On 26 November 2009, the ACT parliament assented to the Building & Construction Industry (Security of Payment) Act [ACT SOPA]. The legislation came into effect on 1 July 2010.

It is important to note:

1. Contractors completing work under affected contracts will now have the rights to progress payments, regardless of whether or not the contract provides for them.
2. The ACT regime is broadly similar to the New South Wales scheme.
3. The ACT SOPA provides a robust and quick system via adjudication for the recovery of progress payments.
4. Importantly, the opportunity to appeal an adjudication decision is limited.
5. In certain circumstances, contactors now have the right to suspend work.

Progress Payments

As with the comparable legislation in New South Wales, the ACT SOPA grants an entitlement to progress payment. The ACT SOPA applies to contracts whether they are written or oral.

Progress payments become payable on one of two dates:

• Where a date progress payments have already been agreed in a contract; or
• On the last date of the month in which the construction work was undertaken, and on the last day of each following month. (Section 10 ACT SOPA).

Progress payments are payable on either:

• The date set out in a contract; or
• 10 business days after a payment claim is made.

Recovery of Progress Payments

 Section 14 of the ACT SOPA prevents “pay when paid” provisions taking effect. Recovery of progress payment is set out by the ACT SOPA:

• First step is to make a payment claim for the work completed. (Section 15 ACT SOPA).
• A payment schedule can the provided by the respondent. (Section 106 ACT SOPA).
• Upon an unsatisfactory Schedule, a claimant may apply for adjudication (Section 17 ACT SOPA).

Judicial Review

 Section 43 of the ACT SOPA does not allow a court jurisdiction to set aside or remit an adjudication decision unless:

• The decision ‘substantially affect[s]’ the rights of a party; and
• There is a ‘manifest error of law of the face’ of the decision or there is ‘strong evidence’ that the adjudicator made an error of law and that determination of the question may add ‘substantially’ to the certainty of the law.

Section 44 of the ACT SOPA grants the ACT Supreme Court jurisdiction to determine a question of law arising in an application subject to the adjudicator’s consent, or the parties’ consent.

Right to suspend work

• When no payment schedule is provided, as set out in section 17; or
• When the claimant is not paid, in accordance with a payment schedule; or
• If there is a failure by the respondent to pay the adjudicated amount,

The Claimant may suspend works on a site S29(4) of the ACT SOPA precludes the claimant from being liable for loss or damage as a result of suspension of Works. This is a powerful tool for a claimant in bringing a resolution of cash flow issues on a site.

Conclusion

The ACT SOPA is a welcome step towards establishing a security of payment scheme across all States or Territories. However, having different regimes in each State and Territory is a source of confusion for what is meant to be a smooth and easy process for subcontractors in building sites. A welcome development would be to see the States and Territories create a uniform regime so as to maximize the cash flow efficiencies.  

This newsletter does not, and is not intended to, offer professional advice in any form.  The purpose of the newsletter is to provide information and general guidance, and does not constitute legal advice. There has been no consideration given as to whether any information or material contained or otherwise referred to in this newsletter is appropriate for you. You should not act upon the matters or comments contained in this newsletter without first taking specific advice on your own particular circumstances.  Blackstone Waterhouse Lawyers is more than happy to assist you in that regard.