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Recourse for non payment in commercial construction disputes

commercial construction disputes

TheĀ Building and Construction Industry Security of Payment Act 2009 (SA)("the Act") commenced operation in South Australia on 10 December 2011.

The legislation is designed to streamline non-domestic construction disputes where the subject matter disagreed on is whether payment for work performed is due and payable.

Prior to the Act, construction disputes were often very time consuming, costly and convoluted. A claim for payment was typically met with a response to the effect that either the work was incomplete or it was unsatisfactory and accordingly the payment would be withheld until such time as the work was completed or rectified.

Whilst the Act does not prevent a claim for incomplete or defective workmanship as determined on expert evidence and heard by the Court, it replaces in the immediate term such litigation with a comparatively quick adjudication which is primarily designed so that the uncontested aspect of any progress claim is promptly paid.

The Act does so by setting a series of tight deadlines, which, if not met, result in a "default position" occurring. By way of example, if a claim for payment (a "progress payment claim") is not met with a response (a "payment schedule") within the required time, it allows the claimant to seek summary relief without set-off or deduction in the first instance, with such reductions then heard later before the Court in its ordinary jurisdiction.

Even in circumstances where a progress payment claim is met with a payment schedule in the required time, the issues in dispute are heard quickly before an arbitrator, rather than before the Court. The effect of that is payment is often received more promptly than would be the case previously and the parties can then continue with the construction works rather than become bogged down in litigation.

In the event that you are undertaking construction work and a builder or subcontractor issues you with a progress payment claim under the Act, it is vital that you seek urgent legal assistance in the event that you dispute the amount of the progress claim. Likewise, if you are a builder or sub-contractor who has issued a progress claim and has been met with a payment schedule, it is critical that you seek prompt legal advice.

A failure to act quickly in such matters may have significant impact on your later rights.


Get in touch with today's blog writer:
Felix Hoelscher

Partner in Commercial Litigation and Disputes

Please note, this Blog is posted in Adelaide, South Australia by Andersons Solicitors. It relates to South Australian legislation. Andersons Solicitors is a medium sized law firm servicing metropolitan Adelaide and regional South Australia across all areas of law for individuals and businesses.

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