Security of Payment - Making a payment claim

If your construction contract is covered by the Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOP Act), you have a statutory right to make progress payment claims. The first step in the prescribed claim and adjudication process is to make a compliant payment claim.

When can a payment claim be made?

You can claim a progress payment:

• as set out in the contract; or
• on or after the last day of the named month in which construction work was first carried out, or related goods and services were first supplied, under the construction contract; and
• on or after the last day of each subsequent named month.

In addition, you must make your payment claim within:

• 6 months after the completion of the work or last date of supply of the services or goods;
• 28 days after the last defects liability period day (final claims only); or
• an alternative period specified in the contract.

Calculating the payment claim value

Payment claims can be made for single and once-off payments, progressive and partial payments, and final payments.  The value of a payment claim must be based on either:

• the amount calculated in accordance with the contract, for example, a pre-agreed milestone payment value; or
• if the contract does not specify a fixed amount, the value of the work carried out or goods and services supplied up to the date of the claim.

If the payment relates to goods or services, they must become the property of the respondent upon payment.

What information is included in the claim?

A payment claim must be in writing and must set out:

• the claimed amount;
• a description of the work carried out, or goods and services supplied for the claimed amount;
• a statement that the claim is made under the Building and Construction Industry (Security of Payment) Act 2021 (WA); and
• if required, include the Homeowner’s Notice.

The claim does not need to be signed.

When is a homeowner’s notice required?

If you are carrying out residential building work for a homeowner worth over $500,000, you will also need to provide them with a copy of the Homeowner’s Notice, which is included in the SOP Regulations.

You do not need to provide the Homeowner’s Notice if:

• you are contracting with a corporation;
• the work is being undertaken for the purpose of a residential development business; or
• the work is for two or more dwellings on separate lots.

What happens if the respondent disagrees with your claim?

If they don’t intend to pay your claim in full, the respondent should issue you with a ‘payment schedule’ within 15 business days of the date of the claim.  The payment schedule must set out the amount they intend to pay, plus all reasons why the amount is wholly or partly disputed.

The respondent is still required to pay you the undisputed amount within the applicable timeframe.  However, if you disagree with the payment schedule, you can apply for adjudication.

What are the consequences of non-payment?

There are specific due dates for payment of claims made under the SOP Act. If your claim isn’t paid on time you have several options, including:

• either applying for adjudication or commencing proceedings in court;
• charging interest; and
• suspending the works.

To suspend the works you must:

• give the respondent a written notice stating your intention to suspend the work in accordance with the Act; and
• provide the respondent with at least 2 business days from the date of the notice prior to stopping work.

You will be required to start work again within 3 business days of receiving payment.