Why the SOP Act is so Significant
The Building & Construction Industry Security of Payment Act 1999 (NSW) is significant because it provides for the following consequences:
- Where a Subcontractor serves a Payment Claim (similar to a tax invoice) on a the other party and the other party does not provide a Payment Schedule (a response) within the relevant time, the other party becomes liable to pay the claimed amount to the Subcontractor on the due date for the progress payment to which the Payment Claim relates regardless of whether a genuine dispute exists.
- Where a Head Contractor or Principal has become liable to pay Payment Claim but has failed to do so, the Subcontractor may:
(a) Obtain a Summary Judgment in the Courts for the amount of the Payment Claim and then recover payment by legal enforcement action, or
(b) Apply to have the amount claimed in the Payment Claim assessed by an Adjudicator within 10 business days. Strict time limits apply in relation to Adjudication Applications.
- Where a Subcontractor elects to commence Court proceedings to recover a Payment Claim that has become payable then:
(a) Provided that the Subcontractor has complied with the Act, the Court will enter Summary Judgement against the other party, and
(b) The other party is not entitled to bring any Cross-Claim or raise any Defence in relation to matters arising under the construction contract in the Court proceedings.
A Court will enter Summary Judgment when it is satisfied that there can be no Defence to a claim. This means that Judgment can be obtained relatively quickly and without the need for a hearing on the facts.
Significant costs and delays can, therefore, be avoided if Subontractors can rely on the Act to enforce unpaid Payment Claims or seek Adjudication of issues raised in a Payment Schedule.
For more information download our complimentary Security of Payment Guide or call and speak to one of our Building & Construction Lawyers.