When you are seeking a determination at adjudication that you are entitled to be paid for the work that you have done it is of the utmost importance that the preparation of your payment claim has left no stone unturned.
Key Points of Security Of Payment Act NSW Claim Preparation
- Contract Review
- Clear & Comprehensive Understanding Of Work To Be Claimed
- Formatting Of Payment Claim
- Service Of Payment Claim
- Monitoring & Follow Up
Contract Review
Your right to entitlement to make a claim under the Security Of Payment Act NSW flows from a construction contract.
A construction contract can be a simple oral agreement, a deal scribbled on the back of a beer coaster in a pub, a quotation and a purchase order, or a formal instrument of agreement (a thick wad of paper with lots of legal jargon !!!).
What ever form the construction contract takes it will essentially consist of these 5 things:
- Offer (to carry out work or provide related goods or services)
- Acceptance (of the offer)
- Intention to be bound (by the arrangement, agreement, contract)
- Consideration (work done, money paid)
For the purposes of the Security Of Payment Act NSW the terms of the construction contract are not crucial because the security of payment act legislation makes provision for both agreed terms and terms that haven’t been agreed or even considered.
For example; when can you make a claim, when is payment due, what is the value of the work, how to deal with variations, how to deal with defective and or incomplete works, etc… etc…
Preparing a payment claim under the NSW Security of Payment Act regime must consider all of the above.
Clear & Comprehensive Understanding Of Work To Be Claimed
The NSW security of payment act legislation makes provision for one claim per month and unless the construction contract says otherwise a monthly progress claim can only be served on or after the last day of the month.
This means that all work completed during the month of June can be claimed on or after the 30th of June.
It is crucial that the claim is for work that has actually been carried out, completed, and is defect free.
You cannot over claim or claim in advance and it is not helpful to your cashflow to under claim.
Keeping a daily written and photographic record of work carried out is perfect for when you get to the end of the month and you are preparing your claim.
Formatting Of A Payment Claim
The NSW Security Of Payment Act legislation is very strict on how a payment claim is to be formatted, or in others what it must include.
A payment claim must be addressed to the correct entity, the actual entity that you have contracted with. The name must appear in full and be accompanied by the ACN or ABN number.
A parent claim must clearly itemise all of the works being claimed and show how the amount being claimed for each item has been calculated.
Service Of The Payment Claim
Service of the payment claim can make or break a successful outcome. If a construction contract specifies and address for service this must be followed. Or if the contract is silent on this section 31 of the Building And Construction Industry Security Of Payment Act 1999 sets out how a claim must be served.
Monitoring & Follow Up
Once you have effected proper service of a payment claim under the Security Of Payment Act NSW you must monitor physical addresses and email addresses etc for a response from the respondent.
The Respondent has 10 business days to pay a payment claim in full or provide a valid payment schedule setting out reasons for non payment if the full amount of the payment claim isn’t going to be paid.
Once you receive a payment schedule you have 10 business days to lodge an adjudication application.
If you do not receive a payment schedule in the 10 business days and you do not receive full payment by the due date for payment you need to serve a notice under section 17(2) of the Building And Construction Industry Security Of Payment Act 1999 within 20 business days of the due date for payment. This notice gives the respondent a further 5 business days to pay in full or provide a payment schedule. If you do not receive full payment within the five days then you have 10 business days to apply for adjudication after you receive a payment schedule or if no payment schedule is received after the end of the 5 business day period.