Building and Construction Industry Security of Payment

In Victoria, the Building and Construction Industry Security of Payment Act 2002 known as “SOPA”  (the “Act”) provides for statutory entitlements to progress payments for persons who carry out construction work or who supply related goods and services under construction contracts.

This statutory entitlement is in addition to any other entitlement or remedy under a construction contract that a person may have for recovering that other entitlement.

The objective of the Act is to ensure that any person who undertakes to carry out construction work or undertakes to supply related goods and services under a construction contract is entitled to receive and is able to recover progress payments in relation to the carrying out of that work and the supplying of those goods and services.

The Act sets out a procedure involving the following as a means by which a person can recover a progress payment;

  • the making of a payment claim by the person claiming payment; and
  • the provision of a payment schedule by the person by whom the payment is payable; and
  • the referral of any disputed claim to an adjudicator for determination; and
  • the payment of the amount of the progress payment determined by the adjudicator; and
  • the recovery of the progress payment in the event of a failure to pay.

Sections 5 and 6 inclusive define the scope of construction work and related goods and services covered under the Act along with exceptions.

Domestic building contracts excluded

The Act does not apply to a construction contract which is a domestic contract within the meaning of Domestic Building Contracts Act 1995 between a builder and building owner, exceptions apply.

Effect of pay when paid provisions

A pay when paid provision under a construction contract has no legal effect pursuant to section 13 under the Act.

Generally, all states and territories in Australia do have Building and Construction Industry Security of Payment legislation in operation. `

This article is general in nature and does not constitute legal advice. If you require assistance with any of the topics dealt with in this article we strongly recommend you seek legal advice or contact our office to speak with our experts.