Business Law

Progress Payments in Building and Construction Industry

The Building and Construction Industry Security and Payment Act 1999 provides persons or businesses that carry out construction work a statutory entitlement in certain circumstances to receive progress payments. It also provides a system for recovery of those payments if they are not made.

Progress payments

The Act provides that providers of construction work or goods and/or services for construction are entitled to be paid in accordance with the progress dates specified within the construction contract.

Where a contract does not specify progress payment dates, progress payments are due on the last day of the first month of work and at the end of each month thereafter.

The amount of the progress payments can be specified in the contract or otherwise calculated in accordance with the Act.

When progress payments are not made

If a progress payment is not made on the date that is due, or within 10 days of making a payment claim, the party entitled to be paid may exercise a lien (a form of security) over unfixed plant or materials supplied by the claimant for the construction.

Interest is also payable on unpaid progress payments.

Payment Claims

When a progress payment is not properly made, the entitled party can submit a payment claim within the time limit specified in the contract, or within 12 months of the last provision of services (whichever is longer).  

Once the payment claim has been served, the respondent may, within 10 business days, propose a payment schedule, in response to the payment claim.

If the respondent does not provide a payment schedule within 10 days or by the time stipulated in the contract then they are liable to pay the claimed amount by the due date of the progress payment.

When adjudication is required

A claimant can apply for adjudication where the respondent fails to respond to the payment claim, where the respondent proposes in their schedule to pay less than the claimed amount or where the respondent fails to pay in accordance with their schedule for payment.

Outcome of adjudication

If the adjudicator determines that the respondent is liable to pay then the respondent must pay within 5 days of the determination, or by the date specified by the adjudicator.

If the respondent doesn't pay:

If the respondent does not pay the progress payment according the adjudication, the claimant may:

(a) Apply to the adjudicating body for a certificate of adjudication; and

(b) Serve notice (which states that it is under the Act) upon the respondent that the claimant is going to suspend construction work.

In addition to the amount that was determined payable by the adjudicating body, the adjudication certificate may also include interest payable by the respondent as well as any un-reimbursed adjudication fees that were paid by the claimant on behalf of the respondent.

What to do next:

The adjudication certificate can be entered as a judgment in any court of competent jurisdiction. It must be filed with an affidavit from the claimant asserting that some or the entire adjudicated amount remains outstanding.

The respondent may apply to have the judgment set aside, however they are limited in the representations they can make to court and they cannot dispute the adjudicator’s determination. They must also pay to the Court as security the unpaid adjudicated amount pending determination of their application.

If you have any questions about a progress payment dispute or any building law matter get in touch with your nearest Prime Lawyers office to see how we can assist.

We have business lawyers located at Sydney, Parramatta, Chatswood, Sutherland and Wollongong.    

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