Key Concepts for Payment Claims Under The Building And Construction Industry (Security Of Payment) Act 2009 (Act)
Erika Le, Lawyer
Erika Le, Lawyer at Goodman Law, discusses a number of common practices amongst their clients that have prevented them from successfully making a claim under the Building and Construction Industry (Security of Payment) Act 2009¬†(ACT) (‚??the Act‚?Ě)¬†without our legal input. She explains some of the key concepts and discusses the expectations that are often the root cause of the problem.
At Goodman Law, we frequently assist our building and construction clients with payment claims under the Act.
It is our experience that a claimant may try to make claims under the Act without first obtaining our legal advice with the result that their claim may fail as a result of non-compliance with the strict provisions laid out in the legislation.
Commonly, businesses in the building and construction industry which undertake construction work or the supply of related goods and services will simply include the following notation on tax invoices:
"This is a payment claim made pursuant to the Building and Construction Industry (Security of Payment) Act 2009 (ACT)‚?Ě
There is a general expectation amongst many business owners within the construction industry that, upon the insertion of these words, the tax invoice becomes a compliant payment claim under the Act. However, as recently seen in a variety of matters at Goodman Law, this is not the case.
There is key information that must be included in a payment claim to make it a valid payment claim under the Act. These are:
- Identification of parties;¬†
- Reference date; and¬†
- Full identification of the works claimed.
Identification of Parties
Similar to the requirements for a valid tax invoice for GST purposes, payment claims must clearly identify the parties involved including the claimant, respondent, and all identifying details (including but not limited to ACN/ABN and registered address).
The Act provides that on and from each reference date under a construction contract, a person is entitled to claim payment if the person has undertaken work that the Act relates to.
The important concept to note is the term ‚??reference date‚?Ě which means either:
- The date specified in the construction contract as the date for when a claim is to be made, or¬†
- If the contract does not provide for a date, the last day of the calendar month in which the work was first carried out and the last day of each subsequent month.
It is important that the payment claim clearly states the correct and applicable reference date for the claim to be valid. For example:
- The contract states payment claims can be made on the 14th day of every month, the date of the payment claim must be the 14th.
- Where there is no written contract, if the works were completed 23 November, the reference date must be the last day of the month, being 30 November, 2015.
Identification of Works
The payment claim must clearly identify the construction work or related goods and services to which the claim relates to. This includes the date/time period in which the works were attended to, the location at which the works were undertaken, and the amount of the claim.
We do not recommend using any abbreviations unless they are clearly defined at the beginning of the claim. This is in order to have a clear payment claim stating what the works were, when they were undertaken to and completed, and the amount claimed for the works.
What if the Payment Claim is not valid?
If the payment claim is invalid, the Act is unenforceable. In general, if time expires on an invalid payment claim, the claim is not lost and a valid claim may subsequently be issued as long as either the payment claim is given within the prescribed time period for a payment claim or further work has been completed and remains unpaid.
How can Goodman Law help?
Goodman Law is currently assisting a number of ACT building firms deal with claims where the original payment claim was invalid. Please contact us to discuss any construction industry issues including contracts, debt collection and disputes. We can be reached by¬†email¬†or on¬†02 6206 9900.
Erika Le‚??s Biography
Erika's legal practice focuses on building and construction law including disputes, Building and Construction Security of Payment claims and construction contracts. You can find out more about her,¬†here.
Would you like more information on legal issues facing the construction industry? Here is a¬†link¬†to our blogs on building and construction law.