Security Of Payments Act QLD

Introduction:

The primary objective of the Security of Payments Act is to ensure that contractors in the building and construction industry receive timely progress payments for their services.

Claim Process:

Under the various Security of Payments Acts, any contractor or subcontractor who enters into a building contract, has a statutory entitlement to regular progress payments. To avail to this right, the various Acts provide that a standard 'progress claim' or 'invoice' is also identified as a 'payment claim'.

A "Reference Date" is a crucial concept that determines when a party is entitled to make a payment claim. It could be a specific date (e.g., fortnightly or the end of each month) or tied to specific milestones, stages, or the completion of particular work.

On typical contracts in the building industry, the payment claim is generally submitted to the party responsible for payment at the end of a calendar month. It serves as a formal request for payment, covering the construction work completed in the preceding month.

According to the various Acts, the person or entity that receives the request for payment generally has 15 business days to respond with a 'payment schedule.'

A payment schedule is a formal response to a payment claim and includes essential information such as the identification of the payment claim to which it responds, the proposed amount of payment, and detailed reasons supporting why the proposed amount is less than the claimed amount. The payment schedule serves as a transparent communication tool, outlining the basis for the proposed payment and providing the claimant with clear justifications for any deductions or adjustments.

If a dispute arises and it is resolved under the Security of Payments Act, the contractor becomes the 'Claimant' and the person responsible for payment the 'Respondent'.

If the Respondent issues a payment schedule within the stipulated timeframe, and the amount is less than requested, the Claimant has the right to apply for adjudication generally within 20 business days.

Upon lodging the adjudication application with the registry, an adjudicator is appointed within four business days. For standard payment claims (generally $750,000 and under), the Respondent must provide its adjudication response within 10 business days of receiving a copy of the adjudication.

The adjudicator then determines the payable amount within 10 business days of receiving the Respondent's response, setting a due date for payment, usually within 5 business days of the decision's communication.

If the Respondent fails to pay the full progress payment by the due date, the Claimant can request an 'adjudication certificate' and pursue the unpaid amount as a debt in court. The entire process, from preparing the payment claim to obtaining an adjudication certificate, typically takes around 60 days compared with a year or two in a court of law.

Payment Claim Requirements:

A valid Payment Claim must pertain to construction works performed or related goods and services supplied within a specific month, accruing a 'Reference Date.' It should identify the relevant work, state the claimed payable amount, and explicitly request payment.

It is advisable to accompany the Payment Claim with an itemised invoice and evidence of the completed works, such as receipts, attendance records, and any instructed variations. This helps the Respondent assess the claim, much like what one would expect from subcontractors or suppliers.

The Payment Claim must be served within the time specified in the construction contract. If not stipulated, it is typically within 10 business days after the end of the month for works carried out in the preceding month. However, the final payment claim can be submitted up to six months after completing the works or 28 days after the defects liability period's conclusion.

The final payment claim must include a 'Supporting Statement,' confirming that all subcontractors have been paid the amounts owed by the Claimant at the date of the Final Payment Claim.

Payment Schedule:

Upon receiving a payment claim, the Respondent must provide a payment schedule within 15 business days or within a shorter period if the contract specifies that.

The payment schedule should identify the payment claim, state the proposed payment amount (if any), and explain why the proposed amount is less than the claimed amount.

Adjudication Application and Response:

An adjudication application is valid if it follows the approved form, identifies the relevant payment claim and payment schedule, includes the prescribed fee, incorporates relevant submissions, and is neither frivolous nor vexatious.

Similarly, an adjudication response is valid if it is in writing, identifies the Payment Claim and Payment Schedule, includes relevant submissions, complies with the Act, and is submitted within the prescribed time frame. Both parties must exchange copies of their respective documents.

Why engage an Engineer/Solicitor as your Construction Lawyer?

Numerous disputes often revolve around ambiguous jurisdictional challenges that essentially pertain to issues related to licensing issues, the validity of the contract, and legal precedents without addressing the scope of works, quality, or cost of delays. In the realm of construction law, unlike personal injury or family law, the title 'Construction Lawyer' is not regulated by the Law Society, allowing numerous lawyers with no construction site experience to adopt the label.

While navigating the intricate legislative requirements of the Security of Payments Act demands a profound legal understanding, ensuring compliance and timely adjudication applications requires expertise beyond the typical purview of a 'Construction Lawyer', successful applications hinge on technical merit, valuation, and expert delay analysis, areas often outside the expertise of construction law practitioners.

Some law firms attempt to address this by offering access to a 'team of experts,' but even for larger contractors, reliance on such a team may prove disadvantageous. In contrast, a Construction Lawyer with a comprehensive construction background, particularly one versed in technical matters, can navigate complex issues and provide tailored insights and strategies for amicable resolution of disputes.

Opting for a Construction Lawyer with hands-on experience, technical qualifications, and a diverse professional background ensures a nuanced understanding of construction-legal-commercial issues, especially when compared to those who rely solely on affidavits and reports they barely understand.

Ultimately, engaging with a professional who combines legal acumen with practical industry experience, such as someone with MEP and trade qualifications, a background as a Design Engineer, Engineering Manager, Project Manager, QS, Planner, and extensive experience with major contractors, can significantly enhance the effectiveness of addressing construction disputes and legal matters.

Head Office Address:
Security Of Payments Act QLD
Level 54/111 Eagle St
Brisbane City QLD 4000
Australia

Phone Number: 07 3054 7122

Fax Number: 07 3839 5393

Business Name: Security Payments Act Queensland

Status: Registered

Holder Name: BAKER MERZ LAWYERS PTY LTD

ABN: 40 650 782 317

Category: Law firm

Services: Security of Payments Act QLD, Claims Preparation,
CPM Delay Analysis, Construction Law

Email: info@clb.net.au

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Australian Institute of Project Management
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Royal Institute of Chartered Surveyors

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