Building and Construction Industry Security of Payment Act 2009 (SA) – Payment Claims

Building and Construction Industry Security of Payment Act 2009 (SA) – Payment Claims

If you are a principal, head contractor or subcontractor carrying out construction work or supplying related goods and services, chances are the Building and Construction Industry Security of Payment Act 2009 (SA) (Act) applies to your contract.

The Act entitles a contractor or subcontractor to a progress payment on a job, regardless of whether your contract provides for progress payments. It does not matter if the contract is written or oral, so long as the work being carried out is in SA, and doesn’t relate to residential building work where the owner lives in or intends to live in the building. It applies regardless of whether the contract refers to the Act or not. The Act also provides a quick mechanism for resolving payment disputes.

If you’re a contractor working on a commercial project, you can use the payment claim process to ensure prompt payment, allowing you to continue work, meet your business’ obligations, and construction deadlines:

Payment Claim

You can make a claim for a progress payment for work carried out, or related goods and services supplied under your building contract.

You can do that by preparing a written claim that doesn’t differ too much from the invoice that you might usually issue. It needs to:

  • Identify the work carried out, or related goods and services supplied;
  • Specify the amount of the payment claim (claimed amount); and
  • State that it is made under the Act.

It’s also helpful to set out the party, contract and project details clearly.

Your claimed amount can include amounts that you’ve claimed before but remain outstanding, as well as retentions due for release.

You’ll need to serve the payment claim on the principal, or head contractor, within the later of 6 months of the relevant construction work, or any date set out in your contract. The principal/head contractor has the earlier of 15 business days, or any date set out in your contract, to respond with a payment schedule.

 Payment Schedule

 Once a payment claim is received, the principal/head contractor must serve a payment schedule in response, which:

  • Identifies the payment claim;
  • Indicates how much it will pay, if any (scheduled amount); and
  • If the scheduled amount is less than the claimed amount, explain why and give reasons.

If no payment schedule is served, the principal/head contractor is liable to pay the whole claimed amount.

The scheduled amount is due within the timeframe set out in the contract, or if the contract doesn’t provide that detail, within 15 business days after service of the payment claim.

Enforcing your rights

 If you remain unpaid after receiving a payment schedule, you may:

  • Apply to court for summary judgment in the scheduled amount, as a debt due to you;
  • Apply for adjudication; or
  • Suspend work.

Next time you are chasing payment, or perhaps entering into a new contract, take advantage of the payment claim process in the Act to protect your cashflow and keep your business operations moving.

Please contact Rebecca Clafton, Senior Associate, or Brenton Priestley, Partner, for more information.