This article is from the Australian Property Journal archive
Criticised for lacking in grunt, the Victorian security of payments legislation will be beefed up, using NSW legislation as a model.
The Victorian Parliament is currently considering extensive changes to the Building and Construction Industry Security of Payment Act 2002 (SOP Act).
The Victorian security of payment legislation, which was originally based on NSW’s Building and Construction Industry Security of Payment Act 1999 (NSW Act), will be “more effective in enabling any person who carries out building and construction work to promptly recover progress payments” once the Building and Construction Industry Security of Payment (Amendment) Act 2006 (Amendment Act) comes into effect, says the Victorian Minister for Planning, Mr Rob Hulls.
The Amendment Act is based largely on the 2003 amendments to the NSW Act, and no doubt the Victorian legislature kept a keen eye on their effect when drafting their own amendments.
Likely changes
If passed, the Amendment Act will introduce the following:
- Providing an adjudication process for claimants to enforce payments. A claimant who has obtained an adjudication certificate will be entitled to file it with the court, which will have the same effect as a judgment debt issued by the court. In very limited circumstances, this will include a review process for adjudication determinations.
- Providing security in lieu of payment of an adjudicated amount will no longer be sufficient. The respondent must pay the adjudicated amount.
- Providing an alternate means of recovering adjudicated amounts in court, as well as entitling the claimant to a charge or a lien over unfixed plant or material for overdue amounts to the value of unpaid amounts.
- Placing a time limit on the making of payment claims; that is, a claimant must make a claim within 12 months of the works being carried out unless the contract allows for a greater time.
- Milestone and final payments will be included in the definition of progress payments. Both direct and indirect “pay when get paid” clauses will be deemed void.
- Respondents will no longer be able to rely on cross claims and defences in summary judgment proceedings in court.
The proposed amendments will bring the SOP Act closer to the provisions of the NSW Act. It remains to be seen whether the introduction of the amendments will, as in NSW, increase the amount of claims, resulting in a flurry of claims and litigation by claimants and respondents alike.
The amendments aim to replicate the NSW experience in addressing inadequacies in the existing procedures that have been exploited by respondents to limit the court’s ability to enforce adjudications and prevent or delay payments.
The Victorian building and construction industry will be watching parliament closely to see that the amendments are passed. At this stage, it is anticipated that the proposed amendments will come into effect no later than March 2007.
By Robert Riddell, partner at GADENS LAWYERS.*
