How to Make a Valid Payment Claim Under the Security of Payments Act

The Security of Payments Act (SOPA) plays a vital role in protecting the cash flow of contractors, subcontractors, and suppliers working in the construction industry. One of the most important aspects of this legislation is the ability to make a valid payment claim. However, to benefit from the Act’s protections, the payment claim must be correctly prepared and submitted in accordance with the relevant requirements.

This article explains how to make a valid payment claim under the Security of Payments Act in Australia, with a focus on the core requirements and best practices to follow.

Understand Whether the Act Applies

Before making a payment claim under SOPA, it is important to confirm that the Act applies to your contract. In most cases, the Act covers construction contracts for work or related goods and services in Australia, but some exceptions exist, such as certain residential contracts where the homeowner directly engages the contractor.

Each state and territory has its own version of the Security of Payments Act. For example:

• In New South Wales, the relevant legislation is the Building and Construction Industry Security of Payment Act 1999 (NSW).
• In Victoria, it is the Building and Construction Industry Security of Payment Act 2002 (VIC).

Although the core principles are similar, it is essential to consult the applicable legislation in your jurisdiction.

Prepare a Compliant Payment Claim

A valid payment claim under SOPA must include several key components. These include:

1. Claimant and Respondent Details

The payment claim must clearly identify the parties involved. This includes your business name (the claimant) and the name of the party you are claiming against (the respondent).

2. Description of the Work or Services Provided

The claim should describe the work performed or goods and services supplied. This should be detailed enough for the respondent to understand what the claim relates to.

3. The Claimed Amount

Clearly state the amount you are claiming, which must be a monetary amount. This can include progress payments, variations, or any other agreed charges.

4. The Due Date for Payment

While not always mandatory, it is good practice to include the due date for payment, especially if this is outlined in your contract.

5. A Statement That the Claim Is Made Under the Act

In most jurisdictions, the claim must state that it is made under the relevant Security of Payments legislation. For example, in New South Wales, you must include a statement such as:

“This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 (NSW).”

Without this statement, the claim may not be considered valid under the Act.

Serve the Payment Claim Correctly

Once the payment claim is prepared, it must be served on the respondent in the manner specified by the legislation or your contract. Acceptable methods usually include delivering it in person, sending it by post, or submitting it by email to a nominated address.

Timing is also important. Claims must be served within the statutory timeframe. In most states, you can only serve one payment claim per reference date (usually monthly or as specified in the contract).

Keep Records

It is advisable to keep a detailed record of the claim, including the date of service and the method used. This can be important if the matter proceeds to adjudication or court.

What Happens Next?

After you serve a valid payment claim, the respondent must provide a payment schedule within the timeframe set out in the legislation (usually 10 business days). If the respondent fails to respond or fails to pay the claimed amount, you may have the right to initiate adjudication.

Making a valid payment claim under the Security of Payments Act is a crucial skill for anyone in the building and construction industry. By understanding and following the specific requirements, you can ensure your right to prompt and fair payment is protected.

If you are unsure whether your payment claim complies with the relevant legislation, it is a good idea to seek legal advice or consult with a construction law professional.