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.
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.
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.
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.
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.
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’?
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