 620.