The Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) is a powerful statutory tool that allows those who carry out construction work or that provide construction related goods and services in New South Wales to claim payments due to them under their contracts. It can be used by head contractors, subcontractors, hire companies, materials suppliers and consultants who provide related goods or services to claim payments due to them.
The stated purpose of the SOP Act is to facilitate cash flow down the contractual chain, to stop the common practice of the larger players using those down the contractual chain to fund their projects. The SOP Act only provides this cash flow on an interim basis, it doesn’t prevent a final determination of the merits in a Court, but it does allow a successful claimant the cash flow to continue its business in the interim.
If a claim for payment is disputed, a claimant can choose to have the claim independently adjudicated relatively quickly and cheaply, with the process from claim to payment taking approximately 40 business days.
The SOP Act does not create an entitlement to be paid where one doesn’t exist in the contract, rather, it operates in conjunction with the contract. It also has strict, short and inflexible deadlines for payment claims and responses. Missing a deadline is usually fatal to the claim or response. The combined effect is that the preparation of claims and responses needs to be done with close attention to both the SOP Act and the contract.
The main steps in the SOP Act payment claim process can be summarised as follows:
There are very limited avenues to appeal a determination. If a party seeks to have a determination set aside, it will need to make an application to the Supreme Court.
If you wish to use the SOP Act to make a claim, or have received a document purporting to be a claim under the SOP Act, we suggest that you seek advice without delay.
We have years of experience acting for Claimants and Respondents and can assist you with:
• preparing or responding to payment claims
• preparing or responding to adjudication applications
• appeals from adjudication determinations and final merits disputes
• providing training about the SOP Act in your organisation.