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Security Of Payments Act QLD



The main purpose of the Security Of Payments SOP Act is to help contractors working in the building & construction industry in being paid for the work they do.

Claim Process

Any contractor (the Claimant under the SOP Act) has a statutory right in Queensland to receive regular progress payments.

A Contractor only needs to turn a regular ‘progress claim’ into a ‘payment claim’ for it to be covered by the SOP Act.

A payment claim is sent to the person responsible to make the payment 10 business days after the end of a calendar month, typically as a request for payment for the construction works completed in the preceding month.

From this point onwards, ‘the clock starts ticking’ for the prompt resolution of any dispute in relation to the payment claim; so that under the SOP Act, the person responsible to make the payment (the Respondent) has 15 business days to respond to a ‘payment claim’ with a ‘payment schedule’.

If the respondent provides a payment schedule within the required timeframe, and the amount is less than the amount requested in the payment claim, the claimant has the right to apply for adjudication to the Queensland Building and Construction Commission (QBCC). An application for adjudication must be done within 20 business days of receipt of the payment schedule.

Once the application for adjudication is lodged with the QBCC registry, the QBCC will appoint an adjudicator within 4 business days.

if responding to a standard payment claim ($750,000 and under), the respondent must give the adjudicator its adjudication response within 10 business days after receiving a copy of the adjudication.

For a standard payment claim, the adjudicator will decide the amount payable within 10 business days after the date of receipt of the respondent’s response, and nominate a due date for payment, typically 5 business days after communicating its decision.

If the respondent fails to pay the full amount of the progress payment claimed in the payment claim by the due date, the claimant can get request an ‘adjudication certificate’ and recover the unpaid portion as a debt in court.

The whole process, from the preparation of the payment claim to obtaining an adjudication certificate takes roughly 60 days.


Payment Claim Requirements

The Payment Claim must be for construction works carried out, or related goods and services supplied in a given month, so it accrues a ‘Reference Date’.

The Act specifies the requirements of a valid Payment Claim, which are (a) identifies the work to which the claim relates, (b) states the amount which the Claimant claims are payable, and (c) requests payment of the claimed amount.

It is good practice to provide an itemised invoice and evidence of the works carried out in the form of receipts, attendance records in site diaries, and any variations instructed or identified so the respondent can assess it. Think of what you would expect to see from one of your subs or suppliers before you pay them.

The Payment Claim must be served in the time allowed for in the construction Contract, or if the contract does not specify a date, typically within 10 business days after the end of the month for works carried out the month before.

However, if it is the last (final) payment claim, it can be submitted up to six 6 months after the completion of the works, or 28 days after the end of the last day of the defects liability period, typically 12 months + 28 days in standard contracts. The last payment claim must include a ‘Supporting Statement’ declaring that all Subcontractors have been paid all amounts owed to them by the Claimant at the date of the Final Payment Claim.


Payment Schedule

If given a payment claim, a respondent must respond by giving a payment schedule within 15 business days or within a lesser period if the contract provides a shorter period.

The payment schedule must (a) identify the payment claim to which it responds to, (b) state the amount of payment, if any, which the respondent proposed to make, and (c) state why the amount proposed to be paid was less than the claimed amount.


Adjudication Application and Response

An adjudication application will be valid if (a) it is in the approved form, (b) identifies the payment claim and payment schedule to which it relates, (c) is accompanied by the fee prescribed by regulation for the application, (d) includes the submissions relevant to the adjudication application the claimant chooses to include, (e) the claimant supplied a copy to the respondent, (f) the adjudication application complies with the requirements of the SOP Act, (g) was made within the prescribed time, and (h) the application is neither frivolous nor vexatious.

An adjudication response is valid if (a) it is in writing (b) identifies the Payment Claim and Payment Schedule to which it relates, (c) includes the submissions relevant to the Adjudication Application the Respondent chooses to include, (d) the Respondent supplied a copy to the Claimant, (e) the Adjudication Response complies with the requirements of the SOP Act, and (f) was made within the prescribed time.

Common Questions Answered

  • Q: I made a mistake in my payment claim, can I adjust the scope and value?

    A: Depends. If it has been paid then, unlikely, but you can claim for the (unpaid) works as construction works in your next payment claim. If it is in dispute, then errors and omissions can be corrected before any amounts are adjudicated. If the errors are discovered after the final payment claim has been paid the payment request may have to be made outside the SOP Act.
  • Q: I did not want to enter into a dispute with the builder because he gives me regular work, so I have been accepting the lower amounts he allowed in the payment schedules, but now I may make a loss on the project… can I claim all of the unpaid amounts at the end of the job?

    A: Yes, you can include the portions of the completed works that have not been paid in a new payment claim even if the works were completed a few months beforehand. However, you may have a problem if you submitted your final payment claim, or waited too long and cannot accrue a new reference date.
  • Q: Are the periods of time allocated for the various actions in the SOP Act suggested or mandatory?

    A: Mandatory. Non-compliance with time means that an adjudicator may find that he/she does not have jurisdiction to adjudicate the dispute. However, if the respondent did not issue a payment schedule, he/she cannot submit one when the adjudication process commenced, and the respondent cannot raise new issues for non-payment in addition to those listed in the payment schedule.
  • Q: Are all works in a building ‘construction works’ under the SOP Act?

    A: No, works such as the rectification of defects are not ‘construction works’ that accrue a new reference date.
  • Q: Is an owner with a ‘building owner permit’ allowed to change his/her mind and decide to live in the property so now classifies as a ‘resident owner’ and has the construction works excluded from the SOP Act?

    A: No, the owner is bound to the contract as written when the parties entered into it.
  • Q: The builder says he/she can only get $250,000 per month from the lender to pay for the works. Can a progress claim be capped to that amount?

    A: No, ‘pay when paid’ provisions are not enforceable under the SOP Act. This principle also applies to a builder that will not release payments until it is paid by the Principal. Furthermore, a clause is written into the contract to that effect has no legal effect and can be ignored.
  • Q: The contract says that formal communication is by post, but we communicated only via email during the execution of the contract. Now that we are in a formal dispute, the builder wants to enforce the contract to the letter. Have I lost my right to payment because I failed to notify the builder formally by post?

    A: Unlikely. The adjudicator should be asked in the application to look at how the parties communicated during the execution of the works, and if different from the written contract, the method of communication used during the conduct of the works is likely to be accepted as formal communication. It could be argued that the contract was amended or changed ‘by conduct’ and that the clause has no effect.
  • Q: Do I have to pay for the works if the company or the tradesman carrying out the works are unlicensed?

    A: No, the SOP Act does not allow for payment for unlicensed work.
  • Q: If the contract is silent on markups for indirects and overhead and profit on variations instructed by the respondent, am I entitled to add any markup to any variation instructed by the builder?

    A: Yes, so long as it is a reasonable amount. You need to justify the percentage applied in accordance with standard industry practice, an adjudicator can approve or vary the amount.
  • Q: Am I allowed to charge for supervision, overhead and profit when firming up a PC sum.

    A: Depends on the definition of PC sum. Most QSs understand a ‘Provisional Cost Sum’ to cover a yet-to-be-defined scope so overhead and profit are added to the material and labor cost component when the scope is finally defined. However, some people confuse ‘Provisional Sums’ with ‘Prime Cost Sums’ where the overhead and profit (and sometimes even the labor component) is considered to have been allowed in the contract price. Yet others (i.e. plumbers) read PC sum as ‘Prime Cost Items’ as in a re-measurement contract where the contractor will get compensated for the actual quantity of PC items at the PC rate multiplied by the adjustment amount as a lump-sum on top of original lump-sum amount.
  • Q: I was unable to travel to the site due to COVID, can the builder hire a local contractor and backcharge me for the works?

    A: Depends. If your contract includes a ‘not to be exceeded’ dates, a mandatory schedule with a critical path, or a ‘time is of the essence’ clause, the builder may backcharge you even if you did your best to travel to the site. If the contract does not, then it is unlikely.
  • Q: We were delayed due to the builder calling us to stay back because the pre-works for our trade were not ready. However, the builder now claims that we did not notify him of the delay within 7 days as per the notification requirements in contract. Are we now time-barred from making a claim for the delay?

    A: No, in this case, it is the builder who first became aware of the delay, so the notification requirements became superfluous (‘it notified itself’ when he called you). Always ask in a contract without a formal notification clause ‘what constitutes notification?’… you may be surprised by some of the answers.

Why hire an Engineer/Solicitor as your Construction Lawyer?

Many disputes focus unnecessarily on vague jurisdictional challenges for what are in essence disputes over the scope of the works, quality, or delay. Unlike personal injury or family law, the Queensland Law Society does not regulate who can be called a ‘Construction Lawyer’. Some Lawyers who never set foot on a construction site freely adopt the moniker.

Granted, the legislative requirements in the SOP Act are difficult to navigate, so an in-depth legal knowledge of the SOP Act is required to ensure compliance with the requirements and timeframes in the Act to ensure an adjudication application makes it through the door. But once the pre-conditions in the Act are complied with, a wholly successful application depends on technical merit, valuation and expert delay analysis, all of which are well outside the typical ‘Construction Lawyer’s’ expertise.

Some law firms attempt to bridge that gap offering ‘a team of experts’ to deal with scope, quality and delay issues, which sometimes work for the largest contractors with deep pockets. But even large contractors are at a disadvantage when they rely on ‘a team of experts’ instead of an expert in all areas that can assess, and balance differing opinions and interests, and focus on the important issues. Furthermore, on small matters where the value of the construction disputes does not justify hiring an entire team of experts, the lone ‘Construction Lawyer’ that has no construction expertise is likely to be a liability to their clients.

It appears that it is for these reasons that a ‘Construction Lawyer’ which is not versed in technical matters, relies in its adjudication submissions on affidavits where, typically the personnel on the site, try (often poorly due to the lack of proper guidance), to explain the ‘real’ issues. However, adjudicators have to decide a dispute solely on the submissions in front of them; and after the ‘noise’ in pages and pages of jurisdictional challenges and case law, it is sad for them to see the merit in a poorly framed and evidenced claim and having to decide against it because an adjudicator must not assist any of the parties.

Wouldn't you want to talk about your project's construction-legal-commercial  issues with someone who really understands them?, someone who has MEP and F trade qualifications and acted as Design Engineer, Engineering Manager, Project Manager, QS, Planner, studied law and is now a Registered Solicitor and Adjudicator under the SOP Act in Queensland?, someone who spent 20 of his formative years with Leighton Contractors (now CIMIC/ CPB) and has over 30 years of first-hand experience in the development of many of Australia's iconic projects in building, mining, oil and gas, rail and metro, communications and renewable energy projects before becoming a real ‘Construction lawyer’?

Enquire or Call 07 3054 7122 to speak to our Engineer Lawyers.

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