What is the Security of Payments Act (ACT)?
Everything you need to know about the Security of Payments Act in the ACT.
Are you considering hiring a contractor to carry out some work? Whether it’s a small job or an on-going project, there are legislative provisions that regulate the payment of workers. The Building and Construction Industry (Security of Payment Act 2009) (ACT) is a state based legislation that regulates fair and timely payments for work and supplies delivered in the building and construction industry.
If you are considering hiring contractors for a construction project, LawPath’s expert debt recovery lawyers can help you better understand your rights and obligations.
What is the Security of Payments Act (ACT)?
In the ACT, the building and construction industry is regulated by the Building and Construction Industry (Security of Payment Act 2009) (ACT) which protects the rights of construction workers to receive progress payments for goods or services delivered. The Act applies to all contracts entered into on or after 1 July 2010 and provides a streamlined adjudication process so that contractors and suppliers can receive or claim progress payments through a quick and inexpensive process. These progress payments include range of payments including single payments, final payments and milestone payments in relation to the carrying out of work and the supplying of goods and services under a contract.
Entitlement to payment
Under the Act, contractors are entitled to receive progress payments under any contract. This includes verbal, written contracts and absent contracts where the contract may stipulate that the contractor is not entitled to claim progress payments. The Act does not apply to construction contracts formed as part of a loan agreement or for residential building work.
Progress payments are calculated on the value of work or supplies that have been carried out or delivered and the terms of the contract. Interest is payable on the unpaid amount of a progress payment and is calculated at the greater of the following:
- The rate stipulated in the Court Procedure Rules 2006;
- The rate given in the contract.
Where there is a progress payment owing for construction work and a claim has been made by the owed party, the Act specifies that payment must be made within 10 business days after a payment claim is made. If full payment for the goods or services is not made within the due date, a payment schedule must be provided to the claimant within 10 business days of the claim.
If a person does not intend to pay the total amount claimed, they may provide a payment schedule within 10 days of the claim being made. A payment schedule is a notice in writing that must be served to the claimant to inform them the debtor does not intend to pay the amount claimed. The payment schedule must identify the payment amount being claimed and state reasons as to why the person proposes to pay less than the amount claimed.
The Act has specific provisions for the adjudication of disputes between a claimant and a debtor. If there is a dispute or unresolved conflict between the parties regarding the amount claimed, the claimant claimant can apply for adjudication by contacting an Authorised Nominating Authority (ANA). The ANA will appoint an adjudicator to hear disputes about the account payments.
If the adjudicator’s decision is in favour of the claimant, the debtor has to pay the adjudicated amount within 5 business days. The decision is enforceable as a judgement debt through the courts but it does not extinguish the debtor’s right to seek a final resolution through a court or tribunal.
Breach of the Act
The amended Building and Construction Industry (Security of Payment) Act protects the rights of contractors and suppliers under a construction contract to receive and recover progress payments for carrying out work and supplying related goods and services. Where a person fails to pay an adjudicated amount, the claimant can request a certificate from the ANA and lodge it as an application in Court.
If you have a payment dispute or are looking to hire a contractor, LawPath’s experienced debt recovery lawyers can advise you on your rights and obligations.
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Jennifer is a Paralegal, working in our content team, which aims to provide free legal guides to facilitate public access to legal resources. With a keen interest in media and IP law, her research focuses on the evolving role of the law to navigate new and emerging information platforms.