It is now clear that payment claims served out of time under the Victorian Building and Construction Industry Security of Payment Act (Act) will be invalid after the recent Victorian Supreme Court decision in Hallmarc Construction v Saville  VSC 491.
Hallmarc Construction entered into a construction contract with Mr Saville for the supply and installation of joinery for a 134-apartment residential development.
The contract between the two parties made no express provision regarding time for payment, defects liability period or a final payment certificate. As a result, the default provisions covering such matters under the Act applied, meaning:
- the reference date for a final payment claim was the date immediately following the day after the construction work or related goods or services were last carried out (s 9(2)(d) of the Act); and
- the payment claim must be served no later than 3 months after the reference date (s 14(5) of the Act).
Justice Vickery found that the last date on which Mr Saville undertook construction work, or provided related goods or services, under the contract was 30 September 2013.Therefore the reference date was 1 October 2013, being the date from which the three month period began to run.
Mr Saville submitted his first payment claim on 21 February 2014, and the second payment claim on 16 May 2014. As a result, the Court found that both claims were ‘hopelessly out of time’ and, therefore, any Adjudication Determination made under the Act was void.
The Court found that while the Act is intended to provide for the timely resolution of claims under construction contracts, the availability of rights conferred by the Act, such as adjudication, depends upon strict observance of the time limits expressed in the Act.
Significance of the case
This decision highlights that parties seeking to assert their rights under the Act need to strictly adhere to its time limits. Nonetheless, contractors and subcontractors who fail to meet the time limits mandated by the Act remain able to seek recourse for any payment claims that may be due in court proceedings (rather than adjudication).
This case also highlights the need to ensure that parties ensure that their contracts specify the time periods for serving and paying claims in compliance with the Act.
For assistance and further information on how to meet your obligations under the Act please contact a member of our construction team below and view our practice webpage here.
Chris Edquist, Partner
T: +61 3 9321 9919
Stephen Natoli, Partner
T: +61 3 9321 9796
Tony Britt, Partner
T: +61 2 8083 0497
Troy Lewis, Partner
T: +61 7 3135 0614
Stephen Burton, Partner
T: +61 7 3135 0604
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.