13
Nov

Differences in security of payment legislation in each state

Each state has its own security of payment legislation; the primary goal of which is to ensure that contractors and subcontractors in the construction industry are paid for the work that they perform and that payment is made on time, without the need for costly and lengthy litigation, where entitlement is disputed.

Effectively, security of payment adopts a ‘pay now, argue later’ approach, which is achieved by the establishment of a mandatory adjudication scheme for interim resolution of payment claim disputes.

Security of payment runs concurrently alongside entitlements under the construction contract, and claims for payment can proceed to adjudication even if the formal dispute resolution procedure under the construction contract has commenced.

Whilst the overall purpose of each of the statutes is the same, there are important differences that claimants and respondents need to be familiar with, otherwise they run the risk of falling into the trap of missing a deadline or a mandatory requirement.

For ease of reference, the differences between each of the states have been compared in the tables below.

It is worth noting that changes will be made to security of payment disputes in New South Wales by the Building and Construction Industry Security of Payment Amendment Act 2018 (NSW) (the Amendment Act) which commences on 21 October 2019 but only relates to contracts that are entered into after 21 October 2019. Please see our article “Changes to New South Wales Security of Payment” for a comprehensive breakdown of the effects on the amendments to the Building and Construction Industry Security of Payment Act 1999 (NSW).

Differences in requirements for valid payment claim

RequirementNew South Wales
(pre 21 October 2019)		New South Wales
(post 21 October 2019)		ACTVictoriaQueensland
Identify construction work (or related goods and services) to which it relates
Indicate / specify monetary amount claimed
Be served on person, who is or may be liable to make payment
State that it is made under the ActOnly if it is connected with an exempt residential construction contract
Be the first payment claim in respect of a reference date under the contract
Be in writing

Differences in timeframes for submitting a claim and being paid

New South Wales
& ACT		VictoriaQueensland
Later of:
  • period prescribed by the contract; or

  • 12 months period after the construction work to which the claim relates was last carried out.
    		• Later of:
  • period prescribed by the contract; or

  • 3 month period after the reference date.

  • Progress payment – within the longest of the following periods: as per contractual terms; or within 6 months of construction work to which claim relates being last carried out (or related goods and services were last supplied).

  • Final payment – within the longest of the following periods: as per contractual terms; or 28 days after the end of the last defects liability period for the contract; or 6 months after completion of all construction work to be carried out (or related goods and services to be supplied).

    • Differences in timeframes for being paid

    New South Wales
    (pre 21 October 2019)    		New South Wales
    (post 21 October 2019)    		ACT
    & Victoria    		Queensland
    Earlier of :
  • date prescribed by contract; or

  • either:
  • 15 business days after a payment claim is made by principal to head contractor; or

  • 30 business days after payment claim is made by a subcontractor; or

  • 10 business days after a progress claim under an exempt residential construction contract.
    		• Earlier of :
  • date prescribed by contract; or

  • either:
  • 15 business days after a payment claim is made by principal to head contractor; or

  • 20 business days after payment claim is made by a subcontractor; or

  • 10 business days after a progress claim under an exempt residential construction contract.
  • Date prescribed by the contract; or

  • if no date is prescribed under the contract, 10 business days after a payment claim is made.
  • As per contractual terms (unless void under the QBCC Act or a 'pay when paid' provision); or

  • If no (or void) contractual terms, then 10 business days after the day the payment claim is made.

    • Differences in timeframes for respondents to issue a payment schedule disputing a payment claim

    New South Wales, ACT & VictoriaQueensland
    Earlier of:

    • time required by the contract; or

    • 10 business days after the payment claim is served.

    		The shorter of the following periods:

    • If the contract is written, as per contractual terms; or

    • The period that is 25 business days after the day the payment claim is given to the respondent.

    Differences in requirements for valid payment schedule

    RequirementNew South WalesACTVictoriaQueensland
    Identify payment claim to which it relates
    Indicate / state amount of payment the respondent proposes to make
    Reason why payment is lower & why money is being withheld (if applicable)
    Identify amount of claim which is an excluded amount
    Include any other information prescribed / be in the prescribed form
    Note – Nothing currently prescribed
    Be in writing

    Differences in timeframes for making an adjudication application

    Type of Adjudication ApplicationNew South Wales & ACTVictoriaQueensland
    Disputed amount indicated on a payment schedule (but undisputed amount paid)Within 10 business days following receipt of the payment schedule.Within 10 business days following receipt of the payment schedule.Within 30 business days following receipt of the payment schedule
    Respondent failing to pay the whole or any part of the scheduled amount by the due date (after providing a payment schedule)Within 20 business days following the due date for payment.Within 10 business days following the due date for payment.Within 20 business days following the due date for payment
    Respondent fails to provide a payment schedule and fails to pay the whole or any part of the claimed amount by the due date
  • Notice of intention to make application must be given to respondent within 20 days of due date of payment.

  • Respondent may serve payment schedule within 5 business days of receiving notice.

  • Application can be made within 10 business days after the 5 business day period has ended (NB in the ACT an application can also be made on the date of receipt of the payment schedule (if any).
  • Notice of intention to make application must be given to respondent within 10 days of due date of payment.

  • Respondent may serve payment schedule within 2 business days of receiving notice.

  • Application can be made within 5 business days after the 2 business day period has ended.

    		• With 30 business days after the later of:
  • the due date for payment; or

  • the last day the respondent could have given a payment schedule (response period).

    • Differences in the requirements for making a valid adjudication application

    RequirementsNew South WalesACTVictoriaQueensland
    Be issued to:An ANA selected by the claimant.An ANA selected by the claimant.

    • An ANA listed in the contract (if 3 or more are listed); or

    • Otherwise, to an ANA selected by the claimant.

    		The Registrar by a claimant.
    Relate to a valid payment claim under the Act
    Be in the approved form / prepared in accordance with the regulations
    Be in writing
    Identify the payment claim and schedule (if any)
    Accompanied by an application fee (if any)
    Be served on the respondent

    If you have:

    • been served with a payment claim;
    • are not being paid by a contractor or principal; or
    • simply need some clarifications as to processes by which to get paid in a timely manner,

    contact Dark Legal on the details below for a free consultation.